Cache Reports First Quarter Fiscal 2013 Results

  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
shares outstanding                        13,405,000             13,419,000
Number of stores open at end of           249                    268

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 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.

                       March 30,           December 29,        March 31,
ASSETS                  2013             2012                2012
Current assets:
Cash and               $ 1,662,000         $ 12,360,000        $ 10,710,000
Marketable               -                   3,013,000           7,014,000
Certificate of
deposits -               3,000,000           3,000,000           3,000,000
Receivables, net         3,070,000           2,200,000           3,346,000
Income tax               -                   184,000             131,000
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   
Total current            36,757,000          44,227,000          53,874,000
Equipment and
leasehold                19,810,000          20,177,000          19,367,000
improvements, net
Intangible assets,       102,000             102,000             102,000
Other assets            641,000           10,119,000        9,726,000   
Total assets           $ 57,310,000       $ 74,625,000       $ 83,069,000  
Accounts payable       $ 14,524,000        $ 12,397,000        $ 10,502,000
Accrued                  2,109,000           2,615,000           1,372,000
Accrued                 10,100,000        11,795,000        10,188,000  
Total current            26,733,000          26,807,000          22,062,000
Other liabilities        9,869,000           8,777,000           11,267,000
Commitments and
Common stock             171,000             171,000             171,000
Additional paid-in       48,907,000          48,735,000          48,564,000
Retained earnings        11,425,000          29,930,000          40,800,000
Treasury stock, at      (39,795,000 )      (39,795,000 )      (39,795,000 )
stockholders'           20,708,000        39,041,000        49,740,000  
Total liabilities
and stockholders'      $ 57,310,000       $ 74,625,000       $ 83,069,000  

                                            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 
Gross profit                                 16,396,000        22,197,000 
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 
Diluted weighted average shares              13,405,000        13,419,000 

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.

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
      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.


Cache Inc.
Maggie Feeney, 212-575-3206
Executive Vice President and
Chief Financial Officer
Investor Relations:
ICR, Inc.
Allison Malkin/Rachel Schacter
203-682-8225 / 646-277-1243
Press spacebar to pause and continue. Press esc to stop.