8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report: May 19, 2005 (Date of Earliest Event Reported)

Cost Plus, Inc.

(Exact name of Registrant as specified in its charter)

California	0-14970	94-1067973
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

200 4^th Street

Oakland, California 94607

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (510) 893-7300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On May 19, 2005, Cost Plus, Inc. issued a press release regarding its first quarter sales and earnings data in which it also provided earnings guidance for the second quarter and updated full year earnings guidance. A copy of the press release is attached as Exhibit 99.1 hereto.

Pursuant to General Instruction B.2 of Form 8-K, the press release attached as Exhibit 99.1 is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, but is instead furnished for purposes of that instruction.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits.

Exhibit Number	Description
99.1	Press Release of Cost Plus, Inc. dated May 19, 2005.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

COST PLUS, INC
By:	/s/ John J. Luttrell
	John J. Luttrell
	Executive Vice President and Chief Financial Officer (Principal Accounting Officer)

Dated: May 19, 2005

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release of Cost Plus, Inc. dated May 19, 2005.

EX-99.1

Exhibit 99.1

COST PLUS, INC. ANNOUNCES FIRST QUARTER RESULTS AND PROVIDES GUIDANCE FOR

SECOND QUARTER

Oakland, CA – May 19, 2005 – Cost Plus, Inc. (NASDAQ: CPWM) announced today financial results for its fiscal first quarter ended April 30, 2005.

The Company reported a net loss of $138,000 or $0.01 per diluted share for the first quarter of fiscal 2005. The net loss includes pre-tax charges totaling $3.1 million, or $0.09 per diluted common share, related to the departure of the Company’s former CEO and the closure of four stores. The Company earned $3.2 million, or $0.14 per diluted share, in the prior year first quarter.

Net sales for the first quarter of 2005 were $200.0 million, a 7.7% increase over first quarter 2004 net sales of $185.7 million. Comparable store sales decreased 1.9%, compared to a 3.4% increase for the first quarter of 2004.

The Company indicated that weaker than expected customer traffic surrounding the Easter Holiday was the primary reason for the comparable store sales decrease. For the quarter, sales of consumable products outperformed the home side of the business. Despite this shift, net merchandise margin rates were up 50 basis points quarter-over-quarter, reflecting a more disciplined approach to markdown activity and stronger than average sales performance from higher margin categories including bedding, home collectibles, floor coverings, jewelry and accessories, pillows and frames. The Company indicated that recent efforts to reinvigorate these higher margin businesses appear to have met with initial success.

During the quarter, the Company opened five stores and closed four stores, as planned.

Earnings guidance for the second quarter of fiscal 2005 is estimated to be in the range of $0.06 to $0.11 per diluted share vs. $0.15 per diluted share for the prior year second quarter. The Company’s guidance is predicated on the following major assumptions:

• Ten new stores opened vs. nine stores opened in the second quarter last year. One store is anticipated to close this year vs. one store closed in the second quarter last year.

• Comparable store sales from a decrease of 1% to an increase of 1% vs. a 3.2% increase in the prior year second quarter. The comparable store sales guidance includes lower sales of outdoor dining furniture from cooler weather in certain key markets and from an oversupply of outdoor wooden dining products in the marketplace. Other outdoor living categories have performed better thus far in the quarter, including such items as acrylic drink and dinnerware, umbrellas and outdoor furniture pillows.

• Total sales between $202 million and $206 million vs. $190 million in the prior year.

• Gross profit rate between 33.5% and 33.9% vs. 33.9% in the prior year. Added occupancy costs and reduced leverage from these costs offset an anticipated 30 basis point increase in merchandise margin rates between the two quarterly periods.

• SG&A rate between 30.3% and 30.7% vs. 29.6% in the prior year. Included in second quarter 2005 SG&A expense is an additional $0.8 million in advertising production costs for media expected to run primarily in the last half of the year. These costs are expensed as incurred.

• Pre-tax income between $2.0 million and $3.8 million vs. $5.4 million in the prior year.

• An effective income tax rate of 38.5% in the current year vs. 38.0% in the prior year.

• Net income between $1.2 million and $2.3 million vs. $3.3 million in the prior year.

• Estimated earnings per diluted share between $0.06 and $0.11 vs. $0.15 last year, with weighted average shares outstanding estimated at 22.3 million for the quarter vs. 22.3 million last year.

