Cost Plus, Inc. Reports Third Quarter Earnings and Provides Fourth Quarter Earnings Guidance
Oakland, CA – November 19, 2004 – Cost Plus, Inc. (Nasdaq: CPWM) announced today net income for the third quarter of fiscal 2004 of $0.4 million versus $0.9 million for the third quarter of fiscal 2003. Earnings per diluted share were $0.02 for the quarter compared to $0.04 last year. Earnings were in line with prior guidance issued on November 4, 2004. Year-to-date financial results set a record with net income of $7.0 million or $0.31 per diluted share compared with net income of $6.3 million or $0.28 per diluted share last year.
For the third quarter, net sales increased 12.0% to $190.4 million from $170.0 million last year. Same store sales increased 0.5% on top of a 1.2% increase last year. Year-to-date, net sales were $565.6 million, a 15.7% increase from $489.0 million for the same period last year, with same store sales growing 2.3% on top of a 2.5% prior year increase.
Nine new stores were opened during the quarter, as planned. The Company also reported today that the eight new stores planned for the fourth quarter were opened by November 18, 2004, making a net total of 33 new stores opened in fiscal 2004.
Murray Dashe, Chairman, CEO and President said: “Although customer traffic was inconsistent during the third quarter, we saw a marked improvement in traffic trends in the last two weeks of October. We are confident that our assortments are now ready for the Holiday rush, and if traffic now remains consistent, we are comfortable that we should achieve the current earnings consensus for the fourth fiscal quarter of $1.32 per fully diluted share.”
Under its common stock repurchase program, in the third fiscal quarter the Company repurchased 150,000 shares of common stock for a total cost of $4.8 million, bringing the year-to-date purchases to 425,500 shares at a total cost of $14.9 million. On November 18, 2004 the Company’s Board of Directors authorized the repurchase of an additional 1 million shares under the program leaving a total of 1,074,500 shares available for repurchase. The program does not require the Company to repurchase any shares and the program can be discontinued at any time.
Earnings guidance for the fourth quarter of fiscal 2004 is at $1.32 per diluted share and is predicated on the following major assumptions:
- Opening of eight new stores versus ten in the fourth quarter last year. One new store opening in last year’s fourth quarter was a replacement for a store that closed.
- Same-store sales up approximately 2.5% on top of a 3.1% increase in the prior year.
- Total sales up approximately 14% to $356 million.
- Gross profit rate at approximately 36.3%, the same as in the prior year, primarily due to improved merchandise margins offset by higher fuel and occupancy costs.
- SG&A rate at approximately 22.3% versus 22.1% last year with the current year increase due almost entirely to professional fees associated with the documentation and testing of internal controls under Sarbanes-Oxley.
- Pre-tax income at approximately $47 million versus $42 million in the fourth quarter of 2003.
- An effective income tax rate of 38% in the current year vs. 36% in the prior year.
- Net income of approximately $29 million versus $27 million last year.
- Estimated earnings per diluted share of $1.32 versus $1.18 last year, with weighted average diluted shares outstanding of 22.4 million versus 22.6 million last year.
Earnings guidance for the full fiscal year is at $1.63 per share with weighted average shares outstanding of 22.4 million.
The Company’s third quarter earnings conference call will be today, November 19, 2004, at 8:00 a.m. PST. It will be held in a “listen-only” mode for all participants other than the sell-side and buy-side investment professionals who regularly follow the Company. Phone numbers for the call are (415) 357-1950 or (212) 231-6029. Callers are advised to dial in approximately 15 minutes prior to the scheduled start time. A telephonic replay will be available at (402) 977-9140, Access Code: 21211573, from 10:00 a.m. PST Friday to 10:00 a.m. PST on Monday, November 22. Investors may also access the live call or the replay over the internet at www.streetevents.com; www.fulldisclosure.com and www.worldmarket.com. The replay will be available approximately one hour after the live call concludes.
Cost Plus, Inc. is a leading specialty retailer of casual home living and entertaining products. As of November 19, 2004, the Company operated 237 stores in 30 states, compared to 204 stores in 26 states at the same time last year.
The above statements relating to anticipated fourth quarter and full year 2004 financial results are “forward-looking statements” that are based on current expectations and are subject to various risks and uncertainties, that could cause actual results to differ materially from those forecasted. Such risk factors include, but are not limited to: changes in economic conditions or international conflicts that affect consumer spending; the potential effect of adverse weather on Holiday shopping; changes in the competitive environment; 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; further terrorist attacks and our nation’s response thereto; and changes in accounting rules and regulations. Please refer to documents on file with the Securities and Exchange Commission for a more detailed discussion of the Company’s risk factors. The Company does not undertake any obligation to update its forward-looking statements.
