Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 8, 2018

CHRISTOPHER & BANKS CORPORATION
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)

 
 
 
001-31390
 
06-1195422
(Commission File Number)
 
(IRS Employer Identification No.)

2400 Xenium Lane North
Plymouth, Minnesota 55441
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (763) 551-5000

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (Section 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (Section 240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o



Item 2.02    Results of Operations and Financial Condition.

On March 8, 2018, Christopher & Banks Corporation issued a press release reporting its results for the fourteen-week and fifty-three week periods ended February 3, 2018. A copy of the press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 2.02.

The information furnished in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended (the "1933 Act"), and shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Exchange Act or the 1933 Act, except as expressly set forth by specific reference in such filing.

 
 
Item 9.01
Financial Statements and Exhibits.
 
 
(d)
Exhibits:
 
 
 


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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
CHRISTOPHER & BANKS CORPORATION
 
 
 
 
 
 
Date: March 8, 2018
By:
/s/ Marc A. Ungerman
 
 
Marc A. Ungerman
 
 
Interim Chief Financial Officer and Vice President, Controller
 
 
 
 
 
 


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

CHRISTOPHER & BANKS CORPORATION
EXHIBIT INDEX TO FORM 8-K

 
 
 
Date of Report:
 
Commission File No.:
March 8, 2018
 
001-31390


CHRISTOPHER & BANKS CORPORATION


 
 
 
Exhibit Number
 
Description
 
 
 
99.1
 




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Exhibit
Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12115145&doc=3
2400 Xenium Lane North, Plymouth, MN 55441 ▪ (763) 551-5000 ▪ www.christopherandbanks.com
CHRISTOPHER & BANKS CORPORATION REPORTS
FOURTH QUARTER AND FULL YEAR FISCAL 2017 FINANCIAL RESULTS

- Delivered a fourth quarter comparable sales increase of 5.7% -
- Expanded gross margin rate in the fourth quarter by 240 basis points -
- Reduced SG&A as a percent of net sales by 730 basis points in the fourth quarter -

Minneapolis, MN, March 8, 2018 - Christopher & Banks Corporation (NYSE: CBK), a specialty women’s apparel retailer, today reported results for the 14-week fourth quarter and 53-week fiscal year ended February 3, 2018, as compared to the 13-week fourth quarter and 52-week year ended January 28, 2017.

Results for the Fourteen Weeks Ended February 3, 2018
Net sales totaled $92.3 million, an increase of 8.6%, compared to net sales of $85.0 million in the fourth quarter last year, while operating an average of 6% fewer stores as compared to the same period last year. Net sales attributable to the 14th week totaled $5.0 million.
Comparable sales increased 5.7% on a 14-week basis following a 7.8% decrease in the same period last year. This included eCommerce sales growth of 11.6% following a 7.5% increase in the same period last year.
Gross margin was 27.2% compared to 24.8% in the same period last year. The 240 basis point increase reflects an improved merchandise margin rate, primarily due to lower markdowns, and the effect of sales leverage on occupancy costs.
Selling, general & administrative expenses (“SG&A”) decreased by $3.7 million. As a percent of net sales, SG&A was 34.1%, compared to 41.4% in the prior year period.
Net loss totaled $8.8 million, or $(0.23) per share, compared to a net loss for the prior year period of $17.2 million, or $(0.46) per share. This includes a net loss of approximately $0.3 million, or $(0.01) per share, from the 14th week.
Adjusted EBITDA, a non-GAAP measure, was $(6.3) million, compared to $(14.1) million for the same period last year. This includes EBITDA of approximately $(0.3) million from the 14th week.

Joel Waller, Interim President and Chief Executive Officer, commented, “We ended the year on a strong note, illustrating the significant progress that we have made across a number of strategic initiatives. We took steps centered around merchandising, marketing, eCommerce, and store operations to stabilize the business and position us to drive more consistent financial performance. For the fourth quarter, we delivered strong comparable sales growth and expanded gross margin, and ended the year with a well-balanced assortment in terms of fashion content, size ranges and newness. We look forward to working with Keri Jones, our recently appointed Chief Executive Officer, as we continue to leverage the strong foundation we have established to drive sustainable long-term growth.”


