Cost Plus, Inc. (NASDAQ: CPWM) today announced financial results
for its first quarter ended April 28, 2012 and provided its
financial outlook for the second quarter and full year of fiscal
2012.
First Quarter Highlights
- Same store sales for the quarter
increased 7.9% on top of a 5.5% increase for the quarter last
year.
- Same store customer count for the
quarter increased 2.7% and same store average ticket increased
5.0%.
- Sales for the quarter for the
direct-to-consumer business were $7.3 million, a 36.9% increase,
compared to $5.3 million for the quarter last year.
- Achieved net income from continuing
operations for the first fiscal quarter, the first time since
fiscal 2004. Net income from continuing operations was $129,000
compared to a net loss from continuing operations of $3.0 million
for the first quarter of last year.
- Non-GAAP EBITDA from continuing
operations for the quarter was $7.5 million compared to $5.0
million for the quarter last year.
First Quarter Results from Continuing Operations
Net sales for the first quarter of fiscal 2012 were $214.6
million, a 7.4% increase compared to $199.7 million for the first
quarter of last year. Same store sales for the first quarter of
fiscal 2012 increased 7.9% on top of a 5.5% increase for the first
quarter of last year. The increase in same store sales for the
first quarter was due to an increase in customer count of 2.7% and
an increase in the average ticket per customer of 5.0%.
Gross profit as a percentage of net sales for the first quarter
of fiscal 2012 increased 30 basis points to 32.0% compared to 31.7%
for the first quarter of last year. The improvement in gross profit
for the quarter was primarily due to the leveraging of occupancy
costs on higher sales, offset by a slightly lower merchandise
margin.
As a percentage of net sales, selling, general and
administrative (SG&A) expenses for the first quarter of fiscal
2012 decreased 120 basis points to 30.4% compared to 31.6% for the
first quarter of last year. The decrease in SG&A expenses as a
percentage of net sales for the quarter was primarily due to
increased leverage from higher sales.
Net income from continuing operations for the first quarter of
fiscal 2012 was $129,000, or $0.01 per diluted share, compared to a
net loss from continuing operations of $3.0 million, or $0.14 per
diluted share, for the first quarter of last year.
Net loss for the first quarter of fiscal 2012 was $74,000, or
$0.00 per diluted share, compared to a net loss of $3.4 million, or
$0.15 per diluted share, for the first quarter of last year.
For the first quarter of fiscal 2012, non-GAAP earnings before
interest, taxes, depreciation, and amortization (“EBITDA”) from
continuing operations was $7.5 million compared to $5.0 million for
the first quarter of last year.
The Company opened one new store during the quarter and closed
none to end the quarter with 259 stores in 30 states.
The Company ended the quarter with $22.8 million in borrowings
and $6.9 million in letters of credit outstanding under its
asset-based credit facility compared to $41.0 million in borrowings
and $7.8 million in letters of credit at the end of the first
quarter of last year. The percentage utilization under the credit
facility at the end of the first quarter of fiscal 2012 was 21%
compared to 38% at the end of the first quarter of last year. The
revolving credit facility is asset-based and expires in January
2016. The Company expects to pay off its asset-based credit
facility in its entirety before the end of the fiscal year.
Second Quarter and Updated Full Year Fiscal 2012 Outlook from
Continuing Operations
The Company’s outlook for the second quarter and full year of
fiscal 2012 does not include any costs or consider the accounting
impact related to the previously announced potential acquisition by
Bed Bath & Beyond, Inc. Because the transaction with Bed Bath
& Beyond, Inc. is currently pending, the Company is unable to
determine the costs and expenses that may affect the guidance
below, but it believes such costs and expenses may be
significant.
The Company’s outlook for the second quarter of fiscal 2012 is
as follows:
- Net sales in the range of $210 million
to $216 million, based on a same store sales increase in the range
of 6% to 8% compared to a same store sales increase of 2.8% for the
second quarter of fiscal 2011.
- Gross profit as a percentage of net
sales in the range of 31.4% to 31.6% compared to 29.8% for the
second quarter of fiscal 2011.
