Brookstone (NASDAQ:BKST)
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Brookstone 2nd-Quarter Earnings Exceed Previous Guidance; Company
Raises Earnings Forecast for the Year
NASHUA, N.H., Aug. 18 /PRNewswire-FirstCall/ -- Brookstone, Inc.
(NASDAQ:BKST), the product development and specialty retail company, announced
today that second-quarter results improved by approximately 80 percent over
2003, driven by a 13.3 percent rise in same-store sales. Brookstone also raised
its year-end earnings forecast for the second time this year.
For the second quarter ended July 31, 2004, Brookstone narrowed its loss to
$465,000, or $0.02 per diluted share, compared to previously released guidance
of $0.03 to $0.04 per diluted share, and compared to the 2003 second-quarter
loss of $2.3 million, or $0.12 per diluted share.
Same-store sales for the 13-week period climbed 13.3 percent, while total sales
for the second quarter surged 22.2 percent to $98.3 million, compared to $80.5
million for the second quarter of 2003. Direct Marketing sales rose 16.6
percent to $16.3 million as compared to last year.
For the first six months of 2004, same-store sales climbed 16.2 percent. Total
sales for the first half of the year increased 24.3 percent to $175.8 million,
compared to $141.4 million in the same period last year. Direct Marketing
sales rose 16.5 percent to $28.1 million, compared to $24.1 million last year.
Year-to-date revenue improved 24.3 percent, as the net loss narrowed by 41.5
percent to $5.1 million, or $0.25 per diluted share, compared to $8.7 million,
or $0.45 per diluted share last year.
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 very pleased with our second-quarter results and believe they validate
our unique market position as both a product developer and multi-channel
retailer," said Brookstone Chairman, President and Chief Executive Officer
Michael Anthony. "Even in this variable retail environment, we generated
consistently strong, double-digit same-store sales increases in all three
months of the quarter, delivered a strong Father's Day performance and
significantly improved our operating results."
Mr. Anthony continued: "During the second quarter, we saw continued favorable
customer response to our unique and innovative proprietary products.
Additionally, we're pleased to report that our new and remodeled stores are
performing at or above expectations and that our airport stores continue to
deliver strong results. To date this year, we've opened eight new stores and
remodeled three, all in our dynamic New Store Design."
Mr. Anthony continued: "The Brookstone Direct Marketing business also turned in
an impressive performance, led by the Internet and the expanded circulation of
the Brookstone catalog, which delivered increased sales to the catalog and
Internet site and significant incremental revenue to the stores. We're very
pleased with the synergy we've achieved among our sales channels through this
targeted marketing strategy and plan to increase the circulation of the
Brookstone catalog in the fourth quarter by approximately 75 percent."
Looking forward to the second half of the year, Mr. Anthony said: "We remain
on track to open 18 to 20 new stores this year, including three in airports,
and to remodel 10 to 12 stores. We plan to open approximately 11 new stores
and remodel nine in the third quarter.
"During the third and fourth quarters, we will introduce more than 100 new
products that we believe will resonate strongly with customers. With the
addition of these new products to our already compelling merchandise selection,
we believe Brookstone again will be the retailer of choice this Holiday
season."
Mr. Anthony concluded: "We expect a third-quarter loss of between $0.33 and
$0.36 per diluted share, compared to a loss of $0.30 per diluted share in 2003.
For the third quarter, we anticipate same-store sales will increase in the
mid-single digits. This increased loss is consistent with our business model,
which typically increases losses in the third quarter as we open new stores.
"Furthermore, as a result of our strong year-to-date results, we are raising
our guidance for year-end earnings to between $1.10 and $1.12 per diluted
share, compared to our earlier estimate of between $1.07 and $1.10 per diluted
share, an increase of up to 29 percent over the $0.87 we earned in 2003."
Brookstone, Inc. is a product development and specialty retail company that
operates 278 Brookstone brand stores nationwide and in Puerto Rico. Typically
located in high-traffic regional shopping malls, lifestyle centers and
airports, Brookstone 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 catalog 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 Twenty-six weeks ended
July 31, August 2, July 31, August 2,
2004 2003 2004 2003
Net sales $98,316 $80,474 $175,767 $141,431
Cost of sales 63,664 53,850 118,028 100,017
Gross profit 34,652 26,624 57,739 41,414
Selling, general and
administrative expenses 35,036 30,207 65,276 55,291
Loss from operations (384) (3,583) (7,537) (13,877)
Interest expense, net 209 181 445 311
Loss before taxes and
other party interest in
consolidated entities (593) (3,764) (7,982) (14,188)
Income tax benefit (228) (1,449) (3,073) (5,462)
Loss before other party
interests in consolidated
entities (365) (2,315) (4,909) (8,726)
Other party interest in
consolidated entities,
net of tax 100 -- 200 --
Net Loss $(465) $(2,315) $(5,109) $(8,726)
Basic/diluted loss per share:
Net Loss $(0.02) $(0.12) $(0.25) $(0.45)
Weighted average shares
outstanding - basic/diluted 20,203 19,323 20,118 19,267
Brookstone, Inc.
Consolidated Condensed Balance Sheet
($ in thousands)
Unaudited
July 31, August 2, January 31,
2004 2003 2004
Current Assets:
Cash and cash equivalents $30,942 $29,008 $69,738
Receivables, net 9,520 6,478 7,476
Merchandise inventories 68,886 55,489 66,876
Deferred income taxes 9,502 9,849 4,799
Other current assets 6,998 6,024 6,217
Total current assets 125,848 106,848 155,106
Deferred income taxes 4,738 5,854 4,738
Property and equipment, net 64,829 45,184 53,970
Intangible assets, net 3,988 4,258 4,123
Other assets 5,377 1,937 2,390
Total assets $204,780 $164,081 $220,327
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $15,356 $10,780 $15,759
Other current liabilities 26,603 23,647 41,827
Total current liabilities 41,959 34,427 57,586
Other long term liabilities 17,453 14,567 15,676
Long term obligation under
capital lease 1,946 2,027 1,941
Commitments and Contingencies
Total shareholders' equity 143,422 113,060 145,124
Total liabilities and
shareholders' equity $204,780 $164,081 $220,327
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/
http://www.gardenerseden.com/