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8-K - 8-K - CACHE INCa13-24067_18k.htm

Exhibit 99.1

 

 

Company Contact:

Anthony DiPippa

 

Executive Vice President and

 

Chief Financial Officer

Cache, Inc.

 

 

(212) 575-3206

 

 

Investor Relations:

Allison Malkin/Rachel Schacter

 

ICR, Inc.

 

(203) 682-8225/(646) 277-1243

 

CACHE REPORTS THIRD QUARTER FISCAL 2013 RESULTS

Comparable Store Sales Increase 6.0%

Gross Profit Margin Expands 150 basis points to 33.5%

 

New York, New York — November 12, 2013 — Cache, Inc. (NASDAQ: CACH), a specialty chain of women’s apparel stores, reported results for the thirteen (“third quarter”) and thirty-nine week periods (“first nine months”) ended September 28, 2013.

 

For the 13-week period ended September 28, 2013:

 

·                  Net sales increased 3.1% to $47.2 million from $45.8 million in the third quarter of fiscal 2012. Comparable store sales increased 6.0%, as compared to a decrease of 2.9%  in the third quarter of fiscal 2012;

·                  Gross profit increased 7.9% to $15.8 million, or 33.5% of net sales, compared to $14.7 million, or 32.0% of net sales, in the third quarter of fiscal 2012, due to the improvement in sales and a decrease in markdowns;

·                  Operating loss totaled $8.0 million,  as compared to an operating loss of $8.1 million in the third quarter of fiscal 2012;

·                  Net loss totaled $8.0 million or $0.38 per share, as compared to net loss of $6.4 million or $0.49 per share, in the prior year period; and

·                  Adjusted net loss totaled $7.4 million, or $0.35 per share, as compared to adjusted net loss of $4.9 million or $0.38 per share in the third quarter of fiscal 2012.  (See reconciliation of adjusted net loss to net loss.)

 

Jay Margolis, Chairman and Chief Executive Officer, commented: “Our third quarter results included solid progress on our key merchandising, store and e-commerce initiatives that we identified at the start of the year and are expected to position Cache for profitability and sustained long term growth.  Specifically, we generated increased net sales, positive comparable store sales and an expansion in gross profit margin, as compared to a year ago.  During the quarter, we saw a favorable consumer response to our initial efforts to differentiate Cache from peers with unique event dresses, tops, sportswear and accessories. This positive performance was partially offset by our actions to clear product that was not consistent with our go-forward strategy. We also continued to significantly reduce promotional activity in our e-commerce channel to enhance our profitability and importantly create brand integrity as we present a clear pricing message to our customers.”

 

1



 

“I am confident in our outlook as we enter the all important holiday season, Mr. Margolis continued.  “We have exciting plans in place to capitalize on the gift giving season and our merchandise is positioned to take advantage of our customers’ needs during the festivities of the season.  Our overarching goal remains to maximize our white space opportunity, which we have defined as “the events in a woman’s life,” and we believe we have the right talent, merchandise, store base and marketing to achieve this objective.”

 

For the 39-week period ended September 28, 2013:

 

·                  Net sales decreased 1.6% to $160.8 million from $163.4 million in the first nine months of fiscal 2012. Comparable store sales increased 1.4%, as compared to an increase of 4.0% in the first nine months of fiscal 2012;

·                  Gross profit decreased 16.1% to $53.1 million, or 33.0% of net sales compared to $63.2 million, or 38.7%  of net sales, in the first nine months of fiscal 2012;

·                  Operating loss totaled $19.4 million, as compared to an operating loss of $8.5 million, in the first nine months of fiscal 2012;

·                  Net loss was $29.7 million or $1.70 per share, as compared to net loss of $6.6 million or $0.51 per share,  in the first nine months of fiscal 2012; and

·                  Adjusted net loss totaled $16.4 million, or $0.94 per share, as compared to adjusted net loss of $4.8 million, or $0.38 per share in the first nine months of fiscal 2012. (See reconciliation of net loss to adjusted net loss.)

