Cost Plus Posts $14M Q3 Loss

OAKLAND, CA-Cost Plus Inc. has gained traction in its turnaround efforts despite a $13.9 million loss for the third quarter, the operator of World Market and Cost Plus World Market stores said Monday in a conference call to discuss results for the period ended Nov. 3. Cost Plus CEO and president Barry Feld told financial analysts listening in on the call that third quarter results reflected “the increasing traction of our turnaround effort,” confirming the trends that the company has cited in previous reports on its efforts to return to profitability.

As evidence of progress toward the turnaround, Feld cited a continuing improvement in buyer margin, inventory turn, customer count and average ticket. He said these trends “are evidence that our new merchandise assortment and everyday value pricing strategy are resonating with our customers, and will build to profitability.”

For the time being, however, Cost Plus remains in the loss column, with a per-share loss of 63 cents in the third quarter, compared with a loss of 55 cents per diluted share in the third quarter last year, when the total loss was $12.2 million. This year’s loss came on sales of $220.6 million, compared to $215.4 million for the third quarter of fiscal 2006.

Cost Plus same store sales decreased 4.3% for the quarter, compared to a 1.3% decrease last year in the third quarter. The company explained that it expected same store sales to decline because of the heavy coupon activity of a year ago that was not repeated this year.

The company opened three new stores and closed two during the third quarter and ended the quarter with 297 stores in 34 states versus 283 stores in 34 states at the end of the third quarter of fiscal 2006. It expects to open one net new store in the fourth quarter, compared with four new stores in the same period last year. The new store will put the chain at 298 locations, compared with 287 locations at the end of last year.