Cache Reports Third Quarter Fiscal 2009 Results
Third Quarter Loss per Share of $0.53, Includes $0.10 per Share Charge
Cash and Marketable Securities of $34.2 Million
Introduces Fourth Quarter Fiscal 2009 Diluted EPS Guidance of $0.12 to $0.15
- Press Release
- Source: Cache Inc.
- On 7:00 am EDT, Friday October 23, 2009
NEW YORK--(BUSINESS WIRE)--Cache Inc., (NASDAQ:CACH - News), a specialty chain of women’s apparel stores, reported results for the thirteen (“third quarter”) and thirty-nine week periods (“first nine months”) ended September 26, 2009.
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| CACH | 4.30 | 0.00 |
For the 13-week period ended September 26, 2009:
- Net sales decreased 22.7% to $44.9 million from $58.1 million in the third quarter of fiscal 2008. Comparable store sales decreased 21.7%, as compared to a decrease of 3.9% in the third quarter of fiscal 2008;
- Net loss totaled $6.8 million or ($0.53) per share, including $0.10 per share in separation agreement costs. This compares to a net loss of $1.6 million or ($0.12) per share, including $0.02 per share in store closure costs, in the third quarter of fiscal 2008;
- Adjusted net loss for the 13-week period in fiscal 2009 was $5.5 million or ($0.43) per share, excluding separation agreement costs, compared to an adjusted net loss of $1.4 million or ($0.10) per share, excluding store closure costs, for the 13-week period in fiscal 2008.
Thomas Reinckens, Chairman and Chief Executive Officer, commented: “We were disappointed with our third quarter results, which reflected lower than expected sales and our decision to accelerate markdowns in anticipation of our new fall and holiday assortments. On a positive note, we maintained a strong balance sheet and generated significant cost savings, while implementing merchandise strategies to position Cache for improved sales and profitability during the fourth quarter. In November, we expect to launch a new expanded assortment to meet more of our existing customers lifestyle needs, as well as to attract new customers.”
“We are pleased with the progress we made to reposition our Company,” continued Mr Reinckens. “During the quarter, we intensified our value pricing initiative, which is allowing us to broaden our customer reach and continued to maintain a strong balance sheet and stringent financial discipline. At quarter end, cash and marketable securities totaled $34.2 million, up 33.6% from the prior year and inventory at cost declined by 39.5% from the prior year. We also generated $5 million in expense savings during the quarter and remain on track to deliver $23 million in cost reductions this year.”
“As we look ahead, we are encouraged about our opportunities in the fourth quarter given our current and upcoming assortments that include compelling fashion, increased value and broader appeal,” Mr. Reinckens stated. “Increasing our confidence in our ability to generate better results in the fourth quarter is the improvement in our sales trend thus far in October. We also expect to strengthen our gross profit margin given the acceleration in markdowns to the third quarter, which has allowed us to increase the newness on our selling floor. Finally, we have planned our holiday promotions to be more impactful and maximize the natural increase in mall traffic during the season. Combined, we believe our efforts position Cache to return to profitability in the fourth quarter.”
For the 39-week period ended September 26, 2009:
- Net sales decreased 22.5% to $154.8 million from $199.8 million in the first nine months of fiscal 2008. Comparable store sales decreased 21.8% following a 1% gain in the first nine months of fiscal 2008;
- Net loss was $7.5 million or ($0.59) per share, including $1.3 million or $0.10 per diluted share in separation agreement costs, net of taxes. This compares to a net loss of $1.6 million or ($0.12) per share, including charges, net of taxes, of: $1.7 million or $0.13 per diluted share related to store closures and $388,000 or $0.03 per diluted share related to the management change during the first nine months of fiscal 2008; and
- Adjusted net loss for the first nine months of fiscal 2009 was $6.2 million or ($0.48) per share, excluding separation agreement costs, as compared to net income of $531,000 or $0.04 per diluted share, excluding store closure and management change costs, in the first nine months of fiscal 2008.
