Cache Slips To Loss In Q2

(RTTNews) - Cache, Inc.(CACH), a women's apparel stores chain, Tuesday reported a loss for the second quarter compared with a profit last year, reflecting a decline in net sales as well as lower margins. In addition, higher costs related to employee separation impacted its results.

According to the company, its turnaround efforts negatively impacted profitability in the recent quarter, while it is expected to allow the firm to begin the third quarter in an improved position. In addition, it believes that the recently-announced new credit facility will enhance its financial flexibility to pursue the initiatives.

Jay Margolis, chairman and chief executive officer of the company said, "During the quarter, we focused on clearing assortments that were not consistent with our go-forward merchandising plan and significantly reducing promotional activity on the web while continuing to make strategic hires to allow us to drive our business forward."

Comparable-store sales were up 0.5 percent in the second quarter, compared to a 4.7 percent growth in the second quarter of 2012. Cache, however, said comparable store sales are positive in the first six weeks of the third quarter, driven by increased traffic and regular price selling.

"I remain confident in our strategies and our ability to achieve improved operating performance in the near term and put us on a path to achieve sustained profitable long term growth in the future," Margolis added.

For the second quarter, the company posted a net loss of $3.16 million or $0.17 per share, compared to a profit of $1.03 million or $0.08 per share in the previous year.

The recent-quarter results included costs of $0.05 per share associated with employee separation charges incurred, in connection with severance for corporate employees. The prior-year recorded such charge of $0.01 per share.

On an adjusted basis, loss per share totaled $0.12, while the company posted earnings of $0.09 per share last year.

On average, two analysts polled by Thomson Reuters expected loss per share of $0.12 for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter declined 2.5 percent to $60.12 million from $61.63 million in the same quarter last year. Gross margin was 34.7 percent, down from 42.8 percent a year ago, mainly driven by an increase in markdowns on prior season assortments, as compared to the prior year, the company stated.

During the second quarter, the firm opened two stores and closed one existing location, ending the period with 250 stores in operation. For the balance of fiscal 2013, it expects to open no new stores and plans to close one additional store.

CACH closed Monday's regular trading at $4.16 on the Nasdaq.