Cost Plus, Inc. Reports Third Quarter Earnings Exceeded Original Estimate.

Business Editors

OAKLAND, Calif.--(BUSINESS WIRE)--Nov. 19, 2003

Cost Plus, Inc. (Nasdaq:CPWM) announced today record net income for the third quarter of fiscal 2003 of $0.9 million, versus a net loss of $0.7 million for the third quarter of fiscal 2002. Earnings per diluted share were $0.04 for the quarter compared to a prior year third quarter net loss per diluted share of $0.03. Results for the 2002 third quarter included a charge of $2.1 million, or $0.06 per fully diluted share, for a wage and hour lawsuit settlement. Year-to-date financial results set a record with net income of $6.3 million or $0.28 per diluted share compared with net income of $3.1 million or $0.14 per diluted share in the prior fiscal year.

For the third quarter, net sales increased 13.4% to $170.0 million from $149.9 million last year. Same store sales increased 1.2%, on top of a 14.1% increase last year. Year-to-date, net sales were $489.0 million, a 15.7% increase from $422.6 million for the same period last year, with same store sales growing 2.5% on top of an 8.0% prior year increase.

The Company also reported today that the ten new stores planned for the fourth quarter were opened by November 13, 2003, including the Company's first two Florida stores, located in Jacksonville.

Murray Dashe, Chairman, CEO and President, said, "We are pleased to have exceeded our original guidance for each of the first three quarters, during a soft economic climate. We believe the record earnings we reported in each of these quarters is a testament to the increasing financial strength of our business as it grows, as well as the effectiveness of our employees in managing our variable costs. As we enter the fourth quarter, we are pleased with our sales performance thus far and the sell through on our Holiday product has been encouraging."

During the quarter, the Company opened eight stores, one each in Crystal Lake, IL; Carson City, NV; Seaside, CA; Billings, MT; Maple Grove, MN; Chino, CA; Davis, CA and Denton, TX. Year to date through the third quarter, the Company has opened 21 stores, including one store that replaced a store at an existing location, and has expanded its operations into new markets including Colorado Springs, CO; Richmond, VA; Chico, CA; and Billings, MT.

Earnings guidance for the fourth quarter of fiscal 2003 is at $1.25 per diluted share and is predicated on the following major assumptions:

-- Opening of ten new stores versus six in the fourth quarter

last year. One new store opening in this year's fourth quarter

is a replacement for a store that is closing.

-- Same-store sales up approximately 3% on top of a 2% increase

in the prior year.

-- Total sales up approximately 17% to $317 million.

-- Gross profit rate at approximately 37.1% compared to 36.7%

last year, primarily due to lower costs of distribution in the

current year fourth quarter.

-- SG&A rate at approximately 22.0% versus 22.6% last year.

-- Pre-tax income at approximately $45 million versus $36 million

in the fourth quarter of 2002.

-- An effective income tax rate of 37% in the current year vs.

29% in the prior year. The prior year effective rate included

the results of a prior year tax credit study completed in the

fourth quarter.

-- Net income of approximately $28 million versus $25 million

last year.

-- Estimated earnings per diluted share of $1.25 versus $1.14

last year, with weighted average diluted shares outstanding of

22.8 million versus 22.2 million last year.

The Company's fiscal 2003 earnings guidance for the full year is $1.55 per diluted share. The estimate for fiscal 2003 is predicated on the following major assumptions:

-- New store openings will be 31 versus 26 in the prior year. Two

stores have closed with the opening of their replacements and

one store closed in 2002 that was also replaced by a new

store.

-- Same-store sales growth is expected to be approximately 2.7%

versus 5.6% last year.

-- Net sales will grow to approximately $806 million, a 16%

increase over last year.

-- Gross profit rate is expected to be approximately 35.2% versus

34.9% last year.

-- SG&A rate is expected to be approximately 27.3% versus 27.8%

last year with the reduction due to leverage from additional

sales and the litigation settlement and other charges incurred

in fiscal 2002.

-- Pre-tax income is expected to be approximately $55 million

versus $41 million in fiscal 2002.

-- An effective income tax rate of 37% in the current year.

-- Net income is expected at $34.6 million.

