Strong Same Store Sales Drive Third Quarter Earnings Improvement
Over 2002 Company Reaffirms Upwardly Revised Full Year Earnings
Guidance NASHUA, N.H., Nov. 19 /PRNewswire-FirstCall/ -- Specialty
retailer Brookstone, Inc. , known for its unique line of
proprietary products, continued its record of year over year
earnings improvement by announcing today that diluted earnings per
share for the third quarter of 2003 improved 13.5 percent over
2002. Total company sales for the 13-week period ended November 1,
2003, climbed 17.2 percent to $73.7 million, compared to $62.8
million for the third quarter 2002. Same-store sales surged 15.9
percent, while Direct Marketing sales increased 6.9 percent to
$13.4 million on an 8.1 percent decrease in circulation. For the
third quarter 2003, Brookstone reported a net loss of $5.9 million,
or $0.45 per diluted share, compared to a net loss of $6.7 million,
or $0.52 per diluted share, in the third quarter of 2002. 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 rose 12.8 percent, to $215.1 million, compared to $190.7
million for the first nine months of 2002. Same-store sales for the
first nine months of 2003 climbed 9.9 percent, while sales in
Direct Marketing increased 5.7 percent to $37.5 million, compared
to $35.5 million for the first nine months of 2002. Net loss
year-to-date is $14.6 million, or $1.13 per diluted share, as
compared to a net loss in 2002 of $15.4 million, or $1.21 per
diluted share. Brookstone Chairman, President and Chief Executive
Officer Michael Anthony said, "the strong third quarter results
bode well for the Company as it enters the all-important Holiday
shopping season." "We are extremely pleased with our strong
performance in the third quarter and throughout the first nine
months of 2003," Mr. Anthony said. "We are clearly connecting with
the customer with our range of unique, functional and proprietary
products, the majority of which are designed and engineered in-
house and available only at Brookstone. New product penetration
remains strong. With a number of outstanding new products just
coming to market in the first part of the fourth quarter, we
believe this Holiday season will be one of our most successful and
profitable." Mr. Anthony continued: "I am also pleased to report
that all segments of our businesses performed well over the third
quarter and believe we are well positioned for continued success
throughout the remainder of the year. We recorded double-digit same
store sales increases during each month of the quarter, and are
optimistic as we move into the Holiday selling season. We believe
that our inventory position will be sufficient to support our
strong sales trend." "Our New Store Design concept, which we are
rolling out throughout 2003, continues to resonate with customers
and as a group performed significantly above the company average.
Year to date we have opened a total of 17 new stores and remodeled
13, all in the New Store Design." Mr. Anthony concluded: "Based on
the strong performance of the first three quarters and the
potential for success in the fourth quarter, we reaffirm our second
upwardly revised earnings estimate for the year." Brookstone
projects year-end earnings in 2003 of between $1.14 and $1.17 per
diluted share, an increase over the $0.93 per diluted share the
company earned in 2002. Brookstone, Inc. is a specialty retailer
that operates 271 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 -- 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) (Unaudited) Thirteen Thirteen Thirty-nine Thirty-nine
weeks weeks weeks weeks ended ended ended ended November 1,
November 2 November 1, November 2, 2003 2002 2003 2002 Net sales
$73,657 $62,843 $215,088 $190,707 Cost of sales 51,993 46,320
152,010 139,875 Gross profit 21,664 16,523 63,078 50,832 Selling,
general and administrative expenses 30,903 26,944 86,194 75,409
Gain on curtailment of retiree medical plan --- --- --- (642) Loss
from operations (9,239) (10,421) (23,116) (23,935) Interest
expense, net 298 340 609 965 Loss before taxes (9,537) (10,761)
(23,725) (24,900) Income tax benefit (3,672) (4,089) (9,134)
(9,462) Net Loss $(5,865) $(6,672) $(14,591) $(15,438)
Basic/diluted loss per share: Net Loss $(0.45) $(0.52) $(1.13)
$(1.21) Weighted average shares outstanding - basic/diluted 13,158
12,772 12,949 12,711 Brookstone, Inc. Consolidated Balance Sheet ($
in thousands) Unaudited November 1, November 2, February 1, 2003
2002 2003 Current Assets: Cash and cash equivalents $ 1,544 $ 1,971
$ 54,144 Receivables, net 7,044 5,020 6,079 Merchandise inventories
84,771 79,539 58,987 Deferred income taxes 15,258 13,626 4,161
Other current assets 6,548 6,023 5,280 Total current assets 115,165
106,179 128,651 Deferred income taxes 5,091 4,352 5,854 Property
and equipment, net 50,300 40,092 39,720 Intangible assets, net
4,191 4,501 4,413 Other assets 7,610 5,399 1,954 Total assets $ $ $
182,357 160,523 180,592 Liabilities and Shareholders' Equity
Current Liabilities: Short-term borrowings $ -- 9,300 $ -- Accounts
payable 27,001 21,861 10,720 Other current liabilities 26,137
20,629 33,197 Total current liabilities 53,138 51,790 43,917 Other
long term liabilities 14,934 12,736 13,809 Long term obligation
under capital lease 1,985 2,165 2,110 Commitments and Contingencies
Total shareholders' equity 112,300 93,832 120,756 Total liabilities
and shareholders' equity $ 182,357 $ 160,523 $ 180,592 DATASOURCE:
Brookstone, Inc. CONTACT: Philip Roizin, EVP of Finance and
Administration, or Robert Fusco, Investor Relations, both of
Brookstone, Inc., +1-603-880-9500 Web site:
http://www.brookstone.com/
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