COST PLUS, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(Dollars in thousands, except per share amounts, unaudited) |
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Third Quarter |
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October 30, 2004 |
November 1, 2003 |
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Net sales |
$ 190,416 |
100.0 |
% |
$ 170,019 |
100.0 |
% |
Cost of sales and occupancy |
128,309 |
67.4 |
113,061 |
66.5 |
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|
Gross profit |
62,107 |
32.6 |
56,958 |
33.5 |
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Selling, general and administrative expenses |
59,292 |
31.1 |
53,067 |
31.2 |
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Store preopening expenses |
1,543 |
0.8 |
1,567 |
0.9 |
||
Income from operations |
1,272 |
0.7 |
2,324 |
1.4 |
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Net interest expense |
677 |
0.4 |
962 |
0.6 |
||
Income before income taxes |
595 |
0.3 |
1,362 |
0.8 |
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Income taxes |
226 |
0.1 |
|
504 |
0.3 |
|
Net income |
$ 369 |
0.2 |
% |
$ 858 |
0.5 |
% |
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Net income per share – diluted |
$ 0.02 |
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|
$ 0.04 |
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|
Weighted average shares outstanding- diluted |
22,276 |
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|
22,537 |
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New stores opened |
9 |
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8 |
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For the Nine Months Ended |
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October 30, 2004 |
November 1, 2003 |
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Net sales |
$ 565,619 |
100.0 |
% |
$ 488,997 |
100.0 |
% |
Cost of sales and occupancy |
377,168 |
66.7 |
|
322,678 |
66.0 |
|
|
Gross profit |
188,451 |
33.3 |
|
166,319 |
34.0 |
|
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|
|
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|
Selling, general and administrative expenses |
170,035 |
30.1 |
|
150,148 |
30.7 |
|
Store preopening expenses |
4,792 |
0.8 |
|
3,834 |
0.8 |
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|
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|
Income from operations |
13,624 |
2.4 |
|
12,337 |
2.5 |
|
Net interest expense |
2,258 |
0.4 |
|
2,346 |
0.5 |
|
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Income before income taxes |
11,366 |
2.0 |
|
9,991 |
2.0 |
|
Income taxes |
4,319 |
0.8 |
|
3,697 |
0.7 |
|
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Net income |
$ 7,047 |
1.2 |
% |
$ 6,294 |
1.3 |
% |
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Net income per share – diluted |
$ 0.31 |
|
|
$ 0.28 |
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Weighted average shares outstanding- diluted |
22,380 |
|
|
22,228 |
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New stores opened |
26 |
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|
21 |
|
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COST PLUS, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In thousands, unaudited) |
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October 30, 2004 |
|
November 1, 2003 |
ASSETS |
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Current assets: |
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|
Cash and cash equivalents |
$ 4,549 |
|
$ 3,705 |
|
|
Merchandise inventories |
282,994 |
|
250,244 |
|
|
Other current assets |
23,758 |
|
22,914 |
|
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|
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Total current assets |
311,301 |
|
276,863 |
|
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Property and equipment, net |
149,699 |
|
123,408 |
|
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Goodwill |
4,178 |
|
4,178 |
|
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Other assets |
6,477 |
|
8,901 |
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Total assets |
$ 471,655 |
|
$ 413,350 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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|
Accounts payable |
$ 69,163 |
|
$ 59,885 |
|
|
Income taxes payable |
— |
|
157 |
|
|
Accrued compensation |
7,384 |
|
9,255 |
|
|
Line of Credit |
32,500 |
|
35,900 |
|
|
Notes payable |
1,601 |
|
— |
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|
Other current liabilities |
20,919 |
|
18,347 |
|
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Total current liabilities |
131,567 |
|
123,544 |
|
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|
Capital lease obligations |
15,580 |
|
36,632 |
|
|
Notes payable |
37,925 |
|
— |
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|
Other long-term obligations |
18,470 |
|
14,127 |
|
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Shareholders’ equity: |
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|
Common stock |
218 |
|
218 |
|
|
Additional paid-in capital |
156,015 |
|
147,074 |
|
|
Retained earnings |
113,245 |
|
91,755 |
|
|
Other comprehensive income |
(1,365) |
|
— |
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|
Total shareholders’ equity |
268,113 |
|
239,047 |
|
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|
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Total liabilities and shareholders’ equity |
$ 471,655 |
|
$ 413,350 |
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Contact:
Murray Dashe
(510) 893-7300
or
John Luttrell
(510) 808-9119