Cost Plus Takes Hits in Third Quarter

Staff -- Home Textiles Today, 12/14/2009 12:00:00 AM

Oakland, Calif. —

Cost Plus worked over the third quarter to "rebuild" its top line by reducing costs and watching inventories, but the home furnishings specialty chain still posted double-digit sales declines as it narrowed its net loss.

For the quarter ended Oct. 31, net loss from continuing operations was $22.3 million, or $1.10 per share, compared to a net loss of $24.0 million, or $1.09 per share, last year.

Sales dropped 10.4% to $181.9 million. Comps tumbled 9.1% compared to a 3.4% decline a year ago — but fell guidance, which was a 6.0% to 11.0% decrease.

Same-store sales were hurt by an 8.8% reduction in the average ticket as traffic remained flat and furniture sales declined.

On a more positive note, the comp trend improved over each month in the third quarter and persists through this month.

"During November, the company generated its first positive comp month since June of 2008 following an improving sales trend in the three previous months," said Barry Feld, ceo.

He said several factors have contributed to this recent comp improvement. "The results from the alternate media test conducted earlier this year provided the basis to effectively layer new types of media that included various promotional offers to drive new customer trial and ultimately reduce reliance on newspaper inserts," he explained.

Year-to-date, net loss from continuing operations was $67.5 million compared to a net loss of $68.4 million last year. The results include $6.3 in costs related to closing eight stores this year.

Sales fell 10.7% to $549.5 million, and same store sales fell 9.6% compared to a decrease of 0.6% for the same period last year.

"As we begin rebuilding the top line we will maintain our focus on cost containment and inventory discipline, which is essentially returning the company to profitability," Feld said.