- Net Sales Increase of 2.9% to $106.7
million –
- Comparable Sales Increase of 4.5%
-
- Gross Margin Expanded 95 basis points
-
Christopher & Banks Corporation (NYSE:CBK), a specialty
women’s apparel retailer, today reported results for the third
quarter ended October 29, 2016.
Results for the Third Quarter Ended October 29, 2016
- Net sales totaled $106.7 million, an
increase of 2.9%, while operating on average 506 stores, compared
to $103.6 million in net sales for the third quarter of fiscal
2015, while operating on average 533 stores.
- Comparable sales increased 4.5%
compared to a 6.7% decrease in the same period last year.
- Gross margin rate increased 95 basis
points to 36.8%, as compared to last year’s third quarter.
- Net income totaled $3.5 million, or
$0.09 per diluted share, compared to a net loss for the prior year
period of $0.3 million, or a $0.01 loss per share.
- Adjusted EBITDA, a non-GAAP measure,
was $6.7 million, compared to $3.8 million for the same period last
year. The Company defines Adjusted EBITDA as Net income (loss),
adjusted for Income tax provision (benefit); Other Income; Interest
expense, net; Depreciation and Amortization; Impairment of store
assets; and certain non-recurring items.*
- On-hand inventory, at cost, was down
3.8%, in line with the Company’s expectations.
LuAnn Via, President and Chief Executive Officer, commented, "We
are very pleased with our third quarter performance, as we exceeded
our original guidance as well as our preliminary results reported
on November 4, 2016. Our comparable sales increase reflects a
favorable response to our merchandise assortment as well as our
effective marketing campaigns and events that drew her into our
stores and to our website. We saw growth in average spend among our
existing customers and reactivated more lapsed and also acquired
additional new customers. We were able to drive an increase in
gross margin rate, despite a highly promotional environment and
unseasonably warm weather. As we look ahead, we expect continued
momentum as we further execute across our strategic initiatives in
merchandising, marketing and technology to drive long term
profitable growth.”
LuAnn Via also stated, “In addition to the initiatives we are
undertaking to increase sales, we continue to focus on improving
our cash flow. After significant investments in technology and
stores the past several years, we are focusing on optimizing these
investments in Fiscal 2017 and reducing capital outlays. We are
also taking a close look at our costs and identifying opportunities
for additional savings in a number of areas, including occupancy,
and increased efficiencies in processes and contract negotiations.
Our preliminary assessment suggests there is an opportunity for net
savings in fiscal 2017 of approximately $5.0 million to $7.0
million, before giving effect to the costs the Company would incur
in connection with potential growth in overall sales.”
Balance Sheet Highlights and Capital Expenditures
Cash, cash-equivalents and investments totaled $25.8 million as
of October 29, 2016. Capital expenditures for the third quarter of
fiscal 2016 were $2.0 million compared to $5.1 million in last
year’s third quarter. Capital expenditures in the third quarter
this year primarily reflected investments in new stores and
technology associated with the Company’s Customer First initiative.
For the third quarter ended October 29, 2016, the Company had no
outstanding borrowings under its revolving credit facility.
Outlook for the 2016 Fourth Quarter and Full Fiscal
Year
For the fourth quarter of fiscal 2016, the Company currently
expects:
- Total net sales of between $93.0
million and $97.0 million, with a comparable sales increase of 1.0%
to 5.0%, as compared to net sales of $94.6 million and a comparable
sales decrease of 3.4% in last year’s fourth quarter;
- A net loss of $4.1 million to $5.9
million or a net loss of $0.11 to $0.16 per share, as compared to a
net loss of $46.6 Million or a net loss of $1.26 per share in last
year’s fourth quarter, including $37.5 million or a net loss of
$1.02 per share to record a valuation allowance for deferred tax
assets;
- Adjusted EBITDA, a non-GAAP measure, is
expected to be between approximately a negative $0.6 million and a
negative $2.4 million**;
- Depreciation and amortization to be
approximately $3.4 million as compared to $3.3 million in last
year’s fourth quarter;
- On-hand inventory, at cost, at the end
of the quarter to decline by low single digits, as compared to the
end of last year’s fourth quarter;
- To close six Missy, Petite, Women
(“MPW”) stores, and close 24 CB and CJ stores and convert them into
12 MPW stores; and
- Average square footage to be down 5.0%,
as compared to last year’s fourth quarter.
