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Cost Plus Inc. (CPWM) filed Quarterly Report for the period ended 2011-10-29.
Cost Plus Inc. has a market cap of $210.9 million; its shares were traded at around $9.45 with a P/E ratio of 24.9 and P/S ratio of 0.2.
This is the annual revenues and earnings per share of CPWM over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of CPWM.
Highlight of Business Operations:
The Company reported a net loss of $8.6 million in the third quarter of fiscal 2011, or $0.39 per diluted share, compared to a net loss of $8.3 million, or $0.38 per diluted share, for the third quarter of last year. The increase in the net loss for the quarter was primarily due to a $2.9 million increase in selling, general and administrative expenses, offset by a $2.4 million increase in gross profit. The increase in selling, general and administrative expenses is largely due to higher store payroll costs primarily related to store merchandise resets, which did not occur last year, as well as higher advertising expenses. The increase in gross profit is due to a 3.7% increase in net sales, offset by higher costs of sales due to a shift in the mix within the home division for the quarter.Net Sales Net sales consists almost entirely of retail sales, but also includes direct-to-consumer sales and shipping revenue. Net sales increased $7.3 million, or 3.7%, to $201.9 million for the third quarter of fiscal 2011 from $194.6 million for the third quarter of fiscal 2010. Year-to-date, net sales were $599.5 million, a 4.3% increase compared to $575.0 million for the same period last year. Comparable store sales increased 4.0% in the third quarter of fiscal 2011, compared to an increase of 8.8% in the third quarter of fiscal 2010. Year-to-date, comparable store sales increased 4.1% compared to an increase of 6.9% for the same period last year. The increase in same store sales for the third quarter was attributable to an increase in the average ticket per customer of 2.7% and an increase in customer count of 1.2%. As of October 29, 2011, the calculation of comparable store sales included a base of 257 stores. A store is included as comparable at the beginning of the fourteenth full fiscal month of sales with the exception of relocated stores, which remain comparable upon opening. At the end of the third quarter of fiscal 2011, the Company operated 258 stores in 30 states versus 263 stores in 30 states at the end of the third quarter of fiscal 2010.
Cost of Sales and Occupancy Cost of sales and occupancy, which consists of costs to acquire merchandise inventory and costs of freight and distribution, as well as certain facilities costs, increased $4.9 million, or 3.7%, to $139.7 million in the third quarter of fiscal 2011 as compared to the third quarter of last year. As a percentage of net sales, total cost of sales and occupancy decreased 10 basis points to 69.2% in the third quarter of fiscal 2011 compared to 69.3% in the third quarter of fiscal 2010. The 10 basis point decrease in cost of sales and occupancy as a percentage of net sales was primarily due to lower occupancy costs offset by a higher cost of sales. The increase in cost of sales as a percentage of net sales for the third quarter was primarily due to a shift within the home division towards higher dollar and lower merchandise margin furniture compared to last year. Year-to-date, total costs of sales and occupancy were $415.0 million and increased $18.0 million, or 4.5%, compared to the same period in fiscal 2010. As a percentage of net sales, total cost of sales and occupancy for the year-to-date period increased 20 basis points to 69.2% from 69.0% last year.
Selling, General and Administrative (“SG&A”) Expenses SG&A expenses for the third quarter of fiscal 2011 were $67.3 million compared to $64.4 million for the third quarter last year. As a percentage of net sales, SG&A expenses increased 20 basis points to 33.3% for the third quarter of fiscal 2011 from 33.1% for the third quarter last year. The increase in SG&A expenses as a percentage of net sales is largely due to higher store payroll costs primarily related to store merchandise resets, which did not occur last year, as well as higher advertising expenses. The Company expects to end the year with total advertising expense flat year-over-year. Year-to-date, as a percentage of net sales, SG&A expenses decreased 70 basis points to 32.5% from 33.2% for the same period last year primarily due to increased leverage from higher sales.
Income Taxes The Company’s effective tax rate from continuing operations was a benefit of 5.0%, before discrete items, in the third quarter of fiscal 2011 compared to a provision of 0.9%, before discrete items, in the third quarter of fiscal 2010 primarily related to state income taxes. No provision or benefit was recorded in the third quarter of fiscal 2010 for federal income taxes due to the recent net operating losses incurred. The Company’s business is highly seasonal, reflecting the general pattern associated with the retail industry of peak sales and earnings during the fourth quarter holiday selling season. The Company expects to have positive net income for fiscal year 2011, but due to the seasonality of its business, it had losses for the first three quarters of the year which resulted in recording a tax benefit for each of those quarters. Last year, the Company could not support net income for the year due to its recent history of recurring losses, and therefore did not recognize tax benefits on its quarterly losses through the third quarter because it did not expect to have enough net income to offset the year-to-date benefit that would have been recorded.
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