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Third Quarter Loss per Share of $0.53, Includes $0.10 per Share Charge
Cash and Marketable Securities of $34.2 Million
Introduces Fourth Quarter Fiscal 2009 Diluted EPS Guidance of $0.12 to $0.15
NEW YORK--(BUSINESS WIRE)-- Cache Inc., (NASDAQ: CACH), a specialty chain of women's apparel stores, reported results for the thirteen ("third quarter") and thirty-nine week periods ("first nine months") ended September 26, 2009.
For the 13-week period ended September 26, 2009:
-- Net sales decreased 22.7% to $44.9 million from $58.1 million in the
third quarter of fiscal 2008. Comparable store sales decreased 21.7%, as
compared to a decrease of 3.9% in the third quarter of fiscal 2008;
-- Net loss totaled $6.8 million or ($0.53) per share, including $0.10 per
share in separation agreement costs. This compares to a net loss of $1.6
million or ($0.12) per share, including $0.02 per share in store closure
costs, in the third quarter of fiscal 2008;
-- Adjusted net loss for the 13-week period in fiscal 2009 was $5.5 million
or ($0.43) per share, excluding separation agreement costs, compared to
an adjusted net loss of $1.4 million or ($0.10) per share, excluding
store closure costs, for the 13-week period in fiscal 2008.
Thomas Reinckens, Chairman and Chief Executive Officer, commented: "We were disappointed with our third quarter results, which reflected lower than expected sales and our decision to accelerate markdowns in anticipation of our new fall and holiday assortments. On a positive note, we maintained a strong balance sheet and generated significant cost savings, while implementing merchandise strategies to position Cache for improved sales and profitability during the fourth quarter. In November, we expect to launch a new expanded assortment to meet more of our existing customers lifestyle needs, as well as to attract new customers."
"We are pleased with the progress we made to reposition our Company," continued Mr Reinckens. "During the quarter, we intensified our value pricing initiative, which is allowing us to broaden our customer reach and continued to maintain a strong balance sheet and stringent financial discipline. At quarter end, cash and marketable securities totaled $34.2 million, up 33.6% from the prior year and inventory at cost declined by 39.5% from the prior year. We also generated $5 million in expense savings during the quarter and remain on track to deliver $23 million in cost reductions this year."
"As we look ahead, we are encouraged about our opportunities in the fourth quarter given our current and upcoming assortments that include compelling fashion, increased value and broader appeal," Mr. Reinckens stated. "Increasing our confidence in our ability to generate better results in the fourth quarter is the improvement in our sales trend thus far in October. We also expect to strengthen our gross profit margin given the acceleration in markdowns to the third quarter, which has allowed us to increase the newness on our selling floor. Finally, we have planned our holiday promotions to be more impactful and maximize the natural increase in mall traffic during the season. Combined, we believe our efforts position Cache to return to profitability in the fourth quarter."
For the 39-week period ended September 26, 2009:
-- Net sales decreased 22.5% to $154.8 million from $199.8 million in the
first nine months of fiscal 2008. Comparable store sales decreased 21.8%
following a 1% gain in the first nine months of fiscal 2008;
-- Net loss was $7.5 million or ($0.59) per share, including $1.3 million
or $0.10 per diluted share in separation agreement costs, net of taxes.
This compares to a net loss of $1.6 million or ($0.12) per share,
including charges, net of taxes, of: $1.7 million or $0.13 per diluted
share related to store closures and $388,000 or $0.03 per diluted share
related to the management change during the first nine months of fiscal
2008; and
-- Adjusted net loss for the first nine months of fiscal 2009 was $6.2
million or ($0.48) per share, excluding separation agreement costs, as
compared to net income of $531,000 or $0.04 per diluted share, excluding
store closure and management change costs, in the first nine months of
fiscal 2008.
Gross profit for the third quarter of fiscal 2009 was $14.2 million, or 31.6% of net sales, compared to $25.6 million, or 44.1% of net sales, in the third quarter of fiscal 2008. For the first nine months of fiscal 2009, gross profit was $61.2 million, or 39.6% of net sales, compared to $88.2 million, or 44.2% of net sales, in the first nine months of fiscal 2008. The decline in gross profit margin for the third quarter and first nine months of fiscal 2009 was primarily driven by increased markdowns and lower sales which did not offset fixed occupancy costs.