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Results for the Fifty-Three Weeks Ended February 3, 2018
Net sales totaled $365.9 million, a decrease of 4.1%, compared to net sales of $381.6 million last year, while operating on average 6.4% fewer stores. Net sales attributable to the 53rd week totaled $5.0 million.
Comparable sales decreased 2.5% for the 53-week period as compared to the same period last year.
Net loss for fiscal 2017 totaled $22.0 million, or $(0.59) per share. Net loss for fiscal 2016 totaled $17.8 million, or $(0.48) per share. This includes a net loss of approximately $0.3 million, or $(0.01) per share, from the 53rd week.
Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure. Please see “Non-GAAP Measures” below and reconciliations of this non-GAAP measure to the comparable GAAP measure that follows in the table below., a non-GAAP measure, was $(9.4) million, compared to $(3.4) million for the same period last year. This includes EBITDA of approximately $(0.3) million from the 53rd week.

Balance Sheet Highlights and Capital Expenditures
Cash and cash-equivalents totaled $23.1 million as of February 3, 2018. Total inventory was $41.4 million at the end of the fourth quarter as compared to $36.8 million at the end of the fourth quarter last year, an increase of 12%. At fiscal year-end approximately 55% of the inventory was less than 60 days old compared to approximately 40% at the end of last year. On a two-year basis, inventory was approximately flat at the end of the quarter. The Company returned to a more normalized and healthy inventory level at the end of fiscal 2017, following a sharp decline at the end of fiscal 2016. Inventory at the end of the quarter would have been up 6% on a 52-week calendar.

Capital expenditures for the fourth quarter of fiscal 2017 were $0.7 million compared to $1.6 million in last year’s fourth quarter. Capital expenditures in the fourth quarter this year primarily reflected investments in stores and technology associated with the Company’s omni-channel capabilities. For the fourth quarter ended February 3, 2018, the Company had no outstanding borrowings under its revolving credit facility.

As previously discussed, the Company continues to pursue a potential sale and leaseback of its corporate facility and will provide updates on the process as warranted.

Non-GAAP Measures
In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), this press release contains non-GAAP financial measures, Adjusted EBITDA and Adjusted loss per share. The presentation of these non-GAAP measures are not in accordance with GAAP, and should not be considered superior to or as a substitute for net income or net loss, or any other measure of performance derived in accordance with GAAP. The Company believes the inclusion of these non-GAAP measures provides useful supplemental information to investors regarding the underlying performance of the Company’s business operations, especially when comparing such results to previous periods. These non-GAAP measures are not an alternative for measures of financial performance prepared in accordance with GAAP and may be different from similarly titled

_______________________
* Adjusted EBITDA is a non-GAAP financial measure. Please see “Non-GAAP Measures” below and reconciliations of this non-GAAP measure to the comparable GAAP measure that follows in the table below.

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non-GAAP measures used by other companies. Investors are encouraged to review the reconciliation of the non-GAAP financial measure to its most directly comparable GAAP measure as provided in the tables below.

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; Impairment of long-lived assets; and certain discretionary items. Please see “Non-GAAP Measures” above and the reconciliation of this non-GAAP measure to the comparable GAAP measure that follows in the table below.

Adjusted loss per share is a non-GAAP financial measure. The Company defines adjusted loss per share as GAAP loss per share adjusted for certain discretionary items as outlined in the reconciliation of this non-GAAP measure to the comparable GAAP measure that follows in the table below.

Conference Call Information
The Company will discuss its fourth quarter and full-year results in a conference call scheduled for today, March 8, 2018, at 8:30 a.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 approximately one hour of the completion of the call and will be accessible at http://www.christopherandbanks.com for 30 days. In addition, an audio replay of the call will be available shortly after its conclusion and will be archived until March 15, 2018. This call may be accessed by dialing 1-844-512-2921 and using the passcode 13676744.

About Christopher & Banks
Christopher & Banks Corporation is a Minneapolis-based national specialty retailer featuring exclusively designed privately branded women’s apparel and accessories. As of March 8, 2018, the Company operates 462 stores in 45 states consisting of 315 MPW stores, 78 Outlet stores, 36 Christopher & Banks stores, and 33 stores in its women’s plus size clothing division CJ Banks. The Company also operates the www.ChristopherandBanks.com eCommerce website.

