CHRISTOPHER & BANKS CORP - FORM 8-K - EX-99.1 - EXHIBIT - March 13, 2013

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Exhibit 99.1
2400 Xenium Lane North, Plymouth, MN 55441 ▪ (763) 551-5000 ▪ www.christopherandbanks.com

FOR:
 
Christopher & Banks Corporation
 
 
 
COMPANY CONTACT:
 
Peter Michielutti
 
 
Senior Vice President,
 
 
Chief Financial Officer
 
 
(763) 551-5000
 
 
 
INVESTOR RELATIONS CONTACT:
 
Jean Fontana
 
 
ICR, Inc.
 
 
(203) 682-8200

CHRISTOPHER & BANKS CORPORATION REPORTS RESULTS FOR THE
FOURTEEN AND FIFTY-THREE WEEK PERIODS ENDED FEBRUARY 2, 2013

Minneapolis, MN, March 13, 2013 - Christopher & Banks Corporation (NYSE: CBK), a specialty women's apparel retailer, today reported results for the fourteen week and fifty-three week periods ended February 2, 2013.* 

Results for the Fourteen Week Period Ended February 2, 2013
•
Net sales totaled $116.0 million, as compared to $105.6 million in the thirteen weeks ended January 28, 2012. Approximately $5.1 million of net sales was attributable to the fourteenth week in the fourth quarter of fiscal 2012. During the quarter, the Company operated an average of 124, or 17%, fewer stores than during the comparable period last year.
•
Same-store sales increased 18.5% in the fourteen weeks ended February 2, 2013, as compared to the fourteen weeks ended February 4, 2012.
•
Operating loss totaled $4.0 million for the fourteen week period ended February 2, 2013. Operating loss was $53.6 million for the thirteen weeks ended January 28, 2012, which included $21.2 million of restructuring and impairment charges.
•
Net loss for the fourteen week period ended February 2, 2013 totaled $4.1 million, or ($0.11) per share. Net loss for the thirteen weeks ended January 28, 2012 totaled $53.2 million, or ($1.50) per share, which loss included $21.2 million of impairment and restructuring charges.

LuAnn Via, President and Chief Executive Officer, commented, “We are delighted with the continued momentum in our business in the fourth quarter due to the ongoing execution of our strategic initiatives. Our customers responded very favorably to our well-balanced merchandise offering, improved value proposition and enhanced marketing programs. I'm proud of the work our team has done; however, we are only in the fourth inning, and we intend to continue to build upon this foundation to drive sustainable long-term sales and earnings growth.”


_______________
* 
As previously announced, the Company changed its fiscal year-end to the Saturday closest to the end of January, from the Saturday nearest to the end of February, to better align the Company's financial reporting periods with its operational cycle and with other specialty retail companies. In this release, except as otherwise noted, financial results for the fourteen and fifty-three week periods ended February 2, 2013 are compared to the thirteen week period and the fifty-two week period ended January 28, 2012, respectively.



1


Results for the Fifty-Three Weeks Ended February 2, 2013
•
Net sales totaled $430.3 million and same-store sales increased 5.7%, compared to the fifty-three week period ended February 4, 2012.
•
Operating loss totaled $16.0 million and included a benefit of $5.2 million, or $0.15 per share, related to restructuring charges. Operating loss was $82.1 million for the fifty-two week period ended January 28, 2012, which loss included $21.2 million of impairment and restructuring charges, or ($0.59) per share.
•
Net loss for the fifty-three week period totaled $16.1 million, or ($0.45) per share, including the $0.15 per share benefit related to the restructuring charges mentioned above, and a negative effective tax rate of 0.6%, which is significantly lower than the statutory rate due to the Company's continued maintenance of a full valuation allowance against its deferred tax assets. This compares to a net loss of $81.4 million, or ($2.29) per share, for the fifty-two weeks ended January 28, 2012.