Gross profit for the third quarter of fiscal 2009 was $14.2 million, or 31.6% of net sales, compared to $25.6 million, or 44.1% of net sales, in the third quarter of fiscal 2008. For the first nine months of fiscal 2009, gross profit was $61.2 million, or 39.6% of net sales, compared to $88.2 million, or 44.2% of net sales, in the first nine months of fiscal 2008. The decline in gross profit margin for the third quarter and first nine months of fiscal 2009 was primarily driven by increased markdowns and lower sales which did not offset fixed occupancy costs.
In total, operating expenses were $25.1 million, or 55.8% of net sales, as compared to $28.3 million, or 48.7% of net sales, in the third quarter of fiscal 2008. For the first nine months of fiscal 2009, total operating expenses were $73.3 million, or 47.3% of net sales, compared to $91.2 million, or 45.6% of net sales, in the first nine months of fiscal 2008. Operating expenses for the 13-week period and first nine months of fiscal 2009 included $2.1 million in separation agreement costs. Operating expenses for the 13-week period in fiscal 2008 included $449,000 in store closure costs. Operating expenses for the first nine months of fiscal 2008 included $3.4 million of charges, primarily related to store closures. The decrease in operating expenses for the quarter and first nine 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 nine months of fiscal 2008, partially offset by costs associated with the separation agreement taken in the third quarter of fiscal 2009.
At September 26, 2009, cash and marketable securities totaled $34.2 million and compares to $25.6 million in cash and marketable securities at September 27, 2008. Total inventory at cost decreased 39.5% at quarter end, from the prior-year period. Working capital decreased by $6.0 million to $40.6 million from $46.6 million at September 27, 2008.
A table summarizing financial results follows:
|
Thirty-Nine Weeks Ended |
Thirteen Weeks Ended |
|||||||||||||||
|
Sept. 26, |
Sept. 27, |
Sept. 26, |
Sept. 27, |
|||||||||||||
| ($ thousands, except for per share data, share numbers and store count) | ||||||||||||||||
| Net sales | $ | 154,813 | $ | 199,820 | $ | 44,941 | $ | 58,139 | ||||||||
| Operating income (loss) | (12,063 | ) | (2,953 | ) | (10,854 | ) | (2,680 | ) | ||||||||
| Store closure and other one-time costs | - | 3,373 | - | 449 | ||||||||||||
| Separation agreement costs | 2,121 | - | 2,121 | - | ||||||||||||
| Operating income (loss) before | ||||||||||||||||
| Separation, store closure and | (9,942 | ) | 420 | (8,733 | ) | (2,231 | ) | |||||||||
| other one-time costs | ||||||||||||||||
| Net income (loss) | (7,533 | ) | (1,594 | ) | (6,783 | ) | (1,646 | ) | ||||||||
| Net income (loss) before separation, store | (6,205 | ) | 531 | (5,457 | ) | (1,363 | ) | |||||||||
| closure and other one-time costs | ||||||||||||||||
| Basic earnings (loss) per share | $ | (0.59 | ) | $ | (0.12 | ) | $ | (0.53 | ) | $ | (0.12 | ) | ||||
| Diluted earnings (loss) per share | $ | (0.59 | ) | $ | (0.12 | ) | $ | (0.53 | ) | $ | (0.12 | ) | ||||
| Per share – Store closure and other | ||||||||||||||||
| one-time costs | $ | - | $ | 0.16 | $ | - | $ | 0.02 | ||||||||
| Per share – Separation agreement costs | $ | 0.10 | $ | - | $ | 0.10 | $ | - | ||||||||
| Diluted earnings (loss) per share – | ||||||||||||||||
| excluding separation, store closure | $ | (0.48 | ) | $ | 0.04 | $ | (0.43 | ) | $ | (0.10 | ) | |||||
| and other one-time costs | ||||||||||||||||
| Basic weighted average shares | ||||||||||||||||
| outstanding | 12,810,000 | 13,372,000 | 12,748,000 | 13,229,000 | ||||||||||||
| Diluted weighted average shares | ||||||||||||||||
| outstanding | 12,810,000 | 13,372,000 | 12,748,000 | 13,229,000 | ||||||||||||
| Number of stores open at end of period | 289 | 295 | 289 | 295 | ||||||||||||
Fourth Quarter Fiscal 2009 Guidance
The Company is introducing guidance for the fourth quarter of fiscal 2009. The Company estimates net sales in the range of $62 million to $64 million, which compares to actual net sales of $65.9 million in fiscal 2008. This guidance assumes comparable stores sales in the fourth quarter of fiscal 2009 will decrease in the low double-digit range and compares to a comparable store sales decrease of 17% in the fourth quarter of fiscal 2008.
