Cache Reports First Quarter Fiscal 2013 Results Business Wire NEW YORK -- May 14, 2013 Cache, Inc., (NASDAQ: CACH), a specialty chain of women’s apparel stores, reported results for the thirteen week period (“first quarter”) ended March 30, 2013. For the 13-week period ended March 30, 2013: *Net sales decreased 4.5% to $53.5 million, from $56.0 million in the first quarter of fiscal 2012. Comparable store sales decreased 1.5%, which compares to an increase of 9.4% in the first quarter of fiscal 2012; *Operating loss totaled $8.3 million, which included costs of $1.5 million associated with employee separation charges incurred, primarily due to the separation agreement with the former CEO, as well as severance for other corporate employees. This compares to an operating loss of $2.0 million in the first quarter of fiscal 2012; *Net loss totaled $18.5 million, or $1.38 per share, which included a $10.2 million charge, or $0.76 per share, for an increase in the tax valuation allowance against net deferred tax assets and a $1.5 million charge, or $0.11 per share, in employee separation charge costs. This compares to a net loss of $1.2 million, or $0.09 per share, in the first quarter of fiscal 2012; and *Adjusted net loss totaled $6.8 million, or $0.51 per share. Jay Margolis, Chairman and Chief Executive Officer, commented: “Our first quarter results reflect our actions to intensify markdown activity on prior season assortments, primarily in sportswear and to reduce promotions on the web. This activity held back our performance in the quarter, yet was an important step as we prepare to introduce our marketing and merchandising strategies that engage our consumer demographic with brand right trends. We began to see elements of our initiatives, including a positive reaction to new date tops, event dresses and day dresses in the first quarter and expect that the continuing development and evolution of our strategies will have a greater impact on our performance during the second half of the year.” “I am pleased with the progress that we are making across all facets of our organization to return our Company to profitability and growth,” Mr. Margolis, continued. “As we look ahead, we will continue to build upon our solid infrastructure to capitalize on the significant opportunities that lie ahead for our brand. To this end, we announced two senior leadership hires in merchandising and marketing and we increased our financial flexibility with the addition of $13.4 million in gross proceeds from the completion of our rights offering. I continue to be extremely excited by the potential of our Cache brand and remain confident that we are implementing the right strategies, possess the right team and have the balance sheet strength to allow us to achieve our sales productivity and profitability goals.” First Quarter Operating Results Gross profit for the first quarter of fiscal 2013 was $16.4 million, or 30.6% of net sales, compared to $22.2 million, or 39.6% of net sales, in the first quarter of fiscal 2012. The decrease in gross profit margin was primarily driven by an increase in markdowns on prior season assortments, as compared to the prior year. In total, operating expenses were $24.7 million, or 46.1% of net sales, as compared to $24.2 million, or 43.3% of net sales, in the first quarter of fiscal 2012. The increase in operating expenses was primarily due to the $1.5 million employee separation charge in connection with the separation agreement with the Company’s former CEO, as well as other corporate employees. These increases were partially offset by decreases in payroll and payroll-related expenses, as well as depreciation expense. The Company’s new senior management is reviewing its business and policies, including inventory management, and, due to the cumulative losses incurred over the past few years and the uncertainty of executing a turn-around in the current year, the Company has recorded an additional valuation allowance charge of $10.2 million against the remaining net deferred tax assets during the three months ended March 30, 2013. At March 30, 2013, cash and marketable securities totaled $4.7 million, as compared to $20.7 million in cash and marketable securities at March 31, 2012. The rights offering was completed on May 1, 2013. Total inventory at cost decreased 1.6%. A table summarizing financial results follows: Thirteen Weeks Ended March 30, March 31, 2013 2012 ($ thousands, except for per share data) Net sales $ 53,510 $ 55,995 Operating loss $ (8,286 ) $ (2,023 ) Net loss $ (18,505 ) $ (1,208 ) Diluted loss per share $ (1.38 ) $ (0.09 ) Adjusted loss per share $ (0.51 ) $ (0.09 ) Basic and diluted weighted average shares outstanding 13,405,000 13,419,000 Number of stores open at end of 249 268 period Store Openings and Closings During the first quarter, the Company closed 11 locations, ending the quarter with 249 stores in operation. During the balance of fiscal 2013, the Company expects to open one new store and close approximately two more stores, ending the year with approximately 248 stores and approximately 500,000 square feet in operation. The closed stores had negative profitability in fiscal 2012 and their closure is expected to have a favorable impact on fiscal 2013 earnings. Conference Call Information The Company announced that it will conduct a conference call to discuss its first quarter fiscal 2013 results today, May 14, 2013 at 9:00 a.