MERRIMACK, N.H., February 18, 2009 -- Innovative product development company and specialty lifestyle retailer Brookstone, Inc. today announced financial results for the fourth quarter and full Fiscal Year ended January 3, 2009.
For the 14-week period ended January 3, 2009, Brookstone reported total net sales of $220.1 million, a 23.7% decrease from the 13-week period ended December 29, 2007. Same-store sales for the 13-week period ended December 27, 2008 decreased 25.5% as compared to the comparable 13-week period last year.
For the 14-week period ended January 3, 2009, Brookstone reported a loss from operations of $98.2 million, compared to income from operations of $64.6 million for the 13-week period ended December 29, 2007. Excluding certain non-cash impairment charges, of approximately $89.8 million related to goodwill, approximately $24.0 million related to intangible assets and approximately $5.2 million related to underperforming stores, for the 14-week period ended January 3, 2009, Brookstone reported income from operations of $20.8 million, compared to income from operations of $65.5 million (which excludes certain non-cash impairment charges of approximately $0.9 million related to intangible assets) for the 13-week period ended December 29, 2007.
For the 53-week period ended January 3, 2009, Brookstone reported total net sales of $496.7 million, a 11.7% decrease from the 52-week period ended December 29, 2007. Same-store sales for the 52-week period ended December 27, 2008 decreased 14.2% as compared to the comparable 52-week period last year.
For the 53-week period ended January 3, 2009, Brookstone reported a loss from operations of $129.4 million, compared to income from operations of $39.9 million for the 52-week period ended December 29, 2007. Excluding certain non-cash impairment charges, of approximately $89.8 million related to goodwill, approximately $24.0 million related to intangible assets and approximately $5.2 million related to underperforming stores, Brookstone reported a loss from operations of $10.4 million, compared to income from operations of $40.8 million (which excludes certain non-cash impairment charges of approximately $0.9 million related to intangible assets) for the 52-week period ended December 29, 2007.
Brookstone, Inc.
Reconciliation of Selected GAAP Measures to
Non-GAAP Measures
(Unaudited)
(in millions)
-----------------------------------------------------
Fourteen Thirteen Fifty-three Fifty-two
weeks ended weeks ended weeks ended weeks ended
January 3, December 29, January 3, December 29,
2009 2007 2009 2007
-----------------------------------------------------
Total sales $ 220.1 $ 288.5 $ 496.7 $ 562.8
=====================================================
Income (loss)
from operations
(GAAP) $ (98.2) $ 64.6 $ (129.4) $ 39.9
Non-cash
impairment
charges 119.0 0.9 119.0 0.9
-----------------------------------------------------
Income (loss)
from operations
(excluding
non-cash
impairment
charges)
(Non-GAAP) $ 20.8 $ 65.5 $ (10.4) $ 40.8
=====================================================
Lou Mancini, Brookstone Chief Executive Officer, said: "Our fourth quarter sales were affected by many of the negative factors rippling through the entire economy. We experienced a significant downturn in sales beginning in October that coincided with the unprecedented turmoil in the financial sector. We responded to these events by reducing our forward inventory buys and cutting costs. In addition, we marked down product prices to proactively monetize our inventory and raise cash. While these steps helped us to tightly manage inventory, which ended the year approximately 22.8% below last year, these actions also reduced our gross margin and profitability. We ended the year with approximately $22.5 million in cash, no cash borrowings and approximately $88.1 million of availability under our revolving credit facility, which is in place through October of 2010."
Brookstone, Inc. is an innovative product development and specialty lifestyle retail company that operates 310 Brookstone Brand stores nationwide and in Puerto Rico. Typically located in high-traffic regional shopping malls and airports, the stores feature unique and innovative consumer products. The Company also operates a Direct Marketing business that includes the Brookstone catalog and an e-commerce website at http://www.brookstone.com.
