Retail boosts Coldwater Creek’s first quarter-Company plans 20 new stores this year

Coldwater Creek announced a stronger than anticipated first quarter due to growth in its retail segment.

By DAVID BUFORD
Staff writer

Its direct channels, including the Internet and catalogs, got off to a slow start in February, but perked up by April, and although generally flat, performed well by industry comparison, company officials said.

But company officials are most excited about the strong performance by retail, the company’s third business model.

"We have a high degree of confidence in the scalability of the model," Dennis Pence, chairman and CEO, said Wednesday. "We believe there is increased potential for opening new stores going forward."

Pence said the company plans to continue using its catalog and Internet channels to create revenue for promoting retail expansion plans. The company reported no debt and plans to open 20 more retail stores by the end of the year.

Overall net sales were more than $115 million and gross profit was $45 million.

Coldwater Creek operated 44 retail stores at the end of the quarter, which ended May 3. Net sales from this segment increased more than 37 percent to $33.3 million, compared with $24.3 million in the same period last year, and represented about 30 percent of net sales.

David Gunter, spokesman for Coldwater Creek, said the company hopes to increase the retail market significantly over the next two years. He anticipates 30 to 40 new stores in 2004 and 40 to 50 new stores in 2005.

"As far as timing, it’s wonderful for us to go into retail," Gunter said. "We’re seen as an up-and-coming brand and developers and landlords are seeking us out."

Catalog net sales increased two-tenths of a percent to $46 million, or about 40 percent of net sales. Lower production costs were offset by a 25 percent increase in customer prospecting through new mailings. The increase should be the same for the next quarter and will likely be ramped up in the fall and closer to the holidays, Gunter said.

The overall gross profit decreased by five-tenths of a percent to $45.1 million, or 39.2 percent, due to a new company strategy regarding clearance merchandise. This involves moving items to the clearance mode from the direct channel quicker to keep inventories low.

Gunter said since the plan started last fall it has proven effective, as inventories over last year are only slightly higher, despite 14 more stores since the end of the first quarter last year.

Coldwater Creek employs about 3,000 people nationwide and will add between 350 and 400 employees with the addition of the 20 new stores. The company employs about 350 people in Sandpoint and 350 in Coeur d’Alene.

David Buford can be reached at 664-8176, ext. 4501, or by e-mail at [email protected].

http://www.cdapress.com/index.asp?Sec=Business&str=11373