Brookstone (NASDAQ:BKST)
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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/