Christopher & Banks Says Turnaround Plan Is Working
Less than two weeks after being blasted by a minority investor and would-be buyer, Christopher & Banks Corporation released preliminary second-quarter financial results in an attempt to demonstrate that its turnaround strategy is working.
The Plymouth-based women’s clothing retailer said late Wednesday that same-store sales—sales at stores open for at least 13 months and a key measure of a retailer’s health—will increase between 5 percent and 5.5 percent for the three-month period that ends Saturday. Sales for the quarter, meanwhile, are expected to total between $102 million and $103 million, down slightly from $105.6 million for the second quarter of last year.
The company also said that it expects cash and cash equivalents to be in the range of $39 million to $40 million at the end of the second quarter—up from $33.7 million at the end of the first quarter.
Full financial results will be released August 29.
“While we remain in the early stages of our turnaround plan, our initiatives are gaining traction,” President and CEO Joel Waller said in a prepared statement. “Our new merchandising and marketing strategies are beginning to show progress. Meanwhile, strategic initiatives underway to reinvigorate sales through in-store merchandise presentation and optimization of our selling staff are also yielding improved performance.”
Christopher & Banks has closed at least 100 stores within the past year and cut hundreds of jobs. Its Wednesday announcement appears to be in response to criticism it has received from Boston-based investment management firm Aria Partners, which owns a 4 percent stake in the company.
On July 3, Aria extended an unsolicited, $64 million buyout offer, offering to pay $1.75 per share—which represented a 51 percent premium over the previous day’s closing price.
But six days later, Christopher & Banks’ board rejected the offer, saying that it wasn’t in the best interest of stockholders and that the best course of action was to stick with the company’s own turnaround strategy. The company also adopted a shareholder rights plan, better known as a “poison pill”—a measure that corporations take to discourage hostile takeovers. The plan will essentially dilute the stock of an investor that acquires 15 percent or more of the company’s shares.
Aria Partner Edward Latessa then sent a sharply worded letter of ridicule to Christopher & Banks’ non-executive Chairman Paul Snyder. In it, he said the board’s credibility in terms of turning the company around was “worthless based on its record thus far” and questioned the compensation of Snyder and another board member.
Christopher & Banks’ new strategy involves reducing the number of styles offered this fall and “rebalancing” its assortment; lowering prices and reducing the variety of prices; improving inventory flow by reducing the number of major floor sets by half; and developing a promotional strategy that features more targeted, unique promotions and fewer storewide events.
The company operates 658 stores in 44 states. For the fiscal year that ended January 28, it reported a net loss of $71.8 million, which included $9.8 million in charges related to restructuring efforts.
For the first quarter that ended April 28, Christopher & Banks reported a net loss of $13.4 million. Same-store sales fell 15 percent during the period.