Cost Plus, Inc. Reports Fourth Quarter and Fiscal 2003 Results at Upper End of Recent Guidance; Releases Initial Guidance for 2004 and Reports on Share Repurchase Program.

Business Editors

OAKLAND, Calif.--(BUSINESS WIRE)--March 18, 2004

Cost Plus, Inc. (Nasdaq:CPWM) announced results for its fourth quarter and fiscal year ended January 31, 2004 that were at the upper end of recent guidance and released initial guidance for its fiscal year ending January 29, 2005.

For the fourth quarter, net income was $26.7 million, or $1.18 per diluted share compared to $25.3 million or $1.14 per diluted share for the fourth quarter of 2002. Included in fiscal 2002 fourth quarter net earnings are tax credits and professional fees associated with an employment and capital investment study. Of the additional net income recognized in the fiscal 2002 fourth quarter, $1.8 million or $0.08 per diluted share relates to prior years. Net income for fiscal 2003 increased 16.2% to $33.0 million, or $1.48 per diluted share, compared to net income of $28.4 million, or $1.28 per diluted share in the prior fiscal year.

During the fourth quarter, net sales increased 15.9% to $312.6 million from $269.7 million last year. Same store sales for the quarter increased 3.1% on top of a 2.0% increase in the prior year. For the full year, net sales were $801.6 million, a 15.8% increase from the prior year, with same store sales increasing 2.7% compared to 5.6% in fiscal 2002.

During February 2004, the Company completed the repurchase of 110,000 shares of common stock for approximately $4.1 million, under a 500,000 share repurchase program. The program does not require the Company to repurchase shares and the program can be discontinued at any time.

According to Murray Dashe, Chairman, CEO and President, "Thus far in the first quarter we have been encouraged by the pace and composition of our business and the balance of consumables to home furnishing sales is as we would expect at this time of year. A majority of our spring merchandise offering is in our stores and we anticipate a strong spring selling season."

For the year, the Company estimates earnings per diluted share of $1.78, a 20.3% increase over the $1.48 per share generated in fiscal 2003. The Company plans a same store sales increase of approximately 4% for the year, reflecting an overall economic climate similar to that of fiscal 2003.

In the fourth quarter, the Company opened ten new stores, one each in: Corona, CA; Charleston, SC; Corpus Christi, TX; Modesto, CA; Antioch, CA; Fairfield, CA; Kansas City, MO; Grand Rapids, MI; and two stores in Jacksonville, FL. One store, Modesto, closed during the quarter with the opening of its replacement. Thus far in the first quarter, the Company has opened four new stores, one each in Durham, NC; Lafayette, LA; Shiloh, IL (St. Louis); and Birmingham, AL.

The Company's net income guidance is at $3.3 million or $0.14 per diluted share for the first fiscal quarter compared to net income of $2.6 million or $0.12 per diluted share for the prior year first quarter. This estimate is predicated on the following major assumptions:

-- The Company will open eight new stores vs. six new stores in

the prior year.

-- Same store sales growth at approximately 4.0% vs. 3.0% in the

prior year.

-- Total sales will grow to approximately $188.0 million vs.

$159.2 million in the prior year.

-- Gross profit rate at approximately 34.2%, the same as last

year.

-- SG&A rate at approximately 30.2% vs. 30.5% in the prior year.

-- Store pre-opening expense at $1.5 million vs. $1.1 million in

the prior year, reflecting two more stores opened in the first

quarter of fiscal 2004.

-- Interest expense at $0.8 million vs. $0.7 million in the prior

year.

-- Effective tax rate at 38% vs. 37% in the prior year.

-- A weighted average share count for the quarter estimated at

22,878,000 vs. 21,731,000 for the prior year first quarter.

The estimate for fiscal 2004 does not include any additional

repurchase of stock beyond the 110,000 shares purchased in

February.

The Company's net income guidance for the fiscal year is $41.2 million or $1.78 per diluted share compared to net income of $33.0 million or $1.48 per diluted share for the prior year. This estimate is predicated on the following major assumptions:

-- The Company will open a net of 33 new stores vs. 29 in the

prior year.

-- Same store sales growth of approximately 4.0% vs. 2.7% in the

prior year.

-- Total sales will grow approximately 17.9% to $944.7 million

vs. $801.6 million in the prior year.

-- Gross profit rate at approximately 35.2% vs. 34.9% in the

prior year.

-- SG&A rate at approximately 27.0% vs. 27.4% in the prior year.

-- Store pre-opening expense at $6.7 million vs. $5.7 million in

the prior year, reflecting three more stores opened in fiscal

2004 vs. fiscal 2003.

-- Interest expense at $3.7 million vs. $3.3 million in the prior

year.

-- Effective tax rate at 38% vs. 36% in the prior year.

-- A weighted average share count for the fiscal year estimated

at 23,082,000 vs. 22,349,000 for the prior year. The estimate

for fiscal 2004 does not include any additional repurchase of

stock beyond the 110,000 shares purchased in February.