The Company now estimates earnings per share for fiscal 2005 between $1.26 to $1.36 per diluted share based upon an estimated comparable store sales increase of approximately 1.5% in the last half of the year.

The Company’s first quarter earnings conference call will be today at 8:00 a.m. PT. It will be held in a “listen-only” mode for all participants other than the sell-side and buy-side investment professionals who regularly follow the Company. Phone numbers for the call are (415) 908-6247 or (212) 346-6540. Callers are advised to dial in approximately 15 minutes prior to the scheduled start time. A telephonic replay will be available at (402) 977-9140, Access Code: 21246289, from 10:00 a.m. PT Thursday to 10:00 a.m. PT on Friday, May 20. Investors may also access the live call or the replay over the internet at www.streetevents.com; www.fulldisclosure.com and www.worldmarket.com. The replay will be available approximately one hour after the live call concludes.

Cost Plus, Inc. is a leading specialty retailer of casual home furnishings and entertaining products. As of May 19, 2005, the Company operated 240 stores in 30 states compared to 218 stores in 26 states at the same time last year.

The above statements and assumptions relating to anticipated second quarter and fiscal 2005 financial results are “forward-looking statements” that are based on current expectations and are subject to various risks and uncertainties that could cause actual results to differ materially from those forecasted. Such risk factors include, but are not limited to: changes in economic conditions that effect consumer spending; international conflicts; changes in the competitive environment; interruptions in the flow of merchandise; changes in the cost of goods and services purchased including fuel, transportation and insurance; a material unfavorable outcome with respect to litigation, claims and assessments; further terrorist attacks and changes in accounting rules, regulations and interpretations. Please refer to documents on file with the Securities and Exchange Commission for a more detailed discussion of the Company’s risk factors. The Company does not undertake any obligation to update its forward-looking statements.

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COST PLUS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts, unaudited)

	First Quarter
	April 30, 2005					May 1, 2004 (As Restated)
Net sales	$	200,023		100.0	%	$	185,703	100.0	%
Cost of sales and occupancy		133,304		66.6			122,771	66.1
Gross profit		66,719		33.4			62,932	33.9
Selling, general and administrative expenses		65,157		32.6			55,156	29.7
Store preopening expenses		1,061		0.5			1,841	1.0
Income from operations		501		0.3			5,935	3.2
Net interest expense		726		0.4			822	0.4
Income (loss) before income taxes		(225	)	-0.1			5,113	2.8
Income tax expense (benefit)		(87	)	0.0			1,940	1.1
Net income (loss)	$	(138	)	-0.1	%	$	3,173	1.7	%
Net income (loss) per share - diluted	$	(0.01	)			$	0.14
Weighted average shares outstanding- diluted		21,914					22,556
New stores opened		5					8

See Notes 2 and 12 to the Company’s consolidated financial statements filed on Form 10-K

for the year ended January 29, 2005 for information regarding the restatement.

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COST PLUS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)

	April 30, 2005			May 1, 2004 (As Restated)
ASSETS
Current assets:
Cash and cash equivalents	$	3,759		$	14,668
Short-term investments		—			1,004
Merchandise inventories		268,492			220,210
Other current assets		14,498			17,768
Total current assets		286,749			253,650
Property and equipment, net		188,134			131,567
Goodwill		4,178			4,178
Other assets		12,937			8,897
Total assets	$	491,998		$	398,292
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	50,377		$	36,945
Income taxes payable		—			236
Accrued compensation		9,700			7,717
Short-term borrowings		10,830			—
Other current liabilities		23,738			19,124
Total current liabilities		94,645			64,022
Capital lease obligations		13,471			35,695
Long-term debt		54,121			—
Other long-term obligations		35,328			31,355
Shareholders’ equity:
Common stock		220			219
Additional paid-in capital		163,128			156,066
Retained earnings		132,071			110,935
Other comprehensive income		(986	)		—
Total shareholders’ equity		294,433			267,220
Total liabilities and shareholders’ equity	$	491,998		$	398,292

See Notes 2 and 12 to the Company’s consolidated financial statements filed on Form 10-K

for the year ended January 29, 2005 for information regarding the restatement.

Contact:

John Luttrell

(510) 808-9119

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