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20.07.2009 20:01:00
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Cache Reports Second Quarter Fiscal 2009 Results
Cache Inc., (NASDAQ: CACH), a specialty chain of women’s apparel stores, reported results for the thirteen ("second quarter”) and twenty-six week periods ("first six months”) ended June 27, 2009.
For the 13-week period ended June 27, 2009:
- Net sales decreased 23.1% to $56.9 million from $74.0 million in the second quarter of fiscal 2008. Comparable store sales decreased 23.0%, as compared to an increase of 3.0% in the second quarter of fiscal 2008;
- Net income totaled $845,000 or $0.07 per diluted share, as compared to net income of $2.1 million or $0.16 per diluted share in the second quarter of fiscal 2008.
Thomas Reinckens, Chairman and Chief Executive Officer, commented: "During the second quarter, we maintained a strong balance sheet, achieved earnings per share at the high end of our expectations and positive cash flow. At quarter end, cash and marketable securities totaled $34.8 million, and inventory declined 36% from the prior year. In addition, we generated $7 million in expense savings and are currently on track to achieve $23 million in cost reductions this year.”
"While the weak consumer spending environment pressured our sales performance during the quarter, we are encouraged by the favorable response to our merchandise categories where we offer compelling value and differentiation in fashion, with particular strength in day dresses, value-priced accessories and tops,” Mr. Reinckens continued. "We expect to expand upon the success of these areas this fall, as we emphasize affordability in our offerings and introduce new denim, casual and activewear assortments, which are in high demand by our customers.”
"As we look ahead, we are confident that our fall assortments, which are delivered to our stores late August, will resonate with consumers and enable us to improve our comparable store sales performance as compared to the first half of the year,” Mr. Reinckens stated. "While the third quarter typically represents a loss for our Company given our calendar year, we are confident that our strategies of offering enhanced value, differentiation and expanded assortments appropriate for day to allow us to garner increased market share. Our focus for the balance of the year will be to continue to strengthen our balance sheet and achieve positive cash flow, while maximizing opportunities to build sales and reduce product costs, as we move to increased overseas sourcing. We believe this strategy will enable us to become a stronger Company with increased sales and profit potential and lead to increased long term value for all Cache stakeholders.”
For the 26-week period ended June 27, 2009:
- Net sales decreased 22.5% to $109.9 million from $141.7 million in the first six months of fiscal 2008. Comparable store sales decreased 21.9% following a 3.1% gain in the first six months of fiscal 2008;
- Net loss was $751,000 or ($0.06) per share, as compared to net income of $52,000 or breakeven on a per share basis in the first six months of fiscal 2008. Results in the first six months of fiscal 2008 included charges, net of taxes, of: $1.5 million or $0.11 per diluted share related to store closures and $388,000 or $0.03 per diluted share related to the management change in January 2008; and
- Adjusted net income for the first six months of fiscal 2008 was $1.9 million or $0.14 per diluted share and excludes store closure and management change costs.
Gross profit for the second quarter of fiscal 2009 was $25.2 million, or 44.4% of net sales, compared to $34.2 million, or 46.2% of net sales, in the second quarter of fiscal 2008. For the first six months of fiscal 2009, gross profit was $47.0 million, or 42.8% of net sales, compared to $62.6 million, or 44.2% of net sales, in the first six months of fiscal 2008. The decline in gross profit margin for the second quarter and first six months of fiscal 2009 was primarily driven by deleverage in occupancy costs resulting from lower sales. This was partially offset by higher initial markup due to improved sourcing and reduced freight costs, as compared to the prior year.
In total, operating expenses were $23.9 million, or 42.0% of net sales, as compared to $31.0 million, or 41.9% of net sales, in the second quarter of fiscal 2008. For the first six months of fiscal 2009, total operating expenses were $48.2 million, or 43.9% of net sales, compared to $62.9 million, or 44.4% of net sales, in the first six months of fiscal 2008. Operating expenses for the first six months of fiscal 2008 included $2.9 million of charges, primarily related to store closures. The decrease in operating expenses for the quarter and first six months of fiscal 2009 was primarily driven by a reduction in store payroll, depreciation and advertising costs, lower general and administrative costs and the effect of the above-mentioned one-time charges incurred during the first six months of fiscal 2008.
At June 27, 2009, cash and marketable securities totaled $34.8 million and compares to $27.4 million in cash and marketable securities at June 28, 2008. Total inventory at cost decreased 36% at quarter end from the prior-year period. Working capital decreased by $2.2 million to $45.7 million from $47.9 million at June 28, 2008, primarily due to reduced profitability.
