Coldwater Creek Announces Fourth Quarter and Fiscal Year 2012 Results *Fourth quarter 2012 comparable premium retail store sales increased 2.7 percent, on a 13-week basis *Fourth quarter 2012 direct sales increased 7.7 percent *Fourth quarter 2012 adjusted net loss per share of $0.65, excluding gain on derivative liability and CEO transition costs SANDPOINT, Idaho, March 13, 2013 (GLOBE NEWSWIRE) -- Coldwater Creek Inc. (Nasdaq:CWTR) today reported financial results for the quarter and fiscal year ended February 2, 2013. The Company noted that the following non-comparable items impacted the fourth quarter and fiscal year: *The Company's fiscal 2012 is a 53-week year with the additional week falling in the fourth quarter compared to the traditional 52 weeks in fiscal 2011. Comparable premium retail store sales for the fourth quarter and full year of fiscal 2012 are presented on a 13-week and 52-week basis and exclude the additional week. The additional week in fourth quarter fiscal 2012 represented a loss of $0.13 per share; *The fourth quarter of fiscal 2012 included a charge, net of tax, of $0.06 per share associated with the Company's CEO transition; *Due to the change in the fair value of the derivative liability related to the Series A Preferred Stock, the Company recorded a gain of $0.05 per share in the fourth quarter of fiscal 2012, and a loss of $0.10 per share for the full year fiscal 2012; *During the fourth quarter of fiscal 2011, the Company recorded a favorable cumulative one-time adjustment for gift card breakage that represented $11.8 million, or $0.39 per share, in the fourth quarter 2011 and $0.47 per share in fiscal year 2011. In addition, the Company recorded a non-cash store impairment charge of $0.08 per share in the fourth quarter of fiscal 2011 and $0.21 per share in fiscal year 2011. Fourth Quarter of Fiscal 2012 Operating Results *Consolidated net sales were $220.8 million, compared with $224.4 million in fourth quarter 2011, which included net sales of $11.8 million as a result of a favorable cumulative one-time adjustment for gift card breakage income. Net sales from the retail segment were $166.0 million, compared with $173.5 million in the same period last year. Comparable premium retail store sales increased 2.7 percent. Net sales decreased due to store closures as a result of our store optimization program and the impact of $10.7 million in net sales from the cumulative one-time gift card breakage recorded in the fourth quarter 2011. Net sales from the direct segment were $54.7 million compared with $50.8 million in the same period last year, which included $1.1 million from the cumulative one-time adjustment for gift card breakage. *Consolidated gross profit was $64.1 million, or 29.1 percent of net sales, compared with $73.1 million, or 32.6 percent of net sales, for fourth quarter 2011. The 350 basis point decline in gross profit margin was primarily due to the 370 basis point benefit in the fourth quarter of fiscal 2011 resulting from the cumulative one-time adjustment for gift card breakage. Adjusting for this benefit, gross margin increased 20 basis points driven by leverage of buying and occupancy costs offset by lower merchandise margins. *Selling, general and administrative expenses (SG&A) were $82.5 million, or 37.4 percent of net sales, compared with $81.8 million, or 36.5 percent of net sales, for fourth quarter 2011. The increase in SG&A expense was driven by a $2.1 million pre-tax charge related to the CEO transition in the 2012 period offset by lower marketing expenses. *Net loss was $20.0 million, or $0.66 per share, and included: (i) other gain, net, of $1.5 million, or $0.05 per share, due to the change in the fair value of the derivative liability related to the Series A Preferred Stock issued in July 2012; (ii) net loss of $4.0 million, or $0.13 per share, incurred in the additional week in the fourth quarter fiscal 2012; and (iii) a charge, net of tax, of $1.7 million, or $0.06 per share associated with the Company's CEO transition. This compares to a net loss of $12.8 million, or $0.42 per share, for fourth quarter 2011 and included: (i) $11.8 million, or $0.39 per share, benefit due to the cumulative one-time adjustment related to gift card breakage; and (ii) a non-cash asset impairment charge of $2.3 million, or $0.08 per share, related primarily to under-performing stores. *Adjusted net loss, which excludes the gain on the derivative liability and the CEO transition expense for fourth quarter 2012, was $19.8 million, or $0.65 per share. This compares to adjusted net loss of $22.3 million, or $0.73 per share, excluding the cumulative one-time adjustment related to gift card breakage income and the non-cash store impairment charge for fourth quarter 2011. (Please see the table