Cache Reports Second Quarter Fiscal 2013 Results Business Wire NEW YORK -- August 13, 2013 Cache, Inc., (NASDAQ: CACH), a specialty chain of women’s apparel stores, reported results for the thirteen (“second quarter”) and twenty-six week periods (“first six months”) ended June 29, 2013. For the 13-week period ended June 29, 2013: *Net sales decreased 2.5% to $60.1 million from $61.6 million in the second quarter of fiscal 2012. Comparable store sales increased 0.5%, which compares to an increase of 4.7% in the second quarter of fiscal 2012; *Gross profit decreased to $20.9 million, or 34.7% of net sales, from $26.4 million, or 42.8% of net sales, in the second quarter of fiscal 2012; *Operating loss totaled $3.1 million, which included costs of $956,000 associated with employee separation charges incurred, in connection with severance for corporate employees. This compares to operating income of $1.7 million in the second quarter of fiscal 2012, which included $152,000 of employee separation charges; *Net loss totaled $3.2 million, or ($0.17) per diluted share, as compared to net income of $1.0 million or $0.08 per diluted share in the second quarter of fiscal 2012; and *Adjusted net loss totaled $2.2 million, or ($0.12) per share, as compared to adjusted net income of $1.1 million or $0.09 per diluted share in the second quarter of fiscal 2012. (See reconciliation of adjusted net income/(loss) to net income/(loss).) Jay Margolis, Chairman and Chief Executive Officer, commented: “We are pleased with the progress made toward our strategic objectives during the second quarter. During the quarter, we focused on clearing assortments that were not consistent with our go-forward merchandising plan and significantly reducing promotional activity on the web while continuing to make strategic hires to allow us to drive our business forward. While our turnaround efforts negatively impacted profitability in the quarter, this activity allowed us to begin the third quarter in an improved position. Following quarter end, we announced a new credit facility which enhances our financial flexibility to pursue our initiatives. I am pleased to welcome our new Chief Financial Officer, Tony DiPippa to Cache and believe he will make a significant contribution to the company.” “In the first six weeks of the third quarter, our comparable store sales are positive, driven by increased traffic and regular price selling, reflecting the success of our new deliveries, especially in dresses, accessories and targeted promotions,” Mr. Margolis, continued. “I expect our sales performance to continue to strengthen, as a greater percentage of our assortments are impacted by our moves, and we see the initial benefits from our process and marketing changes. I remain confident in our strategies and our ability to achieve improved operating performance in the near term and put us on a path to achieve sustained profitable long term growth in the future.” For the 26-week period ended June 29, 2013: *Net sales decreased 3.4% to $113.6 million from $117.6 million in the first six months of fiscal 2012. Comparable store sales decreased 0.4%, as compared to a increase of 6.9% in the first six months of fiscal 2012; *Gross profit decreased to $37.3 million, or 32.8% of net sales from $48.6 million, or 41.3% of net sales, in the first six months of fiscal 2012; *Operating loss totaled $11.4 million, which included costs of $2.5 million associated with employee separation charges incurred, in connection with the separation agreement with the former CEO, as well as severance for other corporate employees. This compares to operating loss of $346,000 in the first six months of fiscal 2012, which included $277,000 of employee separation costs; *Net loss was $21.7 million or ($1.37) per diluted share, as compared to a net loss of $177,000, or ($0.01) per diluted share in the first six months of fiscal 2012; and *Adjusted net loss was $9.0 