News Releases
Brookstone Third Quarter Earnings Improve 27% Over 2001
NASHUA, N.H., Nov. 20, 2002 -- Specialty retailer Brookstone, Inc. (Nasdaq: BKST) today announced a sharp improvement in its third quarter earnings ending November 2, 2002, over the third quarter of 2001, and projected a 59 percent to 67 percent increase in its fiscal year 2002 earnings per share over 2001.
Total Company sales for the 13-week period ending November 2, 2002 increased 7.4 percent to $62.8 million, compared to $58.5 million for the third quarter of last year. Same store sales for the comparable 13-week period increased 7.0 percent. Direct to Customer sales for the third quarter decreased 6.8 percent to $12.5 million, on a planned 24 percent reduction in circulation.
The Company reported a net loss of $6.7 million, or $0.78 per diluted share for the quarter. This loss represents a 27 percent reduction in the Company's net loss per diluted share for the third quarter as compared to the Company's net loss of $1.07 per diluted share for the third quarter of 2001.
Year to date, total Company sales increased 4.1 percent to $190.7 million for the 39-week period ending November 2, 2002, as compared to $183.1 million for the same 39-week period last year. Direct to Customer sales for the 39- week period decreased 0.5 percent, to $35.5 million, compared to last year, and same-store sales for the comparable 39-week period decreased 0.3 percent. Net loss year-to-date is $15.4 million, or $1.82 per diluted share, as compared to last year's loss of $16.9 million or $2.03 per diluted share for the same 39-week period.
"We are very pleased with our third-quarter results," said Brookstone Chairman, President and Chief Executive Officer Michael Anthony. "Sales in all our retail formats increased substantially in the third quarter of this year as compared to the third quarter of last year. We have experienced successes in new product introductions across a wide array of categories, and new product penetration has improved significantly from last year's levels. It is also important to note that this success has been achieved through product performance and without increases in discounting or promotional activity. Sales of our Direct to Customer segment decreased on a planned reduction in circulation, and as a result of this productivity, pretax profitability in this segment increased approximately $1.9 million in the third quarter as compared to last year."
Mr. Anthony continued, "We experienced an increase in product margins for the quarter as a result of new product. In addition, we were able to dramatically leverage SG&A costs as a result of expense control, catalog productivity, and increased sales."
Mr. Anthony further commented, "Our decrease in third quarter inventories is a result of the West Coast port situation. Sales in the third quarter were not affected, however, as in-stock levels were excellent. We expect that inventory levels will continue to increase leading up to December, and that fourth quarter sales will not be materially impacted by the flow of goods through West Coast ports. Lower inventories, combined with tighter working capital management and decreased capital expenditures has resulted in substantially decreased borrowings under our credit facility as compared to last year."
Mr. Anthony concluded, "As a result of strong product performance, we remain optimistic about the Holiday selling season and believe we will achieve same store sales increases in the mid single digit range in the fourth quarter. In addition, our Direct to Customer segment should continue its strong performance over last year."
Based on year to date results, Brookstone projects earnings per share for the 2002 fiscal year of between $1.00 and $1.05 per diluted share, as compared to $0.63 last year, an increase of between 59 percent and 67 percent over fiscal year 2001.
Brookstone, Inc. is a nationwide specialty retailer that operates 254 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 two stores under the Gardeners Eden Brand, and the Company also operates a direct marketing business that consists of three catalogs; Brookstone, Hard-to-Find Tools and Gardeners Eden; as well as an e-commerce web site 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 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)
(Unaudited)
Thirteen weeks Thirteen weeks Thirty-nine Thirty-nine
weeks weeks
ended ended ended ended
Nov. 2, 2002 Nov. 3, 2001 Nov. 2, 2002 Nov. 3, 2001
Net sales $62,843 $58,523 $190,707 $183,132
Cost of sales 46,320 44,306 139,875 133,987
Gross profit 16,523 14,217 50,832 49,145
Selling, general
and administrative
expenses 26,944 28,339 75,409 76,031
Gain on curtailment
of retiree
medical plan --- --- (642) ---
Loss from
operations (10,421) (14,122) (23,935) (26,886)
Interest expense,
net 340 467 965 616
Loss before taxes (10,761) (14,589) (24,900) (27,502)
Income tax benefit (4,089) (5,602) (9,462) (10,561)
Net Loss $(6,672) $(8,987) $ (15,438) $(16,941)
Basic/diluted
loss per share:
Net Loss $(0.78) $(1.07) $(1.82) $(2.03)
Weighted average
shares outstanding
- basic/diluted 8,515 8,370 8,474 8,350
Brookstone, Inc.
Consolidated Balance Sheet
($ in thousands)
Unaudited
November 2, 2002 November 3, 2001 February 2, 2002
Current Assets:
Cash and cash
equivalents $ 1,971 $ 1,573 $ 28,928
Receivables, net 5,020 6,799 8,170
Merchandise inventories 79,539 87,054 55,629
Deferred income taxes 13,626 13,568 3,447
Other current assets 6,023 6,951 4,933
Total current assets 106,179 115,945 101,107
Deferred income taxes 4,352 3,689 4,536
Property and equipment,
net 40,092 48,097 45,058
Intangible assets, net 4,501 4,949 4,812
Other assets 5,399 6,100 1,592
Total assets $160,523 $178,780 $157,105
Liabilities and
Shareholders' Equity
Current Liabilities:
Accounts payable $21,861 $27,248 $11,232
Short term borrowings 9,300 35,470 ---
Other current liabilities 20,629 15,683 22,569
Total current
liabilities 51,790 78,401 33,801
Other long term
liabilities 12,736 12,100 13,246
Long term obligation under
capital lease 2,165 2,332 2,273
Commitments and
Contingencies
Total shareholders' equity 93,832 85,947 107,785
Total liabilities and
shareholders' equity $160,523 $178,780 $157,105
Contacts: Brookstone, Inc. Philip Roizin, EVP of Finance and Administration 603-880-9500 Robert Fusco, Investor Relations Brookstone 603-880-9500