Coldwater Creek reports 2nd-qtr profit as revenue rises, beats forecasts

Coldwater Creek posts 2Q profit, surprises Street

SANDPOINT, Idaho — Women’s clothing chain Coldwater Creek Inc. posted a profit for its second quarter on higher revenue, beating Wall Street’s expectations for another loss and sending its shares soaring more than 20 percent in morning trading Wednesday.

The company also reaffirmed its guidance for the year and said its margins will improve as it benefits from inventory control.

President and CEO Dennis Pence said the company is making progress with its inventory — a key concern for retailers as they deal with the new reality of frugal shoppers. He said the company is also encouraged that initiatives it has been undertaking this year are starting to bring “back a level of predictability” to the business.

He said the company’s fall merchandise is strong and Coldwater Creek expects increased margins in the second half of the year as its inventory remains conservative and the company focuses on expenses.

Shares of Coldwater Creek rose 80 cents, or 23.9 percent, to $4.15 in morning trading.

For the three months that ended July 31, Coldwater Creek said its net income was $1.5 million, or 2 cents per share, compared with a loss of $4.9 million, or 4 cents per share, in the year-ago period.

Revenue rose 12.6 percent to $253.5 million from $225.2 million last year.

Analysts polled by Thomson Reuters, on average, expected Coldwater Creek to report a loss of 4 cents per share on lower revenue of $233.8 million.

Revenue in Coldwater’s retail segment, which includes its stores, spas and outlets, was $195.4 million, up 6.5 percent from a year earlier. Phone and Internet sales jumped 39 percent to $58.1 million.

Coldwater Creek said selling, general and administrative expenses fell less than 1 percent to $82.5 million, driven by employee costs and partially offset by increased marketing.

The company opened five new retail stores in the quarter to finish with 364. It is on track to open 20 new stores this fiscal year.

Coldwater Creek expects to earn between a penny and 4 cents per share in the third quarter, and post a low single digit increase in net sales.

Wall Street, on average, expects the company to earn 3 cents per share in the third quarter on revenue of $276.8 million.

For the year, the company continues to expect earnings of between 8 cents and 12 cents per share, with earnings growth in the second half of the year. Analysts expect earnings for the year of 6 cents per share on revenue of $1.1 billion.