- Net Sales of $88.6 million, reflecting a
Comparable Sales Decrease of 8.9% -
- Gross Margin decreased 320 basis points
-
- Selling, General & Administrative
Expenses decreased by $4.5 million -
Christopher & Banks Corporation (NYSE:CBK), a specialty
women’s apparel retailer, today reported results for the first
quarter ended April 29, 2017.
Joel Waller, Interim President and Chief Executive Officer,
commented, “While our first quarter results did not meet our
expectations, we are pleased with our strong eCommerce growth, as
well as the traction we have gained across a number of initiatives
that we expect will yield improved financial performance in the
back half of the year. We also made meaningful progress on our cost
savings initiative which contributed to a $4.5 million reduction in
SG&A expenses during the quarter. Our first quarter sales were
pressured by industry trends as well as by a shortage of spring and
fashion inventory as a result of the decision made last fall to cut
back on receipts. However, we have a merchandise strategy in place
to provide a more consistent flow of newness and infuse additional
fashion into the product assortment. We are beginning to see
improved sales trends with the receipt of new fashion inventory
during the second quarter and expect continued improvement into the
third quarter as our September assortment will fully reflect this
go forward strategy. Overall, we believe that the steps we are
taking will position Christopher and Banks for consistent and
profitable growth over the long-term.”
Results for the First Quarter Ended April 29, 2017
- Net sales totaled $88.6 million, a
decrease of 11.5%, while operating on average 479 stores. This
compares to $100.0 million in net sales for the first quarter of
fiscal 2016, while operating on average 516 stores.
- Comparable sales decreased 8.9%
following a 6.2% increase in the same period last year. eCommerce
sales increased 14.7%.
- Gross margin rate decreased 320 basis
points to 34.5%, as compared to last year’s first quarter,
primarily due to promotions to move through non-go-forward product
and addressing slow sellers on a more frequent basis, as well as
deleverage of occupancy.
- Selling, general & administrative
expenses (“SG&A”) decreased by $4.5 million, driven by lower
store operating expenses, lower net employee compensation expenses,
and lower professional fees. The SG&A expense decrease was also
attributable to the absence of non-recurring charges of $2.0
million, including advisory fees in connection with shareholder
activism and eCommerce transition costs incurred in the first
quarter of fiscal 2016. These SG&A expense savings were
partially offset by an increase in eCommerce operating expenses,
higher medical expenses and higher marketing expenses. As a percent
of net sales, SG&A improved approximately 50 basis points to
35.0%.
- Net loss totaled $3.7 million, or
($0.10) per share, compared to a net loss for the prior year period
of $0.2 million, or $0.00 per share.
- Adjusted EBITDA*, a non-GAAP measure,
was $(0.4) million, compared to $4.2 million for the same period
last year.
Balance Sheet Highlights and Capital Expenditures
Cash, cash-equivalents and investments totaled $28.3 million as
of April 29, 2017. Total inventory was $42.1 million at the end of
the first quarter as compared to $50.5 million at the end of the
first quarter last year. Merchandise inventory was down 16.7% at
the end of the quarter as compared to the end of last year’s first
quarter, due to a lower level of inventory entering the year, as
well as lower receipts in the quarter.
Capital expenditures for the first quarter of fiscal 2017 were
$2.1 million compared to $3.6 million in last year’s first quarter.
Capital expenditures in the first quarter this year primarily
reflected investments in new stores and technology associated with
the Company’s Customer First initiative. For the first quarter
ended April 29, 2017, the Company had no outstanding borrowings
under its revolving credit facility.
Conference Call Information
The Company will discuss its first quarter results in a
conference call scheduled for today, May 25, 2017, 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 June 25,
2017. In addition, an audio replay of the call will be available
shortly after its conclusion and will be archived until June 1,
2017. This call may be accessed by dialing 1-844-512-2921 and using
the passcode 13662213.
Non-GAAP Measures
In addition to financial measures prepared in accordance with
U.S. generally accepted accounting principles ("GAAP"), this press
release contains a non-GAAP financial measure, 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
reconciliation of the non-GAAP financial measure to its most
directly comparable GAAP measure as provided in the table
below.
__________________________
* Adjusted EBITDA is a non-GAAP financial measure. 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 long-lived assets; and
certain non-recurring items. Please see “Non-GAAP Measures” above
and reconciliations of this non-GAAP measure to the comparable GAAP
measure that follows in the table 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 May 25,
2017, the Company operates 475 stores in 45 states consisting of
320 MPW stores, 81 Outlet stores, 38 Christopher & Banks
stores, and 36 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 that;
(i) the Company is pleased with the traction it has gained across a
number of initiatives that it expects will yield improved financial
performance in the back half of the year; (ii) the Company has a
merchandise strategy in place to provide a more consistent flow of
newness and infuse additional fashion into the product assortment;
(iii) that the Company expects to see continued improvement in
sales trends with the receipt of new fashion inventory during the
second quarter and into the third quarter as the Company’s
September assortment will fully reflect this go forward strategy;
and (iv) that the steps the Company is taking will position it for
consistent and profitable growth over the long-term.
