Cost Plus scales back to regain consumer loyalty

OAKLAND, Calif. Cost Plus is going back to basics, president and ceo Barry Feld has told the investment community. The company’s foray into furniture sets and higher-end decor that was instituted three years ago has alienated its core customers and an expansion eastward overreached, but now the company plans to do right by its once loyal shoppers.

The expansion, which reached as far as Washington, D.C., won’t be rolled back, but Cost Plus, operating as World Market back east, will focus on existing markets as it opens new stores, filling in geographies and looking to leverage costs. Plans for a children’s business, expansion to Hawaii and a catalog all have been dropped.

At the end of its last quarter, Cost Plus had 296 stores versus 274 at the end of last year’s quarter, but it ended both periods operating in the same number of states, 34. The company will open about 12 stores this year in total and will only add net new stores next year if it meets internal performance thresholds.

Net sales in the second quarter, ended Aug. 4, were $215.2 million, down from $215.3 million for the 2006 period. Same-store sales decreased 7.6% and net loss was $29.1 million, or $1.32 a share, versus $17.7 million, or 80 cents a share, in the second quarter last year.