Christopher & Banks Corporation Reports Third Quarter Fiscal 2020 Financial Results
Third Quarter Fiscal 2020 Highlights:
-
Net sales decreased 22.6% to
$72.8 million compared to the same period last year due to lower sales in retail stores, partially offset by 32.4% growth in its eCommerce business -
Net loss totaled
$10.8 million , or ($0.29 ) per share, compared to a net income of$0.5 million , or$0.01 per share in the same prior year period -
Adjusted EBITDA* was negative
$8.2 million compared to$2.8 million in the same period last year
While COVID has had an outsized impact on the customer demographic we serve, we believe that once we enter the post-pandemic world, she will return to her trusted resource for fashion, quality and value. Since I joined
Results for the Third Quarter Ended
-
Net sales decreased 22.6 % to
$72.8 million , due to the decline in retail store sales, partially offset by a 32.4% increase in eCommerce sales. -
Gross margin rate was 24.6%, as compared to 33.9% in last year's third quarter. This decrease reflected lower merchandise margin due to markdowns, higher shipping costs from increased eCommerce orders and split shipments related to ship from store orders and deleverage due to lower revenues. In addition, occupancy cost deleveraged approximately 30 basis points despite the
$2.8 million reduction from savings related to lease negotiations in 2019 as well as 2020. The Company books occupancy at full contract rents until a fully signed amendment is signed and therefore gross profit does not fully reflect rent concessions or deferrals related to COVID. -
Selling, general & administrative expenses (“SG&A”) declined
$3.0 million , or 10.1%, from last year's third quarter primarily due to lower store and corporate compensation, marketing, professional services and store operations costs, partially offset by an increase in medical insurance claims, and online marketing costs. As a percentage of sales, SG&A expense delevered 500 basis points to 36.1%.
Balance Sheet Highlights and Capital Expenditures
Cash and cash equivalents totaled
Total inventory was
Strategic Alternatives
The Company has experienced, and could continue to experience, impacts as a result of the COVID-19 pandemic. As a result, the Company's revenues, results of operations and cash flows continue to be materially adversely impacted, which raises substantial doubt about the Company's ability to continue as a going concern within one year after the date of the accompanying unaudited Condensed Consolidated Financial Statements. The Company continues to take short term measures to increase its liquidity and sources of financing. However, conditions remain challenging and the Company has engaged strategic advisors including
The Company does not intend to disclose further developments unless and until the Board of Directors has approved a specific transaction or otherwise determined that disclosure is appropriate.
Outlook
Due to the continued uncertainty from the COVID-19 Coronavirus, the Company will not be providing guidance for fiscal 2020 at this time.
_____________________
*Adjusted EBITDA is a non-GAAP financial measure. The Company defines Adjusted EBITDA as Net income (loss), adjusted for Income tax provision (benefit); Other income; Interest expense, net; Depreciation and Amortization; Lease termination fees and related costs, Executive Severance; Stock compensation; Impairment of long-lived assets; and certain discretionary items. Please see “Non-GAAP Measures” below and reconciliations of this non-GAAP measure to the comparable GAAP measure that follows in the table below.
Conference Call Information
The Company will discuss its third quarter fiscal 2020 results in a conference call scheduled for today,
Non-GAAP Measures
In addition to financial measures prepared in accordance with
About Christopher & Banks
Forward-Looking Statements
Certain statements in this press release and in our upcoming earnings conference call may constitute forward-looking statements, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which reflect our current views with respect to certain events that could have an effect on our future performance. The forward-looking statements relate to expectations concerning matters that are not historical facts and may use the words “will”, "expect", "anticipate", "plan", "intend", "project", "believe", “should”, "drive" "in order to" and similar expressions. Except for historical information, matters discussed in this press release or on our earnings conference call may be considered forward-looking statements.
