Bombay Announces Second Quarter Operating Results

Furniture World Magazine

The Bombay Company, Inc. (NYSE:BBA) reported that revenues for the three months ended July 31, 2004 declined 6% to $122.5 million compared to $130.3 million for the three months ended August 2, 2003. For the six-month period, revenues declined 1% to $246.1 million compared to $249.5 million for the corresponding period of the prior year. Same store sales for Bombay stores in existence for more than one year decreased 18% for the quarter and 13% for the year-to-date period compared to a 26% increase for the quarter and a 25% increase for the six months last year. Net loss for the second quarter was $6.3 million or $0.18 per share compared to a net loss of $0.8 million or $0.02 per share for the corresponding period of the prior year. For the six months ended July 31, 2004, the net loss was $12.1 million or $0.34 per share compared to a net loss of $2.0 million or $0.06 per share for the six months ended August 2, 2003. The average ticket declined 5% during the quarter while overall transaction count, including new stores, declined 1%. Internet sales continue to grow at a double digit rate, a trend reinforced by both the popularity of BombayKIDS and the growth in the number of email subscribers. During the quarter, the Company completed the move to a new, larger distribution center in the Northeast and began shipments during the first week of August. The new distribution center will result in a reduction of off-site storage costs and improved operating efficiencies in that facility. The Company ended the quarter with $136.6 million in inventory, 16% below last year's levels and below planned amounts. James D. Carreker, Chairman and Chief Executive Officer, stated, "We found ourselves with less clearance merchandise than last year and less newness overall in our assortment. Shortcomings in the merchandise assortment and continuing softness in demand for moderately-priced home furnishings resulted in a disappointing performance for the quarter and the year-to-date periods. Just as strong same store sales afforded us tremendous operating leverage last year when we reported a 25% increase, this year, we are seeing the impact of the loss of operating leverage against a higher base of fixed costs due to increased store count and our investment in infrastructure. "Our goal for the second half is to reintroduce our customers to the newness and excitement of our assortment. A postcard mailed in late July announced the arrival of our Metro Asia themed merchandise and has been followed up with a catalog during the second week of August. Metro Asia will be followed by other new themes later in the year. Our customers will see a steady flow of new product this fall and into the holiday season. The lower inventory position has allowed our merchants to refresh the assortment and introduce more newness than we experienced in the spring and significantly more than last fall. "In light of results of the first half, we have decided to delay the opening of up to 10 stores for 2004, opening a net of 29 to 34 stores. This will allow us to reduce our capital requirements and give us more time to focus on execution for the fourth quarter. The reduction will relate primarily to the execution of our in-fill strategy in top 25 markets as store migration from mall to off-mall and opening of our combination format stores are continuing as planned. We continue to be encouraged by our store migration strategy and with the performance of our BombayKIDS stores, especially in the combination format," noted Mr. Carreker. Based upon the recent months' sales trends, the Company projects total revenues for the third quarter to be in the range of $138 to $143 million with low double-digit declines in same store sales for the third quarter. Revenues from non-store operations are expected to be 7% to 8% of total revenues. We expect results for the quarter to be a loss in the range of $.07 to $.11 per share. Approximately 33 stores will be opened during the quarter including 8 BombayKIDS stores in the combination format while we close 5 stores. During the fourth quarter, we expect to open 12 to 17 stores, including 2 to 3 BombayKIDS stores, and close 11 stores ending the year with approximately 500 to 505 stores which includes 50 to 51 BombayKIDS stores. In conjunction with this release, you are invited to listen to Bombay's conference call with management that will be conducted on Thursday, August 19, 2004 at 10:00 a.m. Central Time. The Company will review the second quarter results as well as the outlook for the remainder of Fiscal 2004. Interested parties should dial 800-847-8137 ten minutes prior to the start time. The call will also be broadcast live over the Internet at http://www.bombaycompany.com/. For those who are unable to listen to the live broadcast, a telephone replay will be available for 72 hours beginning at 12:00 p.m. Central Time at 800-633-8284. The access code is 21185889. The call will also be available for replay for 45 days on the investor relations page of the Bombay website. The Bombay Company, Inc. designs, sources and markets a unique line of home accessories, wall decor and furniture through 472 retail outlets, specialty catalogs and the Internet in the U.S. and internationally.