Coldwater Creek projects upcoming losses

SANDPOINT - Coldwater Creek Inc. announced it projects per share losses of 30 to 36 cents for the fiscal third and fourth quarters ending Oct. 29 and Jan. 28.

It projects consolidated net sales in the range of $180 million to $190 million, reflecting a decline in comparable premium retail store sales of 17 to 21 percent when compared to the fiscal third quarter of 2010.

The decline in comparable premium retail store sales reflects soft traffic, the company said in a press release.

"During September we experienced a meaningful improvement in our conversion trends as customers responded to elements of our new design aesthetic," said Dennis Pence, chairman and chief executive officer.

As a result of those trends and inventory management initiatives, Coldwater expects modest improvements in merchandise margin rates for the third quarter.

"Although we are encouraged by these developments, quarter-to-date traffic trends have been challenging," he said. "Additionally, we launched our first-ever nationwide television campaign and while this campaign increased our expense in the quarter, we remain confident that this is an essential investment to support a return to profitable levels of traffic and to encourage trial purchases by new customers."

For the 13-week period ending Oct. 29, the company currently expects:

* Gross margin flat to down slightly compared to the prior year period as modest improvements in merchandise margins are offset by deleveraging of occupancy and buying expenses versus the third quarter of 2010.

* Total inventory at the end of the fiscal third quarter to be down in the low-to-mid teens on a percentage basis as compared to the end of the third quarter 2010.

For the thirteen-week period ending Jan. 28, 2012, the Company expects:

* Net loss in the range of 17-26 cents per share, as compared to a net loss of 40 cents per share in the fourth quarter of fiscal 2010. Net loss for the fiscal 2010 fourth quarter included a non-cash charge of $2.9 million, or 3 cents per share, related to certain retail store asset impairments.

* Continued improvements in conversion rates and average unit retail, offset by expected soft year-over-year traffic levels.

* Gross margin to improve 200 to 400 basis points compared to the same period in 2010 due to reductions in markdown selling as a result of tighter inventory buys, partially offset by deleveraging of occupancy and buying expenses and higher product input costs as compared to the fourth quarter of 2010.

* Total inventory at the end of the fiscal fourth quarter of 2011 to be down in the mid-to-high teens on a percentage basis as compared to the end of fiscal 2010.

"Although it will take time to re-engage our customers, we are pleased to see early indications that they are reacting favorably to our new merchandise direction," said Jill Dean, president and chief merchandising officer. "As we look to the holiday season, we expect overall traffic to remain challenging; however, we believe our holiday product reflects even further improvements in color, print and pattern that resonate favorably with our customers."

Coldwater Creek is a leading specialty retailer of women's apparel, gifts, jewelry, and accessories that was founded in 1984 and is headquartered in Sandpoint. The company sells its merchandise through premium retail stores across the country, online at coldwatercreek.com and through its catalogs.