Decreased traffic to Coldwater Creek affects second quarter results

SANDPOINT — Traffic to specialty retailer Coldwater Creek dropped in July leading to lower-than-expected sales for the second quarter ended Aug. 3. The company is taking several steps, including bringing in a new chief marketing officer, in an attempt to turn things around.

Consolidated net sales for the quarter were $149.7 million, compared with $163.7 million in second quarter 2012. Net sales from the retail segment were $118.6 million, compared with $129.9 million in the same period last year.

Comparable premium retail sales declined 7.3% for the quarter. Net sales from the direct segment were $31.1 million, compared with $33.8 million in the same period last year.

Consolidated gross profit was $44 million, or 29.4% of net sales, compared with $48.5 million, or 29.6% of net sales, for second quarter 2012. The 20 basis point decline in gross profit margin was a result of improved occupancy leverage, offset by lower merchandise margins reflecting increased promotional activity.

"Sales were lower than planned in the second quarter, largely due to a deceleration in traffic during the month of July. Despite a challenging environment, we delivered bottom-line results that were in line with our guidance," said Jill Dean, president and CEO. "Our return to more consistent comparable store sales has been slower than expected; however, we know that customer engagement and driving traffic are critical to our long-term success and two recent announcements represent progress against these objectives. First, we have further strengthened our management team with the addition of Deb Cavanagh as chief marketing officer. In addition, our partnership with Alliance Data Systems provides us with an enhanced platform to drive sales and customer loyalty. We believe that these steps, combined with the extensive work we are continuing to do to align our merchandise assortment with our brand strategy, as well as our disciplined management of expenses and inventory, remain the right focus for our business."

The company closed three premium retail stores and one factory store during the quarter, ending the fiscal quarter with 344 premium retail stores, 36 factory stores and 8 spas. As part of the company's ongoing store optimization plan, the company's plan to close up to six additional retail stores in fiscal 2013 for a total of 45 stores since fiscal 2011.

Coldwater Creek is a leading specialty retailer of women's apparel, jewelry and accessories. The company was founded in 1984 in Sandpoint, Idaho, and sells its merchandise through premium retail stores across the country, online and through its mobile applications.