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8-K - 8-K - CHRISTOPHER & BANKS CORPcbk-20150910x8k.htm

Exhibit 99.1

 

 

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

 

 

 

 

FOR:

 

Christopher & Banks Corporation

 

 

 

COMPANY CONTACT:

 

Peter G. Michielutti

 

 

Executive Vice President,

 

 

Chief Operating Officer and

 

 

Chief Financial Officer

 

 

(763) 551-5000

 

 

 

INVESTOR RELATIONS CONTACT:

 

Jean Fontana

 

 

ICR, Inc.

 

 

(203)  682-8200

 

CHRISTOPHER & BANKS CORPORATION REPORTS RESULTS FOR THE

THIRTEEN WEEK PERIOD ENDED AUGUST 1, 2015

 

 

Minneapolis, MN, September 10, 2015 – Christopher & Banks Corporation (NYSE: CBK), a specialty women’s apparel retailer, today reported results for the thirteen week period ended August 1, 2015.

 

Results for the Thirteen Week Period Ended August 1, 2015

 

·

Net sales totaled $94.0 million, as compared to $106.6 million for the thirteen weeks ended August 2, 2014.  During the quarter, the Company operated an average of 4.4% fewer stores than during the comparable period last year, reflecting its MPW store conversion strategy; offset to some extent by new store openings, primarily outlets.

·

Same-store sales decreased 12.4% in the thirteen weeks ended August 1, 2015, as compared to the thirteen weeks ended August 2, 2014; this follows a 4.7% same-store sales increase in last year's second quarter.

·

Gross margin was 32.9% compared to 35.3% in the second quarter of fiscal 2014.

·

Operating loss was $1.7 million for the thirteen week period ended August 1, 2015.  This compares to operating income of $3.3 million in the second quarter of fiscal 2014.

·

Net loss totaled $0.7 million, or ($0.02) per share.  Net income for the thirteen weeks ended August 2, 2014 totaled $3.4 million, or $0.09 per diluted share.

 

 

LuAnn Via, President and Chief Executive Officer, commented, “Our disappointing second quarter performance reflects a combination of both macro headwinds, as well as company-specific factors that impacted our business, particularly in late June and in the month of July. While we have taken immediate action in a number of areas to address certain merchandising missteps and have seen trends in the business improve somewhat since July, much of the benefit from these initiatives is expected to drive improved sales for Holiday 2015 and Spring 2016.  With the majority of the store base already converted to MPW’s and Outlets approaching our target number, our


 

pace of conversions  and new Outlets will slow down as we remain focused on ensuring that our current store base achieves optimal productivity.    At the same time, we continue to make progress on our Customer First initiative, which includes our omni-channel strategy and our Friendship Rewards loyalty program refresh; this represents a significant opportunity and is expected to enhance customer engagement.  Overall, we believe that we are taking the proper steps to drive improved performance and profitability for the long-term.

 

Balance Sheet Highlights and Capital Expenditures

 

Cash, cash-equivalents and investments totaled $34.5 million as of August 1, 2015.  Inventory per square foot, excluding in-transit and eCommerce inventory, increased approximately 2.7% to $17.00 per square foot, as of August 1, 2015, as compared to August 2, 2014.  For the thirteen week period ended August 1, 2015, the Company had no outstanding borrowings under its revolving credit facility and capital expenditures totaled approximately $9.7 million.

 

Outlook for the 2015 Third Quarter and Fiscal Year

 

Ms. Via also noted, “As the volatility of the external environment and our recent sales trends has increased, we are limiting our sales, gross margin and SG&A guidance to the current fiscal quarter.”

 

For the third quarter of fiscal 2015, the Company currently expects:

·

total net sales of between $101 million and $105 million, as compared to net sales of $110.6 million in last year’s third quarter reflecting quarter to date sales trends;

·

gross margin to be 320 to 400 basis points lower than last year’s third quarter, driven primarily by deleverage of buying and occupancy of  230 to 300 basis points;

·

SG&A to be between approximately $34.3 million and $34.8 million, compared to the $31.5 million of SG&A expense reported in the third quarter last year;

·

inventory per square foot at the end of the quarter to be slightly below the level at the end of last year’s third quarter;

·

depreciation and amortization to be approximately $3.1 million as compared to $2.9 million in last year’s third quarter;

·

its tax rate to be approximately 45%;

·

to close one Christopher & Banks store and two Missy, Petite, Women (“MPW”) stores; to convert four stores into two MPW stores; and to open five MPW and nine Outlet stores; and

·

average store count to be down 3.0% and average square footage to be relatively flat, as compared to last year’s third quarter.

