Cost Plus Sees More Shoppers, But Bigger Loss
Cecile Corral -- Home Textiles Today, March 23, 2009
Hit with a full year net loss of $102.7 million — nearly twice the year-ago loss of $55.5 million — home furnishings and consumables chain Cost Plus World Market nonetheless pointed to positive customer count trends for the fourth consecutive quarter during its earnings call last Thursday evening.
Jane Baughman, vp and cfo, said that the 296-unit retailer saw its customer count inch up by 1% in Q4, and by 1.7% for the year. Cost Plus attributed the gain to its emphasis on value and sharp pricing aimed at drawing in "cost conscious" shoppers, she said.
Barry Feld, president and ceo, emphasized, "Positive customer count trends four quarters in a row have shown that our brand remains relevant in today's marketplace and resonates with cost-conscious consumers."
Still, Baughman warned: "However, the same consumer sentiment put pressure on the number of units per transaction and overall spend per customer, reducing the average transaction to $35.74, or 7% down from last year's fourth quarter." For the full year, the average ticket decline was 4.2%.
The Cost Plus fiscal year net loss of $4.65 per diluted share was close to double the year-ago loss of $2.51 per share.
Quarterly sales fell 3.9% to $354.8 million, and comps dropped 6.1%. Net sales for fiscal 2008 edged up 0.5% to $1.0 billion, with a comp drop of 5.4%.
The home category, which represents 61% of sales vs. 39% in consumable goods, was steady year to year for 2008, the company said. (As is typical, the ratio dipped to about 56% home and 44% consumables in Q4.)
Looking ahead to 2009, Cost Plus expects, like "the general consensus," that there will be "a continual pullback in consumer spending."
Bracing for this extended bout of consumer lassitude, Cost Plus projected a 9% to 12% decline in comp-store sales for the first quarter of fiscal 2009, and outlined strategic initiatives to control overhead. A key theme is to press for lower costs of goods based on such factors as declining raw material prices, excess factory capacity, lower labor costs, favorable U.S. dollar exchange rates, and lower energy prices.
Cost Plus also plans to maximize marketing messages on the themes of "discovery, value and fun."
On the real estate front, Cost Plus reiterated its plans to close 26 units by the end of this month and exit eight media markets, and to "significantly reduce our home office and distribution center work force as part of a program to rationalize operations," Feld said.
He added that the company will not open any new stores in the first quarter of fiscal 2009.
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