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Fashion retailer Cache Q2 profit drops

26 Jul '06

6 min read

-- Announced plans to introduce a new concept called Cache Luxe while exiting its 39-store Lillie Rubin Chain;

-- Opened 10 Cache stores, closed one Cache store and two Lillie Rubin stores; and at quarter-end operated 309 stores in 43 states; and

-- Remodeled one Cache store with 64% of its Cache store base in the new store format at quarter-end.

Following quarter end, the company announced that it retained James Frain, formerly of Chico FAS Inc, as a consultant to advance its marketing efforts.

Gross profit in the second quarter rose by 16.2% to $35.3 million, or 49.2% of net sales, compared to $30.4 million, or 45.3% of net sales, in the second quarter of fiscal 2005. For the first half of fiscal 2006, gross profit rose by 12.4% to $64.5 million, or 47.6% of net sales, compared to $57.5 million, or 44.3% of net sales, in the prior year period. The increase in gross profit margin for the second quarter and first half of fiscal 2006 can be attributed to strong full price selling.

Wolf continued: "As we look ahead, we remain enthusiastic about our short and long term growth prospects. Cache remains a preferred shopping destination for our target customer with its compelling fashion assortment. We are also very excited about our new retail platform, Cache Luxe, which will extend our Cache brand by focusing on higher end apparel and accessories for fashion conscious female shoppers. We also expect to benefit from intensified marketing efforts, which include an expanded direct mail effort and television advertising for the first time. This effort will be headed by our recently added consultant, James Frain. With the solid momentum in our business, and our new marketing and advertising campaigns underway, we feel confident in our ability to deliver a strong performance during the balance of the year."

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