News Releases
Brookstone Announces Second-Quarter 2005 Earnings
MERRIMACK, N.H., Aug 18, 2005 -- Product development company and specialty retailer Brookstone, Inc. (BKST) today announced earnings for the second quarter of 2005. Results in this release relating to the Company's Gardeners Eden brand are reflected as discontinued operations.
For the 13-week period ended July 30, 2005, Brookstone reported a net loss of $5.7 million, or $0.28 per diluted share. This compares to a net loss of $465,000, or $0.02 per diluted share in the second quarter of 2004. The Company announced plans to divest its Gardeners Eden business on June 29, 2005. The second quarter loss for 2005 includes a write-off of the intangible assets of Gardeners Eden, as well as related severance costs, totaling $4.1 million, or $0.12 cents per diluted share. Excluding these Gardeners Eden costs, the net loss for the quarter was at the better end of previously issued comparable guidance of $0.16 to $0.19 loss per diluted share.
For the 26-week period ended July 30, 2005, Brookstone reported a net loss of $12.5 million, or $0.61 per diluted share compared to a net loss of $5.1 million or $0.25 per diluted share for the comparable period in Fiscal 2004.
Total sales for the second quarter decreased 6.6 percent to $87.5 million, while same-store sales decreased 10.0 percent, in each case when compared to the same period in 2004. Direct-Marketing sales decreased 1.7 percent to $13.1 million on a 10.8 percent reduction in catalog circulation.
Total sales for the 26-week period ended July 30, 2005 decreased 2.2 percent to $164.3 million compared to the same period in 2004. Same-store sales decreased 7.3 percent compared to last year. Year to date Direct- Marketing sales climbed 5.7 percent to $24.0 million on a 4.3 percent increase in catalog circulation.
Because of the seasonal nature of specialty retailing, Brookstone generally carries a loss over the first three quarters and makes its profit for the year in the fourth quarter.
As previously announced, Brookstone has signed a definitive merger agreement which was amended as of July 15, 2005 to be acquired by a consortium led by OSIM International Ltd., J.W. Childs Associates L.P. and Temasek Capital (Private) Limited. Under the terms of the amended merger agreement, following approval by Brookstone's shareholders and the satisfaction or waiver of other customary conditions including the receipt of regulatory approvals at the effective time of the merger, each outstanding share of Brookstone's common stock will be converted into the right to receive $20.00 in cash.
Brookstone, Inc. is a specialty retailer that operates 291 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 five stores under the Gardeners Eden Brand, and a direct marketing business that consists of three catalog 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 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 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. Statements about a possible sale or divestiture of its Gardeners Eden business constitute forward-looking statements. Any statements in this release made in connection with the merger are not forward-looking statements within the meaning of the safe harbor provisions of the Reform Act. The Company may not be able to complete a divestiture on acceptable terms because of a number of factors, including failure to reach agreement with a purchaser. 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 ended Twenty-six weeks ended
July 30, 2005 July 31, 2004 July 30, 2005 July 31, 2004
Net sales $87,521 $93,749 $164,308 $167,999
Cost of sales 59,915 60,930 114,797 113,238
Gross profit 27,606 32,819 49,511 54,761
Selling, general and
administrative
expenses 31,577 32,315 63,333 60,352
Income (loss) from
continuing operations (3,971) 504 (13,822) (5,591)
Interest (income)
expense, net (87) 209 (103) 445
Income (loss) before
taxes, other party
interests in consolidated
entities and
discontinued
operations (3,884) 295 (13,719) (6,036)
Other party interests
in consolidated entities 247 163 506 325
Income (loss) before
taxes and discontinued
operations (4,131) 132 (14,225) (6,361)
Income tax provision
(benefit) (1,575) 51 (5,470) (2,446)
Income (loss) from
continuing operations (2,556) 81 (8,755) (3,915)
Discontinued operations,
net of tax (3,193) (546) (3,773) (1,194)
Net loss $(5,749) $(465) $(12,528) $(5,109)
Basic and diluted loss per share:
Income (loss) from
continuing operations $(0.12) $0.00 $(0.43) $(0.19)
Discontinued operations,
net of tax (0.16) (0.02) (0.18) (0.06)
Net loss $(0.28) $(0.02) $(0.61) $(0.25)
Weighted average
shares outstanding
basic/diluted 20,389 20,203 20,376 20,118
Brookstone, Inc.
Condensed Consolidated Balance Sheet
($ in thousands)
(Unaudited)
July 30, 2005 July 31, 2004 January 29, 2005
Current Assets:
Cash and cash equivalents $46,613 $30,942 $86,205
Receivables, net 7,923 9,520 9,859
Merchandise inventories 75,879 68,886 75,585
Deferred income taxes, net 12,271 9,502 3,917
Prepaid expenses 7,315 6,998 6,045
Total current assets 150,001 125,848 181,611
Deferred income taxes, net 5,228 4,738 5,256
Property, plant and equipment,
net 74,362 64,829 74,019
Intangible assets, net --- 3,988 3,853
Other assets 3,213 5,377 1,741
Total assets $232,804 $204,780 $266,480
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $12,076 $15,356 $17,402
Other current liabilities 29,224 26,192 46,500
Total current liabilities 41,300 41,548 63,902
Other long term liabilities 22,668 16,819 22,432
Long term debt 8,308 1,946 8,760
Commitments and Contingencies
Other party interests in
consolidated entities 1,004 1,045 1,100
Total shareholders' equity 159,524 143,422 170,286
Total liabilities and
shareholders' equity $232,804 $204,780 $266,480
-0-
Contact:
Philip Roizin
EVP of Finance and Administration
(603) 880-9500
Robert Fusco
Investor Relations
(603) 880-9500