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): September 11, 2020

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

Delaware
 
001-31390
 
06-1195422
(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

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))

Securities registered pursuant to Section 12(b) of the Act:
Class
 
Trading Symbol
 
Name of each exchange on which registered
Common stock, par value $.01 per share
 
CBKC
 
OTCQX

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 September 11, 2020, Christopher & Banks Corporation issued a press release reporting its results for the thirteen and twenty-six week periods ended August 1, 2020. 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:
 
 
 


2




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: September 11, 2020
By:
/s/ Richard Bundy
 
 
Richard Bundy
 
 
Senior Vice President, Chief Financial Officer
 
 
 
 
 
 


3



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.:
September 11, 2020
 
001-31390


CHRISTOPHER & BANKS CORPORATION


 
 
 
Exhibit Number
 
Description
 
 
 
 




4
Exhibit
Exhibit 99.1
https://cdn.kscope.io/dd1da37aeedd80df66d6c748fe1d0377-cbka15.jpg
2400 Xenium Lane North, Plymouth, MN 55441 ▪ (763) 551-5000 ▪ www.christopherandbanks.com

CHRISTOPHER & BANKS CORPORATION REPORTS
SECOND QUARTER FISCAL 2020 FINANCIAL RESULTS

Minneapolis, MN, September 11, 2020 - Christopher & Banks Corporation (OTC: CBKC), a specialty women’s apparel retailer, today reported results for the second quarter ended August 1, 2020.

Second Quarter Fiscal 2020 Highlights:
Net sales decreased 29.9% to $58.5 million compared to the same period last year due to 36% fewer selling days related to temporary store closures, partially offset by 70.9% growth in its eCommerce business
As a percentage of sales, SG&A levered 20 basis points to 33.1%
Net loss totaled $15.1 million, or ($0.40) per share, compared to a net loss of $5.9 million, or ($0.16) per share in the same prior year period
Adjusted EBITDA* was negative $12.8 million compared to negative $3.0 million last year
Generated cash flow from operations of $5.1 million

Keri Jones, President and Chief Executive Officer, commented, “Our top priorities continue to be the health and safety of our associates and customers as well as the sustainability of our business. Due to the strong foundation that we built and strategic plan we advanced over the course of the last two years, we were able to move quickly to adapt to the challenges brought on by the COVID-19 pandemic. We leveraged our expanded omni-channel capabilities and store inventories, driving 70.9% growth in our eCommerce business for the second quarter. Notably, we saw accelerated growth in both our store customers shopping online for their first time as well as in new online customers, giving us even greater confidence in our longer term opportunities. Importantly, with the strong customer response we have seen to new assortments, we believe that the substantial increase in new merchandise arriving over the next several months set us up for significantly improved performance in the back half of the year.

Ms. Jones continued, “Prior to COVID, we were on our path to recovery through the execution of our strategic initiatives. I am very proud of our team’s efforts as we managed through this extremely challenging period and we remain committed to further advancing our strategies. At the same time, we are acutely focused on driving sales, managing inventory, minimizing expenses and protecting cash as we continue to navigate this pandemic and we believe we have adequate cash and availability to continue to effectively operate the business. We continue to work closely with our landlords and we are more than halfway through lease negotiations and pleased with our progress. We believe that we are well-positioned for the evolving retail landscape given our highly loyal customer base, great value proposition, product offering of casual comfort that matches our customer’s lifestyle, and our expanded omni-channel capabilities. We have the right management team, the right market positioning and infrastructure, and the right strategic plan to drive long term profitable growth in the new environment.”

1




Results for the Second Quarter Ended August 1, 2020
Net sales decreased 29.9% to $58.5 million,due to the sales impact of temporary store closures during the quarter and reduced traffic trends upon reopening, partially offset by a 70.9% increase in eCommerce sales. The Company saw 36% fewer selling days than the same period last year due to temporary store closures.
Gross margin rate was 10.9%, as compared to 29.3% in last year's second quarter. The decline in gross margin rate was due to a decrease in merchandise margin related to markdowns on seasonal product, higher shipping costs associated with the increase in eCommerce sales and the higher percent of those orders that were shipped from stores and deleverage on occupancy costs, despite the $2.2 million in rent savings related to negotiations in 2019.
Selling, general & administrative expenses (“SG&A”) decreased 30.2% to $19.4 million from $27.8 million in the prior year period. Of the $8.4 million decline, more than three-quarters was due to store and corporate compensation related to furloughs and salary reductions, with the remainder of the decrease primarily due to reduced marketing expense and lower costs related to medical benefits, professional services and store operations.

Balance Sheet Highlights and Capital Expenditures
Cash and cash equivalents totaled $2.8 million with $4.6 million in short term borrowings and net availability of $5.9 million under the credit facility as of the end of the second quarter. Long term debt of $15.0 million includes the $10 million PPP loan which is being used for qualified payroll expenses in accordance with the conditions of the loan agreement and we believe that the loan principal will be forgiven under the CARES Act.