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 705-6003 approximately ten minutes prior to the start of the call. The conference call will also be web-cast live at www.cache.com. A replay of this call will be available at 12:00 p.m. ET on May 14, 2013 and remain active until 11:59 p.m. ET on May 21, 2012. The replay can be accessed by dialing (877) 870-5176 and entering replay pin number 413350. About Cache, Inc. Cache is a nationwide, mall-based specialty retailer of sophisticated sportswear and social occasion dresses targeting style-conscious women who have a youthful attitude and are self-confident. The Company currently operates 249 stores, primarily situated in central locations in high traffic, upscale malls in 41 states, the Virgin Islands and Puerto Rico. Certain matters discussed within this press release may constitute forward-looking statements within the meaning of the federal securities laws. Although Cache, Inc. believes the statements are based on reasonable assumptions, there can be no assurance that these expectations will be attained. Actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation, our ability to successfully implement our business strategy and to integrate new members of management, industry trends, merchandise and fashion trends, competition, seasonality, changes in general economic conditions and consumer spending patterns, , as well as other risks outlined from time to time in the filings of Cache, Inc. with the Securities and Exchange Commission. CACHE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 30, December 29, March 31, ASSETS 2013 2012 2012 Current assets: Cash and $ 1,662,000 $ 12,360,000 $ 10,710,000 equivalents Marketable - 3,013,000 7,014,000 securities Certificate of deposits - 3,000,000 3,000,000 3,000,000 restricted Receivables, net 3,070,000 2,200,000 3,346,000 Income tax - 184,000 131,000 receivable Inventories, net 26,894,000 21,246,000 27,326,000 Prepaid expenses and other current 2,131,000 2,224,000 2,347,000 assets Total current 36,757,000 44,227,000 53,874,000 assets Equipment and leasehold 19,810,000 20,177,000 19,367,000 improvements, net Intangible assets, 102,000 102,000 102,000 net Other assets 641,000 10,119,000 9,726,000 Total assets $ 57,310,000 $ 74,625,000 $ 83,069,000 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 14,524,000 $ 12,397,000 $ 10,502,000 Accrued 2,109,000 2,615,000 1,372,000 compensation Accrued 10,100,000 11,795,000 10,188,000 liabilities Total current 26,733,000 26,807,000 22,062,000 liabilities Other liabilities 9,869,000 8,777,000 11,267,000 Commitments and contingencies STOCKHOLDERS' EQUITY Common stock 171,000 171,000 171,000 Additional paid-in 48,907,000 48,735,000 48,564,000 capital Retained earnings 11,425,000 29,930,000 40,800,000 Treasury stock, at (39,795,000 ) (39,795,000 ) (39,795,000 ) cost Total stockholders' 20,708,000 39,041,000 49,740,000 equity Total liabilities and stockholders' $ 57,310,000 $ 74,625,000 $ 83,069,000 equity CACHE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS 13 Weeks Ended 13 Weeks Ended March 30, March 31, 2013 2012 Net sales $ 53,510,000 $ 55,995,000 Cost of sales, including buying and 37,114,000 33,798,000 occupancy Gross profit 16,396,000 22,197,000 Expenses Store operating expenses 18,503,000 19,342,000 General and administrative expenses 4,681,000 4,878,000 Employee separation charge 1,498,000 - Total expenses 24,682,000 24,220,000 Operating loss (8,286,000 ) (2,023,000 ) Other income (expense): Interest income 8,000 18,000 Loss before income taxes (8,278,000 ) (2,005,000 ) Income tax provision (benefit) 10,227,000 (797,000 ) Net loss $ (18,505,000 ) $ (1,208,000 ) Basic loss per share $ (1.38 ) $ (0.09 ) Diluted loss per share $ (1.38 ) $ (0.09 ) Basic weighted average shares 13,405,000 13,419,000 outstanding Diluted weighted average shares 13,405,000 13,419,000 outstanding Non-GAAP Financial Measures In this press release, the Company’s financial results are provided both in accordance with generally accepted accounting principles (GAAP) and using certain non-GAAP financial measures. In particular, the Company provides adjusted net loss, adjusted net loss per share, historic earnings (loss) and earnings (loss) per diluted share, each adjusted to exclude certain costs and accounting adjustments, which are non-GAAP financial measures. These results are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help identify underlying trends in the Company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the Company’s core operating results. These measures should not be considered a substitute for, or superior to, GAAP results. CACHE, INC. AND SUBSIDIARIES Reconciliation of Net Loss to Adjusted Net Loss (dollars in thousands, except per share data) 13 Weeks 13 Weeks Ended Ended March 30, March 31, 2013 2012 Net loss $ (18,505 ) $ (1,208 ) Income tax valuation allowance^(1) 10,201 - Employee separation charge^(2) 1,498 - Adjusted net loss $ (6,806 ) $ (1,208 ) Net loss $ (1.38 ) $ (0.09 ) Income tax valuation allowance^(1) 0.76 - Employee separation charge^(2) 0.11 - Adjusted net loss $ (0.51 ) $ (0.09 ) (1) Represents an increase in the tax valuation against net deferred tax assets. Represents employee separation charge in connection with the separation (2) agreement with the Company's former Chief Executive Officer, as well as severance for other corporate employees. Costs include severance and benefits along with related taxes. Contact: Cache Inc. Maggie Feeney, 212-575-3206 Executive Vice President and Chief Financial Officer or Investor Relations: ICR, Inc. Allison Malkin/Rachel Schacter 203-682-8225 / 646-277-1243
Cache Reports First Quarter Fiscal 2013 Results
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