CULS Cost-U-Less (MM)

Cost-U-Less, Inc. (the "Company") (Nasdaq:CULS) today announced results for the third fiscal quarter ended September 25, 2005. Highlights for the third fiscal quarter ended September 25, 2005, were as follows: -- EPS of $0.15 compared to EPS of $0.14 for Q3 2004. -- Sales of $53.0M, a 3.8% increase over Q3 2004. -- Comparable store sales (stores open a full 13 months) an increase of 5.5% over Q3 2004. For the third fiscal quarter of 2005 the Company reported net income of $639,000, or $0.15 per fully diluted share outstanding, compared to net income of $554,000, or $0.14 per fully diluted share outstanding, for the corresponding period last year. As previously reported, total sales for the fiscal quarter ended September 25, 2005, increased 3.8%, to $53.0 million, compared to $51.1 million for the same period a year ago. For the third fiscal quarter same store sales rose 5.5% compared to 12.5% for the corresponding period a year ago. "We're pleased to report another good quarter of earnings per share, particularly given some of the challenging issues we faced this quarter. We are now seeing the tangible effects of surging gas and energy prices on the wallets of our customers, both retail and institutional," said J. Jeffrey Meder, the Company's President and CEO. "Although it's too early to say with any certainty, it is my firm belief that this year's hurricane season has had a negative impact on tourism since the month of June, when the latest data were made available." Meder added, "We moved our annual anniversary sale from October to September this year with impressive results. It was a hugely successful promotion that drove sales and earnings during the final month of the quarter. Kudos to our marketing, merchandising and store personnel for a great promotion." As previously reported, this promotion, which occurred in the month of October in fiscal 2004, is estimated to have increased fiscal September 2005 same store sales by approximately 5 to 6 percentage points. October 2005 same store sales are expected to be negatively impacted as they will be compared to October 2004 sales which included this promotion. 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. Such statements, including comparable store sales expectations, trends in or expectations regarding the Company's revenue growth, and the Company's growth plans are all based on currently available operating, financial, and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including that the Company may encounter substantial delays, increased expenses or loss of potential store sites due to the complexities, cultural differences, and local political issues associated with the regulatory and permitting processes in the island markets in which the Company may locate its stores. Prolonged adverse occurrences affecting tourism or air travel, particularly to non-U.S. destinations, including political instability, armed hostilities, terrorism, natural disasters or other activity that involves or affects air travel or the tourism industry generally, could cause actual results to differ materially from historical results or those anticipated. Other risks and uncertainties include the Company's small store base; the mix of geographic and product revenues; relationships with third parties; litigation; the Company's ability to maintain existing credit facilities and obtain additional credit; business and economic conditions and growth in various geographic regions; pricing pressures; political and regulatory instability in various geographic regions; and other risks and uncertainties detailed in the Company's filings with the SEC. -0- *T COST-U-LESS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (Unaudited) 13 Weeks Ended 39 Weeks Ended -------------------------------------------- Sept. 25, Sept. 26, Sept. 25, Sept. 26, 2005 2004 2005 2004 -------------------------------------------- Net sales.................$ 53,011 $ 51,088 $ 158,545 $ 151,979 Merchandise costs......... 42,991 41,629 129,253 124,101 ---------- ---------- ---------- ---------- Gross profit.............. 10,020 9,459 29,292 27,878 Operating expenses: Store.................. 7,084 6,764 20,789 19,464 General and administrative........ 1,652 1,630 4,862 5,096 Store openings......... 63 58 327 137 Store closings......... 22 -- 81 -- ---------- ---------- ---------- ---------- Total operating expenses.. 8,821 8,452 26,059 24,697 ---------- ---------- ---------- ---------- Operating income.......... 1,199 1,007 3,233 3,181 Other income (expense): Interest expense, net.. (121) (107) (231) (331) Other.................. (14) 19 68 18 ---------- ---------- ---------- ---------- Income before income taxes.................... 1,064 919 3,070 2,868 Income tax provision...... 425 365 1,185 1,140 ---------- ---------- ---------- ---------- Net income................$ 639 $ 554 $ 1,885 $ 1,728 ========== ========== ========== ========== Earnings per common share: Basic..................$ 0.16 $ 0.15 $ 0.48 $ 0.46 ========== ========== ========== ========== Diluted................$ 0.15 $ 0.14 $ 0.45 $ 0.44 ========== ========== ========== ========== Weighted average common shares outstanding, basic 3,989,876 3,742,053 3,920,927 3,727,171 ========== ========== ========== ========== Weighted average common shares outstanding, diluted.................. 4,207,219 4,012,797 4,159,784 3,902,330 ========== ========== ========== ========== COST-U-LESS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) Sept. 25, Dec. 26, 2005 2004 ------------------ ASSETS ---------------------------------------------------- Current assets: Cash and cash equivalents........................ $ 4,323 $ 6,081 Accounts receivable, net......................... 1,171 805 Inventories, net................................. 24,577 23,140 Other current assets............................. 1,544 1,053 ------- ------- Total current assets......................... 31,615 31,079 Buildings and equipment, net........................ 18,455 14,345 Deposits and other assets........................... 778 778 ------- ------- Total assets................................. $50,848 $46,202 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY ---------------------------------------------------- Current liabilities: Accounts payable................................. $16,045 $16,132 Accrued expenses and other liabilities........... 5,134 5,964 Line of credit................................... 1,703 -- Current portion of long-term debt................ 267 267 Current portion of capital lease................. 223 102 ------- ------- Total current liabilities.................... 23,372 22,465 Other long-term liabilities......................... 1,078 920 Long-term debt, less current portion................ 2,077 2,277 Capital lease, less current portion................. 1,387 607 ------- ------- Total liabilities............................ 27,914 26,269 Commitments and contingencies -- -- Shareholders' equity 22,934 19,933 ------- ------- Total liabilities and shareholders' equity... $50,848 $46,202 ======= ======= *T