 

Gross profit for the third quarter of fiscal 2013 was $15.8 million, or 33.5% of net sales, compared to $14.7 million, or 32.0% of net sales, in the third quarter of fiscal 2012. For the first nine months of fiscal 2013, gross profit was $53.1 million, or 33.0% of net sales, compared to $63.2 million, or 38.7% of net sales, in the first nine months of fiscal 2012. The increase in gross margin in the third quarter of fiscal 2013 was primarily due to lower design, production and sourcing costs, as well as a decrease in markdowns and higher sales, as compared to last year.

 

In total, operating expenses for the third quarter of fiscal 2013 were $23.8 million, 50.3% of net sales, as compared to $22.8 million, or 49.7% of net sales in the third quarter of fiscal 2012. For the first nine months of fiscal 2013, total operating expenses were $72.5 million, or 45.0% of net sales, compared to $71.7 million, or 43.8% of net sales, in the first nine months of fiscal 2012. The increase in total operating expenses for the first nine months of fiscal 2013 primarily reflected increased general and administrative costs and employee separation charges of $2.5 million, which were partially offset by a decrease store operating expense, as compared to the same period in fiscal 2012.

 

At September 28, 2013, cash and marketable securities totaled $6.1 million, compared to $16.4 million in cash and marketable securities at September 29, 2012. Total inventory at cost decreased 9.3% at September 28, 2013, as compared to the prior year period.

 

2



 

A table summarizing financial results follows:

 

 

 

Thirty-Nine Weeks Ended

 

Thirteen Weeks Ended

 

 

 

Sept. 28,
2013

 

Sept. 29,
2012

 

Sept. 28,
2013

 

Sept. 29,
2012

 

 

 

($ thousands, except for per share data, share numbers and store count)

 

Net sales

 

$

160,853

 

$

163,417

 

$

47,221

 

$

45,789

 

Operating loss

 

(19,390

)

(8,455

)

(7,957

)

(8,109

)

Net loss

 

$

(29,660

)

$

(6,553

)

$

(7,997

)

$

(6,376

)

 

 

 

 

 

 

 

 

 

 

Diluted loss per share

 

$

(1.70

)

$

(0.51

)

$

(0.38

)

$

(0.49

)

Adjusted loss per share

 

$

(0.94

)

$

(0.38

)

$

(0.35

)

$

(0.38

)

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

17,450,000

 

12,882,000

 

21,090,000

 

12,892,000

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

17,450,000

 

12,882,000

 

21,090,000

 

12,892,000

 

 

 

 

 

 

 

 

 

 

 

Number of stores open, at end of period

 

250

 

262

 

250

 

262

 

 

Store Count Information

 

During the third quarter, there was no change in the number of stores open, as the Company ended the period with 250 stores in operation.  During the balance of fiscal 2013, the Company expects to open no new stores and close one additional store, ending the year with 249 stores and approximately 500,000 square feet in operation.

 

Conference Call information

 

The Company announced that it will conduct a conference call to discuss its third quarter fiscal 2013 results today, November 12, 2013 at 9:00 a.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 705-6003 approximately ten minutes prior to the start of the call. The conference call will also be web-cast live at www.cache.com. A replay of this call will be available at 12:00 p.m. Eastern Time on November 12, 2013 until 11:59 p.m. Eastern Time on November 19, 2013 and can be accessed by dialing (877) 870-5176 and entering PIN number 13572556.

 

About Cache, Inc.

 

Cache is a nationwide, mall-based specialty retailer of sophisticated sportswear and social occasion dresses targeting style-conscious women who have a youthful attitude and are self-confident. The Company currently operates 250 stores, primarily situated in central locations in high traffic, upscale malls in 41 states, the Virgin Islands and Puerto Rico.

 

3



 

Forward-Looking Statements

 

Certain matters discussed within this press release may constitute forward-looking statements within the meaning of the federal securities laws. Although Cache, Inc. believes the statements are based on reasonable assumptions, there can be no assurance that these expectations will be attained. Actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation, our ability to successfully implement our business strategy and to integrate new members of management, industry trends, merchandise and fashion trends, competition, seasonality, changes in general economic conditions and consumer spending patterns, factors specific to our Company and merchandise, such as demand for our merchandise and markdowns, well as other risks outlined from time to time in the filings of Cache, Inc. with the Securities and Exchange Commission.

