SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 14, 2019
CHRISTOPHER & BANKS CORPORATION
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation)
(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
(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 7.01 Regulation FD Disclosure.
The following information is being “furnished” in accordance with General Instruction B.2 of Form 8-K and shall not be deemed “filed” for 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, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), except as expressly set forth by specific reference in such filing.
On January 14, 2019, Christopher & Banks Corporation (the “Company”) issued a press release disclosing material, non-public information regarding the Company's updated outlook for the fourth fiscal quarter of 2018 and reaffirming its fiscal 2019 outlook.
The press release issued on January 14, 2019 is furnished as Exhibit No. 99.1 to this Current Report on Form 8-K and should be read in conjunction with the registrant's reports on Forms 10-K, 10-Q and 8-K, and other publicly available information, which contain other important information about the registrant.
In addition, furnished herewith as Exhibit 99.2, and incorporated by reference herein, is a copy of presentation materials to be used by Christopher & Banks Corporation (the “Company”) beginning on January 14, 2019, in connection with the Company’s participation at the ICR XChange Conference in Orlando, Florida and in meetings with analysts, stockholders and potential stockholders.
Cautionary Statements. This filing and the exhibits include “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could impair the Company's business are disclosed in the “Risk Factors” section contained in the Company's 2018 Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2018 and in our subsequent 10-Q Reports. All forward-looking statements are expressly qualified in their entirety by such factors. We do not undertake any duty to update any forward-looking statement except as required by law.
Financial Statements and Exhibits.
99.1 Christopher & Banks Corporation Press Release dated January 14, 2019.
99.2 Christopher & Banks Corporation January 14, 2019 ICR presentation materials.
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: January 14, 2019
/s/ Luke R. Komarek
Luke R. Komarek
Senior Vice President, General Counsel
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CHRISTOPHER & BANKS CORPORATION
EXHIBIT INDEX TO FORM 8-K
Date of Report:
Commission File No.:
January 14, 2019
CHRISTOPHER & BANKS CORPORATION
2400 Xenium Lane North, Plymouth, MN 55441 ▪ (763) 551-5000 ▪ www.christopherandbanks.com
CHRISTOPHER & BANKS CORPORATION ANNOUNCES HOLIDAY SALES
AND COMPARABLE SALES OUTLOOK FOR THE FOURTH QUARTER OF FISCAL 2018
- Reaffirms Fiscal 2019 Outlook -
Minneapolis, MN, January 14, 2019 - Christopher & Banks Corporation (NYSE: CBK), a specialty women’s apparel retailer, today announced holiday sales through the first ten weeks of the fourth quarter and provided a comparable sales outlook for the fourth quarter of fiscal 2018 ending February 2, 2019.
Through the first ten weeks of the fourth quarter comparable sales increased approximately 3.0% at expanded merchandise margin rates as compared to the first ten weeks of last year’s fourth quarter.
Comparable sales are expected to be positive low single digits for the fourth quarter following a 5.7% sales comp increase in last year’s fourth quarter.
On-hand inventory is expected to be down mid-single digits as compared to the end of last year's fourth quarter.
Keri Jones, President and Chief Executive Officer, commented, “We are pleased to have delivered
positive comparable sales for the holiday period with strong conversion rates thus far in the quarter. We also saw our eCommerce business continue to accelerate, which we attribute in-part to our ship-from-store initiative. We believe that our improved performance quarter-to-date was the result of new product resonating with customers, an enhanced in-store experience that made it easier to shop, compelling promotions, and our omni-channel initiatives. These results reflect the traction that we are starting to see from our strategic initiatives. Looking ahead, we remain focused on advancing our five strategic initiatives including enhancing and simplifying her shopping experience; delivering compelling promotions; growing our omni-channel business; building loyalty and growing our customer file; and continuing to reduce our cost structure. As such we are reaffirming our fiscal 2019 outlook.”
Fiscal 2019 Outlook
For fiscal 2019, the Company expects:
Net sales to increase 2% to 3% as the result of expanded omnichannel capabilities, enhancements to the overall product assortment, and more impactful marketing promotions to drive customer file growth;
Gross margin expansion of 300 to 350 basis points as a result of improved inventory management including supply chain and omni-channel initiatives, greater discipline around promotions and the continued reduction of occupancy costs;
SG&A as a percentage of sales to decline 150 to 200 basis points due to ongoing cost reduction initiatives; and
Inventory turns to improve as compared to fiscal 2018.
Fourth Quarter Conference Call
The Company plans to discuss its fourth quarter results in a conference call scheduled for March 13, 2019, at 8:30 a.m. Eastern Time.
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 January 14, 2019, the Company operates 461 stores in 45 states consisting of 314 MPW stores, 80 Outlet stores, 35 Christopher & Banks stores, and 32 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.
