Cache Reports Fourth Quarter and Fiscal 2013 Results

  Cache Reports Fourth Quarter and Fiscal 2013 Results

Business Wire

NEW YORK -- March 25, 2014

Cache, Inc., (NASDAQ:CACH), the specialty chain of women’s apparel stores,
reported results for the thirteen (“fourth quarter”) and fifty-two week
(“fiscal 2013”) periods ended December 28, 2013.

Jay Margolis, Chairman and Chief Executive Officer, commented: “Fiscal 2013
was a pivotal year for Cache, during which we set a course to position the
Company to take advantage of a significant white space opportunity in apparel
retail. During the year, we added key talent across all facets of our business
from design to merchandising to marketing and e-commerce. At year end, we
successfully transitioned our merchandise assortment to capitalize on our
opportunity in event dressing; we re-positioned our e-commerce business to
enhance and build our brand; and we refreshed select stores. All of these
actions position us to achieve our goal to become the premiere apparel
destination for all events in a woman’s life. Our priorities in fiscal 2014
are focused on delivering powerful assortments; continuing to refresh our
stores; building brand awareness by showcasing our improved fashion in our
stores; as well as through high impact marketing and online activities. I
believe we are well positioned to capitalize on the opportunities that lie
ahead for the brand and I am confident in our ability to return the Company to
profitability and sustained long-term growth.”

Key Business Milestones in Fiscal 2013:

Jay Margolis assumed the role of Chief Executive Officer (“CEO”) and Chairman
of the Board of Directors in February 2013. Mr. Margolis is a highly
accomplished executive with over 30 years of retail, merchandising and product
development experience in the specialty retail industry.

In 2013, Mr. Margolis has focused on re-establishing Cache as a premier brand
and destination for stylish and fashion conscious women and improving
operational efficiencies. The following are some highlights from Mr. Margolis’
first year:

  *Recruited an experienced leadership team including a new Chief
    Merchandising Officer, Chief Financial Officer, Chief Marketing Officer,
    Senior Vice President of Manufacturing and Distribution, Senior Vice
    President of Design, and Senior Vice President and General Counsel.
  *Revamped Cache’s merchandise strategy and implemented a new inventory
    management strategy.
  *Refocused the Company’s promotional strategies, with less reliance on
    mark-downs.
  *Improved its liquidity position by entering into a new, larger credit
    facility which provides the Company with additional financial flexibility
    to implement its business strategy.
  *Made the decision to consolidate the Company’s distribution and logistics
    operation by moving from three different third party distribution centers
    to one. Two of the third party distribution centers have been combined and
    the third distribution center will be integrated during 2014.
  *Repositioned the online business towards a more brand centric web
    platform, reflecting a full product offering, with an emphasis on new
    collections and full price selling.

For the 13-week period ended December 28, 2013:

  *Net sales were $55.8 million, compared to $60.8 million in the fourth
    quarter of fiscal 2012 and comparable store sales decreased 5.9%.
  *Gross profit was $20.3 million, or 36.4% of net sales and increased 240
    basis points from $20.7 million, or 34.0% of net sales, in the fourth
    quarter of fiscal 2012.
  *Operating loss totaled $4.7 million, inclusive of $1.0 million in non-cash
    asset impairment charges and $106,000 in employee separation charges. This
    compares to an operating loss of $5.0 million in the fourth quarter of
    2012, inclusive of $1.1 million in non-cash asset impairment charges and
    $61,000 in employee separation charges.
  *Net loss totaled $4.8 million, or $0.23 per diluted share, as compared to
    net loss of $5.5 million, or $0.43 per diluted share, in the fourth
    quarter of 2012.
  *Adjusted net loss, totaled $3.6 million, or $0.17 per diluted share, as
    compared to adjusted net loss of $2.3 million, or $0.18 per diluted share,
    in the fourth quarter of fiscal 2012. (See reconciliation of net loss to
    adjusted net loss.)

For the 52-week period ended December 28, 2013:

  *Net sales were $216.7 million, compared to $224.2 million in fiscal 2012
    and comparable store sales decreased slightly by 0.6%.
  *Gross profit was $73.4 million, or 33.9% of net sales, compared to $83.9
    million, or 37.4% of net sales in fiscal 2012.
  *Operating loss totaled $24.1 million, inclusive of $1.0 million in
    non-cash asset impairment charges and $3.2 in employee separation charges.
    This compares to operating loss of $13.4 million in 2012, which included
    $1.1 million in non-cash asset impairment charges and $564,000 in employee
    separation charges.
  *Net loss was $34.4 million, or $1.87 per diluted share, as compared to net
    loss of $12.1 million in 2012, or $0.94 per diluted share.
  *Adjusted net loss was $20.0 million, or $1.09 per diluted share, compared
    to fiscal 2012 adjusted net loss of $7.2 million, or $0.56 per diluted
    share. (See reconciliation of net loss to adjusted net loss.)