For the 2016 fiscal year, the Company currently expects:
- Capital expenditures to be
approximately $12.0 million to $12.5 million, compared to the
Company’s previous expectations of capital expenditures of $12.5
million to $13.0 million;
- Nominal taxes, representing minimal
taxes and fees;
- Average square footage for the year to
be down approximately 1.6% as compared to fiscal 2015; and
- To end the fiscal year with cash, cash
equivalents and investments in the low to mid $30 million range, as
compared to $34.5 million at the end of last year’s fourth
quarter.
Conference Call Information
The Company will discuss its third quarter results in a
conference call scheduled for today, December 1, 2016, at 8:30 a.m.
Eastern Time. The conference call will be simultaneously broadcast
live over the Internet at http://www.christopherandbanks.com. An
online archive of the broadcast will be available within
approximately one hour of the completion of the call and will be
accessible at http://www.christopherandbanks.com until January 1,
2016. In addition, an audio replay of the call will be available
shortly after its conclusion and will be archived until December 8,
2016. This call may be accessed by dialing 1-877-870-5176 and using
the passcode 13650264.
Non-GAAP Measures
In addition to financial measures prepared in accordance with
U.S. generally accepted accounting principles ("GAAP"), this press
release contains non-GAAP financial measures, including Adjusted
EBITDA. The presentation of this non-GAAP measure is not in
accordance with GAAP, and should not be considered superior to or
as a substitute for net income or net loss, or any other measure of
performance derived in accordance with GAAP. The Company believes
the inclusion of this non-GAAP measure provides useful supplemental
information to investors regarding the underlying performance of
the Company’s business operations, especially when comparing such
results to previous periods. This non-GAAP measure is not an
alternative for measures of financial performance prepared in
accordance with GAAP and may be different from similarly titled
non-GAAP measures used by other companies. Investors are encouraged
to review the reconciliations of the non-GAAP financial measure to
its most directly comparable GAAP measure as provided in the tables
below.
* Adjusted EBITDA is a non-GAAP financial measure. Please see
“Non-GAAP Measures” below and reconciliations of this non-GAAP
measure to the comparable GAAP measure that follows in the tables
below.
** Adjusted EBITDA is a non-GAAP financial measure. Please see
“Non-GAAP Measures” below and reconciliation of this non-GAAP
measure to the comparable GAAP measure that follows in the tables
below.
About Christopher & Banks
Christopher & Banks Corporation is a Minneapolis-based
national specialty retailer featuring exclusively designed
privately branded women’s apparel and accessories. As of December
1, 2016, the Company operates 503 stores in 45 states consisting of
315 MPW stores, 82 Outlet stores, 54 Christopher & Banks
stores, and 52 stores in its women’s plus size clothing division CJ
Banks. The Company also operates the www.ChristopherandBanks.com
eCommerce website.
Keywords: Christopher & Banks, CJ Banks, Women’s
Clothing, Plus Size Clothing, Petites, Extended Sizes, Outfits.
Forward-Looking Statements
Certain statements in this press release are forward-looking
statements, made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The
forward-looking statements may use the words “expect”,
“anticipate”, “plan”, “intend”, “project”, “believe”, “drive” “in
order to” and similar expressions and include the statements (i)