Statements in this release which are not historical facts, including statements about the Company's confidence or expectations, earnings, anticipated operations of its e-commerce sites and those of third-party service providers, and other statements about the Company's operational outlook are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 ("Reform Act") and are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in such forward-looking statements. Such risks and uncertainties include, without limitation, risks of changing market conditions in the overall economy and the retail industry, consumer demand, the effectiveness of e-commerce technology and marketing efforts, availability of products, availability of adequate transportation of such products, and other factors detailed from time to time in the Company's annual and other reports posted to the Company's website. Words such as "estimate", "project", "plan", "believe", "feel", "anticipate", "assume", "may", "will", "should" and similar words and phrases may identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. The Company undertakes no obligations to publicly release any revisions to these forward-looking statements or reflect events or circumstances after the date hereof.
BROOKSTONE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
------------ ------------
January 3, December 29,
2009 2007
------------ ------------
(Unaudited)
Assets
------
Current assets:
Cash and cash equivalents $ 22,530 $ 70,857
Receivables, net 9,839 12,816
Merchandise inventories 82,095 106,400
Deferred income taxes, net -- 4,166
Prepaid expenses 16,379 4,020
------------ ------------
Total current assets 130,843 198,259
Property, plant and equipment, net 66,456 71,918
Intangible assets, net 105,000 129,500
Goodwill 99,735 189,524
Other assets 8,565 11,834
------------ ------------
Total assets $ 410,599 $ 601,035
============ ============
Liabilities and Shareholder's Equity
------------------------------------
Current liabilities:
Accounts payable $ 17,033 $ 33,599
Other current liabilities 41,179 61,214
------------ ------------
Total current liabilities 58,212 94,813
Other long-term liabilities 21,370 21,137
Long-term debt 174,089 174,777
Deferred income taxes 38,430 42,999
Other party interests in consolidated
entities 1,040 1,250
Total shareholder's equity 117,458 266,059
------------ ------------
Total liabilities and shareholder's
equity $ 410,599 $ 601,035
============ ============
BROOKSTONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
Fourteen Thirteen
weeks ended weeks ended
------------ ------------
January 3, December 29,
2009 2007
------------ ------------
Net sales $ 220,083 $ 288,461
Cost of sales 148,093 157,349
------------ ------------
Gross profit 71,990 131,112
Selling, general and administrative
expenses 51,254 65,579
Goodwill impairment 89,789 --
Intangible asset impairment 24,000 938
Long-lived asset impairment 5,181 --
------------ ------------
Income (loss) from operations (98,234) 64,595
Loss on early extinguishment of debt -- 383
Interest expense, net 6,558 6,970
------------ ------------
Income (loss) before taxes, other party
interests in consolidated entities and
discontinued operations (104,792) 57,242
Other party interests in consolidated
entities 39 303
------------ ------------
Income (loss) before taxes and
discontinued operations (104,831) 56,939
Income tax provision 12,656 22,563
Loss on discontinued operations, net of
income tax benefit -- (130)
------------ ------------
Net income (loss) $ (117,487) $ 34,246
============ ============
BROOKSTONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
Fiscal year ended
--------------------------
January 3, December 29,
2009 2007
------------ ------------
(Unaudited)
Net sales $ 496,745 $ 562,835
Cost of sales 355,599 360,793
------------ ------------
Gross profit 141,146 202,042
Selling, general and administrative
expenses 151,582 161,200
Goodwill impairment 89,789 --
Intangible asset impairment 24,000 938
Long-lived asset impairment 5,181 --
------------ ------------
Income (loss) from operations (129,406) 39,904
Loss on early extinguishment of debt -- 506
Interest expense, net 24,158 25,711
------------ ------------
Income (loss) before taxes, other party
interests in consolidated entities and
discontinued operations (153,564) 13,687
Other party interests in consolidated
entities 983 1,320
------------ ------------
Income (loss) before taxes and
discontinued operations (154,547) 12,367
Income tax provision (benefit) (6,246) 5,610
Loss on discontinued operations, net of
income tax benefit -- (337)
------------ ------------
Net income (loss) $ (148,301) $ 6,420
============ ============