Fourth Quarter and Full Year Operating Results

Gross profit for the fourth quarter of fiscal 2013 was $20.3 million, or 36.4%
of net sales, compared to $20.7 million, or 34.0% of net sales, in the fourth
quarter of fiscal 2012. For fiscal 2013, gross profit was $73.4 million, or
33.9% of net sales, compared to $83.9 million, or 37.4%, in fiscal 2012. Gross
profit dollars decreased slightly due to the decline in net sales in the
fourth quarter of fiscal 2013 while the Company’s gross profit percentage
increased 240 basis points due to the decrease in markdowns driven by a
significant decline in promotional activity as compared to last year.

In total, operating expenses for the fourth quarter of fiscal 2013 were $25.0
million, or 44.8% of net sales, as compared to $25.7 million, or 42.2% of net
sales, in the fourth quarter of fiscal 2012. For fiscal 2013, total operating
expenses were $97.5 million, or 45.0% of net sales, compared to $97.3 million,
or 43.4% of net sales, in fiscal 2012. The decrease in operating expenses for
the fourth quarter was primarily driven by a decrease in advertising expense
of $692,000.

At December 28, 2013, cash and equivalents totaled $4.5 million, as compared
to cash and investments of $18.4 million at December 29, 2012. Total finished
goods inventory at cost increased 1.6% on a units basis and 15.7% on a dollar
basis at year end. Total inventory at cost increased 11.4% to $23.7 million at
year-end from $21.2 million in the prior-year period. The increase in
inventory was largely due to the earlier receipt of new spring merchandise.

Store Information

During fiscal 2013, the Company opened two stores and closed 12 stores, to end
the year with 250 locations and approximately 500,000 square feet of
operations. The Company currently plans to open at least two new stores in
fiscal 2014. The Company closed seven stores in January 2014.

Conference Call Information

The Company will conduct a conference call to discuss its fourth quarter and
fiscal 2013 results today, March 25, 2014 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 until April 1, 2014 and can be accessed by dialing
(877) 870-5176 and entering PIN number 410026.

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 243 stores, primarily situated in central locations in high traffic,
upscale malls in 41 states, the Virgin Islands and Puerto Rico.

Forward-Looking Statements and Other Information

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 Other important factors that may cause actual
results to differ materially from those expressed in the forward-looking
statements are discussed in our filings with the Securities and Exchange
Commission (the “SEC”), including the section of our Annual Report on Form
10-K to be filed with the SEC on March 25, 2014 titled “Risk Factors.”Except
as may be required by applicable law, we undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, and we caution you not to rely upon
them unduly.

CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                                             
                                             December 28,      December 29,
ASSETS                                       2013              2012
                                                                 
Current assets:
Cash and equivalents                         $ 4,513,000       $ 12,360,000
Marketable securities                          -                 3,013,000
Certificate of deposits - restricted           -                 3,000,000
Receivables, net                               2,806,000         2,200,000
Income tax receivable                          -                 184,000
Inventories, net                               23,673,000        21,246,000
Prepaid expenses and other current assets     1,272,000       2,224,000   
Total current assets                           32,264,000        44,227,000
                                                                 
                                                                 
Equipment and leasehold improvements, net      18,221,000        20,177,000
Intangible assets, net                         102,000           102,000
Other assets                                  1,384,000       10,119,000  
                                                                 
Total assets                                 $ 51,971,000     $ 74,625,000  
                                                                 
                                                                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                 
Current liabilities:
Accounts payable                             $ 10,856,000      $ 12,397,000
Accrued compensation                           4,317,000         2,615,000
Accrued liabilities                           11,197,000      11,795,000  
Total current liabilities                      26,370,000        26,807,000
                                                                 
                                                                 
Other liabilities                              8,818,000         8,777,000
                                                                 
                                                                 
Commitments and contingencies
                                                                 
                                                                 
STOCKHOLDERS' EQUITY
                                                                 
                                                                 
Common stock                                   252,000           171,000
Additional paid-in capital                     60,830,000        48,735,000
Retained earnings (accumulated deficit)        (4,504,000  )     29,930,000
Treasury stock, at cost                       (39,795,000 )    (39,795,000 )
Total stockholders' equity                    16,783,000      39,041,000  
                                                                 
Total liabilities and stockholders' equity   $ 51,971,000     $ 74,625,000  
                                                                 
CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                 
                                             52 Weeks Ended    52 Weeks Ended
                                             December 28,      December 29,
                                             2013              2012
                                                                 
Net sales                                    $ 216,700,000     $ 224,210,000
                                                                 
Cost of sales, including buying and           143,301,000     140,299,000 
occupancy
                                                                 