In total, operating expenses were $25.1 million, or 55.8% of net sales, as compared to $28.3 million, or 48.7% of net sales, in the third quarter of fiscal 2008. For the first nine months of fiscal 2009, total operating expenses were $73.3 million, or 47.3% of net sales, compared to $91.2 million, or 45.6% of net sales, in the first nine months of fiscal 2008. Operating expenses for the 13-week period and first nine months of fiscal 2009 included $2.1 million in separation agreement costs. Operating expenses for the 13-week period in fiscal 2008 included $449,000 in store closure costs. Operating expenses for the first nine months of fiscal 2008 included $3.4 million of charges, primarily related to store closures. The decrease in operating expenses for the quarter and first nine months of fiscal 2009 was primarily driven by a reduction in store payroll, depreciation and advertising costs, lower general and administrative costs and the effect of the above-mentioned one-time charges incurred during the first nine months of fiscal 2008, partially offset by costs associated with the separation agreement taken in the third quarter of fiscal 2009.
At September 26, 2009, cash and marketable securities totaled $34.2 million and compares to $25.6 million in cash and marketable securities at September 27, 2008. Total inventory at cost decreased 39.5% at quarter end, from the prior-year period. Working capital decreased by $6.0 million to $40.6 million from $46.6 million at September 27, 2008.
A table summarizing financial results follows:
Thirty-Nine Weeks Ended Thirteen Weeks Ended
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
2009 2008 2009 2008
($ thousands, except for per share data, share numbers and store
count)
Net sales $ 154,813 $ 199,820 $ 44,941 $ 58,139
Operating (12,063 ) (2,953 ) (10,854 ) (2,680 )
income (loss)
Store closure
and other - 3,373 - 449
one-time costs
Separation
agreement 2,121 - 2,121 -
costs
Operating
income (loss)
before
Separation,
store closure (9,942 ) 420 (8,733 ) (2,231 )
and
other one-time
costs
Net income (7,533 ) (1,594 ) (6,783 ) (1,646 )
(loss)
Net income
(loss) before (6,205 ) 531 (5,457 ) (1,363 )
separation,
store
closure and
other one-time
costs
Basic earnings
(loss) per $ (0.59 ) $ (0.12 ) $ (0.53 ) $ (0.12 )
share
Diluted
earnings $ (0.59 ) $ (0.12 ) $ (0.53 ) $ (0.12 )
(loss) per
share
Per share -
Store closure
and other
one-time costs $ - $ 0.16 $ - $ 0.02
Per share -
Separation $ 0.10 $ - $ 0.10 $ -
agreement
costs
Diluted
earnings
(loss) per
share -
excluding
separation, $ (0.48 ) $ 0.04 $ (0.43 ) $ (0.10 )
store closure
and other
one-time costs
Basic weighted
average shares
outstanding 12,810,000 13,372,000 12,748,000 13,229,000
Diluted
weighted
average shares
outstanding 12,810,000 13,372,000 12,748,000 13,229,000
Number of
stores open at 289 295 289 295
end of period
Fourth Quarter Fiscal 2009 Guidance
The Company is introducing guidance for the fourth quarter of fiscal 2009. The Company estimates net sales in the range of $62 million to $64 million, which compares to actual net sales of $65.9 million in fiscal 2008. This guidance assumes comparable stores sales in the fourth quarter of fiscal 2009 will decrease in the low double-digit range and compares to a comparable store sales decrease of 17% in the fourth quarter of fiscal 2008.
Diluted earnings per share for the fourth quarter of fiscal 2009 is estimated in the range of $0.12 to $0.15, which compares to actual fourth quarter fiscal 2008 loss per share on a GAAP basis of ($0.42), which included costs of $0.10 per diluted share related to non-cash impairment charges. Actual adjusted net loss for the fourth quarter of fiscal 2008 was ($0.32) per share and excluded impairment charges.
Store Opening Plans
During the third quarter, the Company opened one new store and closed three locations, ending the period with 289 stores in operation. For the remainder of fiscal 2009, the Company plans to open one additional new store and close approximately five locations, ending the year with approximately 285 stores and approximately 575,000 square feet in operation.
Conference call information
The Company announced that it will conduct a conference call to discuss its third quarter fiscal 2009 results today, October 23, 2009 at 9:00 a.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-9039 approximately ten minutes prior to the start of the call. The conference call will also be web-cast live at www.cache.com. A replay of this call will be available until October 30, 2009 and can be accessed by dialing (877) 660-6853 and entering account number 3055 and conference code 335196.
About Cache, Inc.
