MINNEAPOLIS--(BUSINESS WIRE)--
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 Expenditures
Cash 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 Information
The 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 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 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 & Banks
Christopher
& 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 Statements
Certain 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 share |
Pretax | Net of tax |
Per share |
|||||||||||||||||
| 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 | |||||||||||||||||
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