Brookstone Announces Third Quarter 2011 Financial Results

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Nov 15, 2011, 06:00 ET

MERRIMACK, N.H., Nov. 15, 2011 /PRNewswire/ -- Innovative product development company and specialty lifestyle retailer Brookstone, Inc. today announced financial results for the third quarter ended October 1, 2011.

For the 13-week period ended October 1, 2011, Brookstone reported total net sales of $78.2 million, a 7.6% increase from the comparable 13-week period of 2010. Same-store sales increased 4.7% as compared to the comparable 13-week period last year.

For the 13-week period ended October 1, 2011, Brookstone reported a loss from operations of $8.8 million, compared to a loss from operations of $14.1 million for the comparable 13-week period last year.

For the 39-week period ended October 1, 2011, Brookstone reported total net sales of $243.8 million, an 11.4% increase from the 39-week period ended October 2, 2010. Same-store sales for the 39-week period ended October 1, 2011 increased 8.2% as compared to the comparable 39-week period last year.

For the 39-week period ended October 1, 2011, Brookstone reported a loss from operations of $31.7 million, compared to a loss from operations of $43.6 million for the 39-week period ended October 2, 2010.

Ron Boire, Brookstone President and Chief Executive Officer, said, "We continue to be encouraged by the improving results in both segments of our business. The third quarter of 2011 marks our eighth consecutive quarter of same-store sales increases in the retail segment, and the eighth consecutive quarter the direct segment has generated increased sales over the comparable quarter of the previous year. This positive trend reflects an expanding product assortment in our direct segment and improved selling efforts in our retail stores. We believe that Brookstone is well-positioned for the upcoming holiday selling season."

About Brookstone:

Brookstone, Inc. is an innovative product development and specialty lifestyle retail company that operates approximately 300 Brookstone Brand stores nationwide and in Puerto Rico. Typically located in high-traffic regional shopping malls and airports, the stores feature unique and innovative consumer products. The Company also operates a Direct Marketing business that includes the Brookstone catalog and an e-commerce website at http://www.brookstone.com.

Brookstone is principally owned by three sponsors, Osim International, J.W. Childs, and Temasek Holdings. In accordance with the terms governing its publicly-held debt, the Company issues quarterly and annual reports under SEC guidelines.

Statements in this release which are not historical facts, including statements about the Company's confidence or expectations, earnings, anticipated operations of its e-commerce sites and those of third-party service providers, and other statements about the Company's operational outlook are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 ("Reform Act") and are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in such forward-looking statements. Such risks and uncertainties include, without limitation, risks of changing market conditions in the overall economy and the retail industry, consumer demand, the effectiveness of e-commerce technology and marketing efforts, availability of products, availability of adequate transportation of such products, and other factors detailed from time to time in the Company's annual and other reports posted to the Company's website. Words such as "estimate", "project", "plan", "believe", "feel", "anticipate", "assume", "may", "will", "should" and similar words and phrases may identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. The Company undertakes no obligations to publicly release any revisions to these forward-looking statements or reflect events or circumstances after the date hereof.

BROOKSTONE, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited)
	October 1, 2011	January 1, 2011	October 2, 2010

Assets

Current assets:
Cash and cash equivalents	$ 1,222	$ 32,097	$ 1,341
Receivables, net	11,147	7,266	6,434
Merchandise inventories	85,099	96,004	89,899
Prepaid expenses	9,152	8,950	9,440

Total current assets	106,620	144,317	107,114

Property, plant and equipment, net	45,917	46,362	47,633
Intangible assets, net	105,000	105,000	105,000
Goodwill	99,734	99,734	99,734
Other assets	4,203	5,386	6,224

Total assets	$ 361,474	$ 400,799	$ 365,705

Liabilities and Shareholder's Equity

Current liabilities:
Accounts payable	$ 30,579	$ 32,836	$ 20,285
Other current liabilities	27,760	44,435	30,176
Short-term borrowings	29,548	---	32,539
Deferred income taxes	716	716	762

Total current liabilities	88,603	77,987	83,762

Long-term debt:
Senior Notes, at face value net of discount	135,169	135,080	169,435
Concession on 2010 Note Exchange, net	11,203	13,529	---
Other long-term debt	2,662	3,408	3,567
Total long-term debt	149,034	152,017	173,002

Other long-term liabilities	17,912	19,604	19,714
Deferred income taxes	37,819	37,819	37,773
Total liabilities	293,368	287,427	314,251

Commitments and contingencies	---	---	---

Equity:
Brookstone Shareholder's equity:
Common Stock – $0.01 par value, 1,000 shares authorized, one share issued and outstanding	---	---	---
Additional paid-in capital	266,842	265,485	245,470
Accumulated other comprehensive income (loss)	(1,391)	(1,414)	(665)
Retained deficit	(198,536)	(151,999)	(194,507)
Total Brookstone Shareholder's equity	66,915	112,072	50,298
Noncontrolling interests	1,191	1,300	1,156
Total equity	68,106	113,372	51,454

Total liabilities and equity	$ 361,474	$ 400,799	$ 365,705

BROOKSTONE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands) (Unaudited)
	Thirteen weeks ended		Thirty-nine weeks ended
	October 1, 2011	October 2, 2010	October 1, 2011	October 2, 2010

Net sales	$ 78,171	$ 72,669	$ 243,801	$ 218,788

Cost of sales	60,107	58,958	188,466	175,962

Gross profit	18,064	13,711	55,335	42,826

Selling, general and administrative expenses	26,851	27,816	87,037	86,472

Loss from operations	(8,787)	(14,105)	(31,702)	(43,646)

Interest expense, net	4,524	6,203	13,420	18,399

Loss before income taxes	(13,311)	(20,308)	(45,122)	(62,045)

Income tax provision (benefit)	170	(12)	520	361

Consolidated net loss	(13,481)	(20,296)	(45,642)	(62,406)

Less: Net income attributable to noncontrolling interests	304	216	895	569

Net loss attributable to Brookstone	$ (13,785)	$ (20,512)	$ (46,537)	$ (62,975)