Cost Plus, Inc. Fights to Survive

Originally Published In the News March 19, 2008 7:01 PM

Cost Plus, Inc. (CPWM-NASDAQ) has a lot in common with small cap specialty retail companies. Their stock is disaster.

Earnings are out, and the numbers are in-line, but same store sales continue to come in weak:

Net sales for the thirteen-week fourth quarter ended February 2, 2008 were $380.2 million, a 4.2% decrease from the $396.7 million fourteen-week fourth quarter ended February 3, 2007. On a comparable thirteen-week quarter, net sales increased by 1.1%. Same store sales for the quarter decreased 3.2% compared to a 3.9% decrease last year. Net sales for the fifty-two week fiscal 2007 were $1.02 billion, a 1.6% decrease from $1.04 billion for the fifty-three week fiscal 2006. On a comparable fifty-two week basis, total sales increased by 0.4%. For the full year, same store sales decreased 5.4% compared to a decrease of 3.3% last year.

Debt makes up the majority of the company’s enterprise value, but if they can turn things around the company might actually stave off disaster. The shareholder list is full of small cap value shops, who had better have an aptitude for distressed investing given the outlook for many specialty retailers.

The most fertile shorts of the past few years have been in the sector, and before this is over half of them will likely disappear.

Good luck Cost Plus, we are pulling for you.

Cost Plus, Inc. Delivers First Quarterly Improvement in Income From Operations Since Beginning Its Turnaround Efforts
Business Wire

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