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Christopher & Banks Corporation Reports Results For The Thirteen-Week Period Ended July 28, 2012

Stocks in this article: CBK

Outlook for the Second Half of Fiscal 2012

For the second half of this fiscal year, the Company expects:

  • Positive same-store sales for both the third and fourth fiscal quarters;
  • Merchandise margins in the second half of the year to exceed the comparable period last year;
  • 200 to 300 basis points of positive leverage on occupancy expense for the twelve months ending February 2, 2013, when compared to the twelve months ended January 28, 2012;
  • SG&A to be in the range of $35 million to $36 million for the third quarter, and $36 million to $37 million for the fourth quarter, which includes a 14 th week;
  • Inventory levels to be in-line with the Company’s sales expectations for the second half of the year;
  • Marketing expenditures for the second half of this fiscal year to be greater than the first half of the fiscal year but less than the same period last year; and
  • Depreciation and amortization to be roughly $18 million in fiscal 2012 and capital expenditures of approximately $6 million for the full fiscal year.

Conference Call Information

The Company will discuss its second quarter results in a conference call scheduled for today, August 29, 2012, at 4:30 p.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 one hour of the completion of the call and will be accessible at http://www.christopherandbanks.com until September 5, 2012. In addition, an audio replay of the call will be available shortly after its conclusion and will be archived until September 5, 2012. This audio replay may be accessed by dialing (877) 870-5176 and using the passcode 1199741.

About Christopher & Banks

Christopher & Banks Corporation is a Minneapolis-based specialty retailer of women’s clothing. As of August 29, 2012, the Company operates 644 stores in 44 states consisting of 390 Christopher & Banks stores, 174 stores in their women’s plus size clothing division CJ Banks, 55 dual stores and 25 outlet stores. The Company also operates the www.ChristopherandBanks.com and www.CJBanks.com e-commerce websites.

Keywords: Christopher & Banks, CJ Banks, Women’s Clothing, Plus Size Clothing, Petites, Extended Sizes, Outfits.

Forward-Looking Statements

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 statements (i) that for the current fiscal year the Company intends to conserve cash by minimizing the number of new store openings; (ii) that the Company expects positive same-store sales for both the third and fourth fiscal quarters; (iii) that merchandise margins in the second half of the year are expected to exceed those in the comparable period last year; (iv) that the Company expects 200 to 300 basis points of positive leverage on occupancy expense for the twelve months ending February 2, 2013, as compared to the twelve months ended January 28, 2012; (v) that SG&A expenses are expected to be in the range of $35 million to $36 million for the third quarter and $36 million to $37 million for the fourth quarter, which includes a 14 th week; (vi) that inventory levels are expected to be in-line with the Company’s sales expectations for the second half of the year; (vii) that marketing expenditures for the second half of this fiscal year are expected to be greater than the first half of the fiscal year but less than the same period last year; and (viii) that depreciation and amortization are expected to be roughly $18 million in fiscal 2012 and capital expenditures are expected to be approximately $6 million for the full fiscal year. 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 our 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 our 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; (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 our 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 our 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 “Investor Relations” and you are urged to carefully consider all such factors.

                     
CHRISTOPHER & BANKS CORPORATION
UNAUDITED COMPARATIVE STATEMENT OF OPERATIONS
FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED
JULY 28, 2012, JULY 30, 2011 AND AUGUST 27, 2011 (1)
(in thousands, except per share data)
     
 
Thirteen Weeks Ended Twenty-six Weeks Ended
July 28, July 30, August 27, July 28, July 30, August 27,
2012 2011 2011 2012 2011 2011
 
Net sales $ 103,436 $ 105,578 $ 96,230 $ 197,058 $ 215,982 $ 220,062
 
Costs and expenses:
Merchandise, buying and occupancy 74,751 71,426 68,403 146,719 149,646 149,229
Selling, general and administrative 30,633 34,077 34,505 61,459 69,171 69,936
Depreciation and amortization 4,907 6,352 6,267 9,939 11,716 11,851
Impairment and restructuring   (4,696 )   -     -     (5,494 )   -     -  
Total costs and expenses   105,595     111,855     109,175     212,623     230,533     231,016  
 
Operating loss (2,159 ) (6,277 ) (12,945 ) (15,565 ) (14,551 ) (10,954 )
 
Interest income   36     68     76     89     163     155  
 
Loss before income taxes (2,123 ) (6,209 ) (12,869 ) (15,476 ) (14,388 ) (10,799 )
 
Income tax provision (benefit)   74     (7 )   113     134     (6 )   293  
 
Net loss $ (2,197 ) $ (6,202 ) $ (12,982 ) $ (15,610 ) $ (14,382 ) $ (11,092 )
 