A table summarizing financial results follows:
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Twenty-Six Weeks Ended |
Thirteen Weeks Ended |
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June 27, 2009 |
June 28, 2008 |
June 27, 2009 |
June 28, 2008 |
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($ thousands, except for per share data, share numbers and store count) |
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| Net sales | $ | 109,872 | $ | 141,681 | $ | 56,866 | $ | 73,973 | ||||||
| Operating income (loss) | (1,212 | ) | (273 | ) | 1,318 | 3,207 | ||||||||
| Store closure and other one-time costs | - | 2,924 | - | - | ||||||||||
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Operating income (loss) before one-time costs |
(1,212 | ) | 2,651 | 1,318 | 3,207 | |||||||||
| Net income (loss) | (751 | ) | 52 | 845 | 2,105 | |||||||||
| Net income (loss) before one-time costs | (751 | ) | 1,894 | 845 | 2,105 | |||||||||
| Basic earnings (loss) per share | $ | (0.06 | ) | $ | 0.00 | $ | 0.07 | $ | 0.16 | |||||
| Diluted earnings (loss) per share | $ | (0.06 | ) | $ | 0.00 | $ | 0.07 | $ | 0.16 | |||||
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Per share – Store closure and other one-time costs |
$ | - | $ | 0.14 | $ | - | $ | - | ||||||
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Diluted earnings (loss) per share – excluding one-time costs |
$ | (0.06 | ) | $ | 0.14 | $ | 0.07 | $ | 0.16 | |||||
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Basic weighted average shares outstanding |
12,841,000 | 13,443,000 | 12,728,000 | 13,320,000 | ||||||||||
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Diluted weighted average shares outstanding |
12,841,000 | 13,462,000 | 12,728,000 | 13,357,000 | ||||||||||
| Number of stores open at end of period | 291 | 297 | 291 | 297 | ||||||||||
Third Quarter Fiscal 2009 Guidance
The Company is introducing guidance for the third quarter of fiscal 2009. The Company estimates net sales in the range of $48 million to $50 million, which compares to actual net sales of $58.1 million in fiscal 2008. This guidance assumes comparable stores sales in the third quarter of fiscal 2009 will decrease in the mid-to-high teen percentage range and compares to a comparable store sales decrease of 4% in the third quarter of fiscal 2008.
Loss per share for the third quarter of fiscal 2009 is estimated in the range of ($0.22) to ($0.17), which compares to actual third quarter fiscal 2008 loss per share on a GAAP basis of ($0.12), which included charges of $0.02 per diluted share for store closures. Actual adjusted net loss for the third quarter of fiscal 2008 was ($0.10) per share and excluded store closure costs.
Store Opening Plans
During the second quarter, the Company opened no new stores and closed three locations, ending the period with 291 stores in operation. For the remainder of fiscal 2009, the Company plans to open one or two additional new stores and close approximately two or three locations, ending the year with approximately 289 stores and approximately 585,000 square feet in operation.
Conference call information
The Company announced that it will conduct a conference call to discuss its second quarter fiscal 2009 results today, July 20, 2009 at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-9039 approximately ten minutes prior to the start of the call. The conference call will also be web-cast live at www.cache.com. A replay of this call will be available until July 27, 2009 and can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference code 327375.
About Cache, Inc.
Cache is a nationwide, mall-based specialty retailer of sophisticated sportswear and social occasion dresses targeting style-conscious women who have a youthful attitude and are self-confident. We currently operate 290 stores, primarily situated in central locations in high traffic, upscale malls in 43 states, the Virgin Islands and Puerto Rico.
