Women's apparel chain CBK Corp sees weak earnings in Q3

26 Sep '08

4 min read

Christopher & Banks Corporation reported results for its fiscal 2009 second quarter ended August 30, 2008.

Second Quarter Highlights:
• Total sales for the quarter ended August 30, 2008 were $131.6 million compared to $141.1 million for the quarter ended September 1, 2007.
• Same-store sales for the quarter ended August 30, 2008 were down 13 percent as compared to the quarter ended September 1, 2007.
• Net income for the second fiscal quarter ended August 30, 2008 was $0.8 million or $0.02 per diluted share. Results for the second quarter were reduced by a non-cash pre-tax long-lived asset impairment charge of $1.2 million, or $0.02 per diluted share, related to the Company's Acorn division. In last year's second quarter, the Company had net income of $3.4 million or $0.09 per diluted share.

Second Quarter Results:
Total sales for the quarter ended August 30, 2008 were $131.6 million compared to $141.1 million for the quarter ended September 1, 2007. Same-store sales for the quarter ended August 30, 2008 were down 13 percent compared to the quarter ended September 1, 2007.

Merchandise buying and occupancy expense was $81.5 million or 61.9% of sales this quarter compared to $90.6 million or 64.2% of sales in last year's second quarter. Merchandise margins improved by 480 basis points. This improvement was partially offset by deleveraging of buying and occupancy costs as a result of a 13 percent decline in same-store sales during the quarter.

Second quarter selling, general and administrative (“SG&A”) expenses were $41.4 million, or 31.5% of sales this fiscal quarter, compared to $40.6 million or 28.8% of sales in the second quarter of last year. The increase in SG&A as a percent of sales was primarily due to a general deleveraging across most expense categories as a result of the 13 percent decline in same-store sales during the quarter.

Depreciation and amortization was $8.0 million in the second quarter this year compared to $5.5 million in the second quarter last year. Depreciation and amortization this year includes approximately $1.2 million in long-lived asset impairment charges at the Company's Acorn division.

The Company's second quarter net income was $0.8 million or $0.02 per diluted share. In last year's second quarter, the Company had net income of $3.4 million or $0.09 per diluted share.

At the end of the fiscal quarter, the Company had $84.0 million in cash, cash equivalents and short-term investments. The Company also had approximately $18.5 million in long-term investments consisting of auction rate securities. This compares to $90.9 million in cash, cash equivalents and short-term investments as of the end of the comparable quarter last year. Last year the Company's auction rate securities were classified as short-term investments.

Six Month Results:
Total sales for the six months ended August 30, 2008 were $291.3 million compared to $290.5 million for the same six month period ended September 1, 2007. Same-store sales for the six months ended August 30, 2008 declined six percent. Net income for the six months ended August 30, 2008 was $12.1 million or $0.34 per diluted share compared to $15.1 million or $0.42 per diluted share for the first six months of last year.

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