News Releases
Brookstone 2002 Earnings Leap 122% to $1.40 Per Diluted Share
Specialty Retailer Reports Fourth Quarter Earnings of $3.17 Per Diluted Share Same Store Sales rose 7.8% in the Fourth Quarter
NASHUA, N.H., March 19, 2003 -- Buoyed by strong fourth-quarter sales and earnings, specialty retailer Brookstone, Inc., (Nasdaq: BKST) today reported a net income for fiscal year 2002 of $12.0 million, or $1.40 per diluted share, an increase of 122.0 percent over 2001. Fiscal 2002 net income includes a one time gain on curtailment of retiree medical plan of $642 thousand recorded in the Company's second fiscal quarter.
For the fiscal year ended Feb. 1, 2003, Brookstone total company sales increased 6.5 percent to $375.9 million compared to $352.9 million last year. Same-store sales for the comparable 52-week period rose 3.5 percent. Direct-to-Consumer sales increased 3.3 percent to $65.6 million.
For the fourth quarter ended Feb. 1, 2003, Brookstone reported a net income of $27.4 million or $3.17 per diluted share, an increase of 20.5 percent over 2001 net income of $22.3 million, or $2.63 per diluted share. Same-store sales for the comparable 13-week period surged 7.8 percent, while total sales climbed 9.1 percent to $185.2 million, compared to $169.8 million for the same period last year. Sales of the Direct-to-Consumer segment in the 13-week period rose 8.3 percent to $30.1 million on a planned reduction in catalog circulation.
Brookstone Chairman, President and Chief Executive Officer Michael Anthony credited the Company's success in fiscal year 2002 to several key factors, including record-setting new product introductions, record-setting profitability in the Direct Marketing segment and the Company's strong retail platform to offer quality and value over discounts to generate revenue.
"In 2002, Brookstone focused its energies and resources on substantially increasing the profitability of the Company," Mr. Anthony said. "Emerging from the difficult retail environment of 2001, we redoubled our product development efforts to bring to market compelling, innovative and differentiated products that enhance the lives of our customers."
Mr. Anthony continued: "Brookstone set itself apart in 2002 from the sea of sameness throughout much of the retail industry. Our success last year further validates the Brookstone business model that offers customers unique, high-quality products they cannot find elsewhere in the marketplace, and at a pricing strategy that relies on value instead of discounts and other gimmicks to spur sales."
Mr. Anthony continued: "We are pleased with the breadth and depth of customer response to the number of new products we introduced in a variety of categories, which contributed significantly to the overall profitability of the Company. We achieved this level of performance without discounts, resulting in not only higher sales but also higher gross margins. These gains were across a broad array of categories and were not dependent on a single item."
Mr. Anthony continued: "We were also pleased to see that all of our sales channels -- retail stores, catalogs and the Internet -- generated significant increases in profitability in 2002. Our retail business recorded an approximately 36 percent increase in profitability over 2001, while our Direct-to-Consumer segment put in a record financial performance as we honed our catalog distribution to focus on more profitable customers and continued to expand and enrich our web site (www.brookstone.com)."
Mr. Anthony added: "We ended the year in a very strong financial position that leaves us confident we will be able to execute our forward plans."
Mr. Anthony concluded: "We believe the success of 2002 leaves Brookstone well-positioned for fiscal year 2003 based on several factors, including: Our prolific pipeline of new and innovative products; a clear strategic vision and operating plan for 2003 and beyond that will generate sales growth and profitability increases across all our sales channels, including retail stores, catalogs and the Internet; and our continued commitment to provide quality and value to the consumer. For the first quarter of 2003, we anticipate narrowing our loss from first quarter 2002 to range between $0.72 to $0.77 per diluted share, compared to a loss of $0.78 per diluted share in 2002. For fiscal year 2003, we expect same-store sales to increase in the 3-4 percent range and to open 15-20 additional new stores. Given these factors, combined with increased productivity, we expect full-year diluted earnings per share of $1.60 to $1.65."
