Cache Inc. (CACH) filed Quarterly Report for the period ended 2009-06-27.
Cache Inc. is a specialty retailer which operates stores selling women\'s apparel and accessories under the trade names Cache and Lillie Rubin. Stores are concentrated in large metropolitan and suburban areas and are located in the finest shopping malls in the country. The typical store averages 2000 square feet. The company\'s merchandise assortment store format is classified under three major categories: sportswear dresses and accessories. Cache Inc. has a market cap of $56.9 million; its shares were traded at around $4.47 with and P/S ratio of 0.2.
Highlight of Business Operations:
During the 26-week period ended June 27, 2009, store operating expenses decreased to $39.3 million from $48.7 million, a decrease of $9.4 million, or 19.4%, as compared to the same 26-week period last year. Store operating expenses decreased primarily due to the Company’s initiatives to reduce costs and preserve cash. Due to these initiatives, the Company achieved reductions primarily in payroll expenses ($4.3 million), advertising expense ($1.8 million), depreciation expense ($1.0 million) and group and liability insurance expense ($658,000). Payroll expenses were lower primarily due to a reduction in store hours allotted to employees. The decline in advertising expense was due to a reduction in spending for postcards, direct mail and photography. Depreciation expense decreased as a result of certain assets being fully depreciated as of fiscal 2008, the closure of 16 underperforming stores, as indicated below, under “Store exit costs” and due to the Company’s decision to reduce capital expenditures on new stores, store renovations and new equipment. Group and liability insurance expense decreased due to changes in the Company’s medical plan coupled with reduction in premiums for liability insurance resulting from renegotiated contracts. As a percentage of net sales, store operating expenses increased to 35.7% from 34.4% for the fiscal 2009 26-week period as compared to the prior year period.
During the 13-week period ended June 27, 2009, store operating expenses decreased to $19.7 million from $24.8 million, a decrease of $5.1 million, or 20.7%, as compared to the same 13-week period last year. Store operating expenses decreased primarily due to the Company’s initiatives to reduce costs and preserve cash. Due to these initiatives, the Company achieved reductions primarily in payroll expenses ($2.3 million), advertising expense ($866,000), depreciation expense ($430,000) and group and liability insurance ($580,000). The decrease in payroll expense was primarily due to a reduction in store hours allotted to employees and the decrease in advertising expense was due to a reduction in spending for postcards, direct mail and photography. Depreciation expense decreased as a result of certain assets being fully depreciated as of fiscal 2008. Group and liability insurance expense decreased due to changes in the Company’s medical plan coupled with reduction in premiums for liability insurance resulting from renegotiated contracts. As a
During the 26-week period ended June 27, 2009, general and administrative expenses decreased to $9.0 million from $11.9 million, a decrease of $2.9 million, or 24.3%, as compared to the same 26-week period last year. The decrease in general and administrative expenses was primarily due to the Company’s initiatives to reduce costs and preserve cash. In total, payroll expenses decreased by $1.1 million, primarily due to the one time charges associated with management changes incurred during the first quarter of fiscal 2008 in the amount of $616,000, combined with a reduction of base salaries paid to several of the Company’s officers and a reduction in headcount. In addition, shipping and commission expenses paid in connection with our Mary L. division decreased by $519,000, due to a decrease in Mary L. sales and also due to a discontinuation of outsourced shipping services for Mary L. products, which are now being shipped through the Company’s primary carrier. Travel expense decreased by $503,000 due to a reduction in travel by corporate and regional management. As a percentage of net sales, general and administrative expenses decreased to 8.2% from 8.4% in fiscal 2009.
During the 13-week period ended June 27, 2009, general and administrative expenses decreased to $4.2 million from $6.2 million, a decrease of $2.0 million, or 31.5%, as compared to the same 13-week period last year. The decrease in general and administrative expenses was primarily due to the Company’s initiatives to reduce costs and preserve cash. In total, payroll expenses decreased by $469,000, primarily due to a reduction of base salaries paid to several of the Company’s officers combined with a reduction in headcount. In addition, shipping and commission expenses paid in connection with our Mary L. division decreased by $596,000, due to a decrease in Mary L. sales and also due to a discontinuation of outsourced shipping services for Mary L. products, which are now being shipped through the Company’s primary carrier. Additional decreases in expenses were noted for travel expense of $249,000, due to a reduction in travel by corporate and regional management and also in professional fees of $414,000. As a percentage of net sales, general and administrative expenses decreased to 7.5% from 8.4% in fiscal 2009.
There were no exit costs incurred during fiscal 2009. During the 26-week period ended June 28, 2008, the Company recorded a pre-tax charge of $2.3 million ($1.5 million after tax or $0.11 per diluted share) for 14 underperforming stores, of which we closed six stores during fiscal 2008 and an additional five stores during the 26-week period ended June 27, 2009. The remaining stores will close over the balance of fiscal 2009. Included in the exit costs is a write down of equipment and leasehold improvements and furniture and fixtures in the amount of $2.1 million, severance accrual of $198,000 and lease termination costs for $665,000. These costs were offset by the reversal of $626,000 of deferred rents.
During the 26 -week period ended June 27, 2009, cash and equivalents decreased by $2.0 million, primarily due to net purchases of marketable securities ($5.4 million), certificates of deposit — restricted ($1.5 million) used as collateral for outstanding letters of credit and purchases of equipment and leasehold improvements ($919,000) for our new and remodeled stores. The decreases in the various areas mentioned above was offset by a decrease in receivables and income tax receivables ($6.6 million), primarily due to collection of an income tax receivable recorded during fiscal 2008. Decreases were also due to the repurchases of common stock ($586,000) and repayment of a note payable ($649,000) in connection with the acquisition of AVD.
CACH is in the portfolios of Michael Price of MFP Investors LLC, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.
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