Cost Plus Hurt by Internal Costs
Don Hogsett -- Home Textiles Today, March 20, 2006
Hurt by weakening same-store sales, thinning margins, and soaring interest costs, fourth-quarter profits at Cost Plus Inc. slid by 8.3%, to $21.5 million from $23.5 million last year.
Helped by new-store openings, sales at the diversified low-price chain rose 7.0%, to $367 million from $363 million last year. But same-store sales slipped by 2.1%, weakening further from a 1.3% decline during the same period a year ago.
Taking a bite out of the bottom line, average gross margin contracted by 110 basis points, or 1.1 percentage points, to 34.0% from 35.1% the prior year. At the same time, operating costs climbed slightly higher, by 20 basis points, or two-tenths of a percentage point, to 23.6% of sales from 23.4% last year.
Putting further pressure on profits, interest expense jumped by 84.8%, to $1.3 million from $726,000 last year, costing the company $616,000 more than last year.
Even as sales climbed higher, inventories remained stable at $253 million, whittled down by one-tenth of a percentage point.
Cost Plus Inc.
|Qtr. 1/28 (x000)||2005||2004||%change|
|Oper. income (EBIT)||35,908||38,271||-6.2|
|Per share (diluted)||0.97||1.06||-8.5|
|Average gross margin||34.0%||35.1%||–|
|Oper. income (EBIT)||37,516||51,428||-27.1|
|Per share (diluted)||0.92||1.35||-31.9|
|Average gross margin||33.7%||34.1%||–|