Women quench their thirst for classic, casual clothing and accessories from Coldwater Creek's stores, catalog, and Web site. The upscale multi-channel retailer sells mostly traditional apparel through some 360 full-line stores and about 35 retail outlets, targeting middle- and upper-income women 35 years of age and older. It also sells directly to consumers via its Coldwater Creek catalog and online store and operates about 10 namesake day spas that typically span 5,400 sq. ft. While it got its start as a catalog operator, today the company's retail presence is felt more at the mall than the mailbox, with stores accounting for more than 75% of sales. Coldwater Creek was founded in 1984 by Dennis and Ann Pence.
The company's fiscal 2012 (ends January) financial performance was all wet. Sales plunged 21% vs. the previous year, and are down a whopping 25% since fiscal 2010. The retailer lost money for the fifth consecutive year. The chain's dismal performance in 2012 was driven by double digit decreases in sales at both its retail and outlet shops and in online and catalog sales.
The steep drop and sales and profits is due to more than the recession, its lingering effects, and slack demand for new apparel among its target customers. Coldwater Creek has an obvious fashion problem. Indeed, the chain has blamed its tepid sales on too much bland, copy-cat, lower-priced merchandise. Its top priority is to evolve its merchandise assortment to offer more compelling, unique fashions by offering a lifestyle focused collection. To build a firmer foundation for the future, Coldwater Creek recently made significant changes in the executive suite. The company hired Jill Dean to head its merchandising -- to give a boost to its merchandising and creative teams -- and promoted Jerome Jessup to president and chief creative officer, who has since added new talent to the company's New York design center.
The historically fast-growing chain has more than tripled its store count from 114 locations in 2005 to about 370 in 2011. However, in fiscal 2012 it closed 10 stores as it attempts to right itself. In addition to halting new store growth, the company has also pared its library of catalogs down to its core Coldwater Creek title, which is designed to drive traffic to the retail stores. The company mailed nearly 59 million catalogs, down significantly from about 128,500 million in 2008. Accounting for part of the drop, Coldwater Creek discontinued its Spirit catalog, which offered more upscale women's apparel and jewelry, and Northcountry, which in addition to apparel and jewelry carried gifts items and merchandise for the home.
The company has no plans to expand its Coldwater Creek - The Spa business (launched in 2006) -- which to date has had a negative impact on earnings. Located close to the retail stores, the day spas offer facials, massages, manicures, pedicures, and a line of women's clothing and personal care products.
Dennis and Ann Pence own about a third of Coldwater Creek's shares. Dennis, chairman and CEO of the company, is steering Coldwater Creek back toward its roots by introducing more "unique and differentiated offerings" and trying to raise prices. – less