Bombay Announces Third Quarter Earnings

Furniture World Magazine

The Bombay Company, Inc. reported that revenues for the three months ended October 30, 2004 declined 6% to $126.7 million compared to $135.4 million for the three months ended November 1, 2003. Same store sales for Bombay stores opened for more than one year decreased 18% for the quarter compared to a 13% increase during the prior year's quarter. Net loss for the third quarter was $7,286,000 or $0.20 per share compared to a net loss of $148,000 or $0.00 per share for the corresponding period of the prior year. For the nine months ended October 30, 2004, revenue declined 3% to $372.7 million compared to $384.9 million for the corresponding period of the prior year. Same store sales decreased 15% compared to last year's 21% increase. Year-to-date, net operating results reflect a $19.4 million net loss or $.54 per share compared to a net loss of $2.2 million or $0.06 per share for the nine months ended November 1, 2003. James D. Carreker, Chairman and Chief Executive Officer noted, "October ended as we had expected. Declines in both traffic and average ticket impacted overall results and our ability to leverage fixed costs throughout the organization. However, as we enter the fourth quarter, our assortment reflects freshness in the gift area as new product flows into our stores. We expect merchandise to continue to arrive throughout the holiday season." For the quarter, revenue decreased as a result of the decline in same store sales partially offset by growth from new stores. The average ticket was down 3% to $86 compared to $89 last year as sales of high dollar merchandise including bedroom and home office furniture declined. Total transaction count, including new store sales, fell 3% versus the prior year. Gross margin for the third quarter declined 390 basis points primarily due to deleveraging fixed costs on the lower revenue base. Higher distribution center and transportation costs as a percentage of revenue and a 14% increase in retail square footage drove higher expenses while the lower average sales volumes from stores opened for more than one year resulted in deleveraging costs. SG&A expense increased $2.7 million or 410 basis points. Corporate and four-wall store SG&A expenses were tightly controlled. Marketing increased due to shifting an additional catalog into the quarter as we attempted to drive sales and maximize early holiday selling. The Company ended the quarter with $171.7 million of inventory which was $18 million lower than the prior year. This reduction reflects success in flowing merchandise closer to the time of need and to reducing the overall investment in inventory. The Company had $51.5 million in borrowings under it credit facility compared to $55.2 million at the same time last year. Mr. Carreker further commented, "We continue to see data confirming our long-term strategy of migrating stores from mall to off-mall. To provide funds to address the expiration of mall leases and to reposition the real estate portfolio, management has recommended and the Company's Board of Directors has approved divesting its Bailey Street Trading Company wholesale operations by the end of the year." With respect to the fourth quarter, the Company expects total revenues to be in the range of $210 to $220 million with mid single-digit negative to flat same store sales. Revenues from non-store operations are expected to be 7% to 8% of total revenues. During the fourth quarter, plans are to open 16 stores including 3 combination stores while closing 9 stores, ending the year with approximately 500 stores. The Company expects the fourth quarter income from on-going activities, before charges relating to exiting Bailey Street Trading Company, to be in the range of $8 to $12 million or $.23 to $.33 per diluted share. You are invited to listen to Bombay's conference call with management that will be conducted on Friday, November 19, 2004 at 10:00 a.m. Central Time. The Company will review the third quarter results as well as the outlook for the remainder of Fiscal 2004. Interested parties should dial 212-271-4515 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 21185890. 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 493 retail outlets, specialty catalogs and the Internet in the U.S. and internationally.