These forward-looking statements are based largely on information currently available to our management and our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry, 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 the Company's future performance and financial results to differ materially from those expressed or implied by the forward-looking statements. We cannot guarantee their accuracy or our future performance, and there are a number of known and unknown risks, uncertainties, contingencies, and other factors (many of which are outside our control) that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Accordingly, there is no assurance that our expectations will, in fact, be achieved or that our estimates or assumptions will be correct, and we caution investors and all others not to place undue reliance on such 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, : the risk that the Company’s exploration of strategic alternatives may not improve the Company’s liquidity or financial position; the Company’s ability to continue as a going concern; the impact of the COVID-19 pandemic on the health and safety of the Company’s associates, the Company’s supply chain and operations, and customer demand for our merchandise; the magnitude and duration of shutdowns and other restrictions due to the COVID-19 pandemic; the Company’s ability to make rent payments under the terms of its leases or to secure relief from its landlords for such payments, including the related impact on the Company’s liquidity; the Company’s ability to satisfy covenant requirements under its indebtedness and to make payments of principal and interest as they come due; fundamental shifts in the retail industry and the competitive environment; the ability to successfully implement and optimize our omni-channel retail strategy; changes in
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES |
||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||
(in thousands, except per share data) |
||||||||||||||
(unaudited) |
||||||||||||||
Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Net sales | $ |
72,797 |
$ |
94,061 |
$ |
171,403 |
$ |
260,724 |
||||||
Merchandise, buying and occupancy costs |
54,862 |
62,135 |
143,364 |
178,710 |
||||||||||
Gross profit |
17,935 |
31,926 |
28,039 |
82,014 |
||||||||||
Other operating expenses: | ||||||||||||||
Selling, general and administrative |
26,308 |
29,271 |
64,192 |
86,213 |
||||||||||
Depreciation and amortization |
1,993 |
1,997 |
5,769 |
6,578 |
||||||||||
Impairment of store assets |
181 |
— |
445 |
311 |
||||||||||
Total other operating expenses |
28,482 |
31,268 |
70,406 |
93,102 |
||||||||||
Operating (loss) income |
(10,547) |
658 |
(42,367) |
(11,088) |
||||||||||
Interest expense, net |
(270) |
(138) |
(823) |
(405) |
||||||||||
(Loss) income before income taxes |
(10,817) |
520 |
(43,190) |
(11,493) |
||||||||||
Income tax (benefit) provision |
(9) |
33 |
(50) |
113 |
||||||||||
Net (loss) income | $ |
(10,808) |
$ |
487 |
$ |
(43,140) |
$ |
(11,606) |
||||||
Basic (loss) income per share: | ||||||||||||||
Net (loss) income | $ |
(0.29) |
$ |
0.01 |
$ |
(1.14) |
$ |
(0.31) |
||||||
Basic shares outstanding |
37,855 |
37,495 |
37,728 |
37,755 |
||||||||||
Diluted (loss) income per share: | ||||||||||||||
Net (loss) income | $ |
(0.29) |
$ |
0.01 |
$ |
(1.14) |
$ |
(0.31) |
||||||
Diluted shares outstanding |
37,855 |
37,552 |
37,728 |
37,755 |
||||||||||
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(in thousands) | ||||||
(unaudited) | ||||||
|
|
|
||||
|
|