Brookstone, Inc. is a nationwide specialty retailer that operates 258 Brookstone Brand stores nationwide and in Puerto Rico. Typically located in high-traffic regional shopping malls and airports, the stores feature unique and innovative consumer products. The Company also operates three stores under the Gardeners Eden Brand, and a direct marketing business that consists of three catalogs; Brookstone, Hard-to-Find Tools and Gardeners Eden; as well as an e-commerce web site at http://www.Brookstone.com.
Statements in this release which are not historical facts, including statements about the Company's confidence or expectations, earnings, anticipated operations of its e-commerce sites and those of third-party service providers, and other statements about the Company's operational outlook, are forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from those set forth in such forward-looking statements. Such risks and uncertainties include, without limitation, risks of changing market conditions in the overall economy and the retail industry, consumer demand, the effectiveness of e-commerce technology and marketing efforts, availability of products, availability of adequate transportation of such products, and other factors detailed from time to time in the Company's annual and other reports filed with the Securities and Exchange Commission. Words such as "estimate", "project", "plan", "believe", "feel", "anticipate", "assume", "may", "will", "should" and similar words and phrases may identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. The Company undertakes no obligations to publicly release any revisions to these forward-looking statements or reflect events or circumstances after the date hereof.
Brookstone, Inc.
Consolidated Statement of Income
($ in thousands)
(Unaudited)
Thirteen weeks ended Fifty-two weeks ended
Feb. 1, 2003 Feb. 2, 2002 Feb. 1, 2003 Feb. 2, 2002
-------------------------------------------------------
Net sales $ 185,171 $ 169,785 $ 375,878 $ 352,917
Cost of sales 95,164 90,656 235,039 224,643
--------- --------- --------- ---------
Gross profit 90,007 79,129 140,839 128,274
Selling, general
and
administrative
expenses 45,449 42,559 120,858 118,590
Gain on curtailment
of retiree medical
plan -- -- (642) --
--------- --------- --------- ---------
Income from
operations 44,558 36,570 20,623 9,684
Interest
expense, net 303 412 1,268 1,028
--------- --------- --------- ---------
Income before
taxes 44,255 36,158 19,355 8,656
Income tax
provision 16,817 13,885 7,355 3,324
--------- --------- --------- ---------
Net income $ 27,438 $ 22,273 $ 12,000 $ 5,332
========= ========= ========= =========
Basic income
per share:
--------- --------- --------- ---------
Net income $ 3.22 $ 2.66 $ 1.41 $ 0.64
========= ========= ========= =========
Diluted income
per share:
--------- --------- --------- ---------
Net income $ 3.17 $ 2.63 $ 1.40 $ 0.63
========= ========= ========= =========
Brookstone, Inc.
Consolidated Balance Sheet
($ in thousands)
Feb. 1, 2003 Feb. 2, 2002
-------- --------
Assets
Current Assets:
Cash and cash equivalents $ 54,144 $ 28,928
Receivables, net 6,079 8,170
Merchandise inventories 58,987 55,629
Deferred income taxes, net 4,161 3,447
Other current assets 5,280 4,933
-------- --------
Total current assets 128,651 101,107
Deferred income taxes, net 5,854 4,536
Property and equipment, net 39,720 45,058
Intangible assets, net 4,413 4,812
Other assets 1,954 1,592
-------- --------
Total assets $180,592 $157,105
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 10,720 $ 11,232
Other current liabilities 33,197 22,569
-------- --------
Total current liabilities 43,917 33,801
Other long term liabilities 13,809 13,246
Long term obligation under
capital lease 2,110 2,273
Commitments and Contingencies
Total shareholders' equity 120,756 107,785
-------- --------
Total liabilities and
shareholders' equity $180,592 $157,105
======== ========
Contacts: Philip Roizin, EVP of Finance and Administration
(603) 880-9500
Robert Fusco, Investor Relations
(603) 880-9500