Specialty women’s apparel retailer, Christopher & Banks, Corp. (NYSE:CBK), releases Q3, 2016 financials.
Christopher & Banks Corporation (CBK), a specialty women’s apparel retailer, today reported results for the third quarter ended October 29, 2016.
Results for the Third Quarter Ended October 29, 2016
Net sales totaled $106.7 million, an increase of 2.9%, while operating on average 506 stores, compared to $103.6 million in net sales for the third quarter of fiscal 2015, while operating on average 533 stores.
Comparable sales increased 4.5% compared to a 6.7% decrease in the same period last year.
Gross margin rate increased 95 basis points to 36.8%, as compared to last year’s third quarter.
Net income totaled $3.5 million, or $0.09 per diluted share, compared to a net loss for the prior year period of $0.3 million, or a $0.01 loss per share.
Adjusted EBITDA, a non-GAAP measure, was $6.7 million, compared to $3.8 million for the same period last year. 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 store assets; and certain non-recurring items.*
On-hand inventory, at cost, was down 3.8%, in line with the Company’s expectations.
LuAnn Via, President and Chief Executive Officer, commented, “We are very pleased with our third quarter performance, as we exceeded our original guidance as well as our preliminary results reported on November 4, 2016. Our comparable sales increase reflects a favorable response to our merchandise assortment as well as our effective marketing campaigns and events that drew her into our stores and to our website. We saw growth in average spend among our existing customers and reactivated more lapsed and also acquired additional new customers. We were able to drive an increase in gross margin rate, despite a highly promotional environment and unseasonably warm weather. As we look ahead, we expect continued momentum as we further execute across our strategic initiatives in merchandising, marketing and technology to drive long term profitable growth.”
LuAnn Via also stated, “In addition to the initiatives we are undertaking to increase sales, we continue to focus on improving our cash flow. After significant investments in technology and stores the past several years, we are focusing on optimizing these investments in Fiscal 2017 and reducing capital outlays. We are also taking a close look at our costs and identifying opportunities for additional savings in a number of areas, including occupancy, and increased efficiencies in processes and contract negotiations. Our preliminary assessment suggests there is an opportunity for net savings in fiscal 2017 of approximately $5.0 million to $7.0 million, before giving effect to the costs the Company would incur in connection with potential growth in overall sales.”
Balance Sheet Highlights and Capital Expenditures
Cash, cash-equivalents and investments totaled $25.8 million as of October 29, 2016. Capital expenditures for the third quarter of fiscal 2016 were $2.0 million compared to $5.1 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 Customer First initiative. For the third quarter ended October 29, 2016, the Company had no outstanding borrowings under its revolving credit facility.
Outlook for the 2016 Fourth Quarter and Full Fiscal Year
For the fourth quarter of fiscal 2016, the Company currently expects:
Total net sales of between $93.0 million and $97.0 million, with a comparable sales increase of 1.0% to 5.0%, as compared to net sales of $94.6 million and a comparable sales decrease of 3.4% in last year’s fourth quarter;
A net loss of $4.1 million to $5.9 million or a net loss of $0.11 to $0.16 per share, as compared to a net loss of $46.6 Million or a net loss of $1.26 per share in last year’s fourth quarter, including $37.5 million or a net loss of $1.02 per share to record a valuation allowance for deferred tax assets;
Adjusted EBITDA, a non-GAAP measure, is expected to be between approximately a negative $0.6 million and a negative $2.4 million**;
Depreciation and amortization to be approximately $3.4 million as compared to $3.3 million in last year’s fourth quarter;
On-hand inventory, at cost, at the end of the quarter to decline by low single digits, as compared to the end of last year’s fourth quarter;
To close six Missy, Petite, Women (“MPW”) stores, and close 24 CB and CJ stores and convert them into 12 MPW stores; and
Average square footage to be down 5.0%, as compared to last year’s fourth quarter.
For the 2016 fiscal year, the Company currently expects:
Capital expenditures to be approximately $12.0 million to $12.5 million, compared to the Company’s previous expectations of capital expenditures of $12.5 million to $13.0 million;
Nominal taxes, representing minimal taxes and fees;
Average square footage for the year to be down approximately 1.6% as compared to fiscal 2015; and
To end the fiscal year with cash, cash equivalents and investments in the low to mid $30 million range, as compared to $34.5 million at the end of last year’s fourth quarter.
Conference Call Information
The Company will discuss its third quarter results in a conference call scheduled for today, December 1, 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 January 1, 2016. In addition, an audio replay of the call will be available shortly after its conclusion and will be archived until December 8, 2016. This call may be accessed by dialing 1-877-870-5176 and using the passcode 13650264.
In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release contains non-GAAP financial measures, including Adjusted EBITDA. The presentation of this non-GAAP measure 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 this non-GAAP measure provides useful supplemental information to investors regarding the underlying performance of the Company’s business operations, especially when comparing such results to previous periods. This non-GAAP measure is 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 reconciliations of the non-GAAP financial measure to its most directly comparable GAAP measure as provided in the tables below.
* Adjusted EBITDA is a non-GAAP financial measure. Please see “Non-GAAP Measures” below and reconciliations of this non-GAAP measure to the comparable GAAP measure that follows in the tables below.
** Adjusted EBITDA is a non-GAAP financial measure. Please see “Non-GAAP Measures” below and reconciliation of this non-GAAP measure to the comparable GAAP measure that follows in the tables 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 December 1, 2016, the Company operates 503 stores in 45 states consisting of 315 MPW stores, 82 Outlet stores, 54 Christopher & Banks stores, and 52 stores in its women’s plus size clothing division CJ Banks. The Company also operates the www.ChristopherandBanks.com eCommerce website.
Christopher & Banks, Corp. (NYSE:CBK) shares are trading +22.09% on the news and in the range of $1.96 – 2.19 during the current trading session. When taking a look at which direction the stock might be headed, investors often look to brokerage analysts who cover the stock. Sell-side research firms on Wall Street currently have a consensus one-year price target of $4.13 on the stock. This is according to brokerage analysts polled by Thomson Reuters First Call.
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Sell-side analysts are projecting earnings per share of $-0.14 for the next fiscal quarter. For the current year, analysts are predicting earnings of $-0.20 per share according to First Call.
Looking at where the stock is trading on a technical level, the stock is trading +39.13% away from its 50-day moving average of $1.51. Based on the most recent available data, the equity is -30.46% off of its 52-week high of $3.02 and +118.75% away from its 52-week low which is $0.96. In looking further ahead, potential investors should note that the company’s price to next year’s EPS estimates is $19.09.
Today, the stock opened at $2.14 and the last bid at the time of writing stood at $2.10. During the session thus far, the equity dipped down to $1.96 and touched $2.19 as the high point. Christopher & Banks, Corp. (NYSE:CBK) has a market cap of $78.20M and has seen an average daily volume of 190,451 over the past three months.
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