Cost Plus has net losses despite sales gains

Oakland, Calif.— Top 100 retailer Cost Plus World Market posted net losses in its third quarter and nine months ended Oct. 29, despite sales gains in both periods.

Sales in the quarter rose 5.4% to $200.7 million from $190.4 million in the comparable 2004 period, and were up 6.7% to $603.5

Net losses in the latest quarter were $2.7 million, and $1.3 million in the nine months, measured against net profits of $246,000 in the 2004 quarter and $6.8 million in the 2004 nine months. The 2005 periods were bolstered by income tax benefits of $1.7 million in the quarter and $913,000 in the nine months.

2005 year-to-date results also included $3.3 million in pretax charges linked to the departure of the company's former CEO and the closing of five stores.

President and CEO Barry Field said, "Sales for the third quarter reflect weak customer traffic as a result of general macroeconomic factors that are affecting most retailers in our sector, and our decision not to repeat a significant promotion that took place in the third quarter of the prior year.

"Despite the pressure on sales, merchandise margins for the quarter were notably better than last year as a result of lower promotions, a focus on increasing sales of goods in higher-margin categories, and higher initial markups on purchases," he said.

Cost Plus World Market, a specialist in imported casual home furnishings and home entertaining products, ranks No. 22 on Furniture/Today's list of Top 100 furniture stores.

The company opened 11 stores in the latest quarter. As of Nov. 18, it operated 262 stores in 32 states, compared with 237 stores in 30 states at the same time last year.

Cost Plus expects fourth-quarter earnings per share of 98 cents to $1.08. Full-year earnings per share are anticipated to be 92 cents to $1.01, including the pretax charge for store closings and the departure of the former CEO.