Back in October, home furnishings retailer Cost Plus
Net income for the quarter fell 57% to $369,000 from $858,000 a year earlier, but year-to-date earnings through the first nine months have grown by double digits to $7 million, a record for the company. Revenues rose 12% to $190.4 million, though comps were essentially flat -- gaining only a fraction of a percent.
Cost Plus sells a variety of decorative items, kitchenware, and home furnishings imported from over 70 countries -- similar to rival Pier One
Without a doubt, it has been a difficult environment for the industry of late. Foolish analysis entitled Pier 1 Warns and Pier 1 Needs a Makeover provides some perspective on the sluggish traffic, frequent profit warnings, and falling comps that have plagued the retailer. The stock has made progress since this summer, when I noted that a rebound could be in store for the beaten-up company (though there is a slight possibility that Warren Buffett and Berkshire Hathaway's
With a 5.9% decline on October comps, though, and recently reduced guidance, the company still has a long road ahead. It hasn't been any better at Bombay
There are many pluses to Cost Plus, not the least of which is a healthy 20%-plus compounded annual top-line growth rate over the past five years. Unfortunately, there are also a number of minuses, such as negative free cash flows and declining operating margins that were already below many competitors'. Right now, at least, the math just doesn't add up for Cost Plus.
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- Short Trip to Bombay?
Fool contributor Nathan Slaughter doesn't own shares of any company mentioned.