Brookstone Reports Q3 Results at the Better End of Guidance Range,
Raises Earnings Forecast for the Year MERRIMACK, N.H., Nov. 17
/PRNewswire-FirstCall/ -- Brookstone, Inc. (NASDAQ:BKST), the
product development and specialty retail company, today announced
that its third-quarter earnings were at the better end of the range
of Company guidance, posting a net loss of $6.7 million, or $0.33
per diluted share. Total Company sales for the 13-week period ended
October 30, 2004, climbed 15.9 percent to $85.4 million, compared
to $73.7 million for the third quarter in 2003, while same-store
sales rose 4.3 percent. Direct-Marketing sales in the third quarter
2004 jumped 17.9 percent to $15.8 million. For the third quarter,
Brookstone reported a net loss of $6.7 million, or $0.33 per
diluted share, compared to a net loss in the third quarter of 2003
of $5.9 million, or $0.30 per diluted share. Because of the
seasonal nature of specialty retailing, Brookstone generally
carries a loss over the first three quarters and makes its profit
for the year in the fourth quarter. Year-to-date, Brookstone total
sales soared 21.4 percent to $261.1 million, compared to $215.1
million for the first nine months of 2003, while same-store sales
climbed 12.2 percent. Direct-Marketing sales for the first nine
months of 2004 increased 17.1 percent to $43.9 million, compared to
$37.5 million last year. Net loss year-to-date stands at $11.8
million, or $0.58 per diluted share, an improvement of 19.2 percent
over the net loss over the first nine months of 2003 of $14.6
million, or $0.75 per diluted share. Brookstone Chairman, President
and Chief Executive Officer Michael Anthony said the Company's
year-to-date results position Brookstone well for success in the
remainder of the year. "We are very pleased with our performance
over the first nine months of the year," Mr. Anthony said. "All
three strategies of the Brookstone business model -- product
development, retail stores and multi-channel synergy -- continue to
drive our Company to record levels." Mr. Anthony continued: "For
the Holidays, we have already introduced innovations in a variety
of categories, and new merchandise continues to arrive daily. We
believe our exciting new products, the majority of which Brookstone
designs and engineers, will again make Brookstone the retailer of
choice for innovative and high-quality gifts this Holiday season.
Our in- stock performance has been excellent, and our current
inventory situation, combined with planned receipts, will ensure we
are in position to meet our sales plans." Mr. Anthony continued:
"We recently completed our 2004 new-store and remodeling program,
opening 20 new stores, including three in airports and two
Gardeners Eden locations, and remodeling 12 stores." Mr. Anthony
continued: "Our Direct-Marketing efforts remain an important
component to our success. In the fourth quarter, we will increase
the circulation of the Brookstone catalog to more than 19 million
books, from 11 million in 2003, a proven strategy that delivers
additional incremental traffic and sales to our retail stores and
generates revenue and profit to all three sales channels." Mr.
Anthony concluded: "We anticipate same-store sales increases in the
mid-single digits for the fourth quarter. Based on our performance
over the first nine months of the year and the potential for
success during the fourth quarter, we are raising our 2004 year-end
earnings projection to a range of $1.12 and $1.14 per diluted
share." Brookstone, Inc. is a product development and specialty
retail company that operates 287 Brookstone Brand stores nationwide
and in Puerto Rico. Typically located in high-traffic regional
shopping malls, lifestyle centers and airports, the stores feature
unique and innovative consumer products. The Company also operates
five 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 in this release 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. Brookstone, Inc. Consolidated Statement of Operations ($ in
thousands, except per share data) (Unaudited) Thirteen weeks ended
Thirty-nine weeks ended October 30 November 1 October 30 November 1
2004 2003 2004 2003 Net sales $85,355 $73,657 $261,122 $215,088
Cost of sales 58,927 51,993 176,955 152,010 Gross profit 26,428
21,664 84,167 63,078 Selling, general and administrative expenses
36,113 30,903 101,389 86,194 Loss from (9,685) (9,239) (17,222)
(23,116) operations Interest expense, net 315 298 760 609 Loss
before taxes and other party interest in consolidated entities
(10,000) (9,537) (17,982) (23,725) Income tax benefit (3,464)
(3,672) (6,537) (9,134) Loss before other party interests in
consolidated entities (6,536) (5,865) (11,445) (14,591) Other party
interest in consolidated entities, net of tax 143 --- 343 --- Net
Loss $(6,679) $(5,865) $(11,788) $(14,591) Net Loss per share -
basic and diluted $(0.33) $(0.30) $(0.58) $(0.75) Weighted average
shares outstanding - basic/diluted 20,341 19,737 20,183 19,424
Brookstone, Inc. Consolidated Condensed Balance Sheet ($ in
thousands) October 30, 2004 November 1, 2003 January 31, 2004
Current Assets: Cash and cash equivalents $3,700 $1,544 $69,738
Receivables, net 8,002 7,044 7,476 Merchandise Inventories 98,845
84,771 66,876 Deferred income taxes 13,027 15,258 4,799 Other
current assets 7,389 6,548 6,217 Total current assets 130,963
115,165 155,106 Deferred income taxes 4,731 5,091 4,738 Property
and equipment, net 74,796 50,300 53,970 Intangible assets,net 3,920
4,191 4,123 Other assets 10,263 7,610 2,390 Total assets $224,673
$182,357 $220,327 Liabilities and Shareholders' Equity Current
Liabilities: Accounts payable $31,092 $27,001 $15,759 Other current
liabilities 29,855 26,137 41,827 Total current liabilities 60,947
53,138 57,586 Other long term liabilities 17,386 14,934 15,676 Long
term debt 9,144 1,985 1,941 Commitments and Contingencies Total
shareholder's equity 137,196 112,300 145,124 Total liabilities and
shareholders' equity $224,673 $182,357 $220,327 CONTACT: Philip
Roizin EVP of Finance and Administration (603) 880-9500 Robert
Fusco Investor Relations (603) 880-9500 DATASOURCE: Brookstone,
Inc. CONTACT: Philip Roizin, EVP of Finance and Administration,
+1-603-880-9500, Robert Fusco, Investor Relations, +1-603-880-9500,
both of Brookstone, Inc. Web site: http://www.brookstone.com/
http://www.gardenerseden.com/
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