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Coldwater Creek Inc. posted nearly $28 million in second-quarter losses, but chairman and chief executive officer Dennis Pence said the closure of up to 45 doors as well as a new design direction would help return the firm to profitability.
“We took action early in the quarter on our slower-moving styles and ended the quarter with inventory per square foot down 16 percent,” Pence told analysts on a conference call. “We continue to tightly manage our expenses and ended the quarter with [selling, general and administrative expenses] down in excess of $12 million compared to a year ago.”
Losses tallied $27.7 million, or 30 cents a share, and compared with profits of $1.5 million, or 2 cents, a year earlier. The quarter’s losses were extended by $2.4 million, or 3 cents a share, by a noncash asset impairment related to 18 underperforming stores.
Sales for the quarter ended July 30 sank 28.4 percent to $181.4 million from $253.5 million. The Sandpoint, Idaho, firm operates 366 full-priced stores, 39 outlets and nine spas.
Coldwater said it would close 35 to 45 of its stores over the next two years. Collectively, these stores generated sales of about $45 million to $55 million over the past 12 months. Their closure is expected to lead to annual expense reductions of $15 million to $20 million.
Coldwater’s new design vision is in stores now with the fall line, which is built on three strategies — driving color, print and pattern into proven key items, balancing the casual and career offerings and a pant assortment with three fits.
“The first half of 2011 has indeed been a challenging period for our company and we recognize that we have lost market share during our transition,” Pence said.