Certain statements in this press release 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 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, 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 and in our subsequent Form 10-Q Reports. 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.
Senior Vice President, Chief Financial Officer
INVESTOR RELATIONS CONTACT:
Christopher & Banks Corporation ICR Presentation January 14, 2019 1
Disclosure or Safe Harbor Statement Certain statements on the slides which follow may be forward-looking statements about Christopher & Banks Corporation (the “Company”). Such forward-looking statements involve risks and uncertainties which may cause actual results to differ. These forward-looking statements may be identified by such terms as “will”, “expect”, “believe”, “anticipate”, “outlook”, “target”, “plan”, “initiatives”, “estimated”, “strategy” and similar terms. You are directed to the cautionary statements regarding risks or uncertainties described in the Company’s filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and other SEC filings made since the date of that 10-K Report. Participants are cautioned not to place undue reliance on such forward-looking statements, which reflect management’s views only as of January 14, 2019. The Company undertakes no obligation to update or revise the forward-looking statements. 2
Investment Highlights • Unique
brand positioning serving an attractive customer segment with opportunity to gain more loyal brand ambassadors • New and seasoned management team • Leveraging our investments to drive increased growth through integrated omni- channel initiatives • Significant operational improvements underway to expand operating margin • Cash on hand, with no long-term debt, and no current borrowings under our $55M credit facility 3
Company Snapshot • A heritage brand appealing to an attractive customer segment • A loyal customer base which we know well, capturing customer data for 90% of all transactions • A unique brand promise delivering on our customers’ need for comfort, quality, value and service • Continuing to grow omni-channel capabilities • Flexible real estate portfolio • Improved operating disciplines and cost optimization 4
Company History 1956 1992 2000 2008 2009 2010 2012 – present 2018 First combined store Braun’s - Company Company Launched e- First Outlet Continuing to New CEO, format Company Goes changes name to commerce Store collapse & combine CFO & CMO with Public Christopher & business stores to right size Hired Midwestern Banks and begin retail footprint roots opening CJ Banks in recognition of opportunity in women’s plus size 5
Our Store Base • Current store count of 461 stores • 381 Full-price stores • 80 outlets • 43% are in small & rural markets where we have high brand recognition and minimal competition • 77% of stores are in markets with populations <75,000 • 67% of stores in C&D centers • 65% of stores are in traditional malls 6
Growing Digital Presence • Digital sales nearly doubled in 5 years • 4th consecutive year of double digit online sales growth • 95% of online sales occur in markets where we have brick and mortar stores • 92% of our customers continue to shop in stores – 15% of our customers shop in store and online and drive 39% of sales 7
Our Customer Demographics Enjoys What She Expects • Baby-Boomer • Family time • Flattering Features • Over 2/3 employed outside • Church/Community Events • Consistent Fits of home (professions • Exercising (low Intensity) • Good Quality include: education, • Shopping • Great Value healthcare, and • Traveling • Timeless Styles professional assistants) • Cooking / Making Crafts • Personalized Service • 85% college educated • Average HHI $75K 8
Our Customer – Loyal Brand Ambassadors Very loyal customer base • 90% are members of our Friendship Reward program • 28% have PLCC & Drive 39% of tender share Purchases 3.6 times a year • Self-reports that she visits more frequently Spends $171 a year • $47 per purchase IN HER WORDS…… “How do you improve on perfection? Quality of merchandise is amazing. Sales and promos are on going. Customer service is fantastic.”.... Joyce B. “I just love this program (Friendship Rewards). Also love your stores. The clothes are stylish for a woman who isn’t too old or too young. I feel comfortable shopping at C&B.”…. Dawn S. “I am advertising for C&B when I go to work, church, where ever or what ever I am doing…. I love the vibrant colors, variety, comfort, absolutely everything! I just can’t get enough of your clothes and always feel beautiful wearing them. Thank you for giving us so many choices!!”…. Tammy B. 9
Winning Through Differentiation Customer Likes Our Brand Role Customer Likes • Broad Selection • Service and Support • Pricing C&B offers a relevant • Curated for me & unique selection, Customer Dislikes for every size with Customer Dislikes • Confusing, little help exceptional service • Limited Choice available at a great value. (styles, sizes) • For everybody • Value (price/quality (versus for me) trade off) 10
Challenges With Prior Strategy • Significant changes made to the real estate portfolio which have not performed to expectations – Collapse and Combine strategy was rolled out too aggressively, with insufficient testing – Misguided outlet expansion resulted in opening locations which diluted operating income and cash flow • Assortment architecture and inventory flow did not align with consumer demand • Inconsistent experience and merchandise misses led customers to stray from brand • Didn’t fully capitalize on our strong store organization and the relationships associates have with our customers 11