that as the Company looks ahead, it expects continued momentum as
it further executes across its strategic initiatives in
merchandising, marketing and technology to drive long term
profitable growth; (ii) that our preliminary assessment suggests
there is an opportunity for net savings in fiscal 2017 of
approximately $5.0 million to $7.0 million, before giving effect to
the costs the Company would incur in connection with potential
growth in overall sales; and (iii) made in the “Outlook for the
2016 Fourth Quarter and Full Fiscal Year” section.
These statements are based on management’s current expectations
and are subject to a number of uncertainties and risks, as well as
assumptions that, if they do not fully materialize or prove
incorrect, could cause the Company’s actual results to differ
materially from those expressed or implied by the forward-looking
statements. Important factors that could cause actual results to
differ materially from estimates or projections contained in the
forward-looking statements include, but are not limited to: (i) the
inherent difficulty in forecasting consumer buying and retail
traffic patterns which may be affected by factors beyond the
Company’s control, such as a weakness in overall consumer demand;
adverse weather, economic or political conditions; and shifts in
consumer tastes or spending habits that result in reduced sales or
gross margins; (ii) lack of acceptance of the Company’s fashions,
including its seasonal fashions; (iii) the ability of the Company’s
infrastructure and systems to adequately support its operations;
(iv) the effectiveness of the Company’s brand awareness, marketing
programs and efforts to enhance the in-store experience; (v) the
possibility that, because of poor customer response to the
Company’s merchandise, management may determine it is necessary to
sell merchandise at lower than expected margins or at a loss; (vi)
the failure to successfully implement the Company’s strategic and
tactical plans and initiatives; (vii) general economic conditions
could lead to a reduction in store traffic and in consumer spending
on women’s apparel; (viii) fluctuations in the levels of the
Company’s sales, expenses or earnings; and (ix) risks associated
with the performance and operations of the Company’s Internet
operations.
Readers are cautioned not to place undue reliance on these
forward-looking statements which are based on current expectations
and speak only as of the date of this release. The Company does not
assume any obligation to update or revise any forward-looking
statement at any time for any reason.
Certain other factors that may cause actual results to differ
from such forward-looking statements are included in the Company’s
periodic reports filed with the Securities and Exchange Commission
and available on the Company’s website under “For Investors” and
you are urged to carefully consider all such factors.
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in
thousands, except per share data) (unaudited)
Thirteen Weeks Ended Thirty-Nine Weeks
Ended October 29, October 31, October 29,
October 31, 2016 2015 2016 2015
Net sales $ 106,668 $ 103,641 $ 296,625 $ 289,259 Merchandise,
buying and occupancy costs 67,447 66,519
189,543 188,992 Gross profit
39,221 37,122 107,082 100,267 Other Operating Expenses: Selling,
general and administrative 32,483 33,604 98,585 95,223 Depreciation
and amortization 3,119 3,116 9,116 8,733 Impairment of store assets
— 67 476 182
Total other operating expenses 35,602
36,787 108,177 104,138 Operating
income (loss) 3,619 335 (1,095 ) (3,871 ) Interest expense, net (44
) (36 ) (126 ) (76 ) Other income — —
911 — Income (Loss) before income taxes
3,575 299 (310 ) (3,947 ) Income tax provision (benefit) 82
614 249 (1,480 ) Net
income (loss) $ 3,493 $ (315 ) $ (559 ) $ (2,467 )
Basic income (loss) per share: Net Income (loss) $ 0.09 $
(0.01 ) $ (0.02 ) $ (0.07 ) Basic shares outstanding 37,075
36,906 36,992 36,877
Diluted income (loss) per share: Net Income (loss) $
0.09 $ (0.01 ) $ (0.02 ) $ (0.07 ) Diluted shares
outstanding 37,153 36,906 36,992
36,877
CHRISTOPHER & BANKS CORPORATION
AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) (unaudited) October
29, October 31, 2016 2015 ASSETS
Current assets: Cash and cash equivalents $ 25,882 $ 24,369
Short-term investments — 5,009 Accounts receivable 3,742 4,978
Merchandise inventories 54,085 52,503 Prepaid expenses and other
current assets 9,726 10,512 Deferred income taxes — 3,558 Income