| CACHE, INC. AND SUBSIDIARIES | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| June 27, | December 27, | June 28, | ||||||||||
| ASSETS | 2009 | 2008 | 2008 | |||||||||
| Current assets: | ||||||||||||
| Cash and equivalents | $ | 4,315,000 | $ | 4,835,000 | $ | 1,045,000 | ||||||
| Marketable securities | 30,513,000 | 25,153,000 | 26,319,000 | |||||||||
| Receivables, net | 2,653,000 | 3,898,000 | 4,565,000 | |||||||||
| Income tax receivable | 534,000 | 5,883,000 | 0 | |||||||||
| Inventories, net | 22,420,000 | 22,321,000 | 35,042,000 | |||||||||
| Prepaid expenses and other current assets | 2,109,000 | 1,795,000 | 4,465,000 | |||||||||
| Total current assets | 62,544,000 | 63,885,000 | 71,436,000 | |||||||||
| Equipment and leasehold improvements, net | 38,415,000 | 43,320,000 | 46,764,000 | |||||||||
| Goodwill | 9,092,000 | 9,092,000 | 10,089,000 | |||||||||
| Intangible assets, net | 1,245,000 | 1,304,000 | 1,364,000 | |||||||||
| Other assets | 2,399,000 | 1,924,000 | 382,000 | |||||||||
| Total assets | $ | 113,695,000 | $ | 119,525,000 | $ | 130,035,000 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 5,559,000 | $ | 6,375,000 | $ | 10,567,000 | ||||||
| Note payable | 1,282,000 | 1,259,000 | 1,362,000 | |||||||||
| Accrued compensation | 1,316,000 | 1,713,000 | 1,949,000 | |||||||||
| Accrued liabilities | 8,647,000 | 11,077,000 | 9,663,000 | |||||||||
| Total current liabilities | 16,804,000 | 20,424,000 | 23,541,000 | |||||||||
| Note payable | 2,518,000 | 3,143,000 | 3,753,000 | |||||||||
| Other liabilities | 16,430,000 | 16,795,000 | 16,373,000 | |||||||||
| Deferred income taxes, net | 0 | 0 | 99,000 | |||||||||
| Commitments and contingencies | ||||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||
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Common stock, par value $.01; authorized, 20,000,000 shares; issued 16,410,036, 16,410,036 and 16,392,936 |
164,000 | 164,000 | 164,000 | |||||||||
| Additional paid-in capital | 47,272,000 | 47,155,000 | 46,784,000 | |||||||||
| Retained earnings | 70,302,000 | 71,053,000 | 78,227,000 | |||||||||
| Treasury stock, 3,682,199, 3,372,000 and 3,167,000 shares, at cost | (39,795,000 | ) | (39,209,000 | ) | (38,906,000 | ) | ||||||
| Total stockholders' equity | 77,943,000 | 79,163,000 | 86,269,000 | |||||||||
| Total liabilities and stockholders' equity | $ | 113,695,000 | $ | 119,525,000 | $ | 130,035,000 | ||||||
| CACHE, INC. AND SUBSIDIARIES | |||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
| FOR THE TWENTY-SIX WEEKS ENDED | |||||||
| June 27, | June 28, | ||||||
| 2009 | 2008 | ||||||
| Net sales | $ | 109,872,000 | $ | 141,681,000 | |||
| Cost of sales, including buying and occupancy | 62,848,000 | 79,074,000 | |||||
| Gross profit | 47,024,000 | 62,607,000 | |||||
| Expenses | |||||||
| Store operating expenses | 39,251,000 | 48,701,000 | |||||
| General and administrative expenses | 8,985,000 | 11,871,000 | |||||
| Store exit costs | 0 | 2,308,000 | |||||
| Total expenses | 48,236,000 | 62,880,000 | |||||
| Operating loss | (1,212,000 | ) | (273,000 | ) | |||
| Other income (expense): | |||||||
| Interest expense | (98,000 | ) | (131,000 | ) | |||
| Interest income | 127,000 | 487,000 | |||||
| Income (loss) before income taxes | (1,183,000 | ) | 83,000 | ||||
| Income tax provision (benefit) | (432,000 | ) | 31,000 | ||||
| Net income (loss) | $ | (751,000 | ) | $ | 52,000 | ||
| Basic earnings (loss) per share | ($0.06 | ) | $0.00 | ||||
| Diluted earnings (loss) per share | ($0.06 | ) | $0.00 | ||||
| Basic weighted average shares outstanding | 12,841,000 | 13,443,000 | |||||
| Diluted weighted average shares outstanding | 12,841,000 | 13,462,000 | |||||
| CACHE, INC. AND SUBSIDIARIES | |||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
| FOR THE THIRTEEN WEEKS ENDED | |||||||
| June 27, | June 28, | ||||||
| 2009 | 2008 | ||||||
| Net sales | $ | 56,866,000 | $ | 73,973,000 | |||
| Cost of sales, including occupancy and buying costs | 31,636,000 | 39,781,000 | |||||
| Gross profit | 25,230,000 | 34,192,000 | |||||
| Costs and expenses | |||||||
| Store operating expenses | 19,663,000 | 24,783,000 | |||||
| General and administrative expenses | 4,249,000 | 6,202,000 | |||||
| Store exit costs | 0 | 0 | |||||
| Total expenses | 23,912,000 | 30,985,000 | |||||
| Operating income | 1,318,000 | 3,207,000 | |||||
| Other income (expense): | |||||||
| Interest expense | (47,000 | ) | (63,000 | ) | |||
| Interest income | 60,000 | 197,000 | |||||
| Income before income taxes | 1,331,000 | 3,341,000 | |||||
| Income tax provision | 486,000 | 1,236,000 | |||||
| Net income | $ | 845,000 | $ | 2,105,000 | |||
| Basic earnings per share | $0.07 | $0.16 | |||||
| Diluted earnings per share | $0.07 | $0.16 | |||||
| Basic weighted average shares outstanding | 12,728,000 | 13,320,000 | |||||
| Diluted weighted average shares outstanding | 12,728,000 | 13,357,000 | |||||
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