Cache Reports Second Quarter 2006 Results; Diluted EPS Totals $0.10, or $0.36 Adjusted; Maintains Full Year Earnings Guidance.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Cache Inc., (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CACH CACH Canyon de Chelly National Monument (US National Park Service) CACH Carolina Chickadee CACH Canadian Adult Congenital Heart Network CACH Chicago Area Consolidation Hub (United Parcel Service) ), a specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. chain of women's apparel stores with 309 stores currently open, reported results for the thirteen and twenty-six week periods ended July July: see month. 1, 2006. As previously announced, the Company plans to exit its Lillie Rubin Ru´bin n. 1. A ruby. business by October October: see month. 2006 with plans to close 20 Lillie Rubin stores and convert the remaining 17 stores to its new concept, Cache Luxe luxe n. 1. The condition of being elegantly sumptuous. 2. Something luxurious; a luxury. [French, luxury, from Latin luxus. . For the 13 week period ended July 1, 2006: --Net sales increased 7.0% to $71.7 million compared to $67.0 million in the second quarter of 2005 and Cache comparable store sales, excluding Lillie Rubin stores, increased 8%; --Operating income before exit costs associated with the closing of the Lillie Rubin business of $5.7 million, rose 63.6% to $7.7 million, or 10.8% of net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight , as compared to $4.7 million, or 7.0% of net sales in the second quarter of 2005; --Net income including pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta Lillie Rubin exit costs of $5.7 million and stock option expense of $0.3 million, totaled $1.7 million, or $0.10 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, as compared to $0.19 per diluted share last year; and --Adjusted diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. totaled $0.36 per diluted share in the second quarter of fiscal 2006. Adjusted diluted EPS exclude: (i) losses related to Lillie Rubin of $0.05 per diluted share and (ii) Lillie Rubin exit costs of $0.21 per diluted share. This compares to adjusted second quarter fiscal 2005 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.23, which excludes losses related to Lillie Rubin of $0.04 per diluted share. Second quarter fiscal 2006 adjusted diluted earnings per share includes a $0.01 per diluted share impact, related to stock option expense with no comparable expense in the second quarter of fiscal 2005. For the 26 week period ended July 1, 2006: --Net sales increased 4.4% to $135.5 million compared to $129.8 million in the first half of fiscal 2005 and Cache comparable store sales, excluding Lillie Rubin stores, gained 6%; --Operating income before Lillie Rubin exit costs rose 34.2% to $10.0 million, or 7.4% of net sales, as compared to $7.5 million, or 5.8% of net sales in the first half of fiscal 2005; --Net income including pre-tax Lillie Rubin exit costs of $5.7 million and stock option expense of $0.6 million, totaled $3.4 million, or $0.21 per diluted share, as compared to $0.30 per diluted share last year; and --Adjusted diluted EPS in the first half of fiscal 2006 totaled $0.52 and exclude: (i) losses related to Lillie Rubin of $0.10 per diluted share and (ii) Lillie Rubin exit costs of $0.21 per diluted share. This compares to adjusted diluted earnings per share of $0.36 in the first half of fiscal 2005, which exclude Lillie Rubin losses of $0.06 per diluted share. First half fiscal 2006 results included $0.02 per diluted share impact, related to stock option expense with no comparable expense incurred in the first half of fiscal 2005. Mr. Brian The name Brian (sometimes spelled Bryan) comes from an Irish backround. It is of Celtic origin and its meaning may be "hill" or "strong, noble, and high"[1]. Woolf Woolf , (Adeline) Virginia (Stephen) 1882-1941. British writer whose works include fiction written in an experimental stream-of-consciousness style, such as Mrs. , Cache's Chairman commented: "Our second quarter results were at the high end of our recently raised guidance and at Cache reflected strong full price selling across our core categories of dresses, sportswear and accessories. This drove a 390 basis point increase in gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. and a 63.6% gain in operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. before Lillie Rubin exit costs. We are pleased to end the quarter with inventory that is in great shape and our business positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the fall season." Additionally, during the second quarter, the Company: --Announced plans to introduce a new concept called Cache Luxe while exiting its 39-store Lillie Rubin Chain; --Opened 10 Cache stores, closed one Cache store and two Lillie Rubin stores; and at quarter-end operated 309 stores in 43 states; and --Remodeled one Cache store with 64% of its Cache store base in the new store format at quarter-end. Following quarter end, the Company announced that it retained James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. P. Frain, formerly of Chico Chico (chē`kō), city (1990 pop. 40,079), Butte co., N Calif., in a region noted for its almond and walnut production; inc. 1872. Olives, kiwi fruit, grain, and nursery stock are also grown, and cattle are raised. FAS, Inc., as a consultant to advance its marketing efforts. Gross profit in the second quarter rose by 16.2% to $35.3 million, or 49.2% of net sales, compared to $30.4 million, or 45.3% of net sales, in the second quarter of fiscal 2005. For the first half of fiscal 2006, gross profit rose by 12.4% to $64.5 million, or 47.6% of net sales, compared to $57.5 million, or 44.3% of net sales, in the prior year period. The increase in gross profit margin for the second quarter and first half of fiscal 2006 can be attributed to strong full price selling. In total, operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were $33.2 million, or 46.4% of net sales, as compared to $25.6 million, or 38.3% of net sales in the second quarter of 2005. The increase in operating expenses was primarily due to the $5.7 million charge taken to exit the Company's Lillie Rubin business. Additionally, higher depreciation expense and the effect of adopting FAS 123R contributed to the rise in operating expenses in the second quarter of fiscal 2006. Stock option related expense in the second quarter of fiscal 2006 totaled $0.3 million. The Company did not record any stock option expense in fiscal 2005. For the first half of fiscal 2006, total operating expenses were $60.1 million, or 44.4% of net sales compared to $50.0 million, or 38.6% of net sales in the prior year period. The increase in operating expenses for the first half of fiscal 2006 was primary due to the $5.7 million charge to exit the Company's Lillie Rubin business. Also impacting operating expenses for the first half of fiscal 2006 was stock option expense of $0.6 million, with no comparable expense in the first half of fiscal 2005. At July 1, 2006, cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has totaled $56.0 million, rising $12.9 million from $43.1 million at July 2, 2005. Inventory was current at $30.1 million, as compared to $30.2 million on July 2, 2005. Working capital increased by $13.1 million to $69.4 million from $56.3 million at July 2, 2005. Mr. Wolf continued: "As we look ahead, we remain enthusiastic about our short and long term growth prospects. Cache remains a preferred shopping destination for our target customer with its compelling fashion assortment assortment /as·sort·ment/ (ah-sort´ment) the random distribution of nonhomologous chromosomes to daughter cells in metaphase of the first meiotic division. as·sort·ment n. . We are also very excited about our new retail platform, Cache Luxe, which will extend our Cache brand by focusing on higher end Coordinates: For other places with the same name, see Billinge. Higher End or Billinge Higher End is a district of the Metropolitan Borough of Wigan, in Greater Manchester, England. apparel and accessories for fashion conscious female shoppers. We also expect to benefit from intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: marketing efforts, which include an expanded direct mail effort and television advertising for the first time. This effort will be headed by our recently added consultant, James P. Frain. With the solid momentum in our business, and our new marketing and advertising campaigns underway, we feel confident in our ability to deliver a strong performance during the balance of the year."