- Net loss from continuing operations in
the range of $5.0 million to $3.4 million, or $0.22 to $0.15 per
diluted share, compared to a net loss from continuing operations of
$7.8 million for the second quarter of fiscal 2011.
- EBITDA from continuing operations in
the range of $1 million to $3 million compared to EBITDA from
continuing operations of $13,000 for the second quarter of fiscal
2011.
- The Company does not plan to open any
new stores during the second quarter of fiscal 2012 and plans to
close one store, compared to no new stores and one store closure
during the second quarter of fiscal 2011.
The Company’s outlook for the full year of fiscal 2012 is as
follows:
- Net sales in the range of $1.0 billion
to $1.1 billion, based on a same store sales increase in the range
of 5% to 6% compared to a same store sales increase of 5.4% for
fiscal 2011. Comparable store sales for fiscal 2012 were measured
on a 53 to 53 week basis, while comparable store sales for fiscal
2011 were measured on a 52 to 52 week basis.
- Gross profit as a percentage of net
sales in the range of 32.6% to 32.7% compared to 32.1% for fiscal
2011.
- Income tax expense in the range of $7
million to $8 million compared to $1.6 million for fiscal
2011.
- Net income from continuing operations
in the range of $28 million to $29 million, or $1.13 to $1.16 per
diluted share, compared to net income from continuing operations of
$17.7 million for fiscal 2011.
- EBITDA from continuing operations in
the range of $65 million to $67 million compared to EBITDA from
continuing operations of $51.3 million for fiscal 2011.
- The Company is targeting to open five
to ten new stores and the outlook includes an estimate of eight new
stores, including two relocations and one store closure, compared
to one relocation and five store closures during fiscal 2011.
Cost Plus, Inc. is a leading specialty retailer of casual home
living and entertaining products. As of May 16, 2012, the Company
operated 259 stores in 30 states.
Forward-Looking Statements
This press release contains forward-looking statements that are
based on current expectations and are subject to various risks and
uncertainties, which could cause actual results to differ
materially from those forecasted. Such forward-looking statements
include, but are not limited to, statements relating to our second
quarter and fiscal 2012 outlook, our ability to pay off our
asset-based credit facility in its entirety before the end of the
fiscal year and our proposed transaction with Bed Bath &
Beyond, Inc. The risks and uncertainties include, but are not
limited to: uncertainties as to the timing of the tender offer and
the merger with Bed Bath & Beyond Inc.; the risk that the
transaction will not close; the potential of the transaction making
it more difficult to maintain relationships with employees,
customers, vendors or other business partners; changes in economic
conditions that affect consumer spending; changes in the
competitive environment; currency fluctuations; timely introduction
and customer acceptance of merchandising offerings; foreign and
domestic labor market fluctuations; interruptions in the flow of
merchandise; changes in the cost of goods and services purchased
including fuel, transportation and insurance; a material
unfavorable outcome with respect to litigation, claims and
assessments; unseasonable weather and other seasonal
considerations; the effects associated with terrorist acts; and
changes in accounting rules and regulations. Please refer to
documents on file with the Securities and Exchange Commission,
including the Company’s Annual Report on Form 10-K, for a more
detailed discussion of the Company’s risk factors. The Company does
not undertake any obligation to update its forward-looking
statements.
Use of Non-GAAP Financial Information
This release references the non-GAAP financial measure of
EBITDA. The Company believes that the non-GAAP financial measure
allows management and investors to understand and compare the
Company's operating results in a more consistent manner for the
first quarter of fiscal 2012 and for the outlook amounts provided
for the second quarter and full year of fiscal 2012. The non-GAAP
measure presented may not be comparable to similarly titled
measures reported by other companies. The non-GAAP measure should
be considered supplemental and not a substitute for the Company's
financial results that are recorded in accordance with generally
accepted accounting principles for the periods presented.
