Higher Margins Lift Christopher & Banks’ Stock

Higher Margins Lift Christopher & Banks’ Stock

Christopher & Banks said that weather conditions affected fourth-quarter sales but its profit margins will likely improve more than the company previously anticipated.

Plymouth-based women’s clothing retailer Christopher & Banks said Monday that it has lowered its fourth-quarter expectations for a key sales metric, but it also said that margins should improve more than previously expected.

The news caused a bump in the company’s stock price; shares closed up nearly 5 percent at $7.77 on Monday. Shares were up another 4 percent at $8.09 during Tuesday morning trading.

Christopher & Banks has been executing a turnaround strategy that in recent years has involved shuttering more than 100 stores, cutting jobs, and combining some stores under new formats. After the company's former CEO abruptly resigned in early 2012, it operated under an interim CEO and then hired LuAnn Via, formerly of Payless ShoeSource, as its permanent chief executive.

Under Via, Christopher & Banks has reported improved financial results in recent quarters.

On Monday, the company updated its outlook for its fourth fiscal quarter, saying that it now expects same-store sales—sales at stores open at least 13 months and a key industry barometer—to be flat or “slightly” up from last year’s fourth quarter. That’s a less rosy outlook than it previously announced. The company had previously expected a “low-single digit increase” but said that store closures due to weather have hampered growth.

The retailer also said, however, that it now expects its gross margin—an important profit measure—to improve by more than the company previously expected. The higher margin growth is due to the company running fewer promotions than it had planned.

Furthermore, Christopher & Banks said inventory will be up (as it previously planned) during the fourth quarter as the company invests in “new core programs that have been well received by our customers.”

“Given the challenges created by weather and a difficult retail environment, overall we are very pleased with our performance to-date for the quarter,” Via said in a statement. “While our top line has been modestly impacted by weather-related store closures, we are exceeding our gross margin expectations which we attribute to effective execution on our strategies.”

Via also said that the company is receiving a “favorable reaction” to its current assortment of merchandise and its marketing strategies are proving fruitful.

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 590 stores in 43 states, including 360 traditional stores; 150 CJ Banks stores, which focus on plus-size clothing; 49 MPW (missy, petite, and women’s) locations; and 31 outlet stores.