Fools have had several opportunities to remark upon the strong performance of specialty retailer Coldwater Creek (NASDAQ:CWTR) this year, the latest coming in August when Rick Aristotle Munarriz noted the company's strong earnings growth even as it's taken steps back toward traditional store-based selling at the expense, to some degree, of catalogs. Last week brought another chance with the company's release of fiscal Q3 (ended Oct. 30) financial results.
Les bon temps, as someone who never studied French might say, continued to rouller: Q3 revenues rose nearly 9% to $151 million, and while incentive compensation drove up SG&A expense as a percentage of sales the top-line expansion and powerful gross margin growth driven by improved merchandise margins and lower discounting helped operating margins leap to nearly 10.5% from 6.5% the year before. Net income growth of nearly 70%, meanwhile, is nothing to sneeze at.
I like the company's strategy. Concentrating on the store experience, particularly in women's apparel and accessories, can really be worth the time and money spent when it creates the type of loyalty that Chico's FAS (NYSE:CHS) and others benefit from. And an Internet storefront seems a better way to build on this than a catalog: Mass mailings are largely shots in the dark, while few people end up at websites they didn't intend to visit.
And electronic commerce allows for more personalization and "touch" than do catalogs. In short, it's a smart complimentary initiative. Performing well and financially strong, there's lots that looks smart about Coldwater Creek at the moment -- including its investors, who've seen their shares crush the S&P 500 over the last 12 months.
Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story.
