Brookstone Q1 Earnings Improve 27.6 Percent on Strong Sales
Increases NASHUA, N.H., May 19 /PRNewswire-FirstCall/ -- Specialty
retailer Brookstone, Inc. , propelled by strong double-digit
same-store sales from customer demand for its innovative products,
announced today that earnings for the first quarter improved 27.6
percent over first-quarter results in 2003. Same-store sales for
the 13-week period ended May 1, 2004, soared 20.1 percent, while
total sales for the quarter rose 27.1 percent to $77.5 million,
compared to $61.0 million for the first quarter of 2003. Direct
Marketing sales climbed 16.4 percent to $11.8 million. For the
first quarter, Brookstone narrowed its net loss to $4.6 million, or
$0.23 per diluted share, a 27.6 percent improvement over the loss
of $6.4 million, or $0.33 per diluted share in the first quarter of
2003. Because of the seasonal nature of specialty retailing,
Brookstone generally carries a loss through the first three
quarters and makes its profit in the fourth quarter. "We are
extremely pleased with our strong first-quarter results and believe
they reflect the growing customer demand for our high-value,
differentiated products," said Brookstone Chairman, President and
Chief Executive Officer Michael Anthony. "We continue to benefit
from our unique position in the marketplace as both a product
developer and multi-channel retailer, which allows us to operate
outside the influence of big-box retailers that sell
undifferentiated products and compete largely on price." Mr.
Anthony continued: "As a result, in the first quarter of 2004 we
experienced very strong sales of Brookstone products across a wide
variety of categories, as well as increased margins over the first
quarter of 2003. We are particularly pleased with our 20.1 percent
increase in same-store sales, which we attribute to our strong
product selection and the broadening appeal of the Brookstone
brand. Additionally, our airport stores turned in an impressive
performance in the first quarter by generating same-store sales
above the Company average." Looking ahead to the second quarter and
beyond, Mr. Anthony said, "We expect to turn in another successful
Father's Day and to narrow our second- quarter loss by
approximately 50 percent to between $0.04 and $0.06 per diluted
share, compared to our loss of $0.12 per diluted share in the
second quarter of 2003. For the second quarter, we anticipate
same-store sales will be in the high-single digits." "For the year,
we remain on track to open approximately 20 new stores and remodel
10 to 13 stores, all in our successful and award-winning new store
design that we're rolling out nationally and that continues to
generate same- store sales results well above our Company average."
Mr. Anthony concluded: "Given the strength of our business in the
first quarter, our merchandise selection and our full product
pipeline, we believe we will generate sales and earnings that will
lead our Company to another year of record profitability. For the
year, Brookstone reaffirms its recently raised earnings guidance of
between $1.07 and $1.10 per diluted share, an improvement of
approximately 25 percent over the $0.87 per diluted share the
Company earned in 2003." Brookstone, Inc. is a specialty retailer
that operates 274 Brookstone Brand stores nationwide and in Puerto
Rico. Typically located in high-traffic regional shopping malls and
airports, the stores feature unique and innovative consumer
products. The Company also operates three stores under the
Gardeners Eden Brand, and a direct marketing business that consists
of three catalogs titles -- Brookstone, Hard-to-Find Tools and
Gardeners Eden -- as well as e-commerce web sites at
http://www.brookstone.com/ and http://www.gardenerseden.com/.
Statements made available on this conference call and web cast
which are not historical facts, including statements about the
Company's confidence or expectations, earnings, anticipated
operations of its e-commerce sites and those of third-party service
providers, and other statements about the Company's operational
outlook, are forward-looking statements subject to risks and
uncertainties that could cause actual results to differ materially
from those set forth in such forward-looking statements. Such risks
and uncertainties include, without limitation, risks of changing
market conditions in the overall economy and the retail industry,
consumer demand, the effectiveness of e-commerce technology and
marketing efforts, availability of products, availability of
adequate transportation of such products, and other factors
detailed from time to time in the Company's annual and other
reports filed with the Securities and Exchange Commission. Words
such as "estimate", "project", "plan", "believe", "feel",
"anticipate", "assume", "may", "will", "should" and similar words
and phrases may identify forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date thereof. The Company
undertakes no obligations to publicly release any revisions to
these forward-looking statements or reflect events or circumstances
after the date hereof. CONTACT: Philip Roizin EVP of Finance and
Administration (603) 880-9500 Robert Fusco Investor Relations (603)
880-9500 Brookstone, Inc. Consolidated Statement of Operations ($
in thousands) (Unaudited) Thirteen Weeks Ended May 1, 2004 May 3,
2003 Net sales $77,451 $60,957 Cost of sales 54,364 46,166 Gross
profit 23,087 14,791 Selling, general and administrative expenses
30,240 25,085 Loss from operations (7,153) (10,294) Interest
expense, net 236 131 Loss before taxes and other party interests in
consolidated entities (7,389) (10,425) Income tax benefit (2,845)
(4,014) Loss before other party interests in consolidated entities
(4,544) (6,411) Other party interests in consolidated entities, net
of tax of $62 100 --- Net loss $(4,644) $(6,411) Net loss per share
- basic/diluted $(0.23) $(0.33) Weighted average shares outstanding
basic/diluted 20,020 19,213 Brookstone, Inc. Condensed Consolidated
Balance Sheet ($ in thousands) Unaudited May 1, 2004 May 3, 2003
January 31, 2004 Current Assets: Cash and cash equivalents $ 37,409
$ 30,329 $ 69,738 Receivables, net 7,505 6,922 7,476 Merchandise
inventories 69,978 59,871 66,876 Deferred income taxes 7,778 8,274
4,799 Other current assets 7,485 6,137 6,217 Total current assets
130,155 111,533 155,106 Deferred income taxes 4,738 5,854 4,738
Property and equipment, net 58,058 39,851 53,970 Intangible assets,
net 4,056 4,326 4,123 Other assets 4,237 3,753 2,390 Total assets
$201,244 $165,317 $220,327 Liabilities and Shareholders' Equity
Current Liabilities: Accounts payable $15,249 $11,345 $15,759 Other
current liabilities 27,119 23,031 41,827 Total current liabilities
42,368 34,376 57,586 Other long term liabilities 16,214 13,943
15,676 Long term obligation under capital lease 1,975 2,069 1,941
Commitments and Contingencies Total shareholders' equity 140,687
114,929 145,124 Total liabilities and shareholders' equity $201,244
$165,317 $220,327 DATASOURCE: Brookstone, Inc. CONTACT: Philip
Roizin, EVP of Finance and Administration, +1-603-880- 9500, or
Robert Fusco, Investor Relations, +1-603-880-9500 both of
Brookstone, Inc Web site: http://www.brookstone.com/
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