Cost Plus Hurt by Internal Costs
By Don Hogsett -- Home Textiles Today, 3/20/2006
Oakland, Calif. — 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.
| Qtr. 1/28 (x000) | 2005 | 2004 | %change |
| Sales | $366,973 | $342,941 | 7.0 |
| Oper. income (EBIT) | 35,908 | 38,271 | -6.2 |
| Net income | 21,513 | 23,456 | -8.3 |
| Per share (diluted) | 0.97 | 1.06 | -8.5 |
| Average gross margin | 34.0% | 35.1% | – |
| SG&A expenses | 23.6% | 23.4% | – |
| 12 months | |||
| Sales | $970,441 | $908,560 | 6.8 |
| Oper. income (EBIT) | 37,516 | 51,428 | -27.1 |
| Net income | 20,233 | 30,221 | -33.0 |
| Per share (diluted) | 0.92 | 1.35 | -31.9 |
| Average gross margin | 33.7% | 34.1% | – |
| SG&A expenses | 29.0% | 27.7% | – |
