News Releases
Brookstone Announces Third Quarter and Year to Date 2006 Financial Results
MERRIMACK, N.H., Oct. 26, 2006 -- Innovative product development company and specialty lifestyle retailer Brookstone, Inc. today announced financial results for the third quarter and the year to date ended September 30, 2006.
For the 13-week period ended September 30, 2006, Brookstone reported total net sales of $87.8 million, which is a 14.4 percent increase compared to the 13-week period ended October 29, 2005. Same-store sales for the 13-week period ended September 30, 2006 increased 6.0 percent from the comparable 13-week period ended October 1, 2005.
For the 39-week period ended September 30, 2006, Brookstone reported total net sales of $255.8 million, which is a 6.1 percent increase compared to the 39-week period ended October 29, 2005. Same-store sales for the 39-week period ended September 30, 2006 decreased 2.5 percent from the comparable 39-week period ended October 1, 2005.
Lou Mancini, Chief Executive Officer of Brookstone, said: "We're pleased by our performance in the third quarter of 2006, particularly with our improving trend in same-store sales. This marks the second consecutive quarter of increases. The better results were due to an appealing product mix and the collective effort of our sales associates. Because of this improvement, the loss from continuing operations, before interest expense this quarter decreased, as compared to the third quarter of last year."
"We will introduce more new products in the fourth quarter, including certain exclusive OSIM healthy lifestyle products, which we believe will leave us well positioned to continue the positive same-store growth trend," Mr. Mancini added.
Brookstone ended the third quarter with no cash borrowings under the Company's asset-backed lending agreement.
On June 29, 2005, the Company announced its plans to sell its Gardeners Eden business, which currently consists of one Gardeners Eden store. As a result, commencing with the second quarter of Fiscal 2005, the Company began reflecting the results of operations from the Gardeners Eden business as a discontinued operation.
In November of 2005, the Company changed its fiscal year end from the Saturday closest to the end of January to the Saturday closest to the end of December. As a result of this change, our presentations through the fourth quarter of 2006 will compare the new quarter end results with the historical results from the old quarter ends. We believe these period-to-period comparisons will be informative given the fact that while the seasonality of the business is skewed towards the Holiday selling season, both the old and new fiscal fourth-quarter periods will encompass the Holiday selling season.
On October 4, 2005, Brookstone, Inc. was acquired through a merger transaction with Brookstone Acquisition Corp., a Delaware corporation formed by OSIM International Ltd and affiliates of J.W. Childs Equity Partners III, L.P. and Temasek (Private) Capital Limited. As a result of the acquisition, Brookstone, Inc. became a privately held, wholly owned subsidiary of OSIM Brookstone Holdings, L.P., the general partner of which is OSIM Brookstone Holdings, Inc. and the majority shareholder of which is OSIM International Ltd.
Brookstone, Inc. is an innovative product development and specialty lifestyle retail Company that operates 306 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 one store under the Gardeners Eden Brand, and a Direct Marketing business that includes the Brookstone and Hard-to-Find Tools catalogs and an e-commerce website at http://www.brookstone.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 within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 ("Reform Act") and are 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. Words such as "estimate", "project", "plan", "believe", "feel", "anticipate", "assume", "may", "will", "should" and similar words and phrases may identify forward-looking statements. Statements about a possible sale or divestiture of its Gardeners Eden business constitute forward-looking statements. The Company may not be able to complete a divestiture on acceptable terms because of a number of factors, including failure to reach agreement with a purchaser. 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
---------- ---------- ----------
September 30, December 31, October 29,
2006 2005 2005
---------- ---------- ----------
(unaudited) (unaudited)
Assets
Current assets:
