Coldwater Creek (CWTRQ) 8-K Coldwater Creek Announces Fiscal 2006 Third Quarter Results

Exhibit 99.1

Coldwater Creek Announces Fiscal 2006 Third Quarter Results

Sandpoint, Idaho, November 21, 2006 – Coldwater Creek Inc. (NASDAQ: CWTR) today reported financial results for the three and nine month periods ended October 28, 2006.

Consolidated Results

Net income for the three-month period ended October 28, 2006, increased $5.4 million, or 51.8 percent, to $15.9 million, or $0.17 per diluted share. This compares with net income of $10.5 million, or $0.11 per diluted share, for the three-month period ended October 29, 2005. Net sales in the fiscal 2006 third quarter increased 37.2 percent to $256.4 million from $186.8 million in the fiscal 2005 third quarter.

Net income for the nine-month period ended October 28, 2006, increased $14.3 million, or 56.9 percent, to $39.5 million, or $0.42 per diluted share, compared with net income of $25.2 million, or $0.27 per diluted share, for the nine-month period ended October 29, 2005. Net sales in the first nine months of fiscal 2006 increased 38.8 percent to $688.1 million from $495.7 million in the same period a year ago.

Comparable store sales increased 9.9 percent for the three-month period ended October 28, 2006, compared with a 6.8 percent increase in the prior-year period.

“Our triple-channel business strategy once again delivered a positive performance for the recent quarter, resulting in net income growth of more than 51 percent, net sales growth of more than 37 percent and a solid increase in same-store sales,” said Dennis Pence, chairman and chief executive officer for Coldwater Creek. “At the same time, we had increases of approximately 80 and 70 basis-points in gross margin and operating margin, respectively, compared with the same period last year.

“The third quarter was notable because of strong net sales increases in all three channels - retail stores, Internet and catalogs - as we successfully navigated what proved to be a highly promotional marketplace during the fall season,” Pence added.

Gross profit for the fiscal 2006 third quarter was $122.2 million, or 47.7 percent of net sales, compared with $87.5 million, or 46.8 percent of net sales, for the fiscal 2005 third quarter. The increase in gross profit rate was primarily due to higher merchandise margins associated with our direct sourcing program and improved leveraging of our retail occupancy costs, partially offset by increased promotional activity.

Selling, general and administrative expenses for the fiscal 2006 third quarter were $97.9 million, or 38.2 percent of net sales, compared with $71.1 million, or 38.1 percent of net sales, for the fiscal 2005 third quarter. The increase in selling, general and administrative expenses of $26.7 million was driven primarily by increases in marketing, personnel and overhead costs associated with the company’s retail expansion.

Income from operations for the fiscal 2006 third quarter increased $7.9 million, or 48.3 percent, to $24.3 million, or 9.5 percent of net sales, compared with $16.4 million, or 8.8 percent of net sales, for the fiscal 2005 third quarter.

Retail Segment

Net sales from the retail segment, which includes the company’s premium retail stores, resort and outlet stores and six test spa locations, increased 48.0 percent to $167.5 million in the fiscal 2006 third quarter, from $113.2 million in the fiscal 2005 third quarter. Retail segment net sales represented 65.3 percent of the company’s total net sales in the fiscal 2006 third quarter, compared with 60.6 percent in the fiscal 2005 third quarter.

Net sales from the retail segment increased 51.0 percent to $439.9 million in the first nine months of fiscal 2006, from $291.4 million in the comparable period last year. Retail segment net sales represented 63.9 percent of the company’s total net sales in the first nine months of fiscal 2006, compared with 58.8 percent in the same period a year ago.

The company opened 29 premium retail stores during the fiscal 2006 third quarter for a total of 225 premium retail stores in operation at the end of the fiscal 2006 third quarter, compared with 163 premium retail stores at the end of the fiscal 2005 third quarter.

Direct Segment

Direct segment net sales increased 20.6 percent to $88.8 million in the fiscal 2006 third quarter from $73.7 million in the fiscal 2005 third quarter. Direct segment net sales represented 34.7 percent of the company’s total net sales in the fiscal 2006 third quarter, compared with 39.4 percent in the fiscal 2005 third quarter.

Direct segment net sales increased 21.4 percent to $248.1 million in the first nine months of fiscal 2006 from $204.3 million in the comparable period last year. Direct segment net sales represented 36.1 percent of the company’s total net sales in the first nine months of fiscal 2006, compared with 41.2 percent in the same period a year ago.

Internet

Internet net sales increased 28.6 percent to $59.5 million in the fiscal 2006 third quarter from $46.2 million in the fiscal 2005 third quarter. Internet net sales represented 66.9 percent of the direct segment’s net sales in the fiscal 2006 third quarter, compared with 62.8 percent in the fiscal 2005 third quarter. Internet net sales represented 23.2 percent of the company’s total net sales in the fiscal 2006 third quarter, compared with 24.7 percent in the fiscal 2005 third quarter.