Total inventory was $36.0 million at the end of the second quarter of 2020, down 26.0% compared to $48.7 million at the end of the same period last year. This compares to a 21.2% increase in inventory for the same period last year as the Company pulled forward product to mitigate higher tariff costs. In addition, in-transit inventory declined $6.5 million to last year due to a large portion of fall receipts shifting out approximately three weeks due to COVID related impacts to our supply chain.

Capital expenditures for the second quarter of 2020 were $0.3 million compared to $0.4 million in last year’s second quarter. This primarily reflects store investments for four new stores that were under construction prior to the pandemic.

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; 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.

**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.


2




Conference Call Information
The Company will discuss its second quarter Fiscal 2020 results in a conference call scheduled for today, September 11, 2020, at 8:30 a.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 705-6003 or (201) 493-6725 if calling internationally. Please dial in approximately 10 minutes prior to the start of the call. 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 thirty days. In addition, an audio replay of the call will be available shortly after its conclusion and will be archived until September 18, 2020. This call may be accessed by dialing 1-844-512-2921 and using the passcode 13708495.

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

About Christopher & Banks
Christopher & Banks Corporation is a Minneapolis-based specialty retailer featuring exclusively designed privately branded women’s apparel and accessories. As of September 8, 2020, the Company operates 452 stores in 44 states consisting of 316 MPW stores, 77 Outlet stores, 31 Christopher & Banks stores, and 28 stores in its women’s plus size clothing division CJ Banks. The Company also operates the www.ChristopherandBanks.com eCommerce website.


3



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, 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.




    COMPANY CONTACT:
 
 
    Richard Bundy
 
 
    Senior Vice President, Chief Financial Officer
 
 
    (763) 551-5000
 
 
 
 
 
    INVESTOR RELATIONS CONTACT:
 
 
    Jean Fontana
 
 
    ICR, Inc.
 
 
    (646) 277-1214
 
 


4




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

 
Thirteen Weeks Ended
 
Twenty-Six Weeks Ended
 
August 1,
 
August 3,
 
August 1,
 
August 3,
 
2020
 
2019
 
2020
 
2019
Net sales
$
58,481

 
$
83,443

 
$
98,606

 
$
166,663

Merchandise, buying and occupancy costs
52,101

 
58,969

 
88,502

 
116,575

Gross profit
6,380

 
24,474

 
10,104

 
50,088

Other operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
19,361

 
27,754

 
37,884

 
56,942

Depreciation and amortization
1,870

 
2,199

 
3,776

 
4,581

Impairment of store assets

 
311

 
264

 
311

Total other operating expenses
21,231

 
30,264

 
41,924

 
61,834

Operating loss
(14,851
)
 
(5,790
)
 
(31,820
)
 
(11,746
)
Interest expense, net
(280
)
 
(111
)
 
(553
)
 
(267
)
Loss before income taxes
(15,131
)
 
(5,901
)
 
(32,373
)
 
(12,013
)
Income tax (benefit) provision
(37
)
 
40

 
(41
)
 
80

Net loss
$
(15,094
)
 
$
(5,941
)
 
$
(32,332
)
 
$
(12,093
)
 
 
 
 
 
 
 
 
Basic loss per share:
 
 
 
 
 
 
 
Net loss
$
(0.40
)
 
$
(0.16
)
 
$
(0.86
)
 
$
(0.32
)
Basic shares outstanding
37,693
 
37,440
 
37,627
 
37,686
 
 
 
 
 
 
 
 
Diluted loss per share:
 
 
 
 
 
 
 
Net loss
$
(0.40
)
 
$
(0.16
)
 
$
(0.86
)
 
$
(0.32
)
Diluted shares outstanding
37,693
 
37,440
 
37,627
 
37,686

5




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

 
August 1,
 
August 3,
 
2020
 
2019
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
2,771

 
$
2,242

Accounts receivable
2,603

 
3,471

Merchandise inventories
36,006

 
48,718

Prepaid expenses and other current assets
4,104

 
3,894

Income taxes receivable
379

 
294

Total current assets
45,863

 
58,619

Non-current assets:
 
 
 
Property, equipment and improvements, net
21,849

 
27,925

Operating lease assets
98,237

 
121,782

Deferred income taxes
613

 
499

Other assets
1,120

 
668

Total non-current assets
121,819

 
150,874

Total assets
$
167,682

 
$
209,493

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
27,901

 
$
27,098

Short-term borrowings
4,575

 
3,450

Current portion of long-term debt
417

 

Current portion of long-term lease liabilities
24,535

 
28,258

Accrued salaries, wages and related expenses
4,749

 
5,139

Accrued liabilities and other current liabilities
21,763

 
19,507

Total current liabilities
83,940

 
83,452

 
 
 
 
Non-current liabilities:
 
 
 
Long-term lease liabilities
89,827

 
111,968

Long-term debt
14,583

 

Other non-current liabilities
2,254

 
2,013

Total non-current liabilities
106,664

 
113,981

 
 