Cash and cash equivalents $ 1,189 $ 76,326 $ 1,547
Receivables, net 11,783 10,906 7,215
Merchandise inventories 95,898 75,716 114,856
Deferred income taxes, net 20,896 4,947 26,956
Prepaid expenses 9,054 9,117 6,220
---------- ---------- ----------
Total current assets 138,820 177,012 156,794
Deferred income taxes, net -- -- --
Property, plant and
equipment, net 73,051 76,328 76,260
Intangible assets, net 131,583 132,271 132,424
Goodwill 190,942 192,453 192,453
Other assets 19,570 19,363 26,293
---------- ---------- ----------
Total assets $ 553,966 $ 597,427 $ 584,224
========== ========== ==========
Liabilities and Shareholders'
Equity
Current liabilities:
Short-term borrowings $ -- $ -- $ 11,150
Accounts payable 26,891 22,012 39,601
Other current liabilities 42,070 54,714 32,448
---------- ---------- ---------
Total current liabilities 68,961 76,726 83,199
Other long-term liabilities 19,637 18,962 16,973
Long-term debt 190,402 190,849 190,948
Deferred income taxes 43,869 43,392 49,435
Commitments and contingencies -- -- --
Other party interests in
consolidated entities 1,397 1,176 1,028
Total shareholders' equity 229,700 266,322 242,641
---------- ---------- ---------
Total liabilities and
shareholders' equity $ 553,966 $ 597,427 $ 584,224
========== ========== ==========
BROOKSTONE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
(Unaudited)
------------------ ------------------ ------------------
Successor Successor Predecessor
------------------ ------------------ ------------------
Thirteen-Weeks
Ended Period Period
------------------ ------------------ ------------------
October 4, 2005 - July 30, 2005 -
September 30, 2006 October 29, 2005 October 3, 2005
------------------ ------------------ ------------------
Net sales $ 87,773 $ 24,937 $ 51,783
Cost of sales 66,516 20,193 39,219
------------------ ------------------ ------------------
Gross profit 21,257 4,744 12,564
Selling, general
and administrative
expenses 30,712 10,776 20,881
------------------ ------------------ ------------------
Loss from
continuing
operations (9,455) (6,033) (8,317)
Interest expense,
net 6,394 4,024 128
------------------ ------------------ ------------------
Loss before
taxes, other party
interests in
consolidated entities
and discontinued
operations (15,849) (10,056) (8,445)
Other party
interests in
consolidated
entities 302 65 181
------------------ ------------------ ------------------
Loss before taxes
and discontinued
operations (16,151) (10,121) (8,626)
Income tax
benefit (5,925) (3,447) (2,417)
------------------ ------------------ ------------------
Loss from
continuing
operations (10,226) (6,674) (6,209)
Income/loss
on discontinued
operations, net of
income tax
benefit (62) 171 (1,864)
------------------ ------------------ ------------------
Net loss $ (10,288) $ (6,505) $ (8,073)
BROOKSTONE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
(Unaudited)
------------------ ------------------ ------------------
Successor Successor Predecessor
------------------ ------------------ ------------------
Thirty-Nine
Weeks Ended Period Period
------------------ ------------------ ------------------
September 30, October 4, 2005 - January 30, 2005 -
2006 October 29, 2005 October 3, 2005
------------------ ------------------ ------------------
Net sales $ 255,804 $ 24,937 $ 216,091
Cost of sales 193,867 20,193 159,872
------------------ ------------------ ------------------
Gross profit 61,937 4,744 56,219
Selling, general
and administrative
expenses 92,189 10,776 78,361
------------------ ------------------ ------------------
Loss from
continuing
operations (30,252) (6,032) (22,142)
Interest expense,
net 18,370 4,024 25
------------------ ------------------ ------------------
Loss before taxes,
other party
interests in
consolidated
entities and
discontinued
operations (48,622) (10,056) (22,167)
Other party
interests in
consolidated
entities 950 65 687
------------------ ------------------ ------------------
Loss before taxes
and discontinued
operations (49,572) (10,121) (22,854)
Income tax
benefit (17,438) (3,447) (7,887)
------------------ ------------------ ------------------
Loss from
continuing
operations (32,134) (6,674) (14,967)
Income/loss on
discontinued
operations, net
of income tax
benefit
(380) 171 (5,634)
------------------ ------------------ ------------------
Net loss $ (32,514) $ (6,505) $ (20,601)
================== ================== ==================
CONTACT: Brookstone, Inc.
Philip Roizin, EVP of Finance and Administration
(603) 880-9500