 
Basic loss per share:
 
Net loss $ (0.06 ) $ (0.18 ) $ (0.37 ) $ (0.44 ) $ (0.41 ) $ (0.31 )
 
Basic shares outstanding   35,631     35,496     35,520     35,616     35,491     35,512  
 
 
Diluted loss per share:
 
Net loss $ (0.06 ) $ (0.18 ) $ (0.37 ) $ (0.44 ) $ (0.41 ) $ (0.31 )
 
Diluted shares outstanding   35,631     35,496     35,520     35,616     35,491     35,512  
 
 
Dividends per share $ -   $ 0.06   $ 0.06   $ -   $ 0.12   $ 0.12  
 
(1)  

In January 2012, the Company changed its fiscal year end to the Saturday closest to the end of January from the Saturday closest to the end of February. The Company has provided financial results for the thirteen and twenty-six weeks ended July 30, 2011 on a comparable basis to the thirteen and twenty-six weeks ended July 28, 2012. The Company's prior year second quarter included the thirteen weeks ended August 27, 2011.

 
       
CHRISTOPHER & BANKS CORPORATION
UNAUDITED COMPARATIVE BALANCE SHEET
(in thousands)
   
 
July 28, August 27,
2012 2011
ASSETS
Current assets:
Cash and cash equivalents $ 40,516 $ 36,747
Short-term investments - 35,263
Merchandise inventories 38,658 53,666
Other current assets   8,572     12,076  
Total current assets   87,746     137,752  
 
Property, equipment and improvements, net   48,881     72,943  
 
Other assets:
Long-term investments - 23,806
Other   432     278  
Total other assets   432     24,084  
 
Total assets $ 137,059   $ 234,779  
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable (1) $ 24,213 $ 36,285
Accrued salaries, wages and related expenses 4,964 6,544
Accrued liabilities (1)   20,770     17,568  
Total current liabilities   49,947     60,397  
 
Other liabilities:
Deferred lease incentives 6,865 14,256
Deferred rent obligations 3,502 6,909
Lease termination fees 185 -
Other   1,926     2,664  
Total other liabilities   12,478     23,829  
 
Stockholders' equity:
Common stock 467 457
Additional paid-in capital 118,333 116,412
Retained earnings 68,545 146,272
Common stock held in treasury (112,711 ) (112,711 )
Accumulated other comprehensive income   -     123  
Total stockholders' equity   74,634     150,553  
 
Total liabilities and stockholders' equity $ 137,059   $ 234,779  
 
(1)   Certain prior year amounts have been reclassified to conform to the current year presentation.
 
       
CHRISTOPHER & BANKS CORPORATION
UNAUDITED COMPARATIVE STATEMENT OF CASH FLOWS
(in thousands)
   
Twenty-six
Weeks Ended
July 28, August 27,
2012 2011
 
Cash flows from operating activities:
Net loss $ (15,610 ) $ (11,092 )
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 9,939 11,851
Amortization of premium on investments 11 35

Loss on disposal of furniture, fixtures and equipment

50 -
Impairment of store assets 139 -
Change in deferred lease liabilities (1) (2,058 ) (1,274 )
Stock-based compensation expense 966 1,631
Gain on investments, net (531 ) (18 )
Changes in operating assets and liabilities:
Increase in accounts receivable (254 ) (1,971 )
Decrease (increase) in merchandise inventories 797 (14,455 )
Increase in prepaid expenses (335 ) (1,367 )
Decrease in income taxes receivable 214 3,657
Increase in other current assets (71 ) -
Decrease in other assets 184 36
Increase in accounts payable (1) 4,747 21,201
Decrease in accrued liabilities (1) (9,078 ) (5,701 )
Decrease in lease termination fee liability (7,847 ) -
Increase in other liabilities   7     132  
Net cash provided by (used in) operating activities   (18,730 )   2,665  
 
Cash flows from investing activities:
Purchases of property, equipment and improvements (2,599 ) (8,213 )
Proceeds from sale of furniture, fixtures, and equipment 33 -
Purchases of investments - (33,008 )
Sales of investments   21,403     35,994  
Net cash provided by (used in) investing activities   18,837     (5,227 )
 
Cash flows from financing activities:
Shares redeemed for payroll taxes (23 ) (124 )
Deferred financing costs (350 ) -
Dividends paid   -     (4,279 )
Net cash used in financing activities   (373 )   (4,403 )
 
Net decrease in cash and cash equivalents (266 ) (6,965 )
 
Cash and cash equivalents at beginning of period   40,782     43,712  
 
Cash and cash equivalents at end of period $ 40,516   $ 36,747  
 
(1)   Certain prior year amounts have been reclassified to conform to the current year presentation.




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