New units help Cost Plus sales

OAKLAND, CALIF. — Building sales, and at the same time tweaking costs, Cost Plus Inc. pushed earnings in the opening quarter up 28.6 percent, to $3.3 million from $2.6 million.

Sales at the specialty retailer of casual home furnishings and entertaining products jumped 16.6 percent, to $185.7 million from $159.2 million the preceding year, aided largely by the rollout of new units. Same-store sales rose at a more moderate pace of 3.4 percent, building on a gain of 3 percent the year before.

Tugging downward at the bottom line, average gross margin narrowed during the first fiscal quarter by 60 basis points, or six-tenths of a percentage point, to 33.6 percent from 34.2 percent.

Offsetting weaker margins, the retailer pared its costs 100 basis points, or one full percentage point, to 29.5 percent of sales from 30.5 percent during the same period a year ago.

Bulking up on the stronger sales and lower costs, operating profits improved 31.1 percent, to $7.6 million from $5.8 million.

Murray Dashe, chairman, president and CEO, commented: "We achieved sales increases in both the home furnishings and consumable products portions of the business. With tight control over operating expenses, we were in a position during the quarter to elect to take additional markdowns in order to assure clean inventories in our stores, as we move into the summer selling season and maintain the sales momentum of certain high-growth categories. Business, thus far in the second quarter, is consistent with our guidance for an increase in comparable-store sales of between 3 percent and 4 percent."