million, or ($0.57) per share, as compared to adjusted net loss of $16,000 or ($0.00) per diluted share in the first six months of fiscal 2012. (See reconciliation of adjusted net income/(loss) to net income/(loss).) Gross profit for the second quarter of fiscal 2013 was $20.9 million, or 34.7% of net sales, compared to $26.4 million, or 42.8% of net sales, in the second quarter of fiscal 2012. For the first six months of fiscal 2013, gross profit was $37.3 million, or 32.8% of net sales, compared to $48.6 million, or 41.3% of net sales in the first six months of fiscal 2012. The decrease in gross margin for the second quarter and first six months of fiscal 2013 was primarily driven by an increase in markdowns on prior season assortments, as compared to the prior year. In total, operating expenses for the second quarter of fiscal 2013 were $24.0 million, or 40.0% of net sales, as compared to $24.7 million, or 40.1% of net sales, in the second quarter of fiscal 2012. For the first six months of fiscal 2013, operating expenses were $48.7 million, or 42.9% of net sales, compared to $48.9 million, or 41.6% of net sales, in the first six months of fiscal 2012. The decrease in operating expenses for the second quarter of fiscal 2013 was driven by decreases in marketing, as well as payroll and payroll-related expenses. The decrease in operating expense for the first six months of fiscal 2013 was driven by decreases in marketing, payroll and payroll-related expenses, and depreciation expense. At June 29, 2013, cash and marketable securities totaled $15.1 million, as compared to $24.4 million in cash and marketable securities at June 30, 2012. Total inventory at cost decreased 13.2% at quarter end from the prior year period. A table summarizing financial results follows: Twenty-Six Weeks Ended Thirteen Weeks Ended June 29, June 30, June 29, June 30, 2013 2012 2013 2012 ($ thousands, except for per share data, share numbers and store count) Net sales $ 113,632 $ 117,628 $ 60,122 $ 61,633 Operating income (11,433 ) (346 ) (3,147 ) 1,677 (loss) Net income $ (21,663 ) $ (177 ) $ (3,158 ) $ 1,031 (loss) Diluted earnings $ (1.37 ) $ (0.01 ) $ (0.17 ) $ 0.08 (loss) per share Adjusted earnings $ (0.57 ) $ - $ (0.12 ) $ 0.09 (loss) per share Basic weighted average 15,769,000 12,877,000 18,378,000 12,880,000 shares outstanding Diluted weighted average 15,769,000 12,877,000 18,378,000 12,928,000 shares outstanding Number of stores open 250 264 250 264 at end of period Store Count Information During the second quarter, the Company opened two stores and closed one existing location, ending the period with 250 stores in operation. During the balance of fiscal 2013, the Company expects to open no new stores and close one additional store, ending the year with 249 stores and approximately 500,000 square feet in operation. Conference Call Information The Company announced that it will conduct a conference call to discuss its second quarter fiscal 2013 results today, August 13, 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 August 13, 2013 and remain active until 11:59 p.m. ET on August 20, 2013. The replay can be accessed by dialing (877) 870-5176 and entering confirmation code 418816. 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 250 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, factors specific to our Company and merchandise, such as demand for our merchandise and markdowns, 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 June 29, December 29, June 30, ASSETS 2013 2012 2012 Current assets: Cash and $ 12,853,000 $ 12,360,000 $ 14,334,000 equivalents Marketable - 3,013,000 7,019,000 securities Certificate of deposits - 2,250,000 3,000,000 3,000,000 restricted Receivables, net 2,299,000 2,200,000 2,359,000 Income tax 59,000 184,000 267,000 receivable Inventories, net 19,321,000 21,246,000 22,267,000 Prepaid expenses and other current 1,679,000 2,224,000 2,516,000 assets Total