Path Forward • New Operating Principles • Rebuilt Leadership Team • Strategic Priorities 12
Operating Principles • Improve Customer Centricity – Continue to deepen our understanding of her and her changing behaviors – Consistently deliver what she expects • Commitment to Operational Excellence – Relentless operating discipline across functions – Right size cost structure • Enhance our Culture – Break down silos – Increase accountability – Play to win 13
New Management Keri Jones, CEO Richard Bundy, SVP, CFO Joined March 2018 Joined July 2018 30+ years of retail experience; 18 years of finance; 14 years retail experience; EVP, CMO Dicks Sporting Goods; 10 years with Chico’s FAS including VP Brand 27 years with Target in roles of EVP, Global Supply Finance & Strategy; Multiple finance & Chain, EVP, Merchandising Planning & Operations analysis roles with Limited Brands, & SVP/VP of Merchandising. Albertson’s, Inc, & NASA’s Jet Propulsion Labs Andrea Kellick, SVP Carmen Wamre, SVP Chief Merchandising Officer Chief Stores Officer Joined July 2018 Joined December 2018 30 years retail experience; 28 years retail experience; 16 years with Target including VP Women’s Field Leadership with Express including Zone VP Apparel; variety of merchandising & planning with for 300+stores, $800M annual sales & 8000 Old Navy, Express & Spiegel. associates. 14
Strategic Initiatives • Enhance the customer experience • Improve marketing & promotional effectiveness • Leverage omni-channel capabilities • Build loyalty & grow our customer file • Optimize our real estate portfolio • Right-size our cost structure 15
Enhance the Customer Experience • Improve relevancy & appropriately balance fashion, updated basics and key items • Better manage inventory flow • Refine vendor structure; improve product lifecycle • Enhance visual merchandising • Strengthen store selling culture 16
Improve Marketing and Promotional Effectiveness • Execute disciplined markdown management • Leverage improved analytics to inform promotions & targeted customer offers • Improve measurement of & increase return on marketing investment 17
Build Loyalty & Grow Customer File • Reallocate marketing spend to drive acquisition while capitalizing on market disruptions • Refresh Reward Loyalty Program & continue to leverage PLCC program to drive growth • Capitalize on our unique positioning & grass roots efforts to drive engagement 18
Leverage Omni-Channel Capabilities • Launch flexible fulfillment capabilities to maximize sales, margin and profitability o Enabled Ship from Store (Nov 2018) o Increased from 67 to 170 stores in December o $2.7M of order demand fulfilled from stores in the month of December o Rollout Buy Online, Pick-up in Store (BOPIS) in Q1 2019 o With ship-to-store; 23% of the time she spends twice as much when she picks up her order o Opportunity to reduce our shipping expense • Continued improvement of online shopping experience 19
Flexible Real Estate Portfolio Store Count at Year End # Yrs to Lease Action Date 900 775 800 171 157 700 608 600 560 518 518 484 500 463 456 76 400 300 41 200 # of Stores with Lease Action Lease with Stores of # 16 100 0 Yrs < 1 1-2 2-3 3-5 > 5 2011 2012 2013 2014 2015 2016 2017 2018 % of Tot 41.1% 34.7% 11.7% 8.5% 4.0% • Consolidation of store formats from 2011 to 2015 dramatically reduced store count by 33% in order to drive productivity • Portfolio analysis recently done with 30-40 planned store closures in the next two and a half years • 41% of stores have a lease action within 1 year and 71% within 2 years providing flexibility to close underperforming stores and negotiate rent reductions • Opportunity to open new stores in markets & centers where we can grow profitably 20
Right Size Cost Structure • Holistic approach being taken to drive cost reductions – Hired 3rd party non-merchandise procurement specialists to analyze and negotiate cost reductions – Continue to aggressively negotiate rent reductions – Optimize our marketing spend – Review and reduce corporate overhead – Reduce shipping and fulfillment expense 21
2019 Outlook For fiscal 2019 expect: • Net sales to increase 2% to 3% driven by – Expanded omnichannel capabilities – Enhancements to the overall product assortment – More impactful marketing promotions to drive customer file growth • Gross margin expansion of 300 to 350 basis points – Improved inventory management including supply chain and omni-channel initiatives – Greater discipline around promotions – Continued reduction of occupancy costs • SG&A as a percentage of sales to decline 150 to 200 basis points – Non-merchandise procurement savings across all areas including marketing, store operations, IT, & utilities – Marketing optimization – Corporate Overhead • Inventory turns to improve as compared to fiscal 2018 – Improved inventory flow – Inventory utilization from Ship from store and BOPIS 22
In Closing • Unique brand positioning serving an attractive customer segment with opportunity to gain more loyal brand ambassadors • New and seasoned management team • Leveraging our investments to drive increased growth through integrated omni-channel initiatives • Significant operational improvements underway to expand operating margin • Cash on hand, with no long-term debt, and no current borrowings under our $55M credit facility 23