Cache sees particular strength in sportswear, dresses

13 Aug '10

4 min read

Cache Inc., a specialty chain of women's apparel stores, reported results for the thirteen and twenty-six week periods ended July 3, 2010.

For the 13-week period ended July 3, 2010:

• Net sales decreased 0.5% to $56.6 million from $56.9 million in the second quarter of fiscal 2009. Comparable store sales increased 5.1%, as compared to a decrease of 23.0% in the second quarter of fiscal 2009;
• Net income totaled $897,000 or $0.07 per diluted share, as compared to net income of $845,000 or $0.07 per diluted share in the second quarter of fiscal 2009.

Thomas Reinckens, Chairman and Chief Executive Officer, commented: “We are pleased to report positive comparable store sales and positive earnings in the second quarter. During the quarter, we saw particular strength in sportswear and dresses, which led to a 5.1% comparable store sales increase. We continued to maintain control of expenses during the quarter and ended the period with a strong balance sheet. Operating expenses declined by 60 basis points as a percentage of net sales. Cash and cash equivalents were $30.9 million and inventory was below the second quarter last year, down $2.0 million or 9.0%.”

“As we begin the second half of the year, we feel very good about the direction of our business. Our comparable store sales are up positive mid-single digits in the first five weeks of our third quarter, providing further evidence that our design and merchandise initiatives are working and generating intended results,”

Mr. Reinckens continued. “To showcase our great new fall and holiday assortments, we have broadened our marketing investment to include national magazine advertising. We also expect to see improvements in our merchandise margin, as we increase full-price selling and reduce our future reliance on air freight.

“While we typically report a loss in the third quarter given the seasonality of our business, we expect to report solid profitability in the fourth quarter, with our heightened discipline and strong assortments allowing us to begin fiscal 2011 with leaner and more current inventory. We remain confident that our strategies will lead to increased long-term sales and profit potential, as well as maximized value for all Cache stakeholders.”

For the 26-week period ended July 3, 2010:

• Net sales decreased 4.3% to $105.1 million from $109.9 million in the first six months of fiscal 2009. Comparable store sales decreased 0.8%, as compared to a decrease of 21.9% in the first six months of fiscal 2009;
• Net loss was $3.2 million or ($0.25) per diluted share, as compared to net loss of $751,000 or ($0.06) per diluted share in the first six months of fiscal 2009.

Gross profit for the second quarter of fiscal 2010 was $24.9 million, or 44.1% of net sales, compared to $25.2 million, or 44.4% of net sales, in the second quarter of fiscal 2009. For the first six months of fiscal 2010, grossprofit was $41.6 million, or 39.6% of net sales, compared to $47.0 million, or 42.8% of net sales, in the first six months of fiscal 2009. The decline in gross profit margin for the first six months of fiscal 2010 was primarily driven by an increase in markdowns and in-house design team and sourcing costs.

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