Christopher & Banks Corporation Reports Fourth Quarter Fiscal 2015 Financial Results
Christopher & Banks Corporation (NYSE: CBK), a specialty women's apparel retailer, today reported results for the fourth quarter and fiscal year ended January 30, 2016.
Results for the Fourth Quarter Ended January 30, 2016
- Net sales totaled $94.6 million, as compared to $98.0 million for the fourth quarter of fiscal 2014. During the quarter, the Company operated an average of 1.6% fewer stores than during the comparable period last year.
- Comparable sales decreased 3.4% in the fourth quarter of fiscal 2015, as compared to the fourth quarter of fiscal 2014.
- Gross margin was 30.9% compared to 29.1% in the fourth quarter of fiscal 2014.
- Operating loss was $7.4 million for the fourth quarter of fiscal 2015. This compares to an operating loss of $6.0 million in the fourth quarter of fiscal 2014, which included the correction of an error that resulted in a cumulative increase to occupancy expense of $3.6 million.
- Net loss totaled $46.6 million, or a $1.26 loss per share, including $37.5 million, or a $1.02 loss per share, to record a valuation allowance for our deferred tax assets. Net income for the fourth quarter of fiscal 2014 totaled $32.2 million, or $0.86 per diluted share; which included a $41.3 million, or $1.09 per diluted share, reversal of our valuation allowance related to deferred income taxes and the after-tax impact of the cumulative error correction of $2.2 million, or $0.06 per diluted share.
LuAnn Via, President and Chief Executive Officer, commented, "During the fourth quarter, we met or exceeded our financial objectives and continued to achieve sequential improvement in a number of key areas, despite the persistence of external headwinds. Our merchandise assortments resonated well with customers driving improved performance in brick and mortar stores, and our e-commerce business remained strong, with sales up 45% in the quarter. Overall, we have made important strides to strengthen our foundation and systems infrastructure to position ourselves for improved financial performance. For 2016, we will remain diligent in the execution of our strategic initiatives to drive increased productivity across our retail store base and to expand our Customer First omni-channel capabilities."
Results for the Fifty-Two Weeks Ended January 30, 2016
- Net sales totaled $383.8 million and comparable sales decreased 8.3%, compared to $418.6 million last year.
- Operating loss totaled $11.3 million, compared to operating income of $9.4 million last year, or $13.0 million excluding the effect of the error correction of $3.6 million.
- Net loss for fiscal 2015 aggregated to $49.1 million, or a $1.33 loss per share, including $37.5 million, or a $1.02 loss per share, to record a valuation allowance for our deferred tax assets. Net income for fiscal 2014 totaled $47.1 million, or $1.24 per diluted share, which included a $41.3 million, or a $1.09 per diluted share, reversal of a valuation allowance related to deferred income taxes and the after-tax impact of the cumulative error correction of $2.2 million, or $0.06 per diluted share.
Balance Sheet Highlights and Capital Expenditures
Cash, cash-equivalents and investments totaled $34.5 million as of January 30, 2016. Inventory per square foot, excluding in-transit and eCommerce inventory, decreased approximately 12.9% to $14.20 per square foot, as of January 30, 2016, as compared to January 31, 2015. For the fourth quarter ended January 30, 2016, the Company had no outstanding borrowings under its revolving credit facility and capital expenditures were $26.1 million in fiscal 2015, which reflected an increase in new store openings and investments in technology.
Outlook for the 2016 First Quarter and Full Fiscal Year
For the first quarter of fiscal 2016, the Company currently expects:
- total net sales of between $93.0 million and $98.0 million, as compared to net sales of $91.6 million in last year's first quarter;
- gross margin to be 35.4% to 36.0% as compared to last year's 35.2%;
- SG&A to be between approximately $35.6 million and $36.0 million, compared to the $32.0 million of SG&A expense reported in the first quarter last year;
- inventory per square foot at the end of the quarter to be approximately 8% lower than at the end of last year's first quarter;
- depreciation and amortization to be approximately $3.0 million as compared to $2.7 million in last year's first quarter;
- to open four Outlet stores and one MPW store;
- to close five Christopher & Banks stores, two CJ stores, and one Missy, Petite, Women ("MPW") store, and to convert four stores into two MPW stores; and
- average square footage to be up 2.4%, as compared to last year's first quarter.
For the 2016 fiscal year, the Company expects:
- capital expenditures to be approximately $11.0 million to $12.0 million;
- nominal taxes, representing minimal taxes and fees;
- to open six new Outlets and four new MPW stores; and
- average square footage for the year to be down approximately 1% as compared to fiscal 2015.
Conference Call Information
The Company will discuss its fourth quarter and full year results in a conference call scheduled for today, March 10, 2016, 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 April 10, 2016. In addition, an audio replay of the call will be available shortly after its conclusion and will be archived until March 17, 2016. This call may be accessed by dialing 1-877-870-5176 and using the passcode 5690774.
About Christopher & Banks
Christopher & Banks Corporation is a Minneapolis-based specialty retailer of women's clothing. As of March 10, 2016, the Company operates 514 stores in 45 states consisting of 314 MPW stores, 77 Outlet stores, 65 Christopher & Banks stores, and 58 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.
