Coldwater Creek Inc. (CWTR, Financial) filed Quarterly Report for the period ended 2013-08-03.
Coldwater Creek has a market cap of $59 million; its shares were traded at around $1.95 with and P/S ratio of 0.10.
Gross profit was $44.0 million, or 29.4 percent of net sales, for the three months ended August 3, 2013, compared to $48.5 million, or 29.6 percent of net sales, for the three months ended July 28, 2012. This decrease in gross profit margin was primarily due to lower merchandise margins as a result of increased promotional activity partially offset by increased leverage of occupancy costs.
Selling, general and administrative expenses ("SG&A") were $62.6 million, or 41.8 percent of net sales, for the three months ended August 3, 2013, compared to $65.7 million, or 40.1 percent of net sales, for the three months ended July 28, 2012. The decrease of $3.1 million in SG&A was primarily due to lower employee-related and marketing expenses.
On July 26, 2013, we entered into a Credit Card Program Agreement (the "Program Agreement") with Comenity Bank, a bank subsidiary of Alliance Data Systems Corporation ("ADS"). Under the Program Agreement, ADS will issue co-branded credit cards and private label credit cards to approved new and existing customers. ADS will also purchase the existing co-branded credit card portfolio at a future date from Chase Bank USA, N.A. ("Chase"). During the three months ended August 3, 2013, we received an up-front incentive payment of $11.5 million, which was deferred and will be amortized over the term of the Program Agreement. On September 11, 2013, ADS and Chase executed the purchase agreement for the existing co-branded credit card portfolio, triggering the second incentive payment of $11.5 million to Coldwater Creek. We will receive an additional $2.0 million upon the launch of a new private label credit card program. We will also be entitled to future payments after ADS begins issuing credit cards under the Program Agreement for revenue sharing based on a percentage of credit card sales, certain new credit card accounts opened and activated, and profit sharing based on certain profitability measures of the program. The term of the Program Agreement is seven years from ADS's purchase of the co-branded credit card portfolio from Chase, with automatic extensions for successive one year terms.
Net cash used in operating activities decreased $10.7 million during the six months ended August 3, 2013 as compared with the six months ended July 28, 2012, primarily due to the receipt of an $11.5 million incentive payment related to our new Credit Card Program Agreement with ADS and the receipt of our annual revenue sharing payments under our current program, partially offset by an increase in net loss, net of non-cash activity. Additionally, our cash balance was lower as of August 3, 2013 due to the timing of payments impacted by the shift in weeks as a result of the 53rd week in fiscal 2012.
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Coldwater Creek has a market cap of $59 million; its shares were traded at around $1.95 with and P/S ratio of 0.10.
Highlight of Business Operations:
Net sales decreased to $149.7 million for the three months ended August 3, 2013, compared to $163.7 million for the three months ended July 28, 2012. The decrease in net sales was primarily driven by a decrease in comparable premium retail store sales(1) of 7.3 percent, the impact of store closures, the impact of the shift in weeks as a result of the 53rd week in fiscal 2012, and a decrease of 8.0 percent in our direct sales, partially offset by an increase in credit card revenue recognized.Gross profit was $44.0 million, or 29.4 percent of net sales, for the three months ended August 3, 2013, compared to $48.5 million, or 29.6 percent of net sales, for the three months ended July 28, 2012. This decrease in gross profit margin was primarily due to lower merchandise margins as a result of increased promotional activity partially offset by increased leverage of occupancy costs.
Selling, general and administrative expenses ("SG&A") were $62.6 million, or 41.8 percent of net sales, for the three months ended August 3, 2013, compared to $65.7 million, or 40.1 percent of net sales, for the three months ended July 28, 2012. The decrease of $3.1 million in SG&A was primarily due to lower employee-related and marketing expenses.
On July 26, 2013, we entered into a Credit Card Program Agreement (the "Program Agreement") with Comenity Bank, a bank subsidiary of Alliance Data Systems Corporation ("ADS"). Under the Program Agreement, ADS will issue co-branded credit cards and private label credit cards to approved new and existing customers. ADS will also purchase the existing co-branded credit card portfolio at a future date from Chase Bank USA, N.A. ("Chase"). During the three months ended August 3, 2013, we received an up-front incentive payment of $11.5 million, which was deferred and will be amortized over the term of the Program Agreement. On September 11, 2013, ADS and Chase executed the purchase agreement for the existing co-branded credit card portfolio, triggering the second incentive payment of $11.5 million to Coldwater Creek. We will receive an additional $2.0 million upon the launch of a new private label credit card program. We will also be entitled to future payments after ADS begins issuing credit cards under the Program Agreement for revenue sharing based on a percentage of credit card sales, certain new credit card accounts opened and activated, and profit sharing based on certain profitability measures of the program. The term of the Program Agreement is seven years from ADS's purchase of the co-branded credit card portfolio from Chase, with automatic extensions for successive one year terms.
Net cash used in operating activities decreased $10.7 million during the six months ended August 3, 2013 as compared with the six months ended July 28, 2012, primarily due to the receipt of an $11.5 million incentive payment related to our new Credit Card Program Agreement with ADS and the receipt of our annual revenue sharing payments under our current program, partially offset by an increase in net loss, net of non-cash activity. Additionally, our cash balance was lower as of August 3, 2013 due to the timing of payments impacted by the shift in weeks as a result of the 53rd week in fiscal 2012.
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