News Releases
Brookstone 2003 Earnings Soar 46 Percent to a Record $17.6 Million -- $1.30 Per Share
NASHUA, N.H., March 17, 2004 -- Specialty retailer Brookstone, Inc. (Nasdaq: BKST), propelled by strong customer demand for its unique products, today reported that 2003 earnings soared 46.3 percent to a record net income of $17.6 million, or $1.30 per diluted share.
The results of the 52-week period ended January 31, 2004, cap a year of strong performance for Brookstone. Highlights for the Company in 2003 include:
* Record total sales of $434.2 million, an increase of 15.5 percent
over 2002;
* Same-store sales increase of 11.2 percent, including a 12.6
percent
same-store sales increase in Holiday 2003, which came on top of a
7.8 percent increase during Holiday 2002;
* Record Direct Marketing yearly total sales of $75.7 million, an
increase of 15.3 percent over 2002;
For the 13-week fourth quarter ended January 31, 2004, Brookstone reported a net income of $32.1 million, or $2.33 per diluted share, an increase of 17.1 percent over the $27.4 million, or $2.12 per diluted share the Company earned in the fourth quarter of 2002. Same-store sales for the comparable 13-week period climbed 12.6 percent, while total sales for the fourth quarter rose 18.3 percent, based on strong customer demand for the Company’s unique line of products.
Brookstone Chairman, President and Chief Executive Officer Michael Anthony said the Company prospered in 2003 by offering unique products that differentiated Brookstone from the competition, and avoiding the downward spiral of price discounts that affected other retailers, particularly around the Holidays. Mr. Anthony also credited an aggressive marketing strategy that leveraged all three Brookstone sales channels and the national rollout of the Company's award-winning new store design.
"Throughout 2003, we brought to market an array of high quality, functional and unique products that our customers found relevant to their lives," Mr. Anthony said. "Placed front and center, our products set us apart from other retailers and delivered the healthy margins that contributed significantly to our record performance."
Mr. Anthony continued: "In 2003, we leveraged our synergistic multi-channel model by doubling the circulation of the Brookstone catalog around the Holidays and generating incremental revenue to our catalog, Internet and retail store divisions."
Mr. Anthony added: "Our retail stores also turned in a strong performance by recording an 11.2 percent same-store sales increase. In 2003, we opened 17 Brookstone stores, including eight airports, and remodeled 13 stores, all in the new store prototype, and opened one Gardeners Eden store. The new store design proved especially successful, as the remodeled stores delivered same store sales increases that were significantly above the chain as a whole. Our Gardeners Eden retail stores also performed well, recording a double-digit same-store sales increase."
Looking forward to fiscal year 2004, Mr. Anthony said: "We anticipate that in 2004 we will continue our record of solid top- and bottom-line increases. We believe that our earnings for the year will be in the range of between $1.53 and $1.58 per diluted share. This is based on opening 15-20 new stores, mid single-digit same-store sales increases and an increased circulation of the Brookstone catalog."
Mr. Anthony concluded: "For the first quarter of 2004, we anticipate we will narrow our loss to a range of between $0.40 to $0.45 per diluted share, compared to a loss of $0.50 per diluted share in 2003. For the first quarter of 2004, we expect same-store sales to increase in the high single digits."
Because of the seasonal nature of specialty retailing, Brookstone generally carries a loss through the first three quarters and makes its profit in the fourth quarter.
Brookstone, Inc. is a specialty retailer that operates 270 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 titles -- Brookstone, Hard-to-Find Tools and Gardeners Eden -- as well as e-commerce web sites at http://www.brookstone.com/ and http://www.gardenerseden.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.
Consolidated Statement of Income
($ in thousands)
(Unaudited)
Thirteen weeks ended Fifty-two weeks ended
Jan. 31, Feb. 1, Jan. 31, Feb. 1,
2004 2003 2004 2003
-----------------------------------------
Net sales $219,085 $185,171 $434,173 $375,878
Cost of sales 108,410 95,164 260,420 235,039
-----------------------------------------
Gross profit 110,675 90,007 173,753 140,839
Selling, general
and administrative
expenses 58,159 45,449 144,353 120,858
Gain on curtailment
of retiree medical plan -- -- -- (642)
-----------------------------------------
Income from operations 52,516 44,558 29,400 20,623
Interest expense, net 248 303 857 1,268
-----------------------------------------
Income before taxes 52,268 44,255 28,543 19,355
Income tax provision 20,125 16,817 10,991 7,355
Net income $ 32,143 $ 27,438 $ 17,552 $ 12,000
=========================================
Basic income per share:
Net income $ 2.42 $ 2.15 $ 1.35 $ 0.94
=========================================
Diluted income per share:
Net income $ 2.33 $ 2.12 $ 1.30 $ 0.93
=========================================
Brookstone, Inc.
Consolidated Balance Sheet
($ in thousands)
January 31, February 1,
2004 2003
-----------------------
Assets
Current Assets:
Cash and cash equivalents $ 69,738 $ 54,144
Receivables, net 7,476 6,079
Merchandise inventories 66,876 58,987
Deferred income taxes, net 4,799 4,161
Other current assets 6,217 5,280
-----------------------
Total current assets 155,106 128,651
Deferred income taxes, net 4,738 5,854
Property and equipment, net 53,970 39,720
Intangible assets, net 4,123 4,413
Other assets 2,390 1,954
-----------------------
Total assets $220,327 $180,592
=======================
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 15,759 $ 10,720
Other current liabilities 41,827 33,197
-----------------------
Total current liabilities 57,586 43,917
Other long term liabilities 15,676 13,809
Long term obligation under capital lease 1,941 2,110
Commitments and Contingencies
Total shareholders' equity 145,124 120,756
-----------------------
Total liabilities and shareholders' equity $220,327 $180,592
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Contacts: Philip Roizin EVP of Finance and Administration (603) 880-9500 Robert Fusco Investor Relations (603) 880-9500