Balance Sheet Highlights and Capital Expenditures
Cash and cash-equivalents totaled $40.7 million as of February 2, 2013. Inventory per store, excluding in-transit and e-Commerce inventory, increased approximately 21% on a per-store basis as of February 2, 2013, as compared to January 28, 2012. For the fifty-three week period ended February 2, 2013, the Company had no outstanding borrowings under its revolving credit facility and capital expenditures totaled approximately $3.6 million.

Real Estate
As part of the Company's real estate restructuring efforts, all 103 stores identified for closure during the transition period ended January 28, 2012 were closed as of July 28, 2012. The Company closed 30 additional stores in the normal course of business during the fourteen weeks ended February 2, 2013. The Company also converted thirteen dual stores back into Christopher & Banks stores during the fourteen weeks ended February 2, 2013.

Outlook for the 2013 First Quarter and Fiscal Year
For the first quarter of fiscal 2013, the Company expects:
•
same-store sales to increase in the low twenty percent range;
•
approximately 800 to 900 bps of gross margin improvement, as compared to the comparable prior year period, due in approximately equal parts to improved merchandise margins and positive leverage on occupancy expense, based on store closings and rent restructurings;
•
SG&A dollars to grow due to increased investments in marketing and store payroll, albeit at a slower pace than the anticipated net sales growth; and
•
inventory levels to be in-line with the Company's anticipated increase in same-store sales.
For the 2013 fiscal year, the Company expects:
•
capital expenditures to be approximately $9 million;
•
to recognize a nominal amount of tax expense, as the Company's tax provisions will continue to be affected by the valuation allowance on its deferred tax assets in fiscal 2013; and
•
average store count to be down 11% for the first quarter and 8% for the fiscal year, as compared to the comparable prior year period.

Conference Call Information
The Company will discuss its fourth quarter and full year results in a conference call scheduled for today, March 13, 2013, at 4:30 p.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 one hour of the completion of the call and will be accessible at http://www.christopherandbanks.com until April 13, 2013. In addition, an audio replay of the call will be available shortly after its conclusion and will be archived until March 20, 2013. This call may be accessed by dialing (877) 870-5176 and using the passcode 9601469.

About Christopher & Banks
Christopher & Banks Corporation is a Minneapolis-based specialty retailer of women's clothing. As of March 13, 2013, the Company operates 605 stores in 44 states consisting of 381 Christopher & Banks stores, 158 stores in its women's plus size clothing division CJ Banks, 41 dual stores and 25 outlet stores. The Company also operates the www.ChristopherandBanks.com and www.CJBanks.com e-commerce websites.

Keywords: Christopher & Banks, CJ Banks, Women's Clothing, Plus Size Clothing, Petites, Extended Sizes, Outfits.


2


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” and similar expressions and include statements that the Company expects: (i) same-store sales for the first quarter to increase in the low twenty percent range; (ii) approximately 800 to 900 bps of gross margin improvement in the first quarter, as compared to the prior year period, due in approximately equal parts to improvement in merchandise margins and positive leverage on occupancy expense, based on store closings and rent restructurings; (iii) SG&A dollars to grow in the first quarter as the Company increases its investments in marketing and store payroll, albeit at a slower pace than the anticipated increase in same-store sales; (iv) inventory levels in the first quarter to be in-line with the Company's anticipated net sales growth; (v) capital expenditures to be approximately $9 million for the fiscal year; (vi) to recognize a nominal amount of tax expense in the fiscal year, as the Company's tax provisions will continue to be affected by the valuation allowance on its deferred tax assets in fiscal 2013; and (vii) average store count to be down 11% for the first quarter and 8% for the fiscal year, as compared to the comparable prior year period. 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 our 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 our 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 our 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 our 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; (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 “Investor Relations” and you are urged to carefully consider all such factors.

