Coldwater Creek, the Sandpoint, Idaho-based specialty women's apparel and accessories retailer, says it's seeing early signs that its turnaround strategies are taking hold, although it's not expecting an overnight return to profitability.
While the company earlier reported a net loss of $99.7 million for its 2011 fiscal year that ended Jan. 28, which was more than double the $44.1 million loss of the prior year, it also saw some positive indicators late in the year that it expects will carry over this year, says Jim Bell, Coldwater Creek's executive vice president.
Those indicators include a younger average age of new customers, an increase in average item price, reduced excess inventory, and a slower rate of loss in the fourth quarter. Coldwater Creek's loss for that quarter was $12.8 million, or 11 cents a share, an improvement compared with a loss of $37 million, or 40 cents a share, in the year-earlier period.
Bell declines to comment on the company's financial performance during its fiscal 2012 first quarter ended April 28, for which results haven't been released yet, but says it has seen encouraging early response to its spring and summer lines.
"We set about the turnaround process 18 months ago and we're working toward it every day," he says.
Coldwater Creek CEO Dennis Pence, who co-founded the company in 1984, has had a hand in every aspect of the latest turnaround strategy, which includes changes in the company's leadership teams and a focus on the Coldwater Creek brand, Bell says.
Pence reassumed the reins as CEO in 2009 after being semi-retired for about two years. Under Pence's direction, the company dropped its former recessionary value-pricing strategy and has since aimed to re-establish its brand identity in the market.
"We became a little too casual and went away from the unique lifestyle option that our customer looked for," Bell says. The company now has renewed its efforts to infuse the ambiance of nature and a sense of ease across its product lines, he says.
"We're getting back to the roots of what made us great," Bell says.
Coldwater Creek promoted Bell to executive vice president and chief operating officer earlier this year.
His responsibilities include information technology, real estate, and distribution and logistics, in addition to his duties as chief financial officer, a position he's held for two years.
The company has made other leadership-team changes in product design, supply-chain management, and branding.
Coldwater Creek also has tightened its inventory control, which results in higher average prices per unit sold due to fewer items being sold through clearance sales. Average unit retail prices in the fourth quarter were up 13 percent compared with the year-earlier quarter.
The average age of new customers in 2011 was 55, while Coldwater Creek's overall customer average is 59, he says. Bell says that's an encouraging indication that Coldwater Creek can expand its market share in the early 50s age group.
"That puts us in an average age where we want to be," he says.
Bell says Coldwater Creek is getting a positive response to its spring and summer lines, which feature vibrant prints and patterns and a "flavor of color that will bring out the essence of the Coldwater Creek brand."
Branding also includes focusing on certain products that customers have come to identify with Coldwater Creek. One company staple is a line of no-iron shirts that Bell describes as one of Coldwater Creek's franchise offerings.
Such franchise offerings are category lines of business that customers identify with the company, he says. "When they think of this item, they think of Coldwater Creek," Bell says.
Another Coldwater Creek franchise is its denim line, he says.
Coldwater Creek has adjusted its marketing strategy to keep up with changing technologies, he says. For instance, the company reduced its catalog circulation in 2011 by 27 percent as part of its strategy to reallocate marketing resources to other advertising media.
To underscore its focus on renewing the Coldwater Creek brand awareness, all marketing, whether through magazines, TV campaigns, or growing social media networking "will be consistent in alignment in the way we speak to our customers across all of our businesses," Bell says.
Although Coldwater Creek started as a mail-order catalog business, it now uses catalogs to drive business primarily to its retail stores, and secondarily to its website.
Only 4 percent to 5 percent of Coldwater Creek's sales come through phone and mail orders, he says. Total direct sales, which include Internet, phone, and mail orders, make up about a quarter of Coldwater Creek's sales.
Coldwater Creek closed 15 premium retail stores and one outlet store in 2011, ending the year with 363 premium retail stores and 38 outlet stores, under a "store-optimization" program through which it expects to close a total of 35 to 45 stores through 2013. Under that program, the company expects to shutter 15 premium retail stores this year and to open one premium store and one outlet store.
Coldwater Creek's net sales in 2011 totaled $773 million, down sharply from $981.1 million in 2010.
Bell declines to estimate when Coldwater Creek will regain profitability. However, he says, "We're confident we've embarked on the right strategies. We've already seen some positive traction, and we expect to see that continue."
Meanwhile, the Coldwater Creek share price has languished around the dollar mark so far this year, from a low of 84 cents a share in January to a high of $1.27 in March, settling at 90 cents at the end of trading last Friday, according to financial data provider Morningstar Inc.
That's a mighty fall from stock prices that peaked at $30.49 a share on Oct. 31, 2006. Coldwater Creek's net income that year was $55.4 million, and the company's sales exceeded $1 billion as it opened 65 new retail stores throught the U.S. to bring its total to 239 at that time.
Today, the company remains a major employer in Sandpoint, where its headquarters are located on a four-building campus with 250,000 square feet of floor space, at 1 Coldwater Creek Drive. Its workforce there is stable at 450 employees, Bell says.
Coldwater Creek also has a Coeur d'Alene campus with 174,000 square feet of floor space in two buildings, both located at 745 W. Hanley. One building houses a call center, and the other houses the company's information-technology operations.
Bell says Coldwater Creek currently employs 50 people in Coeur d'Alene, although the workforce there grows during peak periods, such as around the holidays.
The company also has a 1 million-square-foot distribution center in Parkersburg, W.V., that serves its retail and direct-sales operations.