Christopher & Banks Stock Jumps On Narrowed Loss
In the wake of a significant restructuring process, Christopher & Banks on Tuesday reported another quarter of improved financial results, news that sent its stock climbing.
The Plymouth-based women’s clothing retailer reported a narrower loss, a modest increase in sales, and lower costs as it distances itself from expensive restructuring charges.
Christopher & Banks struggled in recent years, closing more than 100 stores, cutting jobs, and combining some stores under new formats.
Its former chief executive abruptly resigned in early 2012, and after operating under an interim CEO, it tapped former Payless ShoeSource, Inc., CEO LuAnn Via as its leader last fall.
Via was charged with guiding the company through its turnaround attempt, and Christopher & Banks has reported improved results in recent quarters. The company said Tuesday that its net loss totaled $265,000, or $0.01 per share, for the quarter that ended August 3, an improvement from a loss of $2.2 million, or $0.06 per share, during last year’s second quarter.
The quarterly loss was smaller than the $0.02 per share that analysts polled by Thomson Reuters were expecting. Shares of the company’s stock were trading up about 7.8 percent late Tuesday morning at $6.35—although Christopher & Banks’ stock price had slid in the past few months and closed at $7.83 in mid-May.
Revenue, meanwhile, totaled $104.2 million for the latest quarter, up modestly from $103.4 million from the comparable period a year ago—despite the fact that it operated nearly 9 percent fewer stores during this year’s second quarter. Sales fell short of the $105 million that analysts were expecting.
Revenue at stores open at least a year, a key gauge of a retailer’s health, rose 7.7 percent. (During the same period last year, same-store sales climbed 8.9 percent.) Company officials told investors during a Tuesday conference call that store traffic was a major challenge; it dropped more than 10 percent from last year’s second quarter, largely due to higher traffic during last year’s everything-must-go sale, as well as a general decline in mall traffic last quarter. But the conversion rate—meaning the number of customers who actually purchased items—was up significantly, offsetting that decline.
Total costs and expenses were down 1.3 percent during the latest quarter.
“We were pleased that for the quarter we were able to maintain our positive momentum, achieve solid financial results in a difficult retail environment, and deliver our fifth consecutive quarter of positive same-store sales comps,” Via said in a statement. “We also exceeded our gross margin expectations and achieved our operating objectives.”
For the second half of its fiscal year, the company is “well-positioned in our merchandising and marketing efforts, and our inventory levels remain fresh,” Via said. “We will also continue to build upon our strong foundation and refine our strategies as we gain greater insights into our customer in order to drive sustainable long-term sales and earnings growth.”
During Tuesday’s conference call, Via told investors that the company recently upgraded its e-commerce platform and experienced some “transitional issues that impacted direct online sales volumes,” but “we have made considerable progress in putting these issues behind us, and we are confident about the future of our e-commerce business.”
Despite its significant downsizing in recent years, Christopher & Banks is now forecasting moderate growth. The company on Tuesday laid out a three-year growth plan, saying that it expects to achieve “mid-single digit annual comparable store sales growth” and boost its store square-footage footprint by 2 to 3 percent annually by opening at least 20 stores a year and converting existing stores to its “MPW” brand, which focuses on “missy” and “petite” sizes.
During its most recent quarter, the company converted four existing stores into two MPW stores and opened three outlet stores.
“One of my key objectives upon joining the company last fall was to conduct an extensive and in-depth review of the business in order to identify our long-term growth opportunities,” Via said. “As a result of this review, we have developed a long-range plan, beginning with fiscal 2014, focused on driving mid-single digit comparable store sales growth and operating margin expansion over the next three fiscal years.”
Christopher & Banks is among Minnesota’s 50 largest public companies based on revenue, which totaled $430.3 million for the fiscal year that ended in February. It currently operates 597 stores in 44 states, including 369 traditional stores; 153 CJ Banks stores, which focus on plus-size clothing; 45 MPW locations; and 30 outlet stores.