 

4



 

CACHE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

September  28,

 

December 29,

 

September 29,

 

 

 

2013

 

2012

 

2012

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and equivalents

 

$

4,363,000

 

$

12,360,000

 

$

10,374,000

 

Marketable securities

 

 

3,013,000

 

3,009,000

 

Certificate of deposits - restricted

 

1,750,000

 

3,000,000

 

3,000,000

 

Receivables, net

 

2,610,000

 

2,200,000

 

2,294,000

 

Income tax receivable

 

49,000

 

184,000

 

245,000

 

Inventories, net

 

21,588,000

 

21,246,000

 

23,806,000

 

Prepaid expenses and other current assets

 

1,354,000

 

2,224,000

 

2,068,000

 

Total current assets

 

31,714,000

 

44,227,000

 

44,796,000

 

 

 

 

 

 

 

 

 

Equipment and leasehold improvements, net

 

19,814,000

 

20,177,000

 

20,522,000

 

Intangible assets, net

 

102,000

 

102,000

 

102,000

 

Other assets

 

1,449,000

 

10,119,000

 

10,708,000

 

 

 

 

 

 

 

 

 

Total assets

 

$

53,079,000

 

$

74,625,000

 

$

76,128,000

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

8,981,000

 

$

12,397,000

 

$

10,974,000

 

Accrued compensation

 

3,223,000

 

2,615,000

 

1,420,000

 

Accrued liabilities

 

10,374,000

 

11,795,000

 

9,609,000

 

Total current liabilities

 

22,578,000

 

26,807,000

 

22,003,000

 

 

 

 

 

 

 

 

 

Other liabilities

 

9,285,000

 

8,777,000

 

9,628,000

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

252,000

 

171,000

 

171,000

 

Additional paid-in capital

 

60,489,000

 

48,735,000

 

48,666,000

 

Retained earnings

 

270,000

 

29,930,000

 

35,455,000

 

Treasury stock, at cost

 

(39,795,000

)

(39,795,000

)

(39,795,000

)

Total stockholders’ equity

 

21,216,000

 

39,041,000

 

44,497,000

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

53,079,000

 

$

74,625,000

 

$

76,128,000

 

 



 

CACHE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

39 Weeks Ended

 

39 Weeks Ended

 

 

 

September 28,

 

September 29,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Net sales

 

$

160,853,000

 

$

163,417,000

 

 

 

 

 

 

 

Cost of sales, including buying and occupancy

 

107,770,000

 

100,176,000

 

 

 

 

 

 

 

Gross profit

 

53,083,000

 

63,241,000

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

Store operating expenses

 

54,729,000

 

57,727,000

 

General and administrative expenses

 

14,652,000

 

13,466,000

 

Employee separation charges

 

3,092,000

 

503,000

 

Total expenses

 

72,473,000

 

71,696,000

 

 

 

 

 

 

 

Operating loss

 

(19,390,000

)

(8,455,000

)

 

 

 

 

 

 

Other expense (income):

 

 

 

 

 

Amortization of deferred financing cost

 

37,000

 

 

Interest income

 

(22,000

)

(62,000

)

Total other expense (income), net

 

15,000

 

(62,000

)

 

 

 

 

 

 

Loss before income taxes

 

(19,405,000

)

(8,393,000

)

 

 

 

 

 

 

Income tax provision (benefit)

 

10,255,000

 

(1,840,000

)

 

 

 

 

 

 

Net loss

 

$

(29,660,000

)

$

(6,553,000

)

 

 

 

 

 

 

Basic loss per share

 

$

(1.70

)

$

(0.51

)

 

 

 

 

 

 

Diluted loss per share

 

$

(1.70

)

$

(0.51

)

 

 

 

 

 

 

