Coldwater Creek, Inc. (CWTR)

giantsny (70.60) Submitted: 8/30/07 10:05 AM

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$20 huh, nice pick!

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TMF1000 (91.37) Submitted: 9/01/07 3:48 PM

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Coldwater Creek (CWTR)
Price $12.44

Price to sales ratio – 1.02
PE ratio ttm - 22.61

March 8, 2006 4Q:2005 hightlights:
** 4Q net income $18.9 million or $0.20 per share compared with $11.4 million or $0.12 last year
** 4Q: revenues were $287.9 million up 41% from $204.1 million last year
** Fiscal 2005 revenues were $788.2 million up 33.5% from $590.3 million last year
** TTM sales per share $8.33
** Fiscal 2005 $46.8 million or $0.50 per share up 60.6% from $29.1 million or $0.32 per share ---- Later they restated earnings lowering them to $0.44. They also restated revenues.
** TTM $0.44
** Diluted share count 94,656,000
** Cash $131,856,000 and no debt
** Cash from operations $103,658,000 –
** Cash flow for the year was $22,483,000
** CapEx $81,175,000
** Direct sales increased 15.7% to $122.4 million in the fourth quarter from $105.8 million representing 42.5% of the company’s total net sales down from 51.8% last year.
** Direct sales for fiscal 2005 increased 11.7% to $328.6 million from $294.1 million last year representing 41.7% of company total sales compared to 49.8% last year.
** Internet sales $73.7 million in the fourth quarter from $62.3 million
** Internet sales for fiscal 2005 increased 23.6% to $200.6 million up from $162.2 million last year. Internet sales represented 25.4% of the company’s total sales compared to 27.5% last year.
** Catalog sales decreased 2.9% to $128 million in fiscal 2005 from $131.9 last year. Catalog sales represented 16.2% of the company’s total sales in fiscal 2005 compared to 22.3% last year.
** Trading range between March 8, 2006 and May 24, 2006 was $24.11 to $31.26: PE range was 54.79 and 71. PS ratio range 2.89 to 3.75 – I did not change PS ratio for restatement since they are high anyway and will correct next year. I did want to note the problem though.

May 24, 2006 1Q:2006 highlights:
** Net income up 36.3% to $11.6 million or $0.12 compared to $8.5 million or $0.09 last year.
** TTM $0.46
** Revenues were $215.3 million up 38.3% from $155.6 million last year.
** Trading range between May 24, 2006 and August 23, 2006 was $18.69 to $27.50: PE range was 40.63 and 59.8

August 23, 2006 2Q:2006 highlights:
** Net income up 93.7% to $12 million or $0.13 from $6.2 million or $0.07
** TTM $0.52
** Net sales $216.4 million or $153.3 million last year
** Trading range between August 23, 2006 and November 21, 2006 was $26.25 to $31.25; PE range was 50.48 to 60.1


November 21, 2006 3q:2006 quarter highlights:
** 225 store count
** Revenues were $256.4 million up 37.2% from $186.8 million last year
** Net income up 51.8% to $15.9 million or $0.17 per share from $10.5 million or $0.11 per share
** TTM earnings are $0.58
** Same store sales increased 9.9% for the quarter compared to gains of 6.8% last year.
** Direct segment sales up 20.6% to $88.8 million up from $73.7 million last year. This represented 34.7% of the company sales for the quarter. Last year, it made up 39.4% of sales.
** Internet sales increased 28.6% to $59.5 million up from $46.2 million. The Internet represented 66.9% of the direct sales business segment. Internet sales represented 23.2 of the company’s total sales down from 24.7% last year.
** Catalog sales increased 7.1% to $29.4 million for the quarter up from $27.4 million last year. Catalog sales represented 33.1% of total direct sales. Catalog sales represented 11.5% of the company’s total sales compared to 14.7% last year.
** Cash $108,015,000 and no debt
** Cash from operations - $46,209,000
** CapEx which is also used to expand their retail store base was $80,505,000
** Diluted share count 94,840,000
** Trading range between November 21, 2006 and March 7, 2007 was $17.60 to $28.70: PE range was 30.35 and 49.48:

March 7, 2007 4Q:2006 earnings’ highlights:
** 4Q Income per share $0.17 flat with $0.17 last year
** 4Q revenues were $366.6 million up 29.1% from $283.9 million
** Fiscal 2006 revenues were $1,054.611 million up from $779.663 million
** TTM revenues $1,054.611 million or $11.15 per share
** Diluted share count 94,606,000
** Fiscal 2006 net income per share was $0.59 up from $0.44
** TTM earnings $0.59
** 239 stores
** Internet sales grew 33% from last year and represented 25% of net sales
** Cash $148,680,000 and no debt
** Same store up 2.3% in the fourth quarter compared to being up 21.6% last year
** Operating cash flow $112,975,000
** Cash flow $4,371,000 (capex $108,604,000 mostly new stores development 65 new stores)
** Trading range between March 7, 2007 and May 29, 2007 was $16.77 to $22.67: PE ratio range was 28.42 to 38.42: PS ratio range was 1.50 to 2.03

4Q Notes:
The Company completed 350,000 sq.ft expansion of their West Virginia distribution center and has approximately 1 million square foot of capacity to support their target build out of 450 to 500 stores.

