EXHIBIT 99.1
Cost-U-Less Reports Earnings of 15 cents per share for Fourth Quarter,
38 cents per share for Fiscal Year 2003.
Preston, WA, February 26, 2004
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Cost-U-Less, Inc. (the "Company") (Nasdaq: CULS) today announced results for the
fourth fiscal quarter and fiscal year ended December 28, 2003.
Highlights for the fourth fiscal quarter ended December 28, 2003, were as
follows:
o EPS of $0.15 compared to EPS of $0.05 for Q4 2002.
o Sales of $50.5M, an 11.4% increase over Q4 2002.
o Comparable store sales (stores open a full 13 months) increase of
13.8%.
For the fourth fiscal quarter of 2003 the Company reported net income of
$568,000, or $0.15 per fully diluted share outstanding, compared to net income
of $196,000, or $0.05 per fully diluted share outstanding for the corresponding
period last year. For the fiscal year 2003, net income increased to $1.4
million, or $0.38 per fully diluted share outstanding, compared to net income of
$285,000, or $0.08 per fully diluted share outstanding, for fiscal year 2002.
As previously reported, total sales for the quarter increased 11.4% to $50.5
million compared to $45.3 million for the same period a year ago as the Company
benefited from strong comparable sales of 13.8% and the very successful
reopening of its Dededo, Guam store on October 3, 2003. This store suffered
substantial damage from Supertyphoon Pongsona that struck the island of Guam on
December 8, 2002, forcing it to close, and was subsequently rebuilt during 2003.
Same store sales for the fiscal quarter and year ending December 28, 2003, are
calculated on stores excluding the Guam market as the Company's Dededo store was
closed for part of fiscal 2002 and 2003.
Total sales for fiscal year 2003 increased 0.5% to $177.1 million compared to
$176.2 million for fiscal year 2002. Despite the temporary closing of the
Company's Dededo store in Guam from December 8, 2002, until October 3, 2003,
total sales were relatively flat for fiscal 2003 due to positive sales
elsewhere, with comparable store sales for the fiscal year ending December 28,
2003, increasing 8.2%.
"We are pleased to cap off the year with such a strong sales, margins, and
earnings effort," said J. Jeffrey Meder, the Company's President and CEO.
"Figuratively speaking, this comes not as a result of doing one thing one
hundred percent better but one hundred things one percent better, and superior
to our competitors. It encompasses merchandising and operational improvements
throughout our dispersed locations."
For the fourth quarter of fiscal 2003, the Company's gross margins rose 0.6
points to 17.8% of sales compared to 17.2% for the same period a year ago
primarily as a result of higher margins for business-to-business sales. For
fiscal 2003, the Company's gross margins rose 1.2 points to 17.8% of sales
compared to 16.6% for fiscal 2002 due to several factors including better
sourcing, pricing, merchandising and mix of goods in the Company's stores.
General and Administrative expenses were negatively impacted for the fourth
quarter of fiscal 2003 as the Company recorded a charge of approximately
$500,000 for the write down of idle fixed assets from previously closed stores
and an acceleration in depreciation of leasehold improvements.
Other income for the fourth quarter of fiscal 2003 included a pre-tax gain of
approximately $400,000 on the receipt of insurance reimbursements for damage to
inventory and equipment suffered from Supertyphoon Pongsona. For the
corresponding quarter a year ago, the Company's results included a pre-tax
charge of approximately $400,000 for damage to inventory resulting from the
Supertyphoon due to coverage issues. Subsequent to the fiscal year end, the
Company has received the insurance receivables recorded on the balance sheet as
of December 28, 2003.
The Company's balance sheet working capital position also improved. The current
ratio stood at 1.32 for the year ended December 28, 2003, compared to 1.22 for
the year ended December 29, 2002, whereas the total liabilities-to-equity ratio
improved to 1.41 for the year ended December 28, 2003, compared to 1.58 for the
year ended December 29, 2002.
Added Meder, "As we have said before, our focus has been on strengthening the
quality of our balance sheet. We now believe that we have the financial
foundation for the Company to explore expansion opportunities in selected
markets."
Cost-U-Less currently operates eleven stores in the Caribbean and Pacific
region: U.S. Virgin Islands (2), Netherlands Antilles (2), Hawaiian Islands (2),
California (1), Guam (2), American Samoa (1), and Republic of Fiji (1). The
Company builds its business through delivering high-quality U.S. and local
goods, progressive merchandising practices, sophisticated distribution
capabilities, and superior customer service, primarily to island markets.