Diluted earnings per share for the fourth quarter of fiscal 2009 is estimated in the range of $0.12 to $0.15, which compares to actual fourth quarter fiscal 2008 loss per share on a GAAP basis of ($0.42), which included costs of $0.10 per diluted share related to non-cash impairment charges. Actual adjusted net loss for the fourth quarter of fiscal 2008 was ($0.32) per share and excluded impairment charges.
Store Opening Plans
During the third quarter, the Company opened one new store and closed three locations, ending the period with 289 stores in operation. For the remainder of fiscal 2009, the Company plans to open one additional new store and close approximately five locations, ending the year with approximately 285 stores and approximately 575,000 square feet in operation.
Conference call information
The Company announced that it will conduct a conference call to discuss its third quarter fiscal 2009 results today, October 23, 2009 at 9:00 a.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 October 30, 2009 and can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference code 335196.
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 289 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 | ||||||||||||
| ASSETS |
September 26, 2009 |
December 27, 2008 |
September 27, 2008 |
|||||||||
| Current assets: | ||||||||||||
| Cash and equivalents | $ | 5,329,000 | $ | 4,835,000 | $ | 2,023,000 | ||||||
| Marketable securities | 27,376,000 | 25,153,000 | 23,570,000 | |||||||||
| Certificate of deposits - restricted | 1,500,000 | 0 | 0 | |||||||||
| Receivables, net | 2,713,000 | 3,898,000 | 4,848,000 | |||||||||
| Income tax receivable | 2,225,000 | 5,883,000 | 0 | |||||||||
| Inventories, net | 20,434,000 | 22,321,000 | 33,802,000 | |||||||||
| Prepaid expenses and other current assets | 1,117,000 | 1,795,000 | 5,611,000 | |||||||||
| Total current assets | 60,694,000 | 63,885,000 | 69,854,000 | |||||||||
| Equipment and leasehold improvements, net | 35,724,000 | 43,320,000 | 46,393,000 | |||||||||
| Goodwill | 9,092,000 | 9,092,000 | 10,089,000 | |||||||||
| Intangible assets, net | 1,012,000 | 1,304,000 | 1,334,000 | |||||||||
| Other assets | 4,274,000 | 1,924,000 | 389,000 | |||||||||
| Total assets | $ | 110,796,000 | $ | 119,525,000 | $ | 128,059,000 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 7,676,000 | $ | 6,375,000 | 8,931,000 | |||||||
| Note payable | 1,294,000 | 1,259,000 | 1,248,000 | |||||||||
| Accrued compensation | 2,862,000 | 1,713,000 | 2,682,000 | |||||||||
| Accrued liabilities | 8,246,000 | 11,077,000 | 10,366,000 | |||||||||
| Total current liabilities | 20,078,000 | 20,424,000 | 23,227,000 | |||||||||
| Note payable | 2,199,000 | 3,143,000 | 3,450,000 | |||||||||
| Other liabilities | 17,202,000 | 16,795,000 | 16,335,000 | |||||||||
| Deferred income taxes, net | 0 | 0 | 133,000 | |||||||||
| Commitments and contingencies | ||||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||
| Common stock | 164,000 | 164,000 | 164,000 | |||||||||
| Additional paid-in capital | 47,428,000 | 47,155,000 | 47,075,000 | |||||||||