2020 |
|
2019 |
||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ |
1,202 |
$ |
2,150 |
||
Accounts receivable |
3,209 |
4,642 |
||||
Merchandise inventories |
47,262 |
46,394 |
||||
Prepaid expenses and other current assets |
4,123 |
4,188 |
||||
Income taxes receivable |
362 |
334 |
||||
Total current assets |
56,158 |
57,708 |
||||
Non-current assets: | ||||||
Property, equipment and improvements, net |
20,010 |
26,560 |
||||
Operating lease assets |
94,974 |
115,329 |
||||
Deferred income taxes |
613 |
499 |
||||
Other assets |
1,081 |
565 |
||||
Total non-current assets |
116,678 |
142,953 |
||||
Total assets | $ |
172,836 |
$ |
200,661 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ |
35,151 |
$ |
23,577 |
||
Short-term borrowings |
13,978 |
4,550 |
||||
Current portion of long-term debt |
667 |
— |
||||
Current portion of long-term lease liabilities |
23,824 |
26,760 |
||||
Accrued salaries, wages and related expenses |
3,494 |
3,449 |
||||
Accrued liabilities and other current liabilities |
22,883 |
21,470 |
||||
Total current liabilities |
99,997 |
79,806 |
||||
Non-current liabilities: | ||||||
Deferred lease incentives |
— |
— |
||||
Long-term lease liabilities |
88,964 |
106,146 |
||||
Long-term debt |
14,333 |
— |
||||
Other non-current liabilities |
3,120 |
2,006 |
||||
Total non-current liabilities |
106,417 |
108,152 |
||||
Stockholders' equity: | ||||||
Common stock |
454 |
452 |
||||
Additional paid-in capital |
129,865 |
129,273 |
||||
Accumulated deficit |
(51,022) |
(4,147) |
||||
Common stock held in treasury |
(112,875) |
(112,875) |
||||
Total stockholders' equity |
(33,578) |
12,703 |
||||
Total liabilities and stockholders' equity | $ |
172,836 |
$ |
200,661 |
||
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES |
||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||
(in thousands) |
||||||
(unaudited) |
||||||
Thirty-Nine Weeks Ended |
||||||
|
|
|
|
|
||
|
|
2020 |
|
2019 |
||
Cash flows from operating activities: |
||||||
Net loss |
$ |
(43,140) |
$ |
(11,606) |
||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||
Depreciation and amortization |
|
5,769 |
|
6,578 |
||
Impairment of store assets |
445 |
311 |
||||
Amortization of financing costs |
|
140 |
|
46 |
||
Lease expense |
15,176 |
19,320 |
||||
Stock-based compensation expense |
|
463 |
|
570 |
||
Changes in operating assets and liabilities: |
||||||
Accounts receivable |
|
(234) |
|
(1,875) |
||
Merchandise inventories |
|
(5,564) |
|
(5,355) |
||
Prepaid expenses and other assets |
|
233 |
|
(712) |
||
Income taxes receivable |
|
(71) |
|
(66) |
||
Accounts payable |
|
11,500 |
|
5,787 |
||
Accrued liabilities |
|
(2,458) |
|
(2,717) |
||
Lease liabilities |
(13,190) |
(20,954) |
||||
Other liabilities |
|
1,307 |
|
(230) |
||
Net cash used in operating activities |
|
(29,624) |
|
(10,903) |
||
Cash flows from investing activities: |
||||||
Purchases of property, equipment and improvements |
|
(933) |
|
(1,632) |
||
Net cash used in investing activities |
|
(933) |
|
(1,632) |
||
Cash flows from financing activities: |
||||||
Shares redeemed for payroll taxes |
|
(9) |
|
(6) |
||
Proceeds from bank credit facility |
18,155 |
15,400 |
||||
Payments of bank credit facility |
(8,048) |
(10,850) |
||||
Payments for debt issuance costs |
(408) |
— |
||||
Proceeds from long-term borrowings |
15,000 |
— |
||||
Proceeds from secured vendor financing program |
3,871 |
— |
||||
Acquisition of common stock held in treasury, at cost |
— |
(98) |
||||
Net cash provided by financing activities |
|