entitled "GAAP to Non-GAAP Reconciliation of Selected Measures" at the end of this press release.) "Fiscal 2012 was a pivotal year for Coldwater Creek as we began to see the positive impact of the significant changes we have made throughout our organization. Importantly, our product offering is resonating with our customers. In addition, we have created a compelling loyalty program, improved our inventory management, built talent within our organization and continued to execute on our store optimization program. This was particularly apparent in our financial performance in the second half of the year as we achieved two consecutive quarters of comparable premium store sales growth. Overall for the year, we achieved a one percent increase in our comparable premium store sales, gross margin improvement of 170 basis points, and an $18.0 million reduction in SG&A. We ended the year with a clean inventory position and total inventory down five percent," said Jill Dean, President and Chief Executive Officer. "As we move into fiscal 2013, we are focused on building our brand and enhancing our customer experience across all of our channels, consistently delivering trend-right apparel and accessories, driving traffic, and rigorously managing our inventory, which we believe will enable us to continue to generate improvements in our financial performance." Full Year Fiscal 2012 Operating Results *Consolidated net sales for fiscal 2012 were $742.5 million, compared with $773.0 million in fiscal 2011. Net sales from the retail segment were $574.4 million, compared with $595.2 million last fiscal year. Comparable premium retail store sales increased 0.8 percent. Net sales from the direct segment were $168.0 million, compared with $177.8 million last fiscal year. *Consolidated gross profit increased $3.8 million to $233.1 million, or 31.4 percent of net sales, compared with $229.3 million, or 29.7 percent of net sales, for fiscal 2011. The 170 basis point increase in gross profit margin was primarily due to increased leverage of buying and occupancy costs and higher merchandise margins reflecting improved product performance. Last year's gross margin included a 110 basis point benefit in the fourth quarter of fiscal 2011 from the cumulative one-time adjustment for gift card breakage income. *Selling, general and administrative expenses (SG&A) were $301.8 million, or 40.6 percent of net sales, compared with $319.8 million, or 41.4 percent of net sales, for fiscal 2011. The $18.0 million decline in SG&A was due primarily to lower marketing expense compared to last fiscal year. *Net loss was $81.8 million, or $2.69 per share, on 30.5 million weighted average shares outstanding, and included (i) other loss, net, of $2.9 million, or $0.10 per share, related to the Series A Preferred Stock issued in July 2012; (ii) net loss of $4.0 million, or $0.13 per share, incurred in the additional week in the fourth quarter fiscal 2012; and (iii) a charge, net of tax, of $1.7 million, or $0.06 per share, associated with the Company's CEO transition. This compares to a net loss of $99.7 million, or $3.98 per share on 25.1 million weighted average shares outstanding, for fiscal 2011 and included: (i) $11.8 million, or $0.47 per share, due to the cumulative one-time adjustment related to gift card breakage income; and (ii) a non-cash asset impairment charge of $5.2 million, or $0.21 per share, related to certain retail store assets. *Adjusted net loss for fiscal 2012, which excludes the loss on the derivative liability and the CEO transition expense, was $77.2 million, or $2.53 per share, on 30.5 million weighted average shares outstanding. This compares to adjusted net loss of $106.2 million, or $4.24 per share, on 25.1 million weighted average shares outstanding for fiscal 2011 which excludes the cumulative one-time adjustment related to gift card breakage income for fiscal 2011 and the non-cash store impairment charge. (Please see the table entitled "GAAP to Non-GAAP Reconciliation of Selected Measures" at the end of this press release.) Balance Sheet At February 2, 2013, cash totaled $21.7 million and there were no borrowings outstanding under the revolving line of credit. This compared to cash of $51.4 million and $15.0 million of outstanding borrowings under the revolving line of credit as of January 28, 2012. Total inventory decreased 5.1 percent to $125.2 million from $132.0 million at the end of fiscal 2011. Premium retail store inventory per square foot, including retail inventory in the distribution center, increased approximately 8.0 percent as compared to fiscal 2011. Reverse Stock Split On October 4, 2012, the Company effected a reverse stock split of its common stock following stockholder approval. As a result of the split, every four shares of common stock