 
 
Stockholders' equity:
 
 
 
Common stock
454

 
451

Additional paid-in capital
129,713

 
129,118

(Accumulated deficit) retained earnings
(40,214
)
 
(4,634
)
Common stock held in treasury
(112,875
)
 
(112,875
)
Total stockholders' equity
(22,922
)
 
12,060

Total liabilities and stockholders' equity
$
167,682

 
$
209,493


6



CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
 
Twenty-Six Weeks Ended
 
August 1,
 
August 3,
 
2020
 
2019
Cash flows from operating activities:
 
 
 
Net loss
$
(32,332
)
 
$
(12,093
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
3,776

 
4,581

Impairment of store assets
264

 
311

Amortization of financing costs
96

 
30

Lease costs
12,061

 
12,867

Stock-based compensation expense
309

 
413

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
372

 
(704
)
Merchandise inventories
5,692

 
(7,680
)
Prepaid expenses and other assets
255

 
(505
)
Income taxes receivable
(89
)
 
(26
)
Accounts payable
4,255

 
9,286

Accrued liabilities
(2,395
)
 
(2,964
)
Lease liabilities
(11,616
)
 
(13,634
)
Other liabilities
423

 
(230
)
Net cash used in operating activities
(18,929
)
 
(10,348
)
 
 
 
 
Cash flows from investing activities:
 
 
 
Purchases of property, equipment and improvements
(661
)
 
(996
)
Net cash used in investing activities
(661
)
 
(996
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Shares redeemed for payroll taxes
(7
)
 
(5
)
Proceeds from bank credit facility
18,155

 
12,650

Payments of bank credit facility
(13,580
)
 
(9,200
)
Payments of debt issuance costs
(405
)
 

Proceeds from long-term borrowings
15,000

 

Acquisition of common stock held in treasury, at cost

 
(98
)
Net cash provided by financing activities
19,163

 
3,347

 
 
 
 
Net decrease in cash and cash equivalents
(427
)
 
(7,997
)
Cash and cash equivalents at beginning of period
3,198

 
10,239

Cash and cash equivalents at end of period
$
2,771

 
$
2,242

 
 
 
 
Supplemental cash flow information:
 
 
 
Interest paid
$
553

 
$
267

Income taxes paid
59

 
$
198

Accrued purchases of property, equipment and improvements
$
221

 
$
98


7




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

The following table reconciles from Net loss in accordance with generally accepted accounting principles (GAAP) to Adjusted EBITDA, a non-GAAP measure, for the thirteen and twenty-six weeks ended August 1, 2020 and August 3, 2019:

 
Thirteen Weeks Ended
 
Twenty-Six Weeks Ended
 
August 1,
 
August 3,
 
August 1,
 
August 3,
 
2020
 
2019
 
2020
 
2019
Net loss on a GAAP basis
$
(15,094
)
 
$
(5,941
)
 
$
(32,332
)
 
$
(12,093
)
Income tax (benefit) provision
(37
)
 
40

 
(41
)
 
80

Interest expense, net
(280
)
 
(111
)
 
(553
)
 
(267
)
Depreciation & amortization
1,869

 
2,199

 
3,775

 
4,581

Impairment of store assets

 
311

 
264

 
311

Executive severance

 

 

 
396

Stock based compensation
$
147

 
$
160

 
 
 
 
Adjusted EBITDA
$
(12,835
)
 
$
(2,976
)
 
$
(27,472
)
 
$
(5,901
)


8




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

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 thirteen and twenty-six weeks ended August 1, 2020 and August 3, 2019:

 
Thirteen Weeks Ended
 
August 1,
 
August 3,
 
2020
 
2019
 
Pretax
Net of tax
Per share amounts
 
Pretax
Net of tax
Per share amounts
GAAP net loss per share
 
 
$
(0.40
)
 
 
 
$
(0.16
)
Adjustments
 
 
 
 
 
 
 
Impairment of store assets


0.00
 
311

309

0.01
Lease termination fees and other related costs, net


0.00
 
144

143

0.00
Executive severance
147

147

0.00
 


0.00
Stock based compensation


0.00
 
160

159

0.00
Adjusted loss per share
 
 
$
(0.40
)
 
 
 
$
(0.15
)



 
Twenty-Six Weeks Ended
 
August 1,
 
August 3,
 
2020
 
2019
 
Pretax
Net of tax
Per share amounts
 
Pretax
Net of tax
Per share amounts
GAAP net loss per share
 
 
$
(0.86
)
 
 
 
$
(0.32
)
Adjustments
 
 
 
 
 
 
 
Impairment of store assets
264

264

0.01
 
311

309

0.01
Lease termination fees and other related costs, net


0.00
 
144

143

0.00
Executive severance


0.00
 
396

393

0.01
Stock based compensation
309

309

0.01

 
413

413

0.01

Adjusted loss per share
 
 
$
(0.84
)
 
 
 
$
(0.29
)


9