Coldwater Creek Inc., the Sandpoint-based national retailer thats opening new stores at a blistering pace, will add 60 employees at its headquarters campus in the coming year and also will launch a major renovation there that will boost its office space by more than 50 percent.


The new hires will give Coldwater Creek 385 employees at its Sandpoint headquarters by the end of January 2006, which will mark the end of its 2005 fiscal year, spokesman David Gunter says. Moreover, Gunter says, the company expects to have a total of 500 employees in the Sandpoint area within a few years as it continues to add to its burgeoning network of stores.


We are most decidedly in an aggressive growth curve, Gunter says. As we grow, the support system at headquarters has to grow to support that.


The company probably will start construction as soon as this January on a renovation project that will give it an additional 60,000 square feet of office space, after which it will have 177,000 square feet of offices, Gunter says. The space will be converted in Coldwater Creeks 195,000-square-foot former distribution center at the campus three miles northeast of Sandpoint. The building also houses merchandising offices, an employee fitness center, a newly remodeled employee training center, and other facilities. The companys merchandising and finance departments will use the new space.


Were right in the middle of taking out the last of the bulk storage racks from the former distribution center, Gunter says. Coldwater Creek employs another about 350 people at a call center in Coeur dAlene.


Coldwater Creeks lightning-like expansion of its network of retail outlets has continued this year, and by Dec. 31 the national specialty retailer will have opened 48 stores in 2004 after opening 66 stores in 2003, Gunter says. At the end of this year, the company will have 114 outlets.


Earlier this month, the company said that it now expects to open 60 stores next year, up from the 50 announced previously. Gunter says Coldwater Creek already has lined up sites for all 60 of the stores it plans to open in 2005, eliminating some potential barriers to moving ahead with the outlets.


We have all of the sites selected and approved, Gunter says. We have leases for a majority of those.


The companys expansion push has created the need to add the projected 60 new hires in fiscal 2005 at headquarters departments such as merchandising, finance, and creative, Gunter says. The latter department handles photography and other work to put out the companys glossy catalogs.


ALSC Architects PS, of Spokane, is designing the remodeling project in Coldwater Creeks former distribution center, which the company closed in 2002. Gunter says the company will release the cost of the project later. ALSC also designed at the companys administration building.


Coldwater Creek, which started life as a tiny catalog retailer, has placed a heavy emphasis on adding retail stores in recent years. It announced last December that it was escalating its plans for store openings in 2004and said it planned to have 400 stores within the next decade and become a national retail presence.


Gunter says the company has emphasized opening new stores because industry data shows that 90 percent of all purchases made in the womens apparel arena are made in brick-and-mortar stores, rather than through other sales channels such as catalogs or the Internet.


Women shop differently than men, Gunter says. They like to evaluate sizing and quality of the merchandise.


While Coldwater Creek has cut back on its catalog mailings, it says in a recent filing with the U.S. Securities and Exchange Commission that its catalog business will remain an important part of its operation. It spins off a lot of free cash, which we use to build stores, says Gunter. That cash comes as customers order goods from the companys catalogs and both over the Internet, and pay for their orders with credit cards, Gunter says. Once the expenses of the catalog and Internet businesses have been met, its cash coming at you, he says.


Up till now, Coldwater Creek has paid for its new stores, all of which are in leased premises, with internally generated cash, Gunter says. It raised $42 million in a stock offering earlier this year, but we havent touched that, Gunter says. At the end of its second fiscal quarter on July 31, the most recent quarter for which the company has reported its results, Coldwater Creek had the equivalent of $88.6 million in cash. Its due to report its third-quarter results this week.


The catalog business helps in another way, Gunter says. Its a phenomenally effective advertising and promotion vehicle to support our stores.


The company, nevertheless, is retargeting its catalog mailings. Rather than striving to get catalogs into the hands of potential new customers, Coldwater Creek now is concentrating on reaching customers whove bought merchandise from it before, Gunter says.


Were mailing to what is referred to in the industry as the house file, he says.


Over time, as the companys retail network approaches 450 to 500 stores, the company expects that 80 percent of its business will be done at its retail outlets, with the other 20 percent coming through catalogs and the Internet, Gunter says.


That would be a big shift from today. For the quarter ended July 31, Coldwater Creek said that its catalog and Internet businesses accounted for 44.9 percent of net sales, and its retail-store segment accounted for 55.1 percent. Those figures were sharply different from the year-earlier quarter, ended Aug. 2, 2003, when its catalog and Internet businesses were responsible for 58 percent of net sales, and its retail-store network accounted for 42 percent.


For the quarter ended July 31, Coldwater Creek reported net income of $3.4 million, or 8 cents a share, compared with a net loss of $1.4 million, or 4 cents a share, in the year-earlier period. Net sales increased to $111.2 million, up 15 percent from $96.7 million.


As the company decides where to open a store, in addition to evaluating a developers demographic information about a site, it also looks at its file of 15 million customers to see how many of them live nearby, Gunter says. Then, it looks even closer to see how many of its best customersthose whove done a good deal of business with the company recentlylive in that area.


That approach worked spectacularly a few years ago when Coldwater Creek went into Chicago, which had been a very, very strong market for the company, Gunter says.


As for Spokane, where Coldwater Creek has no retail outlet, Gunter says, We certainly have Spokane on the radar screen. Were looking at every single market in the U.S.


Yet, he says, hes not at liberty to say when or where the company might open a store here.