outstanding were consolidated into one share, reducing the number of common shares outstanding on the effective date from 122.0 million to 30.5 million. Derivative Liability During the second quarter of fiscal 2012, in connection with the $65.0 million term loan received from an affiliate of Golden Gate Capital, the Company issued 1,000 shares of Series A Preferred Stock, which are convertible into an aggregate of 6.1 million shares of common stock at a purchase price of $3.40 per share. As a result of this transaction, the Company recorded a derivative liability of $15.7 million, which represented the fair value of the shares of Series A Preferred Stock upon issuance. In accordance with applicable U.S. GAAP, this derivative liability is measured at fair value on a recurring basis with changes recorded as other gain or loss, net. The Company's first quarter of fiscal 2013 earnings guidance set forth below excludes the quarterly impact of any change in the fair value of the derivative liability due to the inherent variability of this financial instrument. Store Optimization Program The Company closed five premium retail stores during the fourth quarter 2012, ending the fiscal year with 349 premium retail stores. As part of the Company's ongoing store optimization plan, the Company closed 15 premium retail stores in fiscal 2012. The Company's plan calls for the closure of up to 15 stores in fiscal 2013, and a total of 45 stores since fiscal 2011. First Quarter of Fiscal 2013 Financial Guidance For first quarter 2013, the Company expects: *Comparable premium retail store sales to be down in the low single digits. *Gross margin improvement of 100 to 200 basis points. *Net loss per share in the range of $0.60-$0.80, excluding the impact of the change in the fair value of the derivative liability. *Total inventory at the end of the quarter to be down in the low single digits as compared to the first quarter of fiscal 2012. Conference Call Information Coldwater Creek will host a conference call on Wednesday, March 13, 2013, at 4:30 p.m. (Eastern) to discuss fiscal 2012 fourth quarter and year end results. The dial in number for the call is 877-705-6003. The call will be simultaneously broadcast on the Investor Relations section of the Company's Web site at www.coldwatercreek.com. A recording of the call can be accessed for one week following the reporting date by calling (877) 870-5176 and providing conference ID 409982. A transcript of the call will also be available in the Investor Relations section of the Company's Web site. Coldwater Creek is a leading specialty retailer of women's apparel, jewelry, and accessories. The Company was founded in 1984 in Sandpoint, Idaho, and sells its merchandise through premium retail stores across the country, online, and through its mobile applications. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release contains "forward-looking statements" within the meaning of the securities laws, including statements about the effect of our strategic initiatives on our future financial results, the Company's expectations about future store closures and, with respect to the first quarter of fiscal 2013, expectations about comparable premium retail store sales, margin rate, net loss per share, and inventory. These statements are based on management's current expectations and are subject to a number of uncertainties, risks and assumptions that may not fully materialize or may prove incorrect. As a result, our actual results may differ materially from those expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, but are not limited to: *the inherent difficulty in forecasting consumer buying and retail traffic patterns and trends, which continue to be erratic and are affected by factors beyond our control, such as significant weather events, current macroeconomic conditions, high unemployment, continuing heavy promotional activity in the specialty retail marketplace, and competitive conditions and the possibility that because of lower than expected customer response, or because of competitive pricing pressures, we may be required to sell merchandise at lower than expected margins, or at a loss; *potential inability to attract and retain key personnel; *our new design aesthetic may take longer to implement than expected or may not resonate with our customers; *difficulties in forecasting consumer demand for our merchandise as a result of changing fashion trends and consumer preferences; *changing business and economic conditions resulting in our inability to realize our sales and earnings expectations; *our potential inability to recover the substantial fixed costs of our retail store base due to sluggish sales, which may result in impairment charges; *our potential inability to maintain compliance with debt