Gross profit                                  73,399,000      83,911,000  
                                                                 
Expenses
Store operating expenses                       73,762,000        77,687,000
General and administrative expenses            19,497,000        17,978,000
Employee separation charges                    3,198,000         564,000
Impairment                                    1,040,000       1,118,000   
Total expenses                                97,497,000      97,347,000  
                                                                 
Operating loss                                (24,098,000 )    (13,436,000 )
                                                                 
                                                                 
Other expense (income):
Amortization of deferred financing cost        91,000            -
Interest income                               (23,000     )    (73,000     )
Total other expense (income), net             68,000          (73,000     )
                                                                 
Loss before income taxes                       (24,166,000 )     (13,363,000 )
                                                                 
Income tax provision (benefit)                10,268,000      (1,285,000  )
                                                                 
                                                                 
Net loss                                     $ (34,434,000 )   $ (12,078,000 )
                                                                 
                                                                 
                                                                 
Basic loss per share                         $ (1.87       )   $ (0.94       )
                                                                 
Diluted loss per share                       $ (1.87       )   $ (0.94       )
                                                                 
                                                                 
                                                                 
Basic weighted average shares outstanding      18,365,000       12,887,000  
                                                                 
Diluted weighted average shares outstanding    18,365,000       12,887,000  
                                                                 
Number of stores open, at the end of the       250               260
period
                                                                 
CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                 
                                             13 Weeks Ended    13 Weeks Ended
                                             December 28,      December 29,
                                             2013              2012
                                                                 
Net sales                                    $ 55,847,000      $ 60,793,000
                                                                 
Cost of sales, including buying and           35,531,000      40,123,000  
occupancy
                                                                 
Gross profit                                  20,316,000      20,670,000  
                                                                 
Expenses
Store operating expenses                       19,033,000        19,960,000
General and administrative expenses            4,845,000         4,512,000
Employee separation charges                    106,000           61,000
Impairment                                    1,040,000       1,118,000   
Total expenses                                25,024,000      25,651,000  
                                                                 
Operating loss                                (4,708,000  )    (4,981,000  )
                                                                 
                                                                 
Other expense (income):
Amortization of deferred financing cost        54,000            -
Interest income                               (1,000      )    (11,000     )
Total other expense (income), net             53,000          (11,000     )
                                                                 
Loss before income taxes                       (4,761,000  )     (4,970,000  )
                                                                 
Income tax provision                          13,000          555,000     
                                                                 
                                                                 
Net loss                                     $ (4,774,000  )   $ (5,525,000  )
                                                                 
                                                                 
                                                                 
Basic loss per share                         $ (0.23       )   $ (0.43       )
                                                                 
Diluted loss per share                       $ (0.23       )   $ (0.43       )
                                                                 
                                                                 
                                                                 
Basic weighted average shares outstanding      21,110,000       12,904,000  
                                                                 
Diluted weighted average shares outstanding    21,110,000       12,904,000  

Non-GAAP Financial Measures

In this press release, the Company’s financial results are provided both in
accordance with accounting principles generally accepted in the United States
of America (GAAP) and using certain non-GAAP financial measures. In
particular, the Company provides adjusted net loss, adjusted net loss per
share, historic loss and 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)
                                                           
                           52 Weeks      52 Weeks      13 Weeks     13 Weeks
                           Ended         Ended         Ended        Ended
                           December      December      December     December
                           28,           29,           28,          29,
                           2013          2012          2013         2012
Net loss                   $ (34,434 )   $ (12,078 )   $ (4,774 )   $ (5,525 )
                                                                             
   Income tax valuation      10,201        3,791         -            2,491
   allowance^(1)
   Employee separation       3,198         350           106          37
   charges^(2)
   Impairment               1,040       693         1,040      682    
   charges^(3)
Adjusted net loss          $ (19,995 )   $ (7,244  )   $ (3,628 )   $ (2,315 )
                                                                             
                                                                             
Diluted loss per share     $ (1.87   )   $ (0.94   )   $ (0.23  )   $ (0.43  )
                                                                             
   Income tax valuation      0.55          0.30          -            0.20
   allowance^(1)
   Employee separation       0.17          0.03          0.01         0.00
   charges^(2)
   Impairment               0.06        0.05        0.05       0.05   
   charges^(3)
Adjusted loss per share    $ (1.09   )   $ (0.56   )   $ (0.17  )   $ (0.18  )
                                                                             
   (1   )  Represents an increase in the tax valuation allowance against net
           deferred tax assets.
           Represents employee separation charges in connection with the
           separation agreement with the Company's former Chief Executive
   (2   )  Officer and Chief Financial Officer, as well as severance for other
           corporate employees. Costs include severance and benefits along
           with related taxes.
   (3   )  Represents store impairment charges for store fixed assets.

Contact:

Company:
Cache, Inc.
Anthony DiPippa, (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
 
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