- Net Sales of $98.5 million, reflecting a
Comparable Sales Decrease of 5.0% -- Fourth Quarter to date
Comparable Sales are up mid-single digits -- Selling,
General & Administrative Expenses decreased by $0.7 million
-
Christopher & Banks Corporation (NYSE: CBK), a specialty
women’s apparel retailer, today reported results for the third
quarter ended October 28, 2017.
Joel Waller, Interim President and Chief Executive Officer,
commented, “We remain pleased with the progress of our turnaround,
and with the inflection point we saw in our business late in
October. For the fourth quarter-to-date, comparable sales are up
mid-single-digits reflecting an increase in transactions and
average dollar sales, including higher AUR as compared to the same
period last year. While the third quarter was somewhat
disappointing, we attribute this partially to weather and saw the
timing of our sales improvement coincide with more seasonable
weather as well as the receipt of new holiday merchandise. Both
Outlets and eCommerce saw positive comp increases in the third
quarter which have accelerated in the fourth quarter-to-date. We
remain focused on refining our merchandise assortment to strike the
right balance between fashion and core product, improving the flow
of fashion and newness, and leveraging our marketing programs to
connect with our customers. Overall, we believe that continuing to
execute on our strategic plan will ultimately drive long-term,
sustainable growth.”
Results for the Third Quarter Ended October 28, 2017
- Net sales totaled $98.5 million, a
decrease of 7.7%, while operating on average 473 stores. This
compares to $106.7 million in net sales for the third quarter of
fiscal 2016, while operating on average 506 stores.
- Comparable sales decreased 5.0%
following a 4.5% increase in the same period last year. eCommerce
sales increased 8.5% following a 16.3% increase in the same period
last year.
- Gross margin rate decreased 300 basis
points to 33.8%, as compared to last year’s third quarter,
primarily due to continued higher promotions and markdowns to move
through non-go-forward product and address slow sellers more
quickly.
- Selling, general & administrative
expenses (“SG&A”) decreased by $0.7 million, driven by lower
store operating expenses, lower net employee compensation expenses,
and the absence of costs related to the customer platform
transition that took place in last year’s third quarter, partially
offset by higher medical claims and consulting fees. As a percent
of net sales, SG&A was 32.3%, compared to 30.5% in the prior
year period.
- Net loss totaled $1.6 million, or
($0.05) per share, compared to net income for the prior year period
of $3.5 million, or $0.09 per share.
- Adjusted EBITDA*, a non-GAAP measure,
was $1.4 million, compared to $6.7 million for the same period last
year.
Balance Sheet Highlights and Capital ExpendituresCash and
cash-equivalents totaled $17.9 million as of October 28, 2017.
Total inventory was $51.4 million at the end of the third quarter
as compared to $54.1 million at the end of the third quarter last
year, a reduction of 4.9%.
Capital expenditures for the third quarter of fiscal 2017 were
$1.2 million compared to $2.0 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 omni-channel capabilities. For the third quarter
ended October 28, 2017, the Company had no outstanding borrowings
under its revolving credit facility.
The Company also announced that it has recently engaged a
leading commercial real estate company to solicit interest in a
sale and leaseback of the Company’s corporate facility in Plymouth
MN which, if consummated, will unlock additional capital and
enhance the Company’s overall liquidity position. The Company
estimates the value of the building is in the low to mid-teen
million dollar range.
Conference Call InformationThe Company will discuss its
third quarter results in a conference call scheduled for today,
November 28, 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 for 30 days. In addition, an
audio replay of the call will be available shortly after its
conclusion and will be archived until December 5, 2017. This call
may be accessed by dialing 1-844-512-2921 and using the passcode
13673598.
Non-GAAP MeasuresIn 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 these
non-GAAP measures 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 these non-GAAP
measures provides useful supplemental information to investors
regarding the underlying performance of the Company’s business
operations, especially when comparing such results to previous
periods. These non-GAAP measures are 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 measures 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 discretionary items. Please see “Non-GAAP Measures” above
and the reconciliation of this non-GAAP measure to the comparable
GAAP measure that follows in the table below.
About Christopher & BanksChristopher & Banks
Corporation is a Minneapolis-based national specialty retailer
featuring exclusively designed privately branded women’s apparel
and accessories. As of November 28, 2017, the Company operates 472
stores in 45 states consisting of 321 MPW stores, 79 Outlet stores,
37 Christopher & Banks stores, and 35 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 StatementsCertain statements in this
press release and in our upcoming earnings conference call may
constitute forward-looking statements, made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995, which reflect our current views with respect to certain
events that could have an effect on our future performance. The
forward-looking statements relate to expectations concerning
matters that are not historical facts and may use the words “will”,
"expect", "anticipate", "plan", "intend", "project", "believe",
“should”, "drive" "in order to" and similar expressions. Except for
historical information, matters discussed in this press release or
on our earnings conference call may be considered forward-looking
statements.
These forward-looking statements are based largely on
information currently available to our management and our current
expectations, assumptions, plans, estimates, judgments and
projections about our business and our industry, 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 future performance and financial results to differ
materially from those expressed or implied by the forward-looking
statements. We cannot guarantee their accuracy or our future
performance, and there are a number of known and unknown risks,
uncertainties, contingencies, and other factors (many of which are
outside our control) that could cause actual results to differ
materially from those expressed or implied by such forward-looking
statements. Accordingly, there is no assurance that our
expectations will, in fact, be achieved or that our estimates or
assumptions will be correct, and we caution investors and all
others not to place undue reliance on such 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, those
factors described in Item 1A, “Risk Factors” and in the
“Forward-Looking Statements” disclosure in “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” of our latest annual report on Form 10-K. All
forward-looking statements that are made or attributable to us are
expressly qualified in their entirety by this cautionary notice.
The Company does not undertake to publicly update or revise its
forward-looking statements even if experience or future changes
make it clear that projected results expressed or implied in such
statements will not be realized.
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 28, October
29, October 28, October 29, 2017
2016 2017 2016 Net sales $ 98,468 $ 106,668 $
273,642 $ 296,625 Merchandise, buying and occupancy costs
65,229 67,447 185,237
189,543 Gross profit 33,239 39,221 88,405 107,082 Other
Operating Expenses: Selling, general and administrative 31,802
32,483 91,956 98,585 Depreciation and amortization 2,976 3,119
9,242 9,116 Impairment of long-lived assets —
— 163 476 Total other operating
expenses 34,778 35,602 101,361
108,177 Operating (loss) income (1,539 ) 3,619
(12,956 ) (1,095 ) Interest expense, net (38 ) (44 ) (107 ) (126 )
Other income — — —
911 (Loss) income before income taxes (1,577 ) 3,575 (13,063
) (310 ) Income tax provision 45 82
136 249 Net (loss) income $ (1,622 ) $
3,493 (13,199 ) (559 ) Basic
income(loss) per share: Net (loss) income $ (0.05 ) $ 0.09
(0.36 ) (0.02 ) Basic shares outstanding 37,285
37,075 37,178 36,992 Diluted
income (loss) per share: Net (loss) income $ (0.05 ) $ 0.09
(0.36 ) (0.02 ) Diluted shares outstanding 37,285
37,153 37,178 36,992
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
(unaudited)
October 28, October 29, 2017 2016
ASSETS Current assets: Cash and cash equivalents $ 17,867 $
25,882 Accounts receivable 4,196 3,742 Merchandise inventories
51,431 54,085 Prepaid expenses and other current assets 4,638 9,726
Income taxes receivable 243 601 Total
current assets 78,375 94,036 Property, equipment and
improvements, net 50,374 57,472 Other non-current assets:
Deferred income taxes 296 375 Other assets 638
460 Total other non-current assets 934
835 Total assets $ 129,683 $ 152,343
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 22,600 $ 16,625 Accrued salaries,
wages and related expenses 5,972 6,754 Accrued liabilities and