covenants; *delays we may encounter in sourcing merchandise from our foreign and domestic vendors, including the possibility our vendors may not extend us credit on acceptable terms, and the potential inability of our vendors to finance production of the goods we order or meet our production needs due to raw material or labor shortages; *our foreign sourcing strategy may not lead to reduction of our sourcing costs or improvement in our margins; *increasing competition from discount retailers and companies that have introduced concepts or products similar to ours; *marketing initiatives may not be successful in improving the breadth of our customer base, or increasing traffic in the near term, or at all; *difficulties encountered in anticipating and managing customer returns and the possibility that customer returns may be greater than expected; *the inherent difficulties in catalog management, for which we incur substantial costs prior to mailing that we may not be able to recover, and the possibility of unanticipated increases in mailing and printing costs; *unexpected costs or problems associated with our efforts to manage the complexities of our multi-channel business model, including our efforts to maintain our information systems; *our revolving line of credit may not be fully available due to borrowing base and other limitations; *the benefits expected from our merchandising and design initiatives may not be achieved or may take longer to achieve than we expect; *the actual number and timing of planned store closures depends on a number of factors that cannot be predicted, including among other things the future performance of our individual stores and negotiations with our landlords; and such other factors as are discussed in our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the U.S. Securities and Exchange Commission. You should not place undue reliance on forward-looking statements, which are based on current expectations and speak only as of the date of this release. We do not assume any obligation to publicly release any revisions to forward-looking statements to reflect events or changes in our expectations after the date of this release. COLDWATER CREEK INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND SUPPLEMENTAL DATA (unaudited) (in thousands, except for per share data and store counts) Three Months Ended Twelve Months Ended February2, January28, February2, January28, 2013 2012 2013 2012 Net sales: Retail $166,039 $173,548 $574,425 $595,192 Direct 54,735 50,804 168,047 177,829 220,774 224,352 742,472 773,021 Cost of sales 156,629 151,223 509,351 543,693 Gross profit 64,145 73,129 233,121 229,328 Selling, general and 82,507 81,804 301,806 319,812 administrative expenses Loss on asset impairments — 2,341 — 5,216 Loss from operations (18,362) (11,016) (68,685) (95,700) Other loss (gain), net (1,494) — 4,025 — Interest expense, net 3,737 755 9,596 2,275 Loss before income taxes (20,605) (11,771) (82,306) (97,975) Income tax provision (benefit) (607) 1,058 (464) 1,719 Net loss $(19,998) $(12,829) $(81,842) $(99,694) Net loss per share — Basic and $(0.66) $(0.42) $(2.69) $(3.98) Diluted Weighted average shares outstanding — Basic and 30,523 30,407 30,477 25,065 Diluted Supplemental Data: Catalogs mailed 16,392 16,875 55,570 58,757 Premium retail stores: Opened — 2 1 5 Closed 5 5 15 15 Count at end of the fiscal 349 363 349 363 period Square footage 1,998 2,165 1,998 2,165 Factory outlet stores: Opened — — — — Closed — 1 — 1 Count at end of the fiscal 38 38 38 38 period Square footage 255 259 255 259 Spas: Count at end of the fiscal 8 9 8 9 period Square footage 42 49 42 49 COLDWATER CREEK INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands, except for per share data) February2, January28, 2013 2012 ASSETS Current assets: Cash and cash equivalents $21,734 $51,365 Receivables 5,150 8,199 Inventories 125,207 131,975 Prepaid and other current assets 17,072 9,410 Deferred income taxes 1,252 2,313 Total current assets 170,415 203,262 Property and equipment, net 169,007 206,079 Deferred income taxes 2,112 1,891 Other assets 4,374 1,883 Total assets $345,908 $413,115 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $57,891 $55,130 Accrued liabilities 87,915 78,175 Current maturities of debt and capital lease 577 15,735 obligations Total current liabilities 146,383 149,040 Deferred rents 82,726 101,384 Long-term debt and capital lease obligations 63,784 26,575 Supplemental executive retirement plan 10,994 12,142 Deferred income taxes 699 1,716 Other liabilities 4,186 5,845 Total liabilities 308,772 296,702 Commitments and contingencies Stockholders' equity: Preferred stock, $0.01 par value, 1,000 shares — — authorized; 1 and 0 shares issued, respectively Common stock, $0.01 par value, 75,000 shares authorized; 