Internet net sales increased 31.3 percent to $164.9 million in the first nine months of fiscal 2006 from $125.6 million in the comparable period last year. Internet net sales represented 66.5 percent of the direct segment’s net sales in the first nine months of fiscal 2006, compared with 61.5 percent in the same period last year. Internet net sales represented 24.0 percent of the company’s total net sales in the first nine months of fiscal 2006, compared with 25.3 percent in the comparable period last year.

Catalog

Catalog net sales increased 7.1 percent to $29.4 million in the fiscal 2006 third quarter from $27.4 million in the fiscal 2005 third quarter. Catalog net sales represented 33.1 percent of the direct segment’s net sales in the fiscal 2006 third quarter, compared with 37.2 percent in the fiscal 2005 third quarter. Catalog net sales represented 11.5 percent of the company’s total net sales in the fiscal 2006 third quarter, compared with 14.7 percent in the fiscal 2005 third quarter.

Catalog net sales increased 5.7 percent to $83.2 million in the first nine months of fiscal 2006 from $78.7 million in the comparable period last year. Catalog net sales represented 33.5 percent of the direct segment’s net sales in the first nine months of fiscal 2006, compared with 38.5 percent in the same period last year. Catalog net sales represented 12.1 percent of the company’s total net sales in the first nine months of fiscal 2006, compared with 15.9 percent in the comparable period last year.

Liquidity and Inventory

At the end of the fiscal 2006 third quarter, the company had no short or long-term debt and a cash position of $108.0 million compared with a cash position of $104.7 million at the end of the fiscal 2005 third quarter. The company’s working capital increased to $164.3 million at the end of the fiscal 2006 third quarter from $125.8 million at the end of the fiscal 2005 third quarter. Inventory increased $64.8 million, or 57.3 percent, to $177.8 million at the end of the fiscal 2006 third quarter from $113.0 million at the end of the fiscal 2005 third quarter. This increase is primarily attributable to the addition of 62 premium retail stores since the end of the fiscal 2005 third quarter.

Conference Call Information

As previously announced, Coldwater Creek will host a conference call on Tuesday, November 21, 2006 at 4:45 p.m. (Eastern) to discuss fiscal 2006 third quarter results. To listen to the live Web cast, log on to http://www.videonewswire.com/event.asp?id=36631. Also, a link to the live Web cast of the call is provided in the Investor Relations section of the company’s Web site at www.coldwatercreek.com. The call will be archived from approximately one hour after the conference call until midnight on Tuesday, November 28, 2006. The replay can be accessed by dialing (719) 457-0820 and giving the passcode “9540483”. A replay or transcript of the call will also be available in the investor relations section of the company’s Web site.

Coldwater Creek is an integrated multi-sales channel retailer of women’s apparel, jewelry, footwear, gift items and accessories through a growing number of premium retail stores located across the country, an Internet site atwww.coldwatercreek.com and direct-mail catalogs.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release contains “forward-looking statements” within the meaning of the securities laws, including statements regarding our financial performance. These statements are based on management’s current expectations and are subject to a number of uncertainties and risks. Actual results may differ materially. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, but are not limited to, our ability to successfully implement our planned retail rollout strategy; our potential inability to recover fixed costs associated with our retail expansion due to sluggish sales; unanticipated increases in mailing and printing costs; consumer privacy concerns about purchasing merchandise over the Internet or potential external or internal infrastructure system failures affecting our e-commerce website; uncertainties related to managing expanding operations and the complexities of our multi-channel strategy; the cost of additional overhead that may be required to expand our brand; the inherent difficulty in forecasting consumer buying patterns and trends and the possibility that any recent improvements in our product margins, or in customer response to our merchandise, may not be sustained due to factors beyond our control, such as current retail conditions, consumer confidence and heightened promotional activity in the marketplace; and such other factors as are discussed in our Quarterly Reports on Form 10-Q, as may be amended, and in our most recent Annual Report on Form 10-K/A filed with the U.S. Securities and Exchange Commission (“SEC”). We believe that these forward-looking statements are reasonable; however, you should not place undue reliance on forward-looking statements, which are based on current expectations and speak only as of the date of this release. We are not obligated to publicly release any revisions to forward-looking statements to reflect events after the date of this release. We provide a detailed discussion of risk factors in periodic SEC filings, and you are encouraged to review these filings in connection with this release.

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Contact:

COLDWATER CREEK INC.

David Gunter

Divisional Vice President of Corporate Communications & Investor Relations

208-263-2266

COLDWATER CREEK INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND SUPPLEMENTAL DATA

(unaudited, in thousands except for per share data and store counts)