###



3


CHRISTOPHER & BANKS CORPORATION
UNAUDITED COMPARATIVE STATEMENTS OF OPERATIONS(1) 
(in thousands, except per share data)

 
 
 
Fourteen
 
Thirteen
 
Nine
 
Fifty-Three
 
Fifty-Two
 
Forty-Eight
 
 
 
Weeks Ended
 
Weeks Ended
 
Weeks Ended
 
Weeks Ended
 
Weeks Ended
 
Weeks Ended
 
 
 
February 2,
 
January 28,
 
January 28,
 
February 2,
 
January 28,
 
January 28,
 
 
 
2013
 
2012
 
2012
 
2013
 
2012
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
$
115,981

 
$
105,647

 
$
68,838

 
$
430,302

 
$
436,182

 
$
412,796

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Merchandise, buying and occupancy
81,008

 
98,169

 
65,640

 
303,680

 
333,288

 
311,925

 
Selling, general and administrative
34,778

 
35,335

 
23,772

 
129,153

 
141,825

 
131,259

 
Depreciation and amortization
4,211

 
4,521

 
3,043

 
18,595

 
21,991

 
20,202

 
Impairment and restructuring
—

 
21,183

 
8,978

 
(5,161
)
 
21,183

 
21,183

 
 
Total costs and expenses
119,997

 
159,208

 
101,433

 
446,267

 
518,287

 
484,569

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating loss
(4,016
)
 
(53,561
)
 
(32,595
)
 
(15,965
)
 
(82,105
)
 
(71,773
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense (income)
110

 
(86
)
 
(66
)
 
14

 
(360
)
 
(324
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss before income taxes
(4,126
)
 
(53,475
)
 
(32,529
)
 
(15,979
)
 
(81,745
)
 
(71,449
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax (benefit) provision
(76
)
 
(251
)
 
(798
)
 
97

 
(390
)
 
(387
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
$
(4,050
)
 
$
(53,224
)
 
$
(31,731
)
 
$
(16,076
)
 
$
(81,355
)
 
$
(71,062
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic loss per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
$
(0.11
)
 
$
(1.50
)
 
$
(0.89
)
 
$
(0.45
)
 
$
(2.29
)
 
$
(2.00
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic shares outstanding
35,883

 
35,581

 
35,582

 
35,694

 
35,547

 
35,554

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted loss per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income loss
$
(0.11
)
 
$
(1.50
)
 
$
(0.89
)
 
$
(0.45
)
 
$
(2.29
)
 
$
(2.00
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted shares outstanding
35,883

 
35,581

 
35,582

 
35,694

 
35,547

 
35,554

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends per share
$
—

 
$
—

 
$
—

 
$
—

 
$
0.18

 
$
0.18

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 
In January 2012, the Company changed its fiscal year end to the Saturday closest to the end of January from the Saturday closest to the end of February. The Company has provided financial results for the thirteen and fifty-two weeks ended January 28, 2012 on a comparable basis to the fourteen and fifty-three weeks ended February 2, 2013. The Company's prior year fourth quarter and full fiscal year included the nine and forty-eight weeks ended January 28, 2012.


4


CHRISTOPHER & BANKS CORPORATION
UNAUDITED COMPARATIVE BALANCE SHEETS
(in thousands)

 
 
 
 
February 2,
 
January 28,
 
 
 
 
2013
 
2012
ASSETS
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
 
$
40,739

 
$
40,782

 
Short-term investments
 
—

 
7,660

 
Merchandise inventories
 
42,704

 
39,455

 
Other current assets
 
10,858

 
8,126

 
 
Total current assets
 
94,301

 
96,023

 
 
 
 
 
 
 
Property, equipment and improvements, net
 
41,230

 
56,443

 
 
 
 
 
 
 
Other assets:
 
 
 
 
 
Long-term investments
 
—

 
13,284

 
Other
 
401

 
266

 
 
Total other assets
 
401

 
13,550

 
 
 
 
 
 
 
 
 
Total assets
 
$
135,932

 
$
166,016

 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable(1)
 
$
22,586

 
$
19,466

 
Accrued salaries, wages and related expenses
 
4,217

 
5,831

 
Accrued liabilities(1)
 
23,410

 
25,566

 
 
Total current liabilities
 
50,213

 
50,863

 
 