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

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

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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, those factors described in Item 1A, “Risk Factors” and in the “Forward-Looking Statements” disclosure in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our latest annual report on Form 10-K. All forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that projected results expressed or implied in such statements will not be realized.


    COMPANY CONTACT:
 
 
    Marc Ungerman
 
 
    Interim Chief Financial Officer and
 
 
    Vice President, Controller
 
 
    (763) 551-5000
 
 
 
 
 
    INVESTOR RELATIONS CONTACT:
 
 
    Jean Fontana
 
 
    ICR, Inc.
 
 
    (646) 277-1214
 
 


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CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

 
For the Quarter Ended
 
For the Year Ended
 
February 3,
 
January 28,
 
February 3,
 
January 28,
 
2018
 
2017
 
2018
 
2017
 
(14 weeks)
 
(13 weeks)
 
(53 weeks)
 
(52 weeks)
Net sales
$
92,265

 
$
84,980

 
$
365,906

 
$
381,605

Merchandise, buying and occupancy costs
67,163

 
63,939

 
252,399

 
253,483

Gross profit
25,102

 
21,041

 
113,507

 
128,122

Other Operating Expenses:
 
 
 
 
 
 
 
Selling, general and administrative
31,442

 
35,184

 
123,398

 
133,768

Depreciation and amortization
3,192

 
3,184

 
12,434

 
12,300

Impairment of long-lived assets
155

 
310

 
318

 
786

Total other operating expenses
34,789

 
38,678

 
136,150

 
146,854

Operating loss
(9,687
)
 
(17,637
)
 
(22,643
)
 
(18,732
)
Interest expense, net
(47
)
 
(33
)
 
(154
)
 
(159
)
Other income

 

 

 
911

Loss before income taxes
(9,734
)
 
(17,670
)
 
(22,797
)
 
(17,980
)
Income tax benefit
(909
)
 
(446
)
 
(773
)
 
(197
)
Net loss
$
(8,825
)
 
$
(17,224
)
 
$
(22,024
)
 
$
(17,783
)
 
 
 
 
 
 
 
 
Basic loss per share:
 
 
 
 
 
 
 
Net loss
$
(0.23
)
 
$
(0.46
)
 
$
(0.59
)
 
$
(0.48
)
Basic shares outstanding
37,290
 
37,088
 
37,212
 
37,016
 
 
 
 
 
 
 
 
Diluted loss per share:
 
 
 
 
 
 
 
Net loss
$
(0.23
)
 
$
(0.46
)
 
$
(0.59
)
 
$
(0.48
)
Diluted shares outstanding
37,290
 
37,088
 
37,212
 
37,016

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CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

 
February 3,
 
January 28,
 
2018
 
2017
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
23,077

 
$
35,006

Accounts receivable
2,626

 
2,549

Merchandise inventories
41,361

 
36,834

Prepaid expenses and other current assets
2,715

 
3,485

Income taxes receivable
172

 
516

Total current assets
69,951

 
78,390

 
 
 
 
Property, equipment and improvements, net
47,773

 
55,332

 
 
 
 
Other non-current assets:
 
 
 
Deferred income taxes
597

 
321

Other assets
1,043

 
577

Total other non-current assets
1,640

 
898

Total assets
$
119,364

 
$
134,620

 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
20,825

 
$
13,867

Accrued salaries, wages and related expenses
5,309

 
6,613

Accrued liabilities and other current liabilities
26,201

 
26,426

Total current liabilities
52,335

 
46,906

 
 
 
 
Non-current liabilities:
 
 
 
Deferred lease incentives
7,762

 
9,021

Deferred rent obligations
6,621

 
6,576

Other non-current liabilities
2,237

 
822

Total non-current liabilities
16,620

 
16,419

 
 
 
 
Stockholders' equity:
 
 
 
Common stock
475

 
473

Additional paid-in capital
127,652

 
126,516

Retained earnings
34,993

 
57,017

Common stock held in treasury
(112,711
)
 
(112,711
)
Total stockholders' equity
50,409

 
71,295

Total liabilities and stockholders' equity
$
119,364

 
$
134,620


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CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
For the Year Ended
 
February 3,
 
January 28,
 
2018
 
2017
 
(53 weeks)
 
