Knobias Clip Report (01-09-20009) CBK
Submitted By Knobias ClipReport
CBK: CEO Comments on Q3 Results and Outlook for Q4 and FY10
By Fain Hughes, fhughes@knobias.com
Christopher & Banks Corporation (CBK) reported results yesterday for its third quarter ended November 29, 2008.
Total sales from continuing operations for the quarter ended November 29, 2008 were $143.0 million, compared to $155.2 million for the quarter ended December 1, 2007. Comparable sales from continuing operations decreased 14% for the quarter. Earnings from continuing operations were essentially break even for the quarter, compared to income from continuing operations of $11.1 million in the third quarter of fiscal 2008, or $0.31 per share.
With the current economic climate remaining soft and the overall retail environment continuing to be highly promotional, the Company anticipates continued pressure on its top line. The Company is assuming the most recent comparable store sales trends will continue and will be in the negative mid-to-high teens for the fourth quarter.
Lorna Nagler, President and CEO of Christopher & Banks, commented in a conference call yesterday, “Traffic and overall retail trends that got materially worse during the fall remained challenging through the holidays. We expect the poor economic conditions and waning consumer confidence to continue well into fiscal 2010. As a result, we anticipate that the overall retail environment will remain highly promotional for some time. We will take the necessary steps to clear excess inventory in Q4 in order to be clean as we enter the Spring. Managing inventory levels in Q4 and fiscal 2010 remain a top priority. We expect in-store inventory to be down low-to-mid single digits at the end of Q4 as compared to last year’s Q4. We will also implement even tighter expense controls as we take a very conservative approach to next year.”
She added, “We are fortunate to have a strong balance sheet, with $90 million in cash/investments and no debt at the end of the quarter, and we are in a very good position to weather this storm. In reviewing our real estate strategy and capital expenditure plans for next year, we will limit store openings to a few key locations and substantially reduce cap ex spending, while doing what we can to drive sales. We currently plan to open a maximum of five stores in fiscal 2010. We intend to cut cap ex to roughly $10 million, down considerably from $19 million this year. With this solid foundation and conservative strategy in place, we will focus our attention on several key merchandising and operational initiatives which should meaningfully drive productivity and operating margin improvement when the economic environment improves.”
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