other current liabilities 24,871 23,478
Total current liabilities 53,443 46,857 Non-current
liabilities: Deferred lease incentives 8,186 9,333 Deferred rent
obligations 6,623 6,348 Other non-current liabilities 2,500
1,396 Total non-current liabilities 17,309
17,077 Stockholders' equity: Common stock 475 471 Additional
paid-in capital 127,348 126,408 Retained earnings 43,819 74,241
Common stock held in treasury (112,711 ) (112,711 )
Total stockholders' equity 58,931 88,409
Total liabilities and stockholders' equity $ 129,683
$ 152,343
CHRISTOPHER &
BANKS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands)
(unaudited) Thirty-Nine Weeks Ended October
28, October 29, 2017 2016 Cash flows
from operating activities: Net loss $ (13,199 ) $ (559 )
Adjustments to reconcile net loss to net cash used in operating
activities: Depreciation and amortization 9,242 9,116 Impairment of
long-lived assets 163 476 Deferred income taxes, net 25 18 Gain
from company-owned life insurance — (911 ) Amortization of premium
on investments — 10 Amortization of financing costs 47 47 Deferred
lease-related liabilities (866 ) (817 ) Stock-based compensation
expense 859 565 Loss on disposal of assets — 1 Changes in operating
assets and liabilities: Accounts receivable (1,648 ) 326
Merchandise inventories (14,597 ) (11,604 ) Prepaid expenses and
other assets (1,260 ) (543 ) Income taxes receivable 273 (88 )
Accounts payable 8,640 123 Accrued liabilities (2,089 ) 2,912 Other
liabilities 1,743 164 Net cash used in
operating activities (12,667 ) (764 )
Cash flows from
investing activities: Purchases of property, equipment and
improvements (4,447 ) (8,770 ) Proceeds from company-owned life
insurance — 911 Maturities of available-for-sale investments
— 3,005 Net cash used in investing activities
(4,447 ) (4,854 )
Cash flows from financing
activities: Issuance of stock for stock options exercises, net
of forfeitures — 17 Shares redeemed for payroll taxes (25 )
(23 ) Net cash used in financing activities (25 )
(6 ) Net decrease in cash and cash equivalents
(17,139 ) (5,624 ) Cash and cash equivalents at beginning of period
35,006 31,506 Cash and cash equivalents
at end of period $ 17,867 $ 25,882
Supplemental cash flow information: Interest paid $ 107 $
143 Income taxes (refunded) paid $ (263 ) $ 102 Accrued purchases
of equipment and improvements $ 288 $ 267
CHRISTOPHER & BANKS CORPORATION AND
SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION OF NET
(LOSS) INCOME TO ADJUSTED EBITDA
(in thousands)
(unaudited)
The following table reconciles from Net (loss) income in
accordance with generally accepted accounting principles (GAAP) to
Adjusted EBITDA, a non-GAAP measure, for the thirteen week and
thirty-nine week periods ended October 28, 2017 and October 29,
2016:
Thirteen Weeks Ended
Thirty-Nine Weeks Ended October 28, October
29, October 28, October 29, 2017
2016 2017 2016 Net (loss) income on a GAAP
basis $ (1,622 ) $ 3,493 $ (13,199 ) $ (559 ) Income tax provision
45 82 136 249 Other income — — — 911 Interest expense, net (38 )
(44 ) (107 ) (126 ) Depreciation & amortization 2,976 3,119
9,242 9,116 Impairment of long-lived assets — — 163 476 Lease
termination fees and other related costs, net — — 484 — Advisory
fees in connection with shareholder activism — — — 1,549 eCommerce
transition fees — — —
684 Adjusted EBITDA $ 1,437 $ 6,738 $
(3,067 ) $ 10,730
CHRISTOPHER & BANKS CORPORATION AND
SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION OF LOSS
PER SHARE
(in thousands, except per share
data)
(unaudited)
No adjustment was necessary for the thirteen week periods ended
October 28, 2017 and October 29, 2016.
The following table reconciles from Net loss per share in
accordance with GAAP to Adjusted net loss per share, on a non-GAAP
basis, for the thirty-nine week periods ended October 28, 2017 and
October 29, 2016:
Thirty-Nine Weeks Ended October
28, October 29, 2017 2016 Pretax
Net of tax
Per shareamounts
Pretax Net of tax
Per shareamounts
GAAP net loss per share $ (0.36 ) $
(0.02 ) Adjustments Lease termination fees and other related costs,
net $ 484 $ 477 $ 0.01 $ — $ — $ — Advisory fees in connection with
shareholder activism — — —
1,549
1,479 0.04 eCommerce transition fees — —
—
684
653 0.02 Adjusted loss per share
$ (0.35 ) $ 0.04
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171128005428/en/
COMPANY:Marc Ungerman, 763-551-5000Interim Chief Financial
Officer and Vice President, ControllerorINVESTOR RELATIONS:ICR,
Inc.Jean Fontana, 646-277-1214