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) for 2016, the Company will remain diligent in the execution of its strategic initiatives to drive increased productivity across its retail store base and to expand its Customer First omni-channel capabilities; (ii) for the first quarter of fiscal 2016, the Company currently expects: (a) total net sales of between $93.0 million and $98.0 million, as compared to net sales of $91.6 million in last year's first quarter; (b) gross margin to be 35.4% to 36.0% as compared to last year's 35.2%; (c) SG&A to be between approximately $35.6 million and $36.0 million, compared to the $32.0 million of SG&A expense reported in the first quarter last year; (d) inventory per square foot at the end of the quarter to be approximately 8% lower as compared to the end of last year's first quarter; (e) depreciation and amortization to be approximately $3.0 million as compared to $2.7 million in last year's first quarter; (f) to open four Outlet stores and one MPW store; (g) to close five Christopher & Banks stores, two CJ stores, and one MPW store; and to convert four stores into two MPW stores; and (h) average square footage to be up 2.4 %, as compared to last year's first quarter; (iii) for the 2016 fiscal year, the Company now expects: (a) capital expenditures to be approximately $11.0 million to $12.0 million; (b) nominal taxes, representing minimal taxes and fees; (c) to open six new Outlet stores and four new MPW stores; and (d) average square footage for the year to be down approximately 1% as compared to the end of fiscal 2015.
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 AND SUBSIDIARIES
|Thirteen Weeks Ended||Fifty-Two Weeks Ended|
|January 30,||January 31,||January 30,||January 31,|
|Merchandise, buying and occupancy costs||65,358||69,457||254,350||270,790|
|Other Operating Expenses:|
|Selling, general and administrative||33,190||31,412||128,413||126,377|
|Depreciation and amortization||3,315||3,005||12,048||11,786|
|Impairment of store assets||99||72||281||216|
|Total other operating expenses||36,604||34,489||140,742||138,379|
|Operating (loss) income||(7,393)||(5,971)||(11,264)||9,415|
|Other expense, net||(39)||(41)||(115)||(191)|
|(Loss) income before income taxes||(7,432)||(6,012)||(11,379)||9,224|
|Income tax provision (benefit)||39,195||(38,176)||37,715||(37,902)|
|Net (loss) income||$||(46,627)||$||32,164||$||(49,094)||$||47,126|
|Basic (loss) income per share:|
|Net (loss) income||$||(1.26)||$||0.87||$||(1.33)||$||1.28|
|Basic shares outstanding||36,906||36,837||36,886||36,819|
|Diluted (loss) income per share:|
|Net (loss) income||$||(1.26)||$||0.86||$||(1.33)||$||1.24|
|Diluted shares outstanding||36,906||37,524||36,886||37,753|
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
|January 30,||January 31,|
|Cash and cash equivalents||$||31,506||$||37,245|
|Prepaid expenses and other current assets||9,059||6,700|
|Deferred income taxes||—||3,550|
|Income taxes receivable||513||845|
|Total current assets||90,641||110,951|
|Property, equipment and improvements, net||59,224||45,107|
|Other non-current assets:|
|Deferred income taxes||393||34,388|
|Total other non-current assets||1,025||39,979|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accrued salaries, wages and related expenses||2,845||2,957|
|Accrued liabilities and other current liabilities||24,570||23,988|
|Total current liabilities||44,060||45,356|
|Deferred lease incentives||9,880||7,110|
|Deferred rent obligations||7,241||6,390|
|Other non-current liabilities||1,301||1,292|
|Total non-current liabilities||18,422||14,792|
|Additional paid-in capital||125,851||124,242|
|Common stock held in treasury||(112,711)||(112,711)|
|Accumulated other comprehensive income (loss)||—||(2)|
|Total stockholders' equity||88,408||135,889|
|Total liabilities and stockholders' equity||$||150,890||$||196,037|
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
|Fifty-Two Weeks Ended|
|January 30,||January 31,|
|Cash flows from operating activities:|
|Net (loss) income||$||(49,094)||$||47,126|
|Adjustments to reconcile net (loss) income to net cash used in operating activities:|
|Depreciation and amortization||12,048||11,786|
|Impairment of store assets||281||216|
|Deferred income taxes, net||37,544||(37,938)|
|Loss on investment, net||—||1|
|Amortization of premium on investments||46||47|
|Amortization of financing costs||62||68|
|Deferred lease-related liabilities||3,267||6,473|
|Stock-based compensation expense||1,637||2,318|
|Loss on disposal of assets||—||56|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other assets||(2,214)||198|
|Income taxes receivable||332||(535)|
Net cash provided by operating activities
|Cash flows from investing activities:|
|Purchases of property, equipment and improvements||(26,082)||(20,270)|
|Purchases of available-for-sale investments||—||(18,480)|
|Maturities of available-for-sale investments||14,987||16,506|
Net cash used in investing activities
|Cash flows from financing activities:|
|Shares redeemed for payroll taxes||(26)||(1,486)|
|Exercise of stock options||—||999|
|Payment of deferred financing costs||—||(99)|
|Net cash used in financing activities||(26)||(586)|
|Net decrease in cash and cash equivalents||(5,739)||(3,829)|
|Cash and cash equivalents at beginning of period||37,245||41,074|
|Cash and cash equivalents at end of period||$||31,506||$||37,245|
|Supplemental cash flow information:|
|Income taxes (refunded) paid||$||(223)||$||487|
|Accrued purchases of equipment and improvements||$||1,105||$||740|
|Shares surrendered for stock option cost||$||—||$||1,715|
Christopher & Banks Corporation
Peter G. Michielutti, 763-551-5000
Executive Vice President,
Chief Operating Officer and
Chief Financial Officer
Jean Fontana, 203-682-8200