This summary is based on the second quarter fiscal 2007 earnings call conducted by Coldwater Creek Inc. (CWTR: chart) on August 29, 2007.

President and COO: Daniel Griesemer
EVP and CFO: Mel Dick
VP, Finance: Tim Martin
President and Chief Merchandising Officer: Georgia Shonk-Simmons
Director of IR: Marie Hirsch

Key Investors Issues

- Net income decreased to $8.7 million despite a 17% growth in sales.
- A new CFO, Tim Martin, was appointed.
- The Coldwater Creek catalog new design will be rolled out in November.
- The initial conversion of the accounting and HR systems to the SAP platform was concluded on time and on budget.

Second Quarter Financial Highlights

Net sales increased 17.1% to $253.5 million from $216.4 million in the fiscal 2006 second quarter.

- Same-store sales decreased 6% compared with an increase of 13.3% a year ago driven by mid-single digit decline in retail store traffic, a highly promotional environment, and a decline in average transaction value.
- The decrease was offset by higher conversion rates and improved IMUs resulting from the direct sourcing program.

- Retail segment net sales, which include the company''s premium retail stores, outlet stores and six test spa locations, increased 23.5% to $177.7 million from $143.8 million in 2006. Retail segment net sales represented 70.1% of total net sales, up from 66.5% in the prior year.
- Direct segment net sales increased 4.5% to $75.8 million compared to $72.6 million in 2006, representing 29.9% of total net sales.
- Internet net sales were up 9.8% to $54.8 million and constituted 72.2% of the direct segment''s net sales compared with 68.7% in the prior year and 21.6% of total net sales.

Catalog net sales decreased 7.3% to $21 million, resulting in a decrease in the proportion to total net sales to 8.3% compared to 10.5% in the prior year.

- Due to the highly promotional environment, the firm experienced resistance to full price spending. However, the cropped pant business and the T-shirt program did well.

Net income was down $3.3 million to 27.6% to $8.7 million or 9 cents per share from $12 million or 13 cents per share in 2006.

Income from operations decreased $6 million or 33.4% to $12 million as a result of the higher cost structure.

Gross profit at $110.2 million compared favorably with $100.1 million realized in 2006.

However, gross profit as a percentage of sales declined from 46.2% in the prior year to 43.5% due to increased promotional activity partially offset by higher merchandise margins associated with the direct sourcing program.

SG&A increased by $16 million from 2006 to $98.1 million.

This was driven primarily by marketing, personnel and overhead costs associated with company''s retail expansion.

At the end of the quarter, the company had no short or long-term borrowings.

The firm had a cash position of $129.9 million compared with a cash position of $113.3 million at the end of the fiscal 2006 second quarter. The company''s working capital increased to $188.9 million from $148.2 million at the end of the fiscal 2006 second quarter.

Retail store inventory per square foot, including retail inventory in the distribution center, decreased 14% compared with the prior year period.

Total inventory increased $29.7 million, or 24% to $153.6 million at the end of the fiscal 2007 second quarter from $123.9 million at the end of the fiscal 2006 second quarter. This increase is primarily attributable to the addition of 64 premium retail stores since the end of the fiscal 2006 second quarter.

Creative initiatives

- In stores, new creative look was introduced, which included an innovative sales floor layout and complimentary signage.
- On the Internet, initial test results of the updated website were positive and the new website went live at the end of May.
- The newly designed Coldwater Creek catalog which will serve as the primary vehicle for driving traffic towards retail stores received positive feedback from customers.