| Retained earnings | 63,520,000 | 71,053,000 | 76,581,000 | |||||||||
| Treasury stock | (39,795,000 | ) | (39,209,000 | ) | (38,906,000 | ) | ||||||
|
Total stockholders' equity |
71,317,000 | 79,163,000 | 84,914,000 | |||||||||
| Total liabilities and stockholders' equity | $ | 110,796,000 | $ | 119,525,000 | $ | 128,059,000 | ||||||
| CACHE, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| FOR THE THIRTY-NINE WEEKS ENDED | ||||||||
|
September 26, |
September 27, 2008 |
|||||||
| Net sales | $ | 154,813,000 | $ | 199,820,000 | ||||
| Cost of sales, including buying and occupancy | 93,574,000 | 111,599,000 | ||||||
| Gross profit | 61,239,000 | 88,221,000 | ||||||
| Expenses | ||||||||
| Store operating expenses | 57,840,000 | 71,741,000 | ||||||
| General and administrative expenses | 13,341,000 | 16,676,000 | ||||||
| Store exit costs | 0 | 2,757,000 | ||||||
| Employee separation charge | 2,121,000 | 0 | ||||||
| Total expenses | 73,302,000 | 91,174,000 | ||||||
| Operating loss | (12,063,000 | ) | (2,953,000 | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | (146,000 | ) | (189,000 | ) | ||||
| Interest income | 178,000 | 612,000 | ||||||
| Loss before income taxes | (12,031,000 | ) | (2,530,000 | ) | ||||
| Income tax benefit | (4,498,000 | ) | (936,000 | ) | ||||
| Net loss | $ | (7,533,000 | ) | $ | (1,594,000 | ) | ||
| Basic loss per share | ($0.59 | ) | ($0.12 | ) | ||||
| Diluted loss per share | ($0.59 | ) | ($0.12 | ) | ||||
| Basic weighted average shares outstanding | 12,810,000 | 13,372,000 | ||||||
| Diluted weighted average shares outstanding | 12,810,000 | 13,372,000 | ||||||
| CACHE, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| FOR THE THIRTEEN WEEKS ENDED | ||||||||
|
September 26, 2009 |
September 27, 2008 |
|||||||
| Net sales | $ | 44,941,000 | $ | 58,139,000 | ||||
| Cost of sales, including occupancy and buying costs | 30,727,000 | 32,525,000 | ||||||
| Gross profit | 14,214,000 | 25,614,000 | ||||||
| Costs and expenses | ||||||||
| Store operating expenses | 18,590,000 | 23,040,000 | ||||||
| General and administrative expenses | 4,357,000 | 4,805,000 | ||||||
| Store exit costs | 0 | 449,000 | ||||||
| Employee separation charge | 2,121,000 | 0 | ||||||
| Total expenses | 25,068,000 | 28,294,000 | ||||||
| Operating loss | (10,854,000 | ) | (2,680,000 | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | (48,000 | ) | (58,000 | ) | ||||
| Interest income | 52,000 | 125,000 | ||||||
| Loss before income taxes | (10,850,000 | ) | (2,613,000 | ) | ||||
| Income tax benefit | (4,067,000 | ) | (967,000 | ) | ||||
| Net loss | $ | (6,783,000 | ) | $ | (1,646,000 | ) | ||
| Basic loss per share | ($0.53 | ) | ($0.12 | ) | ||||
| Diluted loss per share | ($0.53 | ) | ($0.12 | ) | ||||
| Basic weighted average shares outstanding | 12,748,000 | 13,229,000 | ||||||
| Diluted weighted average shares outstanding | 12,748,000 | 13,229,000 | ||||||
Contact:
Cache Inc.
Maggie Feeney, 212-575-3206
Executive Vice President and Chief Financial Officer
OR
Investor Relations:
ICR, Inc.
Allison Malkin/Jane Thorn Leeson
203-682-8225/646-277-1223
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