28,561 |
|
4,446 |
||
Net decrease in cash and cash equivalents |
|
(1,996) |
|
(8,089) |
||
Cash and cash equivalents at beginning of period |
|
3,198 |
|
10,239 |
||
Cash and cash equivalents at end of period |
$ |
1,202 |
$ |
2,150 |
||
Supplemental cash flow information: |
||||||
Interest paid |
$ |
883 |
$ |
405 |
||
Income taxes paid |
$ |
64 |
$ |
263 |
||
Accrued purchases of property, equipment and improvements |
$ |
136 |
$ |
93 |
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES |
|||||||||||||||
GAAP TO NON-GAAP RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA |
|||||||||||||||
(in thousands) |
|||||||||||||||
(unaudited) |
|||||||||||||||
The following table reconciles from Net (loss) income in accordance with generally accepted accounting principles (GAAP) to Adjusted EBITDA, a non-GAAP measure, for the thirteen and thirty-nine weeks ended |
|||||||||||||||
Thirteen Weeks Ended |
|
|
Thirty-Nine Weeks Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
|
2019 |
|||
Net (loss) income on a GAAP basis |
$ |
(10,808) |
$ |
487 |
$ |
(43,140) |
$ |
(11,606) |
|||||||
Income tax (benefit) provision |
(9) |
|
33 |
(50) |
113 |
||||||||||
Interest expense, net |
(270) |
(138) |
(823) |
(405) |
|||||||||||
Depreciation & amortization |
1,993 |
|
1,997 |
5,769 |
6,578 |
||||||||||
Impairment of store assets |
181 |
|
— |
445 |
311 |
||||||||||
Lease termination fees and other related costs, net |
— |
— |
— |
144 |
|||||||||||
Executive severance |
— |
— |
— |
396 |
|||||||||||
Stock based compensation |
154 |
157 |
463 |
570 |
|||||||||||
Adjusted EBITDA |
$ |
(8,219) |
$ |
2,812 |
$ |
(35,690) |
$ |
(3,089) |
|||||||
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES |
||||||||||||||
GAAP TO NON-GAAP RECONCILIATION OF (LOSS) INCOME PER SHARE |
||||||||||||||
(in thousands, except per share data) |
||||||||||||||
(unaudited) |
||||||||||||||
The following table reconciles Net (loss) income per share in accordance with GAAP to Adjusted net (loss) income per share, on a non-GAAP basis, for the thirteen and thirty-nine weeks ended |
||||||||||||||
Thirteen Weeks Ended |
||||||||||||||
|
|
|
|
|
||||||||||
|
|
2020 |
|
|
2019 |
|||||||||
Pretax |
|
Net of tax |
|
Per share amounts |
Pretax |
|
Net of tax |
|
Per share amounts |
|||||
GAAP net (loss) income per share |
$ |
(0.29) |
$ |
0.01 |
||||||||||
Adjustments |
||||||||||||||
Impairment of store assets |
181 |
181 |
0.00 |
— |
— |
0.00 |
||||||||
Lease termination fees and other related costs, net |
— |
— |
0.00 |
— |
— |
0.00 |
||||||||
Stock based compensation |
154 |
154 |
0.00 |
157 |
147 |
0.00 |
||||||||
Adjusted (loss) income per share |
|
|
|
$ |
(0.29) |
|
|
|
$ |
0.01 |
||||
Thirty-Nine Weeks Ended |
||||||||||||||
|
|
|
|
|
||||||||||
|
|
2020 |
|
|
2019 |
|||||||||
Pretax |
|
Net of tax |
|
Per share amounts |
Pretax |
|
Net of tax |
|
Per share amounts |
|||||
GAAP net loss per share |
$ |
(1.14) |
$ |
(0.31) |
||||||||||
Adjustments |
||||||||||||||
Impairment of store assets |
445 |
444 |
0.01 |
311 |
308 |
0.01 |
||||||||
Lease termination fees and other related costs, net |
— |
— |
0.00 |
144 |
143 |
0.00 |
||||||||
Executive Severance |
— |
— |
0.00 |
396 |
392 |
0.01 |
||||||||
Stock based compensation |
463 |
462 |
0.01 |
570 |
564 |
0.02 |
||||||||
Adjusted loss per share |
|
|
|
$ |
(1.12) |
|
|
|
$ |
(0.27) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20201210005271/en/
COMPANY CONTACT:
Senior Vice President, Chief Financial Officer
(763) 551-5000
INVESTOR RELATIONS CONTACT:
(646) 277-1214
Source: