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
Cache Reports Fourth Quarter and Fiscal 2013 Results
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