* Q2 EPS $0.02 vs est loss/shr $0.04
* Q2 sales up 13 pct
* Sees inventory flat y-o-y by end Q3
* Shares up as much as 30 pct
(Recasts; adds details, analyst comment)
By NR Sethuraman
BANGALORE, Aug 25 Deep markdowns to clear
excess inventory at Coldwater Creek Inc CWTR.O have started
to bear fruit as the women's apparel retailer posted a surprise
quarterly profit, sending its shares soaring 30 percent
The company ended the second quarter with inventory being
up 18 percent year-over-year, but said it expected inventory
levels to be roughly flat by the end of the third quarter.
The retailer, which caters to women over 40 who prefer a
more conservative clothing style, had seen its stock crash 15
percent in early June after it reported elevated inventory
levels at the end of the first quarter and forecast a
second-quarter loss. [ID:nSGE6510J2]
"Store level inventory looks very clean," Roth Capital
Partners LLC analyst Elizabeth Pierce said.
Coldwater Creek, which had moved away from its core
merchandise offerings to focus more on basics like T-shirts and
denims, saw a 39 percent rise in direct sales in the second
quarter, helping it post a second consecutive quarterly profit
of 2 cents a share, compared with the 4-cent loss expected by
Direct sales involve business through e-commerce, phone and
Sales rose 13 percent to $253.5 million for the company,
began in 1984 as a home business with one phone and a closet
stuffed with merchandise.
Sales at stores open for at least a year increased 4.8
percent, compared with a decline of 10.2 percent in the same
period last year. [ID:nASA00OOX]
The Sandpoint, Idaho-based company reiterated its full-year
outlook of 8-12 cents a share, ahead of the market consensus of
"The guidance is appropriate and it looks like they are
taking a very conservative stance regarding the second half,
which shouldn't be a shock given the kind of macro headwinds in
terms of consumer spending," analyst Pierce said.
For the second quarter, larger rivals Chico's FAS (CHS.N)
and Ann Taylor Stores Corp ANN.N reported
higher-than-expected and in-line profit, respectively.
For the third quarter, the company expects consolidated net
sales to increase year-over-year in the low single digit range
and same-store sales to be flat.
Shares of the company, which have lost half of their value
since touching a seven-month high of $8.75 on April 23, were
trading 27 percent up at $4.25 on Nasdaq.
The wider S&P apparel retail sub-industry index was down
0.4 percent at 453.98 points Wednesday.
(Reporting by NR Sethuraman in Bangalore)