Additional information about Cost-U-Less is available at www.costuless.com
Forward Looking Statements
This press release contains statements that are forward-looking. These
statements are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are based on current
expectations that are subject to risks and uncertainties that could cause actual
results to differ materially from historical results or those anticipated. These
factors include, without limitation: future market opportunities for existing
and planned stores; our small store base; the mix of geographic and product
revenues; relationships with fourth parties; litigation; our ability to maintain
existing credit facilities and obtain additional credit; business and economic
conditions and growth in various geographic regions; pricing pressures; and
political and regulatory instability in various geographic regions. In addition,
these statements are subject to risks associated with the ongoing negotiations
with ASSI, Inc. regarding the possibility of acquiring all outstanding shares of
the Company's common stock, including any adverse effect on employee morale and
retention, the diversion of management resources and attention, and significant
costs incurred in connection with negotiations, including legal, accounting and
financial advisory services, as well as other risks and uncertainties detailed
in the Company's filings with the SEC.
For further information, contact:
Martin Moore
VP-Chief Financial Officer
Email: mmoore@costuless.com
425-222-5022
COST-U-LESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(Unaudited)
13 Weeks Ended 52 Weeks Ended
-------------- --------------
December 28, December 29, December 28, December 29,
2003 2002 2003 2002
---- ---- ---- ----
Net sales ............................................. $ 50,464 $ 45,312 $ 177,066 $ 176,190
Merchandise costs ..................................... 41,493 37,504 145,563 146,975
----------- ----------- ----------- -----------
Gross profit .......................................... 8,971 7,808 31,503 29,215
Operating expenses:
Store ............................................ 6,210 5,554 22,304 22,181
General and administrative ....................... 2,145 1,513 6,853 5,934
Store openings ................................... 79 0 287 14
----------- ----------- ----------- -----------
Total operating expenses .............................. 8,434 7,067 29,444 28,129
----------- ----------- ----------- -----------
Operating income ...................................... 537 741 2,059 1,086
Other income (expense):
Interest expense, net ............................ (139) (88) (458) (375)
Other ............................................ 550 (327) 710 (236)
----------- ----------- ----------- -----------
Income before income taxes ............................ 948 326 2,311 475
Income tax provision .................................. 380 130 930 190
----------- ----------- ----------- -----------
Net income ............................................ $ 568 $ 196 $ 1,381 $ 285
=========== =========== =========== ===========
Earnings per common share:
Basic ............................................ $ 0.16 $ 0.05 $ 0.38 $ 0.08
=========== =========== =========== ===========
Diluted .......................................... $ 0.15 $ 0.05 $ 0.38 $ 0.08
=========== =========== =========== ===========
Weighted average common shares outstanding, basic ..... 3,636,823 3,606,376 3,613,988 3,606,376
=========== =========== =========== ===========
Weighted average common shares outstanding, diluted ... 3,807,643 3,608,228 3,670,908 3,614,514
=========== =========== =========== ===========
COST-U-LESS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
December 28, December 29,
2003 2002
---- ----
ASSETS
------
Current assets:
Cash and cash equivalents ......................... $ 4,093 $ 2,383
Insurance receivable .............................. 1,135 1,460
Accounts receivable, net .......................... 1,366 2,517
Inventories, net .................................. 19,540 18,626
Other current assets .............................. 1,145 911
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Total current assets ......................... 27,279 25,897
Property and equipment, net ............................ 12,862 13,510
Deposits and other assets .............................. 799 783
------- -------
Total assets ................................. $40,940 $40,190
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LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Line of credit .................................... $ 960 $ 2,367
Accounts payable .................................. 15,240 15,449
Accrued expenses and other liabilities ............ 4,245 3,107
Current portion of long-term debt ................. 267 267
------- -------
Total current liabilities .................... 20,712 21,190
Other long-term liabilities ............................ 684 594
Long-term debt, less current portion ................... 2,544 2,811
------- -------
Total liabilities ............................ 23,940 24,595
Commitments and contingencies
Shareholders' equity ................................... 17,000 15,595
------- -------
Total liabilities and shareholders' equity ... $40,940 $40,190
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