Christopher & Banks Corp. Reports Operating Results (10-Q)
Christopher & Banks Corporation has a market cap of $264 million; its shares were traded at around $7.25 with and P/S ratio of 0.60.
Highlight of Business Operations:We expect to achieve approximately 100 to 150 basis points of gross margin improvement in the third quarter, as compared to last year's third quarter. The anticipated improvement is expected to result from improved merchandise margins and positive leverage of occupancy expense. We expect selling, general and administrative expense dollars for the third quarter of fiscal 2013 to increase when compared to the third quarter of fiscal 2012, due to increased investments in marketing and corporate staff primarily consisting of additions in e-commerce and information technology staff. Marketing expense is projected to increase to 3.1% of sales during the third quarter of fiscal 2013, compared to 2.1% of net sales during the third quarter of fiscal 2012, as a result of our increased direct mail campaigns. As a result, we anticipate selling, general and administrative expense to increase as a percent of net sales in the third quarter, when compared to last year's third fiscal quarter, and be in the range of 29.0% to 29.5%. For the full fiscal year, we expect a slight positive leverage of selling, general and administrative expenses as a percent of sales. We anticipate average store count to be down 7.2% and 8.2% for the third quarter and full year of fiscal 2013, respectively, as compared to the comparable prior year periods.
Net Loss. As a result of the foregoing factors, we reported a net loss of $0.3 million, or 0.2% of net sales and $0.01 per share, for the thirteen weeks ended August 3, 2013, compared to a net loss of $2.2 million, or 2.1% of net sales and $0.06 per share, for the thirteen weeks ended July 28, 2012.
Depreciation and Amortization. Depreciation and amortization expense was $6.8 million, or 3.2% of net sales, for the twenty-six weeks ended August 3, 2013, compared to $9.9 million or 5.0% of net sales, for the twenty-six weeks ended July 28, 2012. The decrease in the amount of depreciation and amortization expense primarily resulted from operating approximately 9.7% fewer stores in the twenty-six weeks ended August 3, 2013 compared to the twenty-six weeks ended July 28, 2012. In addition, the continued maturing of our store base has resulted in more fully depreciated assets and lower depreciation expense.
Net Income (Loss). As a result of the foregoing factors, we reported net income of $0.4 million, or 0.2% of net sales and $0.01 per diluted share, for the twenty-six weeks ended August 3, 2013, compared to a net loss of $15.6 million, or 7.9% of net sales and $0.44 per share, for the twenty-six weeks ended July 28, 2012.
Significant fluctuations in our working capital accounts in the twenty-six weeks ended August 3, 2013 included a $2.5 million increase in accounts payable, a $2.7 million decrease in merchandise inventories, a $1.0 million decrease in accrued liabilities, a $1.2 million increase in accounts receivable and a $1.2 million increase in prepaid expenses and other current assets. The increase in accounts payable related to higher seasonal levels of in-transit inventory at the end of the quarter compared to the end of fiscal 2012. The decrease in merchandise inventories related to seasonality and timing of shipments. The decrease in accrued liabilities primarily related to lower gift card accruals as we experience higher purchase activity in the fourth quarter followed by net redemptions throughout the remainder of the year. The decrease was slightly offset by additional accruals for performance-based incentive compensation and percentage-based rent due to increased sales levels.
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