The Company's fourth quarter earnings conference call will be today, March 18, 2004 at 8:00 a.m. PST. It will be in a "listen-only" mode for all participants other than the Company's current sell-side and buy-side investment professionals. Phone numbers for the call are [phone] or [phone]. Callers are advised to dial in approximately 15 minutes prior to the scheduled start time. A telephonic replay will be available at [phone], Access Code: 21183866 from 10:00 a.m. on March 18th to 10:00 a.m. on March 19th PST. Investors may also access the live call or the replay over the internet at www.streetevents.com; www.companyboardroom.com and www.costplusworldmarket.com. The replay will be available approximately one hour after the live call concludes.

Cost Plus, Inc. is a leading specialty retailer of casual home living and entertaining products. As of January 31, 2004, the Company operated 204 stores in 26 states compared to 175 stores in 23 states as of February 1, 2003.

The above statements relating to the future financial results, operating margins, same store sales increases, operating costs, share repurchases and store openings are "forward-looking statements" which are based on current expectations and are subject to various risks and uncertainties that could cause actual results to differ materially from those forecasted. Such risk factors include, but are not limited to: terrorist activities and our nation's response thereto, unseasonable weather, general economic conditions, changes in fuel costs, changes in transportation rates, fluctuations in the price of the US dollar vs. foreign currencies, delays in the flow of merchandise, the timing and level of markdowns, litigation, claims and assessments, changes in insurance costs, changes in the Company's stock price, new store construction delays, changes in interest rates, the availability of acceptable new store locations, competitive factors and changes in accounting rules and regulations. Please refer to documents on file with the Securities and Exchange Commission for a more detailed discussion of the Company's risk factors. The Company does not undertake any obligation to update its forward-looking statements.

                            COST PLUS, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             (Dollars in thousands, except per share data)
                              (Unaudited)


                                      Fourth Quarter   Fourth Quarter
                                          Ended            Ended
                                    January 31, 2004  February 1, 2003

Net sales                            $312,569  100.0% $269,727  100.0%
Cost of sales and occupancy           199,082   63.7   170,816   63.3
    Gross profit                      113,487   36.3    98,911   36.7
Selling, general and
 administrative expenses               69,099   22.1    60,933   22.6
Store preopening expenses               1,902    0.6     1,296    0.5

Income from operations                 42,486   13.6    36,682   13.6
Net interest expense                      939    0.3       912    0.3

Income before income taxes             41,547   13.3    35,770   13.3
Income taxes                           14,853    4.8    10,504    3.9

Net income                           $ 26,694    8.5% $ 25,266    9.4%

Net income per share - diluted       $   1.18         $   1.14

Weighted average shares outstanding-
diluted                                22,648           22,249

New stores opened                          10                6

                                       Fiscal Year       Fiscal Year
                                          Ended             Ended
                                    January 31, 2004  February 1, 2003


Net sales                            $801,566  100.0% $692,301  100.0%
Cost of sales and occupancy           521,760   65.1   450,385   65.1
    Gross profit                      279,806   34.9   241,916   34.9
Selling, general and
 administrative expenses              219,247   27.4   192,284   27.7
Store preopening expenses               5,736    0.7     5,378    0.8

Income from operations                 54,823    6.8    44,254    6.4
Net interest expense                    3,285    0.4     3,452    0.5

Income before income taxes             51,538    6.4    40,802    5.9

Income taxes                           18,550    2.3    12,416    1.8

Net income                           $ 32,988    4.1% $ 28,386    4.1%

Net income per share - diluted       $   1.48         $   1.28

Weighted average shares outstanding-
diluted                                22,349           22,158

New stores opened                          31               26


                            COST PLUS, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                        (Dollars in thousands)
                              (Unaudited)

                                               January 31, February 1,
                                                    2004       2003
ASSETS
Current assets:
    Cash and cash equivalents                      $ 52,431  $ 49,707
    Short-term investments                            8,999        --
    Merchandise inventories                         210,432   172,388
    Other current assets                             15,311    18,820

        Total current assets                        287,173   240,915

Property and equipment, net                         123,854   120,900
Goodwill                                              4,178     4,178
Other assets                                          6,613     8,666

        Total assets                               $421,818  $374,659

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable                               $ 61,008  $ 58,119
    Income taxes payable                             11,328     9,478
    Accrued compensation                             11,774    11,645
    Other current liabilities                        18,719    20,064

        Total current liabilities                   102,829    99,306

Capital lease obligations                            36,167    37,972
Other long-term obligations                          15,893    11,601

Shareholders' equity:
    Common stock                                        218       215
    Additional paid-in capital                      148,263   136,542
    Retained earnings                               118,448    89,023

        Total shareholders' equity                  266,929   225,780

Total liabilities and shareholders'
 equity                                            $421,818  $374,659