Basic weighted average shares outstanding

 

17,450,000

 

12,882,000

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

17,450,000

 

12,882,000

 

 



 

CACHE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

13 Weeks Ended

 

13 Weeks Ended

 

 

 

September  28,

 

September 29,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Net sales

 

$

47,221,000

 

$

45,789,000

 

 

 

 

 

 

 

Cost of sales, including buying and occupancy

 

31,409,000

 

31,128,000

 

 

 

 

 

 

 

Gross profit

 

15,812,000

 

14,661,000

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

Store operating expenses

 

17,894,000

 

18,268,000

 

General and administrative expenses

 

5,237,000

 

4,275,000

 

Employee separation charges

 

638,000

 

227,000

 

Total expenses

 

23,769,000

 

22,770,000

 

 

 

 

 

 

 

Operating loss

 

(7,957,000

)

(8,109,000

)

 

 

 

 

 

 

Other expense (income):

 

 

 

 

 

Amortization of deferred financing cost

 

37,000

 

 

Interest income

 

(5,000

)

(20,000

)

Total other expense (income), net

 

32,000

 

(20,000

)

 

 

 

 

 

 

Loss before income taxes

 

(7,989,000

)

(8,089,000

)

 

 

 

 

 

 

Income tax provision (benefit)

 

8,000

 

(1,713,000

)

 

 

 

 

 

 

Net loss

 

$

(7,997,000

)

$

(6,376,000

)

 

 

 

 

 

 

Basic loss per share

 

$

(0.38

)

$

(0.49

)

 

 

 

 

 

 

Diluted loss per share

 

$

(0.38

)

$

(0.49

)

 

 

 

 

 

 

Basic weighted average shares outstanding

 

21,090,000

 

12,892,000

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

21,090,000

 

12,892,000

 

 



 

Non-GAAP Financial Measures

 

In this press release, the Company’s financial results are provided both in accordance with accounting principles generally accepted in the United States of America (GAAP) and using certain non-GAAP financial measures. In particular, the Company provides adjusted net loss, adjusted net loss per share, historic loss and loss per diluted share, each adjusted to exclude certain costs and accounting adjustments, which are non-GAAP financial measures. These results are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help identify underlying trends in the Company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the Company’s core operating results.  These measures should not be considered a substitute for, or superior to, GAAP results.

 

CACHE, INC. AND SUBSIDIARIES

Reconciliation of Net Loss to Adjusted Net Loss

(dollars in thousands, except per share data)

 

 

 

39 Weeks

 

39 Weeks

 

13 Weeks

 

13 Weeks

 

 

 

Ended

 

Ended

 

Ended

 

Ended

 

 

 

September 28,

 

September 29,

 

September 28,

 

September 29,

 

 

 

2013

 

2012

 

2013

 

2012

 

Net loss

 

$

(29,660

)

$

(6,553

)

$

(7,997

)

$

(6,376

)

 

 

 

 

 

 

 

 

 

 

Income tax valuation allowance(1)

 

10,201

 

1,327

 

 

1,327

 

Employee separation charges(2)

 

3,092

 

393

 

638

 

179

 

Adjusted net loss

 

$

(16,367

)

$

(4,833

)

$

(7,359

)

$

(4,870

)

 

 

 

 

 

 

 

 

 

 

Diluted loss per share

 

$

(1.70

)

$

(0.51

)

$

(0.38

)

$

(0.49

)

 

 

 

 

 

 

 

 

 

 

Income tax valuation allowance(1)

 

0.58

 

0.10

 

 

0.10

 

Employee separation charges(2)

 

0.18

 

0.03

 

0.03

 

0.01

 

Adjusted loss per share

 

$

(0.94

)

$

(0.38

)

$

(0.35

)

$

(0.38

)

 


(1)         Represents an increase in the tax valuation allowance against net deferred tax assets.

(2)         Represents employee separation charges in connection with the separation agreement with the Company’s former Chief Executive Officer and Chief Financial Officer, as well as severance for other corporate employees. Costs include severance and benefits along with related taxes.