Cache Reports Second Quarter Fiscal 2013 Results

  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
 
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