Christopher & Banks Slips To Q2 Loss, See Weak Q3 Sales

(RTTNews) - Specialty women's apparel retailer Christopher & Banks Corp. (CBK) reported Thursday a net loss for the second quarter compared to a profit last year, reflecting lower gross margins and a double-digit drop in same-store sales.

However, loss per share came in narrower than analysts' expectations, while quarterly net sales missed their estimates. The company also provided sales guidance for the third quarter, below Street view.

"Our disappointing second quarter performance reflects a combination of both macro headwinds, as well as company-specific factors that impacted our business, particularly in late June and in the month of July. While we have taken immediate action in a number of areas to address certain merchandising missteps and have seen trends in the business improve somewhat since July, much of the benefit from these initiatives is expected to drive improved sales for Holiday 2015 and Spring 2016," President and CEO LuAnn Via said in a statement.

Plymouth, Minnesota-based Christopher & Banks reported a net loss of $0.71 million or $0.02 per share for the second quarter, compared to net income of $3.36 million or $0.09 per share in the prior-year quarter.

On average, three analysts polled by Thomson Reuters expected the company to report a loss of $0.04 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter declined to $94.0 million from $106.63 million in the same quarter last year, and missed three Wall Street analysts' consensus estimate of $99.67 million.

Same-store sales decreased 12.4 percent over a 4.7 percent same-store sales growth last year.

The company said it operated an average of 4.4 percent fewer stores during the second quarter, reflecting its Missy, Petite, Women or MPW store conversion strategy, offset to some extent by new store openings, primarily outlets.

"With the majority of the store base already converted to MPW's and Outlets approaching our target number, our pace of conversions and new Outlets will slow down as we remain focused on ensuring that our current store base achieves optimal productivity," Via stated.

Gross margin for the quarter contracted 240 basis points to 32.9 percent from last year's 35.3 percent.

Total costs and expenses declined to $95.71 million from $103.38 million in the year-ago quarter.

Looking ahead to the third quarter, Christopher & Banks expects total net sales between $101 million and $105 million, and gross margin to be 320 to 400 basis points lower than last year. Street is currently looking for sales of $114.09 million for the quarter.

The company also expects to close one Christopher & Banks store and two MPW stores as well as convert four stores into two MPW stores, and open five MPW and nine Outlet stores. The company said it average store count to be down 3.0 percent, compared to last year.

For fiscal 2015, the company expects to open nine new MPW stores and 33 Outlet stores and to end the year with about 525 stores, of which 320 are MPWs, compared to 518 stores at the end of fiscal 2014. The company also expects average store count to be down about 4.0 percent, compared to last year.

"Overall, we believe that we are taking the proper steps to drive improved performance and profitability for the long-term," Via added.

CBK closed Wednesday's regular trading session at $1.60, down $0.07 on a volume of 0.25 million shares.