News Releases
Brookstone Reports Q1 2009 Results Better Than Internal Plan
Inventory managed down 25%,
Operating expenses reduced by 21%
No cash borrowings throughout quarter;
Approximately $50 million of bank availability
MERRIMACK, N.H., April 29, 2009 -- Innovative product development company and specialty lifestyle retailer Brookstone, Inc. today announced financial results for the first quarter ended April 4, 2009.
For the 13-week period ended April 4, 2009, Brookstone reported total net sales of $61.5 million, a 31.6% decrease from the comparable 13-week period last year. Same-store sales decreased 25.1% as compared to the comparable 13-week period of 2008.
For the 13-week period ending April 4, 2009 Brookstone reported a loss from operations of $20.8 million, compared to a loss from operations of $13.0 million for the comparable 13-week period of 2008.
Philip Roizin, Brookstone Chief Executive Officer, said, "As we anticipated, top line results were below last year's levels because of significantly lower mall traffic in the current economic downturn. We responded at the end of last year with a planned reduction of $30 million in overall operating expenses for 2009, including a reduction of 15% in corporate headcount, as well as a freeze on all discretionary capital spending. Additionally, we managed down our inventory levels by 25% during the first quarter as compared to last year."
"As a result of restructured operations, Brookstone at the end of the first quarter had a positive and encouraging liquidity position. We had no cash borrowings throughout the quarter. We held almost $4 million of cash at the end of the quarter, and had approximately $50 million available under our revolving credit facility."
Brookstone remains cautious about full-year 2009 results. "Everyone expects the worst in this environment", said Roizin. "Although we are guarded, our top and bottom line results for the quarter were ahead of our operating plan. We are assuming continuing negative same store sales, albeit at a lower rate during the second and third quarters, and slightly positive sales in the fourth quarter. This, combined with our previously mentioned reductions in operating expenses and improved working capital management, leave us with sufficient liquidity throughout 2009."
"We have seen improvement in sales and customer count the last two weeks of March and through April month-to-date as compared to the first quarter. We expect this trend to be helped by the roll-out of new innovative Brookstone products for Mother's Day, Graduation and Father's Day, as well as by Brookstone's superior product line, renewed focus on the Brookstone customer experience, and, of course, by gradually improving mall traffic as economic conditions stabilize."
Roizin was also encouraged by the support of Brookstone vendors and other counterparties. "Having just returned from a buying trip in Asia, I am heartened by the strong reception from our long-standing and key vendors in China and Singapore. In addition we have seen continued support from our domestic vendors. They are confident in the Brookstone brand and our multi-channel distribution capability, and believe that we are positioned for success despite the difficult economic environment."
About Brookstone:
Brookstone, Inc. is an innovative product development and specialty lifestyle retail company that operates 310 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 a Direct Marketing business that includes the Brookstone catalog and an e-commerce website at http://www.brookstone.com.
Brookstone is principally owned by three sponsors, Osim International, J.W. Childs, and Temasek Holdings. In accordance with the terms governing its publicly-held debt, the Company issues quarterly and annual reports under SEC guidelines.
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, liquidity, 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, effectiveness of cost reduction 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 posted to the Company's website. Words such as "estimate", "project", "plan", "believe", "feel", "anticipate", "expect", "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, and expressly disclaims any duty to, publicly release any revisions to these forward-looking statements or reflect events or circumstances after the date hereof.
BROOKSTONE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
--------------------------------
April 4, January 3, March 29,
2009 2009 2008
-------- -------- --------
(Unaudited) (Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 3,671 $ 22,530 $ 16,958
Receivables, net 5,736 9,839 9,130
Merchandise inventories 69,925 82,095 93,815
Deferred income taxes, net --- --- 11,388
Prepaid expenses 9,648 16,379 9,667
-------- -------- --------
Total current assets 88,980 130,843 140,958
Property, plant and equipment, net 63,847 66,456 69,381
Intangible assets, net 105,000 105,000 129,333
Goodwill 99,734 99,734 189,524
Other assets 7,823 8,565 11,045
-------- -------- --------
Total assets $365,384 $410,598 $540,241
======== ======== ========
Liabilities and Equity
Current liabilities:
Accounts payable $ 9,812 $ 17,033 $ 11,501
Other current liabilities 30,321 41,179 34,827
-------- -------- --------
Total current liabilities 40,133 58,212 46,328
Other long-term liabilities 21,836 21,370 20,497
Long-term debt 173,934 174,089 174,622
Deferred income taxes 38,020 38,430 43,001
-------- -------- --------
Total liabilities 273,923 292,101 284,448
Commitments and contingencies --- --- ---
Equity:
Brookstone Shareholder's equity:
Common stock - $0.01 par value
1,000 shares authorized, one
share issued and outstanding --- --- ---
Additional paid-in capital 241,394 241,205 240,588
Accumulated other comprehensive
income (loss) (537) (532) 533
Retained earnings (deficit) (150,566) (123,216) 13,355
-------- -------- --------
Total Brookstone
Shareholder's equity 90,291 117,457 254,476
Noncontrolling interests 1,170 1,040 1,317
-------- -------- --------
Total equity 91,461 118,497 255,793
-------- -------- --------
Total liabilities and equity $365,384 $410,598 $540,241
======== ======== ========
BROOKSTONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
Thirteen weeks ended
--------------------
April 4, March 29,
2009 2008
-------- --------
Net sales $ 61,460 $ 89,801
Cost of sales 54,892 68,016
-------- --------
Gross profit 6,568 21,785
Selling, general and administrative expenses 27,353 34,735
-------- --------
Loss from operations (20,785) (12,950)
Interest expense, net 5,979 5,622
-------- --------
Loss before income taxes (26,764) (18,572)
Income tax provision (benefit) 473 (7,107)
-------- --------
Consolidated net loss (27,237) (11,465)
Less: Net income attributable to
noncontrolling interests 113 266
-------- --------
Net loss attributable to Brookstone $(27,350) $(11,731)
======== ========
Contact: Tom Moynihan Vice President, Finance 603 880-9500 Tmoynihan@brookstone.com