30,531 and 30,417 shares issued, 305 304 respectively Additional paid-in capital 153,146 151,254 Accumulated other comprehensive loss (1,532) (2,204) Accumulated deficit (114,783) (32,941) Total stockholders' equity 37,136 116,413 Total liabilities and stockholders' equity $345,908 $413,115 COLDWATER CREEK INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) Twelve Months Ended February2, January28, January29, 2013 2012 2011 Operating activities: Net loss $(81,842) $(99,694) $(44,111) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 51,437 56,743 63,329 Non-cash interest expense 5,478 — — Stock-based compensation expense 2,001 2,403 2,476 Supplemental executive retirement plan 587 555 886 expense Deferred income taxes (585) (68) (1,200) Valuation allowance adjustments (312) (839) (2,564) Deferred marketing fees and revenue (1,048) (1,509) (2,055) sharing Deferred rents (19,029) (15,948) (7,249) Loss on derivative liability 2,939 — — Series A Preferred Stock issuance costs 1,086 — — Net loss on asset dispositions and other 2,295 197 447 termination charges Loss on asset impairments — 5,216 3,931 Other 23 148 (516) Net change in operating assets and liabilities: Receivables 2,337 2,212 (3,584) Inventories 6,768 24,506 5,065 Prepaid and other current assets (8,007) 11,198 7,168 Accounts payable 2,869 (22,769) (21,776) Accrued liabilities (9,141) (6,575) (1,236) Net cash used in operating activities (42,144) (44,224) (989) Investing activities: Purchase of property and equipment (16,496) (8,895) (31,084) Proceeds from asset dispositions 144 1,110 73 Change in restricted cash — — 890 Net cash used in investing activities (16,352) (7,785) (30,121) Financing activities: Net proceeds from stock offering — 22,945 — Borrowings on revolving line of credit 10,000 15,000 — Payments on revolving line of credit (25,000) — — Proceeds from the issuance of long-term 65,000 15,000 — debt Payments of long-term debt and capital (15,444) (819) (2,762) lease obligations Payment of debt and Series A Preferred (5,895) (695) — Stock issuance costs Other 204 330 835 Net cash provided by (used in) financing 28,865 51,761 (1,927) activities Net decrease in cash and cash equivalents (29,631) (248) (33,037) Cash and cash equivalents, beginning 51,365 51,613 84,650 Cash and cash equivalents, ending $21,734 $51,365 $51,613 Non-cash investing and financing activities: Property and equipment purchases not yet $390 $2,085 $540 paid Capital lease asset additions and related $25 $75 $1,947 obligations Supplemental cash flow data: Interest paid, net of amount capitalized $4,124 $2,231 $1,817 Income taxes paid (refunded), net $3,460 $(2,112) $(7,261) COLDWATER CREEK INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION OF SELECTED MEASURES (unaudited) (in thousands, except for per share data) Three Months Ended Twelve Months Ended February2, January28, February2, January28, 2013 2012 2013 2012 Net loss: GAAP basis $ (19,998) $ (12,829) $ (81,842) $ (99,694) Excluding: Loss (gain) on derivative (1,494) — 2,939 — liability CEO transition costs 1,687 — 1,687 — Gift card breakage income — (11,765) — (11,765) Loss on asset impairments — 2,341 — 5,216 Non-GAAP adjusted basis $ (19,805) $ (22,253) $ (77,216) $ (106,243) Net loss per share — Basic and Diluted: GAAP basis $ (0.66) $ (0.42) $ (2.69) $ (3.98) Excluding: Loss (gain) on derivative (0.05) — 0.10 — liability CEO transition costs 0.06 — 0.06 — Gift card breakage income — (0.39) — (0.47) Loss on asset impairments — 0.08 — 0.21 Non-GAAP adjusted basis $ (0.65) $ (0.73) $ (2.53) $ (4.24) About Non-GAAP Selected Measures The Company reports its consolidated financial results in conformity with accounting principles generally accepted in the United States (GAAP). The accompanying press release dated March13, 2013, contains non-GAAP financial measures. These non-GAAP financial measures include adjusted net loss and net loss per share, which excludes the loss (gain) on the derivative liability and CEO transition costs for fiscal 2012 and the cumulative one-time adjustment related to gift card breakage income and loss on asset impairments for fiscal 2011. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in conformity with GAAP. Management believes that these non-GAAP financial measures provide meaningful supplemental information because they exclude activity that is not included by management when assessing the performance of the Company. The Company may consider whether other significant items that arise in the future should be adjusted from GAAP measures. CONTACT: For Coldwater Creek Lyn Walther Divisional Vice President, Investor Relations 208-265-7005 Web site: www.coldwatercreek.com
Coldwater Creek Announces Fourth Quarter and Fiscal Year 2012 Results
Press spacebar to pause and continue. Press esc to stop.