Cost Plus, Inc. Reports Fourth Quarter and Fiscal 2008 Results and Provides Outlook for the First Quarter of Fiscal 2009.OAKLAND, Calif. -- Cost Plus, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CPWM CPWM Certified Public Works Manager (New Jersey state license) CPWM Controlled Pulsewidth Modulation ) today announced financial results for its fourth quarter and fiscal year ended January 31, 2009 and provided financial guidance for the first quarter of fiscal 2009. The results for the fourth quarter of fiscal 2008 include impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges related to the store closures and charges related to the work force reductions announced on January 9, 2009. The Company has also provided supplementary non-GAAP financial information that reflects adjustments to highlight the effect of these charges on earnings as well as the effect of other non-cash asset impairments. Fourth Quarter and Fiscal 2008 Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the fourth quarter ended January 31, 2009 were $354.8 million, a 3.9% decrease from the $369.3 million in net sales for the fourth quarter ended February 2, 2008. Same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of for the quarter decreased 6.1% compared to a 3.2% decrease last year. Customer count increased every quarter in fiscal 2008 compared to the prior year and increased 1.0% in the fourth quarter. Net sales for fiscal 2008 were $1.0 billion, a 0.5% increase from the $995.7 million in fiscal 2007. For fiscal 2008 same store sales decreased 2.6% compared to a decrease of 5.4% in fiscal 2007. Customer count increased 1.7% for the year with increases in both the East and West regions. Barry Feld, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , commented, "Our results reflect the severe economic stress that affected nearly all companies in 2008 as consumers dramatically pulled back their spending. However, Cost Plus' ability to drive positive traffic levels in the fourth quarter gives us confidence that our strategic turnaround initiatives will withstand these extreme market conditions. Through inventory optimization, intense liquidity management and operations rationalization rationalization, in psychology: see defense mechanism. , we have strengthened the Cost Plus organization and are adequately funded to meet peak seasonal borrowing needs in 2009." Gross profit rate for the fourth quarter of fiscal 2008 decreased to 23.9% from 30.4% for the same period last year. The results reflect customers' attraction to Cost Plus' lower price point items and consumable A material that is used up and needs continuous replenishment, such as paper and toner. "The low-tech end of the high-tech field!" products and the Company's aggressive pricing to clear holiday assortments and slower moving home products. Additionally, the Company took a $9.0 million charge to write-down and clear selected products that would likely not sell through in their normal course due to the challenging 2009 economic outlook and ongoing multiple retail liquidations in our competitive space. The election to accelerate the cash conversion cycle and sell through of this merchandise further improved the Company's inventory and liquidity position at year-end, thereby increasing 2009 purchasing availability at improved profit margins. The gross profit rate for fiscal 2008 was 25.7% compared to 28.3% for fiscal 2007. Fourth quarter selling, general and administrative ("SG&A") expenses include charges for the following: * $1.9 million non-cash impairment charge to write-down property and equipment net of deferred rent and tenant improvement allowances at the 26 stores that will be closed. * $1.4 million in severance for the work force reduction undertaken in January of 2009. * $0.9 million related to asset impairment charges for 7 underperforming stores that will not be closed. Excluding the items listed above, SG&A expenses as a percentage of net sales were 26.2% for the fourth quarter of 2008 versus 24.9% for the same period last year. Higher store payroll on a lower sales base accounts for the majority of the increase. Increases in health insurance and workers compensation costs were offset by savings from home office initiatives. Excluding the items listed above, SG&A expenses as a percentage of net sales were 32.6% for fiscal 2008 versus 32.0% for fiscal 2007 due to higher store payroll expenses and slightly higher advertising expense. For the fourth quarter of fiscal 2008, the Company reported a loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before interest and taxes (or "EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ") of $12.4 million. Excluding the property and equipment impairments net of deferred rent and tenant improvement allowances, severance payments, and permanent inventory write-down the Company's EBIT on a non-GAAP basis for the quarter would have been $781,000 and earnings before, interest, taxes, depreciation and amortization ("EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ") for the quarter would have been $9.3 million. The following table provides comparable EBIT and EBITDA results on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and non-GAAP basis: [TABLE OMITTED] Net loss on a GAAP basis for the fourth quarter of fiscal 2008 was $18.3 million or $0.83 per share versus $12.5 million or $0.56 per share for the fourth quarter of fiscal 2007. Net loss for fiscal 2008 of $102.7 million or $4.65 per share compared to a net loss of $55.5 million or $2.51 per share last year. In the fourth quarter of fiscal 2008, the Company had income tax expense of $2.0 million mainly as a result of an increase in the tax valuation allowance. The Company ended fiscal 2008 with an outstanding balance of $38.5 million under its $200.0 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility compared to $18.1 million last year. The revolving credit facility is asset based and has three years remaining under the agreement. As noted above, the Company aggressively cleared inventory in the fourth quarter and reduced inventory levels from fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. 