Cache Inc. (CACH, Financial) filed Quarterly Report for the period ended 2009-03-28.
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 $52.5 million; its shares were traded at around $4.06 with and P/S ratio of 0.2.
During the 13-week period ended March 28, 2009, store operating expenses decreased to $19.6 million from $23.9 million, a decrease of $4.3 million, or 18.1%, as compared to the same 13-week period last year. Store operating expenses decreased due to Companys initiatives to reduce costs and to preserve cash. Due to these initiatives, the Company achieved reductions primarily in payroll expenses ($2.0 million), advertising expense ($897,000) and depreciation expense ($610,000). Payroll expenses were lower primarily due to reduction in store hours allotted to employees. Decline in advertising expense was due to 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 Companys decision to reduce capital expenditures on new stores, store renovations and new equipment. As a percentage of net sales, store operating expenses increased to 37.0% from 35.3% for the fiscal 2009 13-week period as compared to the prior year period.
During the 13-week period ended March 28, 2009, general and administrative expenses decreased to $4.7 million from $5.7 million, a decrease of $933,000, or 16.5%, as compared to the same 13-week period last year. The decrease in general and administrative expenses was primarily due to the departure of the Companys previous Chairman and CEO combined with the Companys initiatives to reduce costs and to preserve cash. In total, payroll expenses decreased by $756,000, primarily due to the one time charges associated with the departure of the Companys former Chairman and CEO 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 Companys officers. In addition, travel expense decreased by $253,000 due to a reduction in travel by corporate and regional management. As a percentage of net sales, general and administrative expenses increased to 8.9% from 8.4%, due to lower sales volume in fiscal 2009.
There were no exit costs incurred during the first quarter of fiscal 2009. During the 13-week period ended March 29, 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 four stores during the 13-week period ended March 28, 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 rent accruals.
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 March 28, 2009, we generated $2.2 million of cash flow from operations, as compared to $4.1 million used for the same period in fiscal 2008. 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 March 28, 2009, we had working capital of $43.0 million, cash and marketable securities of $30.5 million and $4.1 million in third party debt outstanding related to the purchase of AVD. The cash and marketable securities at March 28, 2009 included certificates of deposit that have been placed by the Company as collateral against a standby letter of credit in the amount of $550,000.
During the 13-week period ended March 28, 2009, cash and equivalents decreased by $3.7 million, primarily due to net purchases of marketable securities ($4.2 million), a seasonal increase in inventories ($3.7 million) and the net loss incurred during the current 13-week period. In addition, this decrease was caused by purchases of equipment and leasehold improvements ($683,000) for our new and remodeled stores, amortization of deferred rent ($512,000), repurchase of common stock ($586,000), repayment of a note payable ($350,000) in connection with the acquisition of AVD and a net loss of $1.6 million. This decrease was partially offset by, depreciation and amortization expense ($2.7 million), the decrease in receivables ($2.2 million) primarily due to the collection of an income tax receivable recorded during fiscal 2008 and a seasonal increase in accounts payable ($4.3 million).
Read the The complete ReportCACH is in the portfolios of Michael Price of MFP Investors LLC, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.
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 $52.5 million; its shares were traded at around $4.06 with and P/S ratio of 0.2.
Highlight of Business Operations:
During the 13-week period ended March 28, 2009, net sales decreased to $53.0 million from $67.7 million, a decrease of $14.7 million, or 21.7%, as compared to the same 13-week period last year. This reflects $13.2 million of reduced net sales, as a result of a 20.7% decrease in comparable store sales, a decrease of $1.5 million of net sales from our Mary L. division, and a decrease of $134,000 from our non-comparable store sales, which was offset by a small increase in income recognized from our co-branded credit card. The decrease in net sales is due primarily to the ongoing economic crisis, which resulted in a dramatic reduction in mall traffic where Cache stores are located. The decrease in net sales in fiscal 2009 at Cache stores reflected a 8.1% decrease in sales transactions and a 13.7% decrease in average dollars per transactions.During the 13-week period ended March 28, 2009, store operating expenses decreased to $19.6 million from $23.9 million, a decrease of $4.3 million, or 18.1%, as compared to the same 13-week period last year. Store operating expenses decreased due to Companys initiatives to reduce costs and to preserve cash. Due to these initiatives, the Company achieved reductions primarily in payroll expenses ($2.0 million), advertising expense ($897,000) and depreciation expense ($610,000). Payroll expenses were lower primarily due to reduction in store hours allotted to employees. Decline in advertising expense was due to 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 Companys decision to reduce capital expenditures on new stores, store renovations and new equipment. As a percentage of net sales, store operating expenses increased to 37.0% from 35.3% for the fiscal 2009 13-week period as compared to the prior year period.
During the 13-week period ended March 28, 2009, general and administrative expenses decreased to $4.7 million from $5.7 million, a decrease of $933,000, or 16.5%, as compared to the same 13-week period last year. The decrease in general and administrative expenses was primarily due to the departure of the Companys previous Chairman and CEO combined with the Companys initiatives to reduce costs and to preserve cash. In total, payroll expenses decreased by $756,000, primarily due to the one time charges associated with the departure of the Companys former Chairman and CEO 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 Companys officers. In addition, travel expense decreased by $253,000 due to a reduction in travel by corporate and regional management. As a percentage of net sales, general and administrative expenses increased to 8.9% from 8.4%, due to lower sales volume in fiscal 2009.
There were no exit costs incurred during the first quarter of fiscal 2009. During the 13-week period ended March 29, 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 four stores during the 13-week period ended March 28, 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 rent accruals.
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 March 28, 2009, we generated $2.2 million of cash flow from operations, as compared to $4.1 million used for the same period in fiscal 2008. 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 March 28, 2009, we had working capital of $43.0 million, cash and marketable securities of $30.5 million and $4.1 million in third party debt outstanding related to the purchase of AVD. The cash and marketable securities at March 28, 2009 included certificates of deposit that have been placed by the Company as collateral against a standby letter of credit in the amount of $550,000.
During the 13-week period ended March 28, 2009, cash and equivalents decreased by $3.7 million, primarily due to net purchases of marketable securities ($4.2 million), a seasonal increase in inventories ($3.7 million) and the net loss incurred during the current 13-week period. In addition, this decrease was caused by purchases of equipment and leasehold improvements ($683,000) for our new and remodeled stores, amortization of deferred rent ($512,000), repurchase of common stock ($586,000), repayment of a note payable ($350,000) in connection with the acquisition of AVD and a net loss of $1.6 million. This decrease was partially offset by, depreciation and amortization expense ($2.7 million), the decrease in receivables ($2.2 million) primarily due to the collection of an income tax receivable recorded during fiscal 2008 and a seasonal increase in accounts payable ($4.3 million).
Read the The complete ReportCACH is in the portfolios of Michael Price of MFP Investors LLC, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.
