Exhibit 99.1
Cost-U-Less Reports Earnings of 8 cents per share for Second Quarter
Preston, WA, August 8, 2003
Cost-U-Less, Inc. (the "Company") (Nasdaq: CULS) today reported net income of
$306,000, or $0.08 per fully diluted share outstanding, for the second fiscal
quarter ended June 29, 2003, compared to a net loss of ($190,000), or ($0.05)
per fully diluted share outstanding, for the corresponding quarter last year.
Operating income improved by $807,000, to $470,000, for the second fiscal
quarter ended June 29, 2003, compared to an operating loss of ($337,000) for the
corresponding quarter last year.
Same store sales (stores open a full 13 months) rose 4.0% for the second quarter
of fiscal 2003 compared to the same quarter a year ago. Total sales for the
quarter decreased 1.5% to $42.0 million compared to $42.7 million for the same
period a year ago as sales lost due to the temporary closure of the Company's
Dededo store in Guam were largely offset by sales increases in most of the other
stores. As previously reported by the Company, the Dededo store suffered
substantial damage from Supertyphoon Pongsona that struck the island of Guam on
December 8, 2002. The Company is in the process of working with the landlord to
rebuild the store and believes it will be ready to reopen in late 2003. Gross
margins rose 1.7 points to 17.6% of sales as compared to 15.9% for the same
period a year ago.
"We are pleased to report such a significant increase in profitability over our
second quarter a year ago," said J. Jeffrey Meder the Company's President and
Chief Executive Officer. "Our corporate buyers continue to source better priced
and new items for our markets, while local store managers have done a good job
of sourcing product through their local vendors. Combined, we have enhanced our
customers shopping experience, remained competitively priced, and at the same
time improved margins. Our success has come from the collective teamwork of
buyers, managers, vendors and shippers. Additionally, we continue to gain
momentum in sales and earnings in our Guam and St. Thomas markets."
The Company previously reported that it is engaged in discussions with ASSI,
Inc. regarding a potential transaction by which ASSI, Inc. would acquire all
outstanding shares of common stock of the Company. On June 20, 2003, ASSI, Inc.
amended its Schedule 13D filing with the Securities and Exchange Commission to
disclose these discussions. Neither ASSI, Inc. nor the Company has completed its
financial and legal due diligence relating to any such transaction.
Excluding its Dededo store in Guam, Cost-U-Less currently operates ten stores in
the Caribbean and Pacific region: U.S. Virgin Islands (2), Netherlands Antilles
(2), Hawaiian Islands (2), California (1), Guam (1), 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 products and services; our small store base; the mix of geographic
and product revenues; relationships with second 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 x141
COST-U-LESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(Unaudited)
13 Weeks Ended
June 29, June 30,
2003 2002
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Net sales ......................................... $ 42,010 $ 42,665
Merchandise costs ................................. 34,606 35,885
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Gross profit ...................................... 7,404 6,780
Operating expenses:
Store ........................................ 5,371 5,606
General and administrative ................... 1,543 1,509
Store openings ............................... 20 2
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Total operating expenses .......................... 6,934 7,117
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Operating income .................................. 470 (337)
Other income (expense):
Interest expense, net ........................ (112) (109)
Other ........................................ 148 136
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Income before income taxes ........................ 506 (310)
Income tax provision .............................. 200 (120)
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Net income ........................................ $ 306 $ (190)
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Earnings per common share:
Basic ........................................ $ 0.08 $ (0.05)
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Diluted ...................................... $ 0.08 $ (0.05)
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Weighted average common shares outstanding, basic . 3,606,376 3,606,376
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Weighted average common shares outstanding, diluted 3,621,176 3,606,376
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COST-U-LESS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
June 29, December 29,
2003 2002
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ASSETS
Current assets:
Cash and cash equivalents ............................... $ 2,839 $ 2,383
Insurance receivable .................................... 328 1,460
Accounts receivable, net ................................ 1,775 2,517
Inventories, net ........................................ 18,260 18,626
Other current assets .................................... 1,520 911
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Total current assets ............................... 24,722 25,897
Property and equipment, net .................................. 13,179 13,510
Deposits and other assets .................................... 771 783
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Total assets ....................................... $38,672 $40,190
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Line of credit .......................................... $ 3,083 $ 2,367
Accounts payable ........................................ 12,799 15,449
Accrued expenses and other liabilities .................. 3,236 3,107
Current portion of long-term debt ....................... 267 267
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Total current liabilities .......................... 19,385 21,190
Other long-term liabilities .................................. 566 594
Long-term debt, less current portion ......................... 2,677 2,811
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Total liabilities .................................. 22,628 24,595
Shareholders' equity: ........................................ 16,044 15,595
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Total liabilities and shareholders' equity ......... $38,672 $40,190
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