BKST Brookstone (MM)

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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