More than 42% of the customers visiting the Spa were new to their customer files. The Company plans to open three test spa locations for 2007 from the six opened in 2006. The Coldwater Creek ‘The Spa’ was a concept started in fiscal 2005. In the first quarter of 2006, they opened one spa and five others in Q2. The day spas offers facials, messages, body treatments, manicures and pedicures and each spa carry an assortment of relevant apparel and a line of personal care products for women. Each spa is located near a premium ColdWater Creek retail store.
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May 29, 2007 1Q:2007 earnings’ highlights:
** Revenues were $281.292 million up 30.6% from $215.261 million
** TTM revenues were $1120.642 million or $11.84 per share
** Net income per share $0.13 flat with last year’s $0.12
** TTM net income $.59
** Cash $152,091,000
** Store 259
** $29,599,000 in operating earnings
** Capex $26,906,000
** Cash flow for the quarter $2,693,000
** Diluted share count 94,575,000
** Channel Sales:
Retail $184,860,000
Internet $65,810,000
Catalog $30,622,000
** Same store sales up 7.3%
Trading range between May 29, 2007 and August 29, 2007 was $17.00 to $25.69: PE ratio range was 28.81 to 43.54: PS ratio range was 1.44 to 2.17

August 29, 2007 2Q:2007 earnings’ highlights:
** Revenues $253,476,000 up 18.5% from $216,422,000
** Revenues $1157.696 million or $12.22
** TTM earnings were $0.09 down from $0.13
** TTM earnings were $0.55
** Diluted share count 94,733,000
** Channel Sales
Retail $177,654,000
Internet $54,781,000
Catalog $21,041,000
** Cash $129,926,000 and no debt
** Operating cash flow $34,351 million for six months
** Capex $57,519,000 for six months
** Cash flow for six months negative ($23,168,000)
** Cash flow for 2Q:2007 negative ($25,861,000)
** Trading range between August 29, 2007 and the present September 1, 2007 was $12.43 to $13.18

ThompsonFN
3Q:2007 $0.14
4Q:2007 $0.20
Fiscal 2007 $0.57
Fiscal 2008 $0.81

Conclusion:

ColdWater Creek, like many fast growing retailers, carried a fairly high PE when things were going well for them. The recent drop in earnings has caused their stock price to dive. Is it the store concept or retail in general? This seems a much better value to buy them, the Price to sales ratio is near 1. There are many retailers that sell at a lower Price to sales ratio.

I believe many people confuse poor performance, bad management, with temporary problems and temporary habits of the consumer. Knowing my nibbling ways, this company is a prime candidate for the nibbler or the accumulator.

It is one of those stocks, I have to ask; how can they not be higher by the holidays? But proceed with caution. Decreasing discretionary spending is partially to blame for a lot of falling retailers. It is my opinion this is an opportunity, but these trends can go on for a long time in either direction.

This is just a part of my ongoing study of the company. I also want you to read Seth Jayson latest on Coldwater Creek - he is a bear.

http://www.fool.com/investing/general/2007/08/30/l...

The Company is still growing sales, and they have a perfectly clean balance sheet. Part of their earnings drop is due to their opening their new spa concept which is for now losing money. I agree with Seth that earnings are not growing as fast as sales, not even close. In the last quarter, they are dropping, but I don't see selling this one.

No, I never buy heavy, but this is one that I think is worthy for the accumulator. They are targeting 450 to 500 stores. They are looking to target the higher end market and the spa could easily help them attract that market. Will they? I don't know, but I would never run from the opportunity.

The PE was high, not so high now. Margins, same stores sales, fluctuations in cash flow, all of these are as temporary as changes in spending habits.

At $12.44, and only four months to the holidays, this one looks like a perfect candidate for a holiday bounce and I see nothing that convinces me it don't have long-term prospects. Long-term with any retailer depends on them offering clothes that consumers love. Fashion trends can change quickly. But even this can be fixed. Nicely growing revenues seem to indicate there are plenty of buyers, so I don't think they are losing their competitive advantage. Their revenue growth did slow in the last quarter from the first, but this is happening to a lot of retailers.

Disclosure:

I own them, my wife hates them. She thinks they are too high priced and she don

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