taxes receivable 601 503 Total current
assets 94,036 101,432 Property, equipment and improvements,
net 57,472 59,147 Other non-current assets: Deferred income
taxes 375 36,075 Other assets 460 688
Total other non-current assets 835 36,763
Total assets $ 152,343 $ 197,342
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 16,625 $ 16,652 Accrued salaries, wages and
related expenses 6,754 5,501 Accrued liabilities and other current
liabilities 23,478 22,278 Total current
liabilities 46,857 44,431 Non-current liabilities: Deferred
lease incentives 9,333 9,663 Deferred rent obligations 6,348 7,132
Other non-current liabilities 1,396 1,328
Total non-current liabilities 17,077 18,123
Stockholders' equity: Common stock 471 469 Additional paid-in
capital 126,408 125,602 Retained earnings 74,241 121,427 Common
stock held in treasury (112,711 ) (112,711 ) Accumulated other
comprehensive income — 1 Total
stockholders' equity 88,409 134,788
Total liabilities and stockholders' equity $ 152,343 $
197,342
CHRISTOPHER & BANKS CORPORATION AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands) (unaudited)
Thirty-Nine Weeks Ended October 29, October
31, 2016 2015 Cash flows from operating
activities: Net loss $ (559 ) $ (2,467 ) Adjustments to
reconcile net loss to net cash used in operating activities:
Depreciation and amortization 9,116 8,733 Impairment of store
assets 476 182 Deferred income taxes, net 18 (1,695 ) Gain on
investments, net (911 ) (2 ) Amortization of premium on investments
10 34 Amortization of financing costs 47 47 Deferred lease-related
liabilities (817 ) 2,923 Stock-based compensation expense 565 1,389
Loss on disposal of assets 1 —
Changes in operating assets and
liabilities:
Accounts receivable 326 (978 ) Merchandise inventories (11,604 )
(7,185 ) Prepaid expenses and other assets (543 ) (3,708 ) Income
taxes receivable (88 ) 342 Accounts payable 123 (1,703 ) Accrued
liabilities 2,912 805 Other liabilities 164 67
Net cash used in operating activities (764 ) (3,216 )
Cash flows from investing activities: Purchases of property,
equipment and improvements (8,770 ) (22,641 ) Proceeds from
company-owned life insurance 911 — Maturities of available-for-sale
investments 3,005 13,007 Net cash used
in investing activities (4,854 ) (9,634 )
Cash flows from
financing activities: Issuance of stock for stock option
exercises, net of forfeitures 17 0 Shares redeemed for payroll
taxes (23 ) (26 ) Net cash used in financing
activities (6 ) (26 ) Net decrease in cash and
cash equivalents (5,624 ) (12,876 ) Cash and cash equivalents at
beginning of period 31,506 37,245 Cash
and cash equivalents at end of period $ 25,882 $ 24,369
Supplemental cash flow information: Interest
paid $ 143 $ 120 Income taxes paid (refunded) $ 102 $ (246 )
Accrued purchases of equipment and improvements $ 267 $ 1,055
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES GAAP
TO NON-GAAP RECONCILIATION OF NET INCOME (LOSS) (in
thousands) (unaudited)
The following table reconciles from Net income (loss) to
Adjusted EBITDA for the thirteen week and thirty-nine week periods
ended October 29, 2016 and October 31, 2015:
Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 29, October 31, October 29, October
31, 2016 2015 2016 2015 Net income
(loss) $ 3,493 $ (315 ) $ (559 ) $ (2,467 ) Income tax provision
(benefit) 82 614 249 (1,480 ) Other income — — (911 ) — Interest
expense, net 44 36 126 76 Depreciation & amortization 3,119
3,116 9,116 8,733 Impairment of store assets — 67 476 182 Advisory
fees in connection with shareholder activism — 318 1,549 687
eCommerce transition fees — — 684
— Adjusted EBITDA $ 6,738 $ 3,836 $
10,730 $ 5,731
The following table reconciles from Net income (loss) to
Adjusted EBITDA for the projected thirteen week periods ended
January 28, 2017 and January 30, 2016:
Thirteen Weeks Ended January 28, 2017 January
30, Low High 2016 Net loss $ (5,900 ) $
(4,100 ) $ (46,627 ) Income tax provision 70 70 39,195 Interest
expense, net 50 50 39 Depreciation & amortization 3,400 3,400
3,315 Impairment of store assets — — 99 Advisory fees in connection
with shareholder activism — —
277 Adjusted EBITDA $ (2,380 ) $ (580 ) $ (3,702 )
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version on businesswire.com: http://www.businesswire.com/news/home/20161201005324/en/
COMPANY:Christopher & BanksPeter G. Michielutti, (763)
551-5000Executive Vice President, Chief Operating Officer and Chief
Financial OfficerorINVESTOR RELATIONS:ICR, Inc.Jean Fontana, (646)
277-1214