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Cache Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 12, 2011 02:18PM
Cache Inc. (CACH) filed Quarterly Report for the period ended 2011-04-02.
Highlight of Business Operations:
During the 13-week period ended April 2, 2011, net sales increased to $52.1 million from $48.6 million, an increase of $3.5 million, or 7.3%, as compared to the same 13-week period last year. This reflects an increase in comparable store sales of approximately $3.7 million or 7.7%, which was partially offset by a $195,000 decrease in non-comparable store sales. We believe that our merchandising and design strategies, which were implemented during fiscal 2010, are beginning to yield positive results as our products are resonating with customers. The increase in net sales at our stores for the quarter reflected a 20.3% increase in average dollars per transaction, partially offset by a 10.5 % decrease in sales transactions.
During the 13-week period ended April 2, 2011, store operating expenses decreased to $18.1 million from $18.7 million, a decrease of $522,000, or 2.8%, as compared to the same 13-week period last year. Store operating expenses decreased primarily due to a decrease in marketing expense of $341,000 and a decrease in depreciation expense of $272,000 offset by a net increase in all other expenses of $91,000. The decrease in depreciation expense was primarily due to certain assets being fully depreciated as of January 1, 2011, coupled with the impairment of 15 underperforming stores during the fourth quarter of fiscal 2010. As a percentage of net sales, store operating expenses decreased to 34.8% from 38.4% for the fiscal 2011 13-week period, as compared to the prior year period, primarily due to the increase in net sales and to a lesser extent the reduction in store operating expenses in fiscal 2011.
During the 13-week period ended April 2, 2011, general and administrative expenses increased to $5.0 million from $4.7 million, an increase of $370,000, or 7.9% as compared to the same 13-week period last year. General and administrative expenses increased primarily due to an increase in payroll and payroll taxes of $259,000 and professional fees of $123,000. As a percentage of net sales, general and administrative expenses were approximately the same for both periods presented.
During the 13-week period ended April 2, 2011, net other income decreased to $3,000 from $9,000, a decrease of $6,000 as compared to the same 13-week period last year. This decrease was due to a reduction in interest income of $23,000, partially offset by a reduction in interest expense of $17,000.
The Companys cash requirements are primarily for working capital, inventory for new stores, construction of new stores, remodeling of existing stores and to improve and enhance our information technology systems. We have historically satisfied our cash requirements principally through cash flow from operations. During the 13-week period ended April 2, 2011, we used $5.6 million of cash flow from operations, as compared to $8.5 million during the same period in fiscal 2010. We expect to continue to meet our operating cash requirements primarily through cash flows from operating activities, existing cash and equivalents, and short-term investments. At April 2, 2011, we had working capital of $28.0 million, cash and marketable securities of $21.2 million and $1.4 million in third party debt outstanding related to the purchase of Adrienne Victoria Designs, Inc. (AVD). The cash and marketable securities at April 2, 2011, included certificates of deposit of $2.5 million, that have been placed by the Company as collateral against a one-year credit facility.
Income Taxes. The Company accounts for income taxes in accordance with Income Taxes, Topic 740 of the FASB ASC. This guidance requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Companys financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities, using applicable tax rates for the years in which the differences are expected to reverse. At January 1, 2011, the Company maintained $9.3 million of net deferred tax assets, of which approximately $5.7 million related to federal tax operating loss carry-forwards and $1.7 million related to state tax net operating loss carry-forwards. In addition, during the 13-week period ended April 2, 2011, the Company recorded an income tax benefit of $485,000, primarily related to the net loss incurred. The Company established a federal valuation allowance of $5.1 million at January 1, 2011. For state income tax purposes, the Company had a valuation allowance in the amount of $650,000 at January 1, 2011, primarily to reserve for the possible non-utilization of state NOL carry-forwards, which may not be realized in future periods before the NOLs expire. The current portion of deferred tax assets and liabilities of $251,000 is included in prepaid expenses and other current assets, while the non-current portion of deferred tax assets and liabilities of $9.5 million is included in other assets, on the Companys accompanying condensed consolidated balance sheets. When tax contingencies become probable, a liability for the contingent amount is estimated based upon the Companys best estimation of the potential exposures associated with the timing and amount of deductions, as well as various tax filing positions. As of April 2, 2011, the Company has recorded a $417,000 reserve, net of federal benefit for potential tax contingencies. As of April 3, 2010, the Company reported a reserve balance of $435,000.
Stocks Discussed: CACH,
Re: Cache Inc. Reports Operating Results (10-Q)...
Posted by: aguard (IP Logged)
Date: May 12, 2011 05:34PM
WOW! Great numbers! 75% increase in online sales! Same Store Sales up 8%. The company is quietly becoming very profitable. RECOMMENDATION: Quietly buy the stock now before it hits $10 per share.
Stocks Discussed: CACH,