	Three Months Ended				Nine Months Ended
	October 28, 2006		October 29, 2005		October 28, 2006		October 29, 2005
Statements of Operations:
Net sales	$	256,371	$	186,835	$	688,054	$	495,741
Cost of sales		134,188		99,325		363,263		269,019
Gross profit		122,183		87,510		324,791		226,722
Selling, general and administrative expenses		97,864		71,117		264,867		187,605
Income from operations		24,319		16,393		59,924		39,117
Interest, net, and other		1,770		1,015		5,222		2,735
Income before income taxes		26,089		17,408		65,146		41,852
Income tax provision		10,210		6,946		25,681		16,698
Net income	$	15,879	$	10,462	$	39,465	$	25,154
Net income per share - Basic	$	0.17	$	0.11	$	0.43	$	0.28
Weighted average shares outstanding - Basic		92,665		91,656		92,438		91,353
Net income per share - Diluted	$	0.17	$	0.11	$	0.42	$	0.27
Weighted average shares outstanding - Diluted		94,840		94,511		94,741		94,268
Supplemental Data:
	Three Months Ended				Nine Months Ended
	October 28, 2006		October 29, 2005		October 28, 2006		October 29, 2005
Operating Statistics:
Catalogs mailed		24,049		24,345		70,665		68,146
Premium retail store count						225		163
Spa store count						6		—
Resort store count						1		2
Outlet store count						25		21
Premium retail store square footage						1,257		894
	Three Months Ended				Nine Months Ended
	October 28, 2006		October 29, 2005		October 28, 2006		October 29, 2005
Channel Net Sales:
Retail	$	167,526	$	113,178	$	439,923	$	291,408
Internet		59,468		46,229		164,894		125,620
Catalog		29,377		27,428		83,237		78,713
Total	$	256,371	$	186,835	$	688,054	$	495,741

COLDWATER CREEK INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except for share data)

ASSETS

	October 28, 2006		January 28, 2006			October 29, 2005
CURRENT ASSETS:
Cash and cash equivalents	$	108,015	$	131,856		$	104,677
Receivables		40,023		28,814			32,089
Inventories		177,784		86,309			113,019
Prepaid and other		12,961		8,319			8,057
Prepaid and deferred marketing costs		16,664		10,438			18,333
Deferred income taxes		3,400		2,573			434
Total current assets		358,847		268,309			276,609
Property and equipment, net		230,752		178,897			162,336
Deferred income taxes		—		1,850			2,788
Restricted cash		4,440		4,453			1,012
Intangible assets		4,667		4,667			—
Other		335		234			306
Total assets	$	599,041	$	458,410		$	443,051
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	136,922	$	76,329		$	111,329
Current deferred co-branded credit card revenue		4,904		3,112			1,683
Accrued liabilities		52,077		45,481			35,889
Income taxes payable		668		11,377			1,921
Total current liabilities		194,571		136,299			150,822
Deferred rents		86,798		62,632			59,862
Deferred co-branded credit card revenue		8,197		5,428			2,896
Deferred income taxes		1,434		—			—
Supplemental Employee Retirement Plan		6,038		4,982			—
Other		686		672			195
Total liabilities		297,724		210,013			213,775
Commitments and contingencies
STOCKHOLDERS’ EQUITY:
Preferred stock, $.01 par value, 1,000,000 shares authorized, none issued and outstanding		—		—			—
Common stock, $.01 par value, 300,000,000 shares authorized, 92,995,211, 92,020,789 and 91,741,133 shares issued, respectively		930		920			612
Additional paid-in capital		120,847		108,316			105,773
Deferred compensation on restricted stock		—		(914	)		(1,074	)
Retained earnings		179,540		140,075			123,965
Total stockholders’ equity		301,317		248,397			229,276
Total liabilities and stockholders’ equity	$	599,041	$	458,410		$	443,051

COLDWATER CREEK INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Nine Months Ended
	October 28, 2006			October 29, 2005
OPERATING ACTIVITIES:
Net income	$	39,465		$	25,154
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		26,690			18,411
Amortization of Supplemental Employee Retirement Plan		1,056			252
Deferred rent amortization		(3,218	)		(1,494	)
Deferred income taxes		2,457			(910	)
Stock-based compensation		1,778			3,224
Excess tax benefit from exercise of stock options		(7,776	)		—
(Gain) loss on asset disposition		323			(112	)
Other		625			19
Net change in operating assets and liabilities:
Receivables		(11,209	)		(19,381	)
Inventories		(91,475	)		(49,267	)
Prepaid and other		(4,642	)		(1,493	)
Prepaid and deferred marketing costs		(6,226	)		(11,428	)
Accounts payable		62,371			60,393
Accrued liabilities		3,115			2,248
Income taxes payable		(2,328	)		(2,815	)
Deferred co-branded credit card revenue		4,561			4,579
Deferred rents		30,865			23,539
Other changes in non-current assets and liabilities		(223	)		—
Net cash provided by operating activities		46,209			50,919
INVESTING ACTIVITIES:
Purchase of property and equipment		(80,505	)		(58,270	)
Escrow and restricted cash		—			(1,012	)
Net cash used in investing activities		(80,505	)		(59,282	)
FINANCING ACTIVITIES:
Net proceeds from exercises of stock options		2,679			—
Excess tax benefit from exercise of stock options		7,776			1,836
Net cash provided by financing activities		10,455			1,836
Net (decrease) increase in cash and cash equivalents		(23,841	)		(6,527	)
Cash and cash equivalents, beginning		131,856			111,204
Cash and cash equivalents, ending	$	108,015		$	104,677