Cache, Inc., a specialty chain of women’s apparel stores, reported results for the thirteen and twenty-six week periods ended June 29, 2013.
For the 13-week period ended June 29, 2013:
-Net sales decreased 2.5% to $60.1 million from $61.6 million in the second quarter of fiscal 2012. Comparable store sales increased 0.5%, which compares to an increase of 4.7% in the second quarter of fiscal 2012;
- Gross profit decreased to $20.9 million, or 34.7% of net sales, from $26.4 million, or 42.8% of net sales, in the second quarter of fiscal 2012;
-Operating loss totaled $3.1 million, which included costs of $956,000 associated with employee separation charges incurred, in connection with severance for corporate employees. This compares to operating income of $1.7 million in the second quarter of fiscal 2012, which included $152,000 of employee separation charges;
- Net loss totaled $3.2 million, or ($0.17) per diluted share, as compared to net income of $1.0 million or $0.08 per diluted share in the second quarter of fiscal 2012; and
- Adjusted net loss totaled $2.2 million, or ($0.12) per share, as compared to adjusted net income of $1.1 million or $0.09 per diluted share in the second quarter of fiscal 2012.
Jay Margolis, Chairman and Chief Executive Officer, commented: “We are pleased with the progress made toward our strategic objectives during the second quarter. During the quarter, we focused on clearing assortments that were not consistent with our go-forward merchandising plan and significantly reducing promotional activity on the web while continuing to make strategic hires to allow us to drive our business forward.
"While our turnaround efforts negatively impacted profitability in the quarter, this activity allowed us to begin the third quarter in an improved position. Following quarter end, we announced a new credit facility which enhances our financial flexibility to pursue our initiatives. I am pleased to welcome our new Chief Financial Officer, Tony DiPippa to Cache and believe he will make a significant contribution to the company.”
“In the first six weeks of the third quarter, our comparable store sales are positive, driven by increased traffic and regular price selling, reflecting the success of our new deliveries, especially in dresses, accessories and targeted promotions,” Mr. Margolis, continued.
“I expect our sales performance to continue to strengthen, as a greater percentage of our assortments are impacted by our moves, and we see the initial benefits from our process and marketing changes. I remain confident in our strategies and our ability to achieve improved operating performance in the near term and put us on a path to achieve sustained profitable long term growth in the future.”
For the 26-week period ended June 29, 2013:
- Net sales decreased 3.4% to $113.6 million from $117.6 million in the first six months of fiscal 2012. Comparable store sales decreased 0.4%, as compared to a increase of 6.9% in the first six months of fiscal 2012;
- Gross profit decreased to $37.3 million, or 32.8% of net sales from $48.6 million, or 41.3% of net sales, in the first six months of fiscal 2012;
- Operating loss totaled $11.4 million, which included costs of $2.5 million associated with employee separation charges incurred, in connection with the separation agreement with the former CEO, as well as severance for other corporate employees. This compares to operating loss of $346,000 in the first six months of fiscal 2012, which included $277,000 of employee separation costs;
- Net loss was $21.7 million or ($1.37) per diluted share, as compared to a net loss of $177,000, or ($0.01) per diluted share in the first six months of fiscal 2012; and
- Adjusted net loss was $9.0 million, or ($0.57) per share, as compared to adjusted net loss of $16,000 or ($0.00) per diluted share in the first six months of fiscal 2012.
Gross profit for the second quarter of fiscal 2013 was $20.9 million, or 34.7% of net sales, compared to $26.4 million, or 42.8% of net sales, in the second quarter of fiscal 2012. For the first six months of fiscal 2013, gross profit was $37.3 million, or 32.8% of net sales, compared to $48.6 million, or 41.3% of net sales in the first six months of fiscal 2012. The decrease in gross margin for the second quarter and first six months of fiscal 2013 was primarily driven by an increase in markdowns on prior season assortments, as compared to the prior year.
In total, operating expenses for the second quarter of fiscal 2013 were $24.0 million, or 40.0% of net sales, as compared to $24.7 million, or 40.1% of net sales, in the second quarter of fiscal 2012. For the first six months of fiscal 2013, operating expenses were $48.7 million, or 42.9% of net sales, compared to $48.9 million, or 41.6% of net sales, in the first six months of fiscal 2012.
The decrease in operating expenses for the second quarter of fiscal 2013 was driven by decreases in marketing, as well as payroll and payroll-related expenses. The decrease in operating expense for the first six months of fiscal 2013 was driven by decreases in marketing, payroll and payroll-related expenses, and depreciation expense.
