• Q3 net loss widens to US$34m, from $1.3m
  • Net sales up to $266.7m
  • Lower merchandise margins

Coldwater Creek Inc has reported an increase in its third quarter net loss over the same period last year, hit in part by a charge related to the departure of its former CEO. Net sales saw an increase.

The company said that net loss for the three-month period was US$34m, compared with a net loss of $1.3m in the third quarter 2008.

The figure included a $3.8m after-tax charge related to the CEO departure and a $26.3m non-cash income tax charge.

Excluding these additional items, the company's third quarter adjusted net loss was $3.9m.

As well as the CEO costs, the company said it had seen higher marketing expenses, increased wages associated with higher retail sales, and other variable costs drive an increase in selling, general and administrative expenses, as compared with the third quarter last year.

Net sales were $266.7m, compared with $228.5m in the fiscal 2008 third quarter. Sales from the retail segment, which includes the company's premium retail stores, outlet stores, and day spa locations, were $207.3m versus $175.4m in 2008. Comparable premium store sales increased 14.4%.

Direct sales (phone and internet) were $59.4m, compared with $53min the same period last year.

Gross profit for the fiscal 2009 third quarter was $97.1m, or 36.4% of net sales, compared with $86.1m, or 37.7% of net sales, for the fiscal 2008 third quarter. The decline in gross profit was primarily due to lower merchandise margins resulting from increased promotional activity and lower initial markups, partially offset by improved occupancy leverage, the company said.

Dennis Pence, chairman and CEO said: "While we are pleased with the strength of our merchandise assortments and our increased same store sales, our strong top line performance came at the expense of margin and increased promotional costs.

"We are taking steps to improve merchandise margins through changes in pricing and sourcing, while improving the effectiveness and efficiency of our advertising and promotional strategies. We believe that these changes will result in improvements in our long-term financial performance, while continuing our success in providing a strong and compelling assortment of product to our customers."

In the first nine months, net sales were $720.2m, compared with $741.0m in the same period in 2008.

Net loss for the nine-month period was $46.5m, compared with a net loss of $7.4m for the first nine months of fiscal 2008. Adjusted net loss for the nine-month period was $16.3m.

Click here to view the company's full third quarter earnings.