 

For the 2015 fiscal year, the Company now expects:

·

depreciation and amortization to be between $12.0 million and $12.5 million, as compared to $11.8 million in fiscal 2014;

·

capital expenditures to be approximately $27.0 million to $28.0 million;

·

a tax rate of approximately 40%;

·

the average store count to be down approximately 4.0% and related average square footage for the year to be flat as compared to fiscal 2014;


 

·

to open nine new MPW stores and 33 Outlet stores and to end the year with approximately 525 stores, of which 320 are MPWs, as compared to 518 stores at the end of fiscal 2014; and

·

to end the fiscal year with a total square footage increase of approximately 4.0%, as compared to the end of fiscal 2014.

 

Conference Call Information

 

The Company will discuss its second quarter results in a conference call scheduled for today, September 10, 2015, 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 October 10, 2015.  In addition, an audio replay of the call will be available shortly after its conclusion and will be archived until September 17, 2015.  This call may be accessed by dialing 1-877-870-5176 and using the passcode 7916219.

 

About Christopher & Banks 

 

Christopher & Banks Corporation is a Minneapolis-based specialty retailer of women’s clothing.  As of September 10, 2015, the Company operates 533 stores in 44 states consisting of 80 Christopher & Banks stores, 71 stores in its women’s plus size clothing division CJ Banks,  314 MPW stores and 68 Outlet stores.  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” and similar expressions and include the statements that:  (i) while the Company has taken immediate action in a number of areas to address certain merchandising missteps, much of the benefit from these initiatives is expected to drive improved sales for Holiday 2015 and Spring 2016; (ii) with the majority of the store base already converted to MPWs  and  Outlets approaching the Company’s target number, the Company’s pace of conversions and new Outlets will slow down as the Company remains  focused on ensuring that its current store base achieves optimal productivity; (iii) the Company continues to make progress on its Customer First initiative, including its omni-channel strategy and its Friendship Rewards loyalty program refresh; this represents a significant opportunity and is expected to enhance its customer engagement; (iv) overall, the Company believes that it is taking the proper steps to drive improved performance and profitability for the long term; (v) for the third quarter of fiscal 2015, the Company currently expects: (a) total net sales of between $101 million and $105 million, as compared to net sales of $110.6 million in last year’s third quarter, reflecting quarter to date sales trends; (b) gross margin to be 320 to 400 basis points lower than last year’s third quarter driven primarily by deleveraging of buying and occupancy of 230 to 300 basis points; (c) SG&A to be between approximately $34.3 million and $34.8 million, compared to the $31.5 million of SG&A expense reported in the third quarter last year; (d) inventory per square foot at the end of the quarter to be slightly below the level at the end of last year’s third quarter; (e) depreciation and amortization to be approximately


 

$3.1 million as compared to $2.9 million in last year’s third quarter; (f) its tax rate to be approximately 45%;  (g) to close one Christopher & Banks store and two Missy, Petite, Women (“MPW”)  stores; to convert four stores into two MPW stores; and to open five MPW and nine Outlet stores; and (h) average store count to be down 3.0% and average square footage to be relatively flat, as compared to last year’s third quarter; and (vi) for the 2015 fiscal year, the Company now expects: (a) depreciation and amortization to be between $12.0 million and $12.5 million; (b) capital expenditures to be approximately $27.0 million to $28.0 million; (c) a tax rate of approximately 40%; (d) the average store count to be down approximately 4.0% and related average square footage for the year to be flat, as compared to fiscal 2014; (e) to open nine new MPW stores and 33 Outlet stores and to end the year with approximately 525 stores, of which 320 are MPWs, as compared to 518 stores at the end of fiscal 2014; and (f) to end the fiscal year with a total square footage increase of approximately 4.0%, as compared to the end of fiscal 2014.  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; (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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

Twenty-six Weeks Ended

 

 

August 1,

 

August 2,

 

August 1,

 

August 2,

 

 

2015

    

2014

    

2015

    

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

93,997

 

$

106,633

 

$

185,618

 

$

209,998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise, buying and occupancy

 

63,061

 

 

69,000

 

 

122,473

 

 

134,460

 

Selling, general and administrative

 

29,630

 

 

31,281

 

 

61,619

 

 

63,488

 

Depreciation and amortization

 

2,901

 

 

2,958

 

 

5,617

 

 

5,865

 

     Impairment of store assets

 

115

 

 

144

 

 

115

 

 

144

 

Total costs and expenses

 

95,707

 

 

103,383

 

 

189,824

 

 

203,957

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (loss) income

 

(1,710)

 

 

3,250

 

 

(4,206)

 

 

6,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense

 

(33)

 

 

(53)

 

 

(40)

 

 

(104)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income before income taxes

 

(1,743)

 

 

3,197

 

 

(4,246)

 

 

5,937

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

(1,033)

 

 

(165)

 

 

(2,094)

 

 

(42)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(710)

 

$

3,362

 

$

(2,152)

 