2007 by $54.8 million. As a result of its credit agreements, inventory reductions and minimal capital expenditure requirements, the Company's liquidity position is sufficient to enable us to meet planned expenditures through the next twelve months. Mr. Feld further commented, "During the fourth quarter, the Company undertook the prudent decision to close 26 stores and to significantly reduce our home office and distribution center work force as part of a program to rationalize ra·tion·al·ize v. 1. To make rational. 2. To devise self-satisfying but false or inconsistent reasons for one's behavior, especially as an unconscious defense mechanism through which irrational acts or feelings are made to appear operations. We believe these actions will improve the Company's liquidity position in 2009 regardless of the general economy. In addition, as part of our effort to drive foot traffic and deepen customer loyalty, we will be continuously refreshing our value-based merchandise offerings given today's cost-conscious consumer." The Company did not open any new stores during the fourth quarter and ended the year with 296 stores in 33 states versus 298 stores in 34 states at the end of fiscal 2007. As previously announced, the Company expects to close 26 stores and to open no new stores in fiscal 2009. First Quarter Fiscal 2009 Outlook Beginning in the first quarter of fiscal 2009, results from operations of stores being closed in areas where the Company is exiting entire media markets will be removed from continuing operations. Of the 26 stores being closed, 18 are in 8 media markets that the Company is exiting and will be reported as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Historical data will be restated for comparability purposes. The Company expects net sales for the first quarter of fiscal 2009 in the range of $179 million to $184 million, based on a same store sales decrease in the range of 9% to 12% and inclusive of inclusive of prep. Taking into consideration or account; including. the 8 store closures in continuing operations. The Company will open no new stores and close 26 stores in the first quarter of fiscal 2009 versus opening 8 new stores and closing 14 in the first quarter of fiscal 2008. For the first quarter of fiscal 2009, the Company is projecting a loss from continuing operations before interest and taxes in the range of $23 million to $25 million including the 8 store closures. Liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy results and lease buyout reserves for the 8 stores closed in continuing markets are forecasted at a net expense of $6 million for fiscal 2009. The Company projection for the first quarter of fiscal 2009 without these non-recurring charges is a loss from continuing operations before interest and taxes in the range of $17 million to $19 million versus an $18 million loss in the first quarter last year. The results for the first quarter of fiscal 2008 have been restated to exclude the 18 stores that will be reported as discontinued operations. The Company's fourth quarter earnings conference call will be today, March 19, 2009, at 1:30 p.m. PT. The conference call will be in a "listen-only" mode for all participants other than the sell-side and buy-side investment professionals who regularly follow the Company. The toll-free phone number for the call is 800-901-5217 and the access code is 31861779. Callers should dial in approximately 15 minutes prior to the scheduled start time. A telephonic replay will be available at 888-286-8010, Access Code: 78356736, from 4:30 p.m. PT Thursday, March 19, 2009 to 4:30 p.m. PT on Thursday, March 26, 2009. Investors may also access the live call or the replay over the internet at www.streetevents.com; www.fulldisclosure.com and www.worldmarket.com. The replay will be available approximately three hours after the live call concludes. This release references non-GAAP loss from continuing operations before interest and taxes (or "EBIT") and the non-GAAP financial measure of earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting for the periods presented. This press release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " that are based on current expectations and are subject to various risks and uncertainties, which could cause actual results to differ materially from those forecasted. Such "forward-looking statements" include, but are not limited to, statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our future liquidity position and financial guidance and results. The risks and uncertainties include, but are not limited to: adjustments to our accounting records required by our auditors, changes in economic conditions that affect consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. ; changes in the competitive environment; interruptions in the flow of merchandise; changes in the cost of goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. purchased including fuel, transportation and insurance; a material unfavorable outcome with respect to litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , claims and assessments; the effects associated with terrorist acts; 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. [TABLE OMITTED] [TABLE OMITTED] |
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