Cache is a nationwide, mall-based specialty retailer of sophisticated sportswear and social occasion dresses targeting style-conscious women who have a youthful attitude and are self-confident. We currently operate 289 stores, primarily situated in central locations in high traffic, upscale malls in 43 states, the Virgin Islands and Puerto Rico.
CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS September 26, December 27, September 27,
2009 2008 2008
Current assets:
Cash and equivalents $ 5,329,000 $ 4,835,000 $ 2,023,000
Marketable securities 27,376,000 25,153,000 23,570,000
Certificate of deposits - 1,500,000 0 0
restricted
Receivables, net 2,713,000 3,898,000 4,848,000
Income tax receivable 2,225,000 5,883,000 0
Inventories, net 20,434,000 22,321,000 33,802,000
Prepaid expenses and other 1,117,000 1,795,000 5,611,000
current assets
Total current assets 60,694,000 63,885,000 69,854,000
Equipment and leasehold 35,724,000 43,320,000 46,393,000
improvements, net
Goodwill 9,092,000 9,092,000 10,089,000
Intangible assets, net 1,012,000 1,304,000 1,334,000
Other assets 4,274,000 1,924,000 389,000
Total assets $ 110,796,000 $ 119,525,000 $ 128,059,000
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,676,000 $ 6,375,000 8,931,000
Note payable 1,294,000 1,259,000 1,248,000
Accrued compensation 2,862,000 1,713,000 2,682,000
Accrued liabilities 8,246,000 11,077,000 10,366,000
Total current liabilities 20,078,000 20,424,000 23,227,000
Note payable 2,199,000 3,143,000 3,450,000
Other liabilities 17,202,000 16,795,000 16,335,000
Deferred income taxes, net 0 0 133,000
Commitments and
contingencies
STOCKHOLDERS' EQUITY
Common stock 164,000 164,000 164,000
Additional paid-in capital 47,428,000 47,155,000 47,075,000
Retained earnings 63,520,000 71,053,000 76,581,000
Treasury stock (39,795,000 ) (39,209,000 ) (38,906,000 )
Total stockholders' equity 71,317,000 79,163,000 84,914,000
Total liabilities and $ 110,796,000 $ 119,525,000 $ 128,059,000
stockholders' equity
CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTY-NINE WEEKS ENDED
September 26, September 27,
2009 2008
Net sales $ 154,813,000 $ 199,820,000
Cost of sales, including buying and occupancy 93,574,000 111,599,000
Gross profit 61,239,000 88,221,000
Expenses
Store operating expenses 57,840,000 71,741,000
General and administrative expenses 13,341,000 16,676,000
Store exit costs 0 2,757,000
Employee separation charge 2,121,000 0
Total expenses 73,302,000 91,174,000
Operating loss (12,063,000 ) (2,953,000 )
Other income (expense):
Interest expense (146,000 ) (189,000 )
Interest income 178,000 612,000
Loss before income taxes (12,031,000 ) (2,530,000 )
Income tax benefit (4,498,000 ) (936,000 )
Net loss $ (7,533,000 ) $ (1,594,000 )
Basic loss per share ($0.59 ) ($0.12 )
Diluted loss per share ($0.59 ) ($0.12 )
Basic weighted average shares outstanding 12,810,000 13,372,000
Diluted weighted average shares outstanding 12,810,000 13,372,000
CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN WEEKS ENDED
September 26, September 27,
2009 2008
Net sales $ 44,941,000 $ 58,139,000
Cost of sales, including occupancy and buying 30,727,000 32,525,000
costs
Gross profit 14,214,000 25,614,000
Costs and expenses
Store operating expenses 18,590,000 23,040,000
General and administrative expenses 4,357,000 4,805,000
Store exit costs 0 449,000
Employee separation charge 2,121,000 0
Total expenses 25,068,000 28,294,000
Operating loss (10,854,000 ) (2,680,000 )
Other income (expense):
Interest expense (48,000 ) (58,000 )
Interest income 52,000 125,000
Loss before income taxes (10,850,000 ) (2,613,000 )
Income tax benefit (4,067,000 ) (967,000 )
Net loss $ (6,783,000 ) $ (1,646,000 )
Basic loss per share ($0.53 ) ($0.12 )
Diluted loss per share ($0.53 ) ($0.12 )
Basic weighted average shares outstanding 12,748,000 13,229,000
Diluted weighted average shares outstanding 12,748,000 13,229,000
Source: Cache Inc.
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