$

5,979

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(0.02)

 

$

0.09

 

$

(0.06)

 

$

0.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic shares outstanding

 

36,871

 

 

36,591

 

 

36,860

 

 

36,442

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(0.02)

 

$

0.09

 

$

(0.06)

 

$

0.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

36,871

 

 

37,632

 

 

36,860

 

 

37,455

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

CHRISTOPHER & BANKS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

August 1,

 

August 2,

 

 

 

2015

    

2014

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

23,581

 

$

27,565

 

Short-term investments

 

 

10,917

 

 

12,434

 

Merchandise inventories

 

 

50,900

 

 

48,218

 

Deferred income taxes

 

 

3,653

 

 

 —

 

Other current assets

 

 

16,757

 

 

16,616

 

Total current assets

 

 

105,808

 

 

104,833

 

 

 

 

 

 

 

 

 

Property, equipment and improvements, net

 

 

57,122

 

 

41,269

 

 

 

 

 

 

 

 

 

Other non-current assets:

 

 

 

 

 

 

 

Long-term investments

 

 

 —

 

 

3,402

 

Deferred income taxes

 

 

36,173

 

 

 —

 

Other assets

 

 

766

 

 

276

 

Total other non-current assets

 

 

36,939

 

 

3,678

 

 

 

 

 

 

 

 

 

Total assets

 

$

199,869

 

$

149,780

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

23,639

 

$

18,455

 

Accrued salaries, wages and related expenses

 

 

3,273

 

 

5,131

 

Accrued liabilities and other current liabilities

 

 

20,276

 

 

21,013

 

Total current liabilities

 

 

47,188

 

 

44,599

 

 

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

 

 

Deferred lease incentives

 

 

9,456

 

 

6,584

 

Deferred rent obligations

 

 

7,276

 

 

3,736

 

Other non-current liabilities

 

 

1,164

 

 

1,196

 

Total non-current liabilities

 

 

17,896

 

 

11,516

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Common stock

 

 

470

 

 

465

 

Additional paid-in capital

 

 

125,283

 

 

123,173

 

Retained earnings

 

 

121,743

 

 

82,747

 

Common stock held in treasury

 

 

(112,711)

 

 

(112,711)

 

Accumulated other comprehensive income (loss)

 

 

 —

 

 

(9)

 

Total stockholders' equity

 

 

134,785

 

 

93,665

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

199,869

 

$

149,780

 

 


 

CHRISTOPHER & BANKS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Twenty-Six Weeks Ended

 

 

 

August 1,

 

August 2,

 

 

    

2015

    

2014

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net (loss) income

 

$

(2,152)

 

$

5,979

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

5,617

 

 

5,865

 

Impairment of store assets

 

 

115

 

 

144

 

Deferred income taxes, net

 

 

(1,888)

 

 

 —

 

Unrealized gain on investment, net

 

 

(1)

 

 

 —

 

Amortization of premium on investments

 

 

24

 

 

34

 

Amortization of financing costs

 

 

31

 

 

37

 

Deferred lease-related liabilities

 

 

2,696

 

 

2,277

 

Stock-based compensation expense

 

 

1,071

 

 

1,387

 

Loss on disposal of assets

 

 

 —

 

 

51

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Increase in accounts receivable

 

 

(1,919)

 

 

(4,099)

 

Increase in merchandise inventories

 

 

(5,582)

 

 

(3,341)

 

Increase in prepaid expenses and other assets

 

 

(3,414)

 

 

(1,744)

 

Decrease (increase) in income taxes receivable

 

 

163

 

 

(644)

 

Increase (decrease) in accounts payable

 

 

5,135

 

 

(5,274)

 

Decrease in accrued liabilities

 

 

(2,980)

 

 

(3,602)

 

(Decrease) increase in other liabilities

 

 

(148)

 

 

144

 

Net cash used in operating activities

 

 

(3,232)

 

 

(2,786)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property, equipment and improvements

 

 

(17,514)

 

 

(10,340)

 

Purchases of available-for-sale investments

 

 

 —

 

 

(6,497)

 

Maturities and sales of available-for-sale investments

 

 

7,108

 

 

6,740

 

Net cash used in investing activities

 

 

(10,406)

 

 

(10,097)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Shares redeemed for payroll taxes

 

 

(26)

 

 

(1,469)

 

Exercise of stock options

 

 

 —

 

 

843

 

Net cash used in financing activities

 

 

(26)

 

 

(626)

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(13,664)

 

 

(13,509)

 

Cash and cash equivalents at beginning of period

 

 

37,245

 

 

41,074

 

Cash and cash equivalents at end of period

 

$

23,581

 

$

27,565

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

Accrued purchases of equipment and improvements

 

$

975

 

$

531

 

Shares surrendered for stock option cost

 

$

 —

 

$

1,715