-- Weighted average diluted shares outstanding at 22.4 million

shares vs. 22.2 million last year.

The Company's third quarter earnings conference call will be today, November 19, 2003, at 8:00 a.m. PST. It will be held in a "listen-only" mode for all participants other than the sell-side and buy-side investment professionals who regularly follow the Company. 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: 21162986, from 10:00 a.m. PST Wednesday to 10:00 a.m. PST on Thursday, November 20. Investors may also access the live call or the replay over the internet at www.streetevents.com, www.fulldisclosure.com and www.costplus.com. The replay will be available approximately 60 minutes after the live call concludes.

Cost Plus, Inc. is a leading specialty retailer of casual home living and entertaining products. As of November 19, 2003, the Company operates 204 stores in 26 states, compared to 175 stores in 23 states at the same time last year.

The above statements relating to anticipated fourth quarter and fiscal 2003 financial results are "forward-looking statements" which 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 risk factors include, but are not limited to: realization of cost savings assumed in the Company's estimates; changes in economic conditions or international conflicts that affect consumer spending; changes in the competitive environment; interruptions in the flow of merchandise; changes in the cost of goods and services purchased including fuel, transportation and insurance; a material unfavorable outcome with respect to litigation, claims and assessments; further terrorist attacks and our nation's response thereto; 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
     (Amounts in thousands, except earnings per share, unaudited)



                                       Third Quarter Ended
                                November 1, 2003     November 2, 2002

Net sales                       $170,019   100.0%   $149,886   100.0%
Cost of sales and occupancy      113,061    66.5      99,676    66.5
 Gross profit                     56,958    33.5      50,210    33.5
Selling, general and
 administrative expenses          53,067    31.2      49,125    32.8
Store preopening expenses          1,567     0.9       1,213     0.8
Income (loss) from operations      2,324     1.4        (128)   -0.1
Net interest expense                 962     0.6       1,020     0.7

Income before income taxes         1,362     0.8      (1,148)   -0.8
Income taxes                         504     0.3        (436)   -0.3

Net income (loss)               $    858     0.5%      ($712)   -0.5%

Net income (loss) per share
 -- diluted                     $   0.04              ($0.03)

Weighted average shares
 outstanding -- diluted           22,537              21,733

New stores opened                      8                   6



                                       Nine-Month Period Ended
                                November 1, 2003     November 2, 2002

Net sales                       $488,997   100.0%   $422,574   100.0%
Cost of sales and occupancy      322,678    66.0     279,569    66.2
 Gross profit                    166,319    34.0     143,005    33.8
Selling, general and
 administrative expenses         150,148    30.7     131,351    31.0
Store preopening expenses          3,834     0.8       4,082     1.0
Income from operations            12,337     2.5       7,572     1.8
Net interest expense               2,346     0.5       2,540     0.6

Income before income taxes         9,991     2.0       5,032     1.2
Income taxes                       3,697     0.7       1,912     0.5

Net income                      $  6,294     1.3%   $  3,120     0.7%

Net income per share
 -- diluted                     $   0.28            $   0.14

Weighted average shares
 outstanding -- diluted           22,228              22,126

New stores opened                     21                  20




                            COST PLUS, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                       (In thousands, unaudited)


                                   November 1, 2003   November 2, 2002
ASSETS
Current assets:
 Cash and cash equivalents            $  3,705           $  4,712
 Merchandise inventories               250,244            204,478
 Other current assets                   25,072             19,663

 Total current assets                  279,021            228,853
Property and equipment, net            123,408            119,676
Goodwill                                 4,178              4,178
Other assets                             6,586              8,724

Total assets                          $413,193           $361,431


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable                     $ 59,885           $ 43,279
 Accrued compensation                    9,255              6,589
 Revolving line of credit               35,900             37,400
 Other current liabilities              18,347             19,101

 Total current liabilities             123,387            106,369

Capital lease obligations               36,632             38,402
Other long-term obligations             14,127             10,946

Shareholders' equity:
 Common stock                              218                217
 Additional paid-in capital            147,074            135,613
 Retained earnings                      91,755             69,884
 Total shareholders' equity            239,047            205,714

Total liabilities and shareholders'
 equity                               $413,193           $361,431