 
 
 
 
 
Non-current liabilities:
 
 
 
 
 
Deferred lease incentives
 
5,665

 
10,546

 
Deferred rent obligations
 
2,959

 
5,294

 
Lease termination liabilities
 
—

 
8,032

 
Other accrued liabilities
 
1,629

 
1,919

 
 
Total non-current liabilities
 
10,253

 
25,791

 
 
 
 
 
 
 
Stockholders' equity:
 
 
 
 
 
Common stock
 
467

 
458

 
Additional paid-in capital
 
119,632

 
117,399

 
Retained earnings
 
68,078

 
84,154

 
Common stock held in treasury
 
(112,711
)
 
(112,711
)
 
Accumulated other comprehensive income
 
—

 
62

 
 
Total stockholders' equity
 
75,466

 
89,362

 
 
 
 
 
 
 
 
 
Total liabilities and stockholders' equity
 
$
135,932

 
$
166,016

 
 
 
 
 
 
 
(1) 
Certain prior year amounts have been reclassified to conform to the current year presentation.


5


CHRISTOPHER & BANKS CORPORATION
UNAUDITED COMPARATIVE STATEMENTS OF CASH FLOWS
(in thousands)
 
 
 
 
Fifty-Three
 
Forty-Eight
 
 
 
 
Weeks Ended
 
Weeks Ended
 
 
 
 
February 2,
 
January 28,
 
 
 
 
2013
 
2012
Cash flows from operating activities:
 
 
 
 
 
Net loss
 
$
(16,076
)
 
$
(71,062
)
 
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
 
 
 
 
 
 
Depreciation and amortization
 
18,595

 
20,202

 
 
Impairment of store assets
 
424

 
11,445

 
 
Amortization of premium on investments
 
(444
)
 
74

 
 
Amortization of financing costs
 
35

 
—

 
 
Deferred lease related liabilities(1)
 
(7,216
)
 
(6,599
)
 
 
Stock-based compensation expense
 
2,308

 
2,770

 
Loss on disposal of assets
 
52

 
106

 
 
Gain on investments, net
 
(76
)
 
(122
)
 
Changes in operating assets and liabilities:
 
 
 
 
 
 
Decrease in accounts receivable
 
19

 
318

 
 
Increase in merchandise inventories
 
(3,249
)
 
(244
)
 
 
Increase in prepaid expenses and other current assets
 
(3,535
)
 
(1,300
)
 
 
Decrease in income taxes receivable
 
783

 
5,113

 
 
Decrease in other assets
 
180

 
48

 
 
Increase in accounts payable(1)
 
2,952

 
4,369

 
 
(Decrease) increase in accrued liabilities(1)
 
(3,871
)
 
1,583

 
 
(Decrease) increase in lease termination liabilities
 
(8,032
)
 
8,032

 
 
Decrease in other liabilities
 
(290
)
 
(613
)
 
 
  Net cash used in operating activities
 
(17,441
)
 
(25,880
)
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
Purchases of property, equipment and improvements
 
(3,623
)
 
(11,742
)
 
Proceeds from sale of furniture, fixtures and equipment
 
35

 
143

 
Purchases of available-for-sale investments
 
—

 
(35,713
)
 
Redemptions of available-for-sale investments
 
21,403

 
76,827

 
 
Net cash provided by investing activities
 
17,815

 
29,515

 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
Financing costs
 
(350
)
 
—

 
Shares redeemed for payroll taxes
 
(67
)
 
(139
)
 
Dividends paid
 
—

 
(6,426
)
 
 
Net cash used in financing activities
 
(417
)
 
(6,565
)
 
 
 
 
 
 
 
Net decrease in cash and cash equivalents
 
(43
)
 
(2,930
)
Cash and cash equivalents at beginning of period
 
40,782

 
43,712

Cash and cash equivalents at end of period
 
$
40,739

 
$
40,782

 
 
 
 
 
 
 
(1) 
Certain prior year amounts have been reclassified to conform to the current year presentation.


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