Christopher & Banks Corporation Reports First Quarter Fiscal 2020 Financial Results

Christopher & Banks Corporation (OTC: CBKC), a specialty women’s apparel retailer, today reported results for the first quarter ended May 2, 2020.

First Quarter Fiscal 2020 Highlights:

February comparable sales increased 4.9%, reflecting gains across every channel ahead of COVID-19

Net sales decreased 51.8% to $40.1 million compared to the same period last year

Net loss $17.2 million compared to $6.2 million in the same period last year

Adjusted EBITDA* was negative $14.6 million compared to negative $2.9 million last year

Subsequent to first quarter, secured $10.0 million PPP loan under the SBA’s alternative size standard

Keri Jones, President and Chief Executive Officer, commented, “Prior to the COVID-19 pandemic, we were both pleased and highly encouraged with the momentum in our business.

We had made tremendous progress across our strategic initiatives, which was reflected in our strong comp growth, our operating margin expansion and growing customer file.

We had a strong start to fiscal 2020 with nearly 5% comparable sales growth in February. When the pandemic hit, the team was agile and decisive, taking dramatic action to stem cash outflows.

In addition, subsequent to the end of the quarter, we secured a $10 million PPP loan under the SBA’s alternative size standard. We plan to use these funds for qualified expenses and therefore expect the loan to be forgiven under these usage terms.

Ms. Jones continued, “As of today, we have reopened approximately 90% of our store base open and are pleased to see sales volume building in line with our expectations.

Quarter-to-date digital sales are up 50% and we are encouraged to see some of our store-only customers purchasing online for the first time.

We will continue to carefully manage expenses and protect cash as we navigate the coming months and position ourselves to regain the momentum that we began to experience as a result of our turnaround strategies.

As we emerge from this crisis, we see opportunity to gain further market share as a result of the market disruption given our highly loyal customer base, strong value proposition and expanded omni-channel capabilities.”

Results for the First Quarter Ended May 2, 2020

Net sales decreased 51.8% to $40.1 million, largely due to temporary store closures beginning March 19th and extending past the end of the first quarter.

Gross margin rate was 9.3%, as compared to 30.8% in last year's first quarter.

This decrease was due primarily to deleverage of occupancy costs, despite the $2.0 million in rent savings related to negotiations in 2019, as well as merchandise margin decline related to inventory reserves as a result of the impact from COVID-19.

Selling, general & administrative expenses (“SG&A”) decreased to $18.5 million from $29.2 million in the prior year period.

The was the result of $10.6 million in cost savings primarily related to the reduction of labor expense related to furloughs at the store and corporate level as well as temporary salary reductions.

In addition, the Company instituted cost reduction measures across all aspects of the business resulting in $1.9 million of the total savings.

Net loss totaled $17.2 million, or ($0.46) per share, compared to a net loss for the prior year's first quarter of $6.2 million, or ($0.16) per share.

Excluding impairment charges related to executive severance, adjusted loss per share**, a non-GAAP measure, was ($0.15) for the first quarter of Fiscal 2019.

Adjusted EBITDA*, a non-GAAP measure, decreased to ($14.6) million, compared to ($3.0) million for the same period last year.

Balance Sheet Highlights and Capital Expenditures

Cash and cash equivalents totaled $0.2 million with $16.8 million in outstanding borrowings and net availability of $4.1 million under the credit facility as of the end of the first quarter.