The following table is a reconciliation of the Company’s net
income/(loss) from continuing operations to EBITDA from continuing
operations for the first quarter of fiscal 2012 and 2011:
First Quarter
(In thousands)
FY12
FY11
Net income/(loss) from continuing operations $ 129 ($ 3,035
) Add back: Net interest expense 2,978 3,081 Income tax
expense/(benefit) 3 (85 ) Depreciation and amortization expense
4,439 5,023 EBITDA from
continuing operations $ 7,549 $ 4,984
The following table is a reconciliation of the Company’s
projected net income/(loss) from continuing operations to EBITDA
from continuing operations for the second quarter and full year of
fiscal 2012 compared to actual results for the second quarter and
full year of fiscal 2011:
Second Quarter Full Year (In
thousands) FY121 Outlook
FY11 FY121 Outlook FY11
Net income/(loss) from continuing operations ($ 5,000 ) ($
3,400 ) ($ 7,762 ) $ 28,000 $ 29,000 $ 17,711
Add back: Net interest expense 3,000 3,000 3,223 12,000 12,000
12,814 Income tax (benefit)/expense (1,200 ) (800 ) (377 ) 7,000
8,000 1,554 Depreciation and amortization expense 4,200 4,200 4,929
18,000 18,000 19,235
EBITDA from continuing operations $
1,000 $ 3,000 $ 13 $ 65,000
$ 67,000 $ 51,314
1. The projected results for fiscal 2012 are
provided in the table in a range for the second quarter and the
full year.
COST PLUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share amounts, unaudited)
First Quarter
April 28,
2012
April 30,
2011
Net sales $ 214,565 100.0 % $ 199,710 100.0 % Cost of
sales and occupancy 145,934 68.0 136,318
68.3 Gross profit 68,631 32.0 63,392 31.7 Selling,
general and administrative expenses 65,321 30.4 63,109 31.6 Store
closure costs - 0.0 322 0.2 Store preopening expenses 200
0.1 - 0.0 Income/(loss) from continuing
operations, before interest and taxes 3,110 1.4 (39 ) (0.0 ) Net
interest expense 2,978 1.4 3,081 1.5
Income/(loss) from continuing operations before income taxes
132 0.1 (3,120 ) (1.6 ) Income tax expense/(benefit) 3
0.0 (85 )
(0.0
)
Net income/(loss) from continuing operations 129 0.1 (3,035
) (1.5 ) Loss from discontinued operations (203 )
(0.1 ) (331 ) (0.2 ) Net loss $ (74 ) (0.0 ) % $
(3,366 ) (1.7 ) % Net income/(loss) per share from
continuing operations $ 0.01 $ (0.14 ) Net loss per share from
discontinued operations $ (0.01 ) $ (0.01 ) Net loss per share $
(0.00 ) $ (0.15 ) Weighted average shares outstanding -
basic 22,420 22,122 Weighted average shares outstanding - diluted
23,773 22,122 New stores opened 1 0 COST PLUS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
April 28,
2012
April 30,
2011
ASSETS Current assets:
Cash and cash equivalents $ 2,535 $
3,415
Merchandise inventories, net 197,755 185,421 Other current assets
16,000 18,380 Total current
assets 216,290 207,216 Property and equipment, net 133,004
141,234 Other assets, net 5,017 5,788
Total assets $ 354,311 $ 354,238 LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $
57,334 $ 55,197 Accrued compensation 16,738 15,247 Revolving line
of credit 22,800 41,000 Current portion of distribution center
sale-leaseback obligations 944 884 Other current liabilities
21,151 24,104 Total current liabilities
118,967 136,432 Capital lease obligations 4,299 5,807
Long-term distribution center sale-leaseback obligations 110,677
111,621 Other long-term obligations 20,132 24,600
Shareholders' equity: Common stock 225 222 Additional paid-in
capital 178,211 173,546 Accumulated deficit (78,200 )
(97,990 ) Total shareholders' equity 100,236
75,778 Total liabilities and shareholders'
equity $ 354,311 $ 354,238
Cost Plus, Inc. (MM) (NASDAQ:CPWM)
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