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 April 29, April 30,
2017 2016 Net sales $ 88,556 $ 100,033 Merchandise,
buying and occupancy costs 58,018 62,321 Gross profit
30,538 37,712 Other Operating Expenses: Selling, general and
administrative 30,974 35,477 Depreciation and amortization 3,099
3,022 Impairment of long-lived assets 70 168 Total
other operating expenses 34,143 38,667 Operating loss
(3,605) (955)
Interest expense, net
(31) (39) Other income — 911 Loss before income taxes
(3,636) (83) Income tax provision 52 84 Net loss $
(3,688) $ (167) Basic loss per share: Net loss $ (0.10) $
(0.00) Basic shares outstanding 37,090 36,922
Diluted loss per share: Net loss $ (0.10) $ (0.00) Diluted shares
outstanding 37,090 36,922
CHRISTOPHER & BANKS CORPORATION AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) (unaudited)
April 29, April 30, 2017 2016
ASSETS Current assets: Cash and cash equivalents $ 28,270 $
25,703 Short-term investments — 1,001 Accounts receivable 3,953
5,780 Merchandise inventories 42,068 50,531 Prepaid expenses and
other current assets 4,539 10,099 Income taxes receivable
551 598
Total current assets
79,381 93,712 Property, equipment and improvements, net
54,335 60,344 Other non-current assets: Deferred income
taxes 331 400 Other assets 597 557 Total other
non-current assets 928 957 Total assets $ 134,644 $
155,013
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 17,349 $ 18,494 Accrued
salaries, wages and related expenses 6,476 6,744 Accrued
liabilities and other current liabilities 24,996
22,516 Total current liabilities 48,821 47,754 Non-current
liabilities: Deferred lease incentives 8,671 9,974 Deferred rent
obligations 6,625 7,468 Other non-current liabilities 2,637
1,346 Total non-current liabilities 17,933 18,788
Stockholders' equity: Common stock 473 468 Additional paid-in
capital 126,798 126,081 Retained earnings 53,330 74,633 Common
stock held in treasury (112,711) (112,711) Total
stockholders' equity 67,890 88,471 Total liabilities
and stockholders' equity $ 134,644 $ 155,013
CHRISTOPHER & BANKS CORPORATION AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands) (unaudited)
Thirteen Weeks Ended April 29, April 30,
2017 2016 Cash flows from operating
activities: Net loss $ (3,688) $ (167) Adjustments to reconcile
net loss to net cash used in operating activities: Depreciation and
amortization 3,099 3,022 Impairment of long-lived assets 70 168
Deferred income taxes, net (9) (7) Gain from company-owned life
insurance — (911) Amortization of premium on investments — 9
Amortization of financing costs 16 15 Deferred lease-related
liabilities (291) 58 Stock-based compensation expense 289 253
Changes in operating assets and liabilities: Accounts receivable
(1,404) (1,713) Merchandise inventories (5,234) (8,050) Prepaid
expenses and other assets (1,090) (980) Income taxes receivable
(35) (84) Accounts payable 3,378 1,971 Accrued liabilities (1,613)
1,294 Other liabilities 1,912 71 Net cash used in
operating activities (4,600) (5,051)
Cash flows from
investing activities: Purchases of property, equipment and
improvements (2,130) (3,645) Proceeds from company-owned life
insurance — 911 Maturities of available-for-sale investments
— 2,005 Net cash used in investing activities (2,130) (729)
Cash flows from financing activities: Shares redeemed
for payroll taxes (6) (23) Net cash used in financing
activities (6) (23) Net decrease in cash and
cash equivalents (6,736) (5,803) Cash and cash equivalents at
beginning of period 35,006 31,506 Cash and cash
equivalents at end of period $ 28,270 $ 25,703
Supplemental cash flow information: Interest paid $ 31 $ 47
Income taxes (refunded) paid $ (36) $ 86 Accrued purchases of
equipment and improvements $ 243 $ 1,769
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES GAAP
TO NON-GAAP RECONCILIATION OF NET INCOME (LOSS) (in
thousands) (unaudited)
The following table reconciles from Net
loss to Adjusted EBITDA for the thirteen weeks endedApril 29, 2017
and April 30, 2016:
Thirteen Weeks Ended April 29, April
30, 2017 2016 Net loss $ (3,688) $ (167) Income
tax provision 52 84 Other income — 911 Interest expense, net (31)
(39) Depreciation & amortization 3,099 3,022 Impairment of
long-lived assets 70 168 Advisory fees in connection with
shareholder activism — 1,534 eCommerce transition fees —
434 Adjusted EBITDA $ (436) $ 4,203
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version on businesswire.com: http://www.businesswire.com/news/home/20170525005209/en/
Christopher & Banks Corporation:Peter G. Michielutti,
763-551-5000Executive Vice President,Chief Operating Officer
andChief Financial OfficerorINVESTOR RELATIONS:ICR, Inc.Jean
Fontana, 646-277-1214