A table summarizing financial results follows:
Twenty-six Weeks Ended Thirteen Weeks Ended
----------------------- -----------------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
---------- ---------- ---------- ----------
($ Thousands, except for per share data)
Net Sales $ 135,503 $ 129,763 $ 71,682 $ 66,970
Lillie Rubin exit
costs $ 5,662 $ 0 $ 5,662 $ 0
Operating income $ 4,358 $ 7,468 $ 2,054 $ 4,717
Operating income
before Lillie Rubin
exit costs $ 10,020 $ 7,468 $ 7,716 $ 4,717
Net income $ 3,386 $ 4,757 $ 1,658 $ 3,000
Basic earnings per
share $ 0.21 $ 0.30 $ 0.11 $ 0.19
Diluted earnings per
share $ 0.21 $ 0.30 $ 0.10 $ 0.19
Per share - Lillie
Rubin exit costs $ 0.21 $ 0.00 $ 0.21 $ 0.00
Per share - loss
related to
Lillie Rubin $ 0.10 $ 0.06 $ 0.05 $ 0.04
Diluted earnings per
share excluding exit
costs and net loss
related to Lillie
Rubin $ 0.52 $ 0.36 $ 0.36 $ 0.23
Basic weighted average
shares outstanding 15,781,000 15,700,000 15,785,000 15,712,000
Diluted weighted
averageBshares
outstanding 16,151,000 15,830,000 16,168,000 15,950,000
Number of stores open
at end of period 309 297 309 297
Guidance For fiscal 2006, the Company now estimates net sales in the range of $279 million to $285 million as compared to its previous guidance of $276 million to $282 million, as it expects sales to benefit from its new marketing initiatives. This compares to actual net sales of $266.3 million in fiscal 2005. The Company continues to expect fiscal 2006 diluted earnings per share in the range of $0.79 to $0.82, which includes (i) increased marketing expenditures; (ii) stock option expense of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.05 per diluted share; and (iii) Lillie Rubin exit costs of $0.21 per share and losses related to Lillie Rubin of $0.12 to $0.14 per share. This compares to actual fiscal 2005 diluted earnings per share of $0.83, including losses related to Lillie Rubin of $0.16 per share. For the third quarter, the Company is introducing guidance for net sales in the range of $60 million to $63 million, as compared to actual net sales of $57.3 million in the third quarter of fiscal 2005. Third quarter diluted earnings per share are currently estimated in the range of $0.07 to $0.09 per diluted share, which includes stock option expense of $0.01 per diluted share and losses related to Lillie Rubin of $0.02 to $0.04 per share. This compares to actual diluted earnings per share of $0.07 in the third quarter of fiscal 2005.
Guidance
--------
Third Quarter 2006E Fiscal 2006E
----------------------- -----------------------
($ in million,
except per share 2005 2005
amounts) Guidance Actual Guidance Actual
-----------------------------------------------
Total Sales $60-$63 $57.3 $279-$285 $266.3
Lillie Rubin Sales $4-$5 $4.9 $13-$14 $22.5
Sales Excluding
Lillie Rubin $56-$58 $52.4 $266-$271 $243.8
Diluted EPS* $0.07-$0.09 $0.07 $0.79-$0.82 $0.83
Losses Related to
Lillie Rubin $(0.02)-$(0.04) $(0.04) $(0.12)-$(0.14) $(0.16)
Lillie Rubin Exit
Costs $(0.00) $(0.21)
Pro Forma Diluted
EPS* Before Lillie
Rubin Exit Costs and
Losses $0.09-$0.13 $0.11 $1.12-$1.17 $0.99
* Estimates for third quarter fiscal 2006 and full year 2006
diluted earnings per share includes $0.01 and $0.05, respectively for
stock option expense. These expenses were not incurred in fiscal 2005.
Store opening plans The Company expects to open between 18 and 20 new Cache stores, convert two Lillie Rubin stores to Cache and convert 17 Lillie Rubin stores to its Cache Luxe format. In addition, the company has closed six low productivity Cache stores with their