News Releases
Brookstone Announces Second Quarter and Year-to-Date 2009 Financial Results
MERRIMACK, N.H. July 29, 2009 -- Innovative product development company and specialty lifestyle retailer Brookstone, Inc. today announced financial results for the second quarter ended July 4, 2009.
For the 13-week period ended July 4, 2009, Brookstone reported total net sales of $73.0 million, a 25.1% decrease from the comparable 13-week period of 2008. Same-store sales decreased 18.6% as compared to the comparable 13-week period last year.
For the 13-week period ended July 4, 2009, Brookstone reported a loss from operations of $10.5 million, compared to a loss from operations of $7.7 million for the comparable 13-week period last year.
For the 26-week period ended July 4, 2009, Brookstone reported total net sales of $134.4 million, a 28.2% decrease from the comparable 26-week period of 2008. Same-store sales decreased 21.6% as compared to the comparable 26-week period last year.
For the 26-week period ended July 4, 2009, Brookstone reported a loss from operations of $31.3 million, compared to a loss from operations of $20.7 million for the comparable 26-week period last year.
Philip Roizin, Brookstone Chief Executive Officer, said, "Second quarter top line results, while below last year's levels, met our internal financial plans and showed an improvement over the first quarter's rate of decline. At the beginning of the year, we responded to the economic environment and declining mall traffic by identifying over $30 million in annualized expense reductions, and reducing both capital expenditures and working capital requirements. I am pleased to report that year to date, we have reduced operating expenses by $16.5 million, and are on track to meet, if not exceed, our expense reduction goals. Additionally, we managed down our inventory levels by 28% during the second quarter as compared to last year."
"As a result of successfully restructuring our operations, Brookstone ended the second quarter with an encouraging liquidity position, our short term net borrowings increased by only $6.5 million compared with last year."
Brookstone remains cautious about full-year 2009 results. "Although we are guarded, our top and bottom line results year to date are ahead of our operating plan. We are assuming continuing negative same store sales, albeit at a lower rate during the third quarter, 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 to support our sales program through the balance of 2009."
"We have seen improvement in sales and customer count throughout the second quarter. This trend has been helped by the roll-out of new innovative Brookstone products, several of which have been very successful. This improvement has been offset by sales decreases in big ticket items, but these items represent a significantly smaller proportion of sales in the fourth quarter."
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, 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, 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", "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 BALANCE SHEETS
(In thousands, except share data)
--------------------------------
July 4, January 3, June 28,
2009 2009 2008
-------- -------- --------
(Unaudited) (Unaudited)
Assets
------
Current assets:
Cash and cash equivalents $ 2,024 $ 22,530 $ 1,566
Receivables, net 6,628 9,839 8,683
Merchandise inventories 66,242 82,095 92,122
Deferred income taxes, net -- -- 16,802
Prepaid expenses 2,583 16,379 11,071
-------- -------- --------
Total current assets 77,477 130,843 130,244
Property, plant and equipment, net 61,755 66,456 70,363
Intangible assets, net 105,000 105,000 129,167
Goodwill 99,734 99,734 189,524
Other assets 7,090 8,565 10,257
-------- -------- --------
Total assets $351,056 $410,598 $529,555
======== ======== ========
Liabilities and Shareholder's Equity
------------------------------------
Current liabilities:
Accounts payable $ 10,483 $ 17,033 $ 14,947
Other current liabilities 25,709 41,179 29,983
Short-term borrowings 7,000 -- --
-------- -------- --------
Total current liabilities 43,192 58,212 44,930
Other long-term liabilities 21,474 21,370 19,934
Long-term debt, net of current
portion 173,779 174,089 174,466
Deferred income taxes 38,020 38,430 43,052
-------- -------- --------
Total liabilities 276,465 292,101 282,382
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 241,546 241,205 240,797
Accumulated other
comprehensive income (loss) (542) (532) 575
Retained earnings (deficit) (167,305) (123,216) 4,693
-------- -------- --------
Total Brookstone
Shareholder's equity 73,699 117,457 246,065
Noncontrolling interests 892 1,040 1,108
-------- -------- --------
Total equity 74,591 118,497 247,173
-------- -------- --------
Total liabilities and equity $351,056 $410,598 $529,555
======== ======== ========
BROOKSTONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
Thirteen weeks ended Twenty-six weeks ended
-------------------- --------------------
July 4, June 28, July 4, June 28,
2009 2008 2009 2008
-------- -------- -------- --------
Net sales $ 72,972 $ 97,390 $134,431 $187,191
Cost of sales 58,387 70,876 113,278 138,892
-------- -------- -------- --------
Gross profit 14,585 26,514 21,153 48,299
Selling, general and
administrative expenses 25,069 34,232 52,421 68,967
-------- -------- -------- --------
Loss from operations (10,484) (7,718) (31,268) (20,668)
Interest expense, net 5,995 5,902 11,975 11,524
-------- -------- -------- --------
Loss before income
taxes (16,479) (13,620) (43,243) (32,192)
Income tax provision
(benefit) 91 (5,328) 564 (12,435)
-------- -------- -------- --------
Consolidated net loss (16,570) (8,292) (43,807) (19,757)
Less: Net income
attributable to
noncontrolling
interests 169 370 282 636
-------- -------- -------- --------
Net loss attributable
to Brookstone $(16,739) $ (8,662) $(44,089) $(20,393)
======== ======== ======== ========
Contact: Tom Moynihan Vice President, Finance 603 880-9500 Tmoynihan@brookstone.com