MERRIMACK, NH-Specialty retailer Brookstone Inc. reported a 7.3% drop in net sales for the fourth quarter of 2005 with quarterly sales of $76.7 million for the period ending Oct. 29, 2005. Third quarter same-store sales also declined 11.3% compared to the same period in 2004 while direct marketing sales were flat at $13.9 million.

The Merrimack, NH-based tools and gadgets merchant also said it suffered an $11.7 million loss from continuing operations compared to the third quarter of 2004 when it reported a $6 million loss from continuing operations. After discounted operations, Brookstone had a net loss of $13.4 million, $6.7 million more than the net loss recorded for the same period last year.

Year-to-date net sales also were down 3.9% with total sales for the 39-week period ending at $241 million compared to the same 39-week period in 2004. Same-store sales through Oct. 29 decreased 8.7% while direct marketing sales from its catalogue and internet site increased $1.4 million to $39 million. Year-to-date losses from continuing operations totaled $20.4 million, compared to a net loss of $9.9 million for the same period in 2004.

After discontinued operations, Brookstone had a $25.9 million net loss for the year through Oct. 29 compared to an $11.8 million net loss from discontinued operations for the same period last year. The company said it generally carries a loss over the first three quarters and makes its profit for the year in the fourth quarter.

Brookstone president and chief executive officer Michael Anthony said in a statement that the company introduced several new innovative products in a variety of categories in the first nine months of 2005 but they were not enough to offset significant declines.Despite the setbacks, Anthony said he still believes the company’s business model is sound.

The company, which operates 305 Brookstone branded stores in the United States and Puerto Rico, was acquired on Oct. 4 through a merger with Brookstone Acquisition Corp., a Delaware corporation formed by OSIM International Ltd. and affiliates of J.W. Childs Equity Partners III, LP and Temasek Capital Ltd. As a result of that transaction, Brookstone Inc. became a privately held, wholly owned subsidiary of OSIM Brookstone Holdings, LP.

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