(52 weeks)
Cash flows from operating activities:
 
 
 
Net loss
$
(22,024
)
 
$
(17,783
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
12,434

 
12,300

Impairment of long-lived assets
318

 
786

Deferred income taxes, net
(276
)
 
72

Gain from company-owned life insurance

 
(911
)
Amortization of premium on investments

 
7

Amortization of financing costs
62

 
62

Deferred lease-related liabilities
(1,322
)
 
(911
)
Stock-based compensation expense
1,164

 
676

Loss on disposal of assets

 
1

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(77
)
 
1,518

Merchandise inventories
(4,527
)
 
5,647

Prepaid expenses and other assets
242

 
5,567

Income taxes receivable
344

 
(3
)
Accounts payable
6,796

 
(2,610
)
Accrued liabilities
(1,293
)
 
5,972

Other liabilities
1,414

 
(475
)
Net cash (used in) provided by operating activities
(6,745
)
 
9,915

 
 
 
 
Cash flows from investing activities:
 
 
 
Purchases of property, equipment and improvements
(5,158
)
 
(10,327
)
Proceeds from company-owned life insurance

 
911

Maturities of available-for-sale investments

 
3,008

Net cash used in investing activities
(5,158
)
 
(6,408
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Issuance of stock for stock option exercises, net of forfeitures

 
17

Shares redeemed for payroll taxes
(26
)
 
(24
)
Net cash used in financing activities
(26
)
 
(7
)
 
 
 
 
Net (decrease) increase in cash and cash equivalents
(11,929
)
 
3,500

Cash and cash equivalents at beginning of period
35,006

 
31,506

Cash and cash equivalents at end of period
$
23,077

 
$
35,006

 
 
 
 
Supplemental cash flow information:
 
 
 
Interest paid
$
188

 
$
192

Income taxes (refunded) paid
$
(243
)
 
$
106

Accrued purchases of equipment and improvements
$
324

 
$
69


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CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(in thousands)
(unaudited)

The following table reconciles from Net loss in accordance with generally accepted accounting principles (GAAP) to Adjusted EBITDA, a non-GAAP measure, for the quarter and year ended February 3, 2018 and January 28, 2017:

 
For the Quarter Ended
 
For the Year Ended
 
February 3,
 
January 28,
 
February 3,
 
January 28,
 
2018
 
2017
 
2018
 
2017
 
(14 weeks)
 
(13 weeks)
 
(53 weeks)
 
(52 weeks)
Net loss on a GAAP basis
$
(8,825
)
 
$
(17,224
)
 
$
(22,024
)
 
$
(17,783
)
Income tax benefit
(909
)
 
(446
)
 
(773
)
 
(197
)
Other income

 

 

 
911

Interest expense, net
(47
)
 
(33
)
 
(154
)
 
(159
)
Depreciation & amortization
3,192

 
3,184

 
12,434

 
12,300

Impairment of long-lived assets
155

 
310

 
318

 
786

Lease termination fees and other related costs, net

 

 
484

 

Advisory fees in connection with shareholder activism

 

 

 
1,549

eCommerce transition fees

 

 

 
684

Adjusted EBITDA
$
(6,340
)
 
$
(14,143
)
 
$
(9,407
)
 
$
(3,413
)







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CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION OF LOSS PER SHARE
(in thousands, except per share amounts)
(unaudited)

No adjustment was necessary for the quarter ended February 3, 2018 and January 28, 2017.

The following table reconciles Net loss per share in accordance with GAAP to Adjusted net loss per share, on a non-GAAP basis, for the year ended February 3, 2018 and January 28, 2017:

 
Fifty-Three Weeks Ended
 
Fifty-Two Weeks Ended
 
February 3,
 
January 28,
 
2018
 
2017
 
Pretax
Net of tax
Per share amounts
 
Pretax
Net of tax
Per share amounts
GAAP net loss per share
 
 
$
(0.59
)
 
 
 
$
(0.48
)
Adjustments
 
 
 
 
 
 
 
Lease termination fees and other related costs, net
484

477

0.01

 



Advisory fees in connection with shareholder activism



 
1,549

1,479

0.04

eCommerce transition fees



 
684

653

0.02

Adjusted loss per share
 
 
$
(0.58
)
 
 
 
$
(0.42
)


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