current 38,461,000 44,227,000 51,762,000 assets Equipment and leasehold 19,933,000 20,177,000 20,166,000 improvements, net Intangible assets, 102,000 102,000 102,000 net Other assets 636,000 10,119,000 9,040,000 Total assets $ 59,132,000 $ 74,625,000 $ 81,070,000 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 6,671,000 $ 12,397,000 $ 7,957,000 Accrued 3,802,000 2,615,000 2,560,000 compensation Accrued 10,068,000 11,795,000 9,338,000 liabilities Total current 20,541,000 26,807,000 19,855,000 liabilities Other liabilities 9,508,000 8,777,000 10,387,000 Commitments and contingencies STOCKHOLDERS' EQUITY Common stock 253,000 171,000 171,000 Additional paid-in 60,358,000 48,735,000 48,621,000 capital Retained earnings 8,267,000 29,930,000 41,831,000 Treasury stock, at (39,795,000 ) (39,795,000 ) (39,795,000 ) cost Total stockholders' 29,083,000 39,041,000 50,828,000 equity Total liabilities and stockholders' $ 59,132,000 $ 74,625,000 $ 81,070,000 equity CACHE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS 26 Weeks Ended 26 Weeks Ended June 29, June 30, 2013 2012 Net sales $ 113,632,000 $ 117,628,000 Cost of sales, including buying and 76,361,000 69,048,000 occupancy Gross profit 37,271,000 48,580,000 Expenses Store operating expenses 36,835,000 39,459,000 General and administrative expenses 9,415,000 9,190,000 Employee separation charge 2,454,000 277,000 Total expenses 48,704,000 48,926,000 Operating loss (11,433,000 ) (346,000 ) Other income (expense): Interest income 17,000 42,000 Total other income, net 17,000 42,000 Loss before income taxes (11,416,000 ) (304,000 ) Income tax provision (benefit) 10,247,000 (127,000 ) Net loss $ (21,663,000 ) $ (177,000 ) Basic loss per share $ (1.37 ) $ (0.01 ) Diluted loss per share $ (1.37 ) $ (0.01 ) Basic weighted average shares 15,769,000 12,877,000 outstanding Diluted weighted average shares 15,769,000 12,877,000 outstanding CACHE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS 13 Weeks Ended 13 Weeks Ended June 29, June 30, 2013 2012 Net sales $ 60,122,000 $ 61,633,000 Cost of sales, including buying and 39,247,000 35,250,000 occupancy Gross profit 20,875,000 26,383,000 Expenses Store operating expenses 18,332,000 20,117,000 General and administrative expenses 4,734,000 4,437,000 Employee separation charge 956,000 152,000 Total expenses 24,022,000 24,706,000 Operating income (loss) (3,147,000 ) 1,677,000 Other income (expense): Interest income 9,000 24,000 Total other income, net 9,000 24,000 Income (loss) before income taxes (3,138,000 ) 1,701,000 Income tax provision 20,000 670,000 Net income (loss) $ (3,158,000 ) $ 1,031,000 Basic earnings (loss) per share $ (0.17 ) $ 0.08 Diluted earnings (loss) per share $ (0.17 ) $ 0.08 Basic weighted average shares 18,378,000 12,880,000 outstanding Diluted weighted average shares 18,378,000 12,928,000 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 Income (Loss) to Adjusted Net Income (Loss) (dollars in thousands, except per share data) 26 Weeks 26 Weeks 13 Weeks 13 Weeks Ended Ended Ended Ended June 29, June 30, June 29, June 30, 2013 2012 2013 2012 Net loss $ (21,663 ) $ (177 ) $ (3,158 ) $ 1,031 Income tax valuation 10,201 - - - allowance^(1) Employee separation 2,454 161 956 92 charge^(2) Adjusted net $ (9,008 ) $ (16 ) $ (2,202 ) $ 1,123 income (loss) Diluted earnings $ (1.37 ) $ (0.01 ) $ (0.17 ) $ 0.08 (loss) per share Income tax valuation 0.65 - - - allowance^(1) Employee separation 0.15 0.01 0.05 0.01 charge^(2) Adjusted earnings (loss) $ (0.57 ) $ - $ (0.12 ) $ 0.09 per share (1) Represents an increase in the tax valuation against net deferred tax assets. Represents employee separation charge in connection with the (2) separation 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: Investor Relations: ICR, Inc. Allison Malkin/Rachel Schacter 203-682-8225/646-277-1243
Cache Reports Second Quarter Fiscal 2013 Results
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