Cache, Inc., a specialty chain of women’s apparel stores, reported results for the thirteen week period (“first quarter”) ended March 29, 2014.
For the 13-week period ended March 29, 2014:
Net sales were $47.4 million compared to $53.5 million in the first quarter of fiscal 2013. Comparable store sales decreased 8.9%, reflecting the difficult selling season with the decrease in mall traffic, adverse weather conditions and the shift of Easter to the second quarter.
Operating loss totaled $10.7 million and included employee separation charges incurred of $134,000. This compares to an operating loss of $7.7 million in the first quarter of fiscal 2013 and included employee separation charges incurred of $1.5 million.
Net loss totaled $10.8 million or $0.51 per share and included a $134,000 charge, or $0.01 per share, in employee separation charges. This compares to a net loss of $17.8 million, or $1.33 per share, in the first quarter of fiscal 2013 which included a $10.1 million charge, or $0.75 per share, related to an increase in the tax valuation allowance against net deferred tax assets as well as a $1.5 million charge, or $0.11 per share, in employee separation charges.
Jay Margolis, Chairman and Chief Executive Officer, commented, “We had a disappointing start to the year with strength across our dress assortments more than offset by too narrow of an assortment in key casual bottoms, and the decision not to move forward with certain casual and accessories offerings that were inconsistent with our brand positioning. This, along with lower mall traffic throughout the quarter, store closings as a result of winter snowstorms and the later Easter holiday impacted our sales and profitability.
“While not yet evident in our bottom line, the quarter included progress toward our long term goals and we are applying key learnings from the first quarter to our go forward strategies. To this end, we were pleased with the response to our dress assortments in long, short, day and evening categories. At quarter end, dresses represented 55% of our total sales compared to 44% a year ago. On the process side, we reduced lead times to allow us to be more nimble and react faster to fashion trends.”
First Quarter Operating Results
Gross profit for the first quarter of fiscal 2014 was $13.0 million, or 27.3% of net sales, compared to $17.0 million, or 31.7% of net sales, in the first quarter of fiscal 2013. The decrease in gross profit margin was primarily due to the leverage impact of occupancy costs on reduced sales, as compared to the prior year.
In total, operating expenses were $23.6 million, or 49.8% of net sales, as compared to $24.7 million, or 46.1% of net sales, in the first quarter of fiscal 2013. The decrease in operating expenses was primarily due to a decrease in store operating expenses, partially offset by increases in general and administrative expense due to an increase in payroll and payroll related costs and a net increase in other miscellaneous items.
At March 29, 2014, cash totaled $806,000, as compared to $4.7 million in cash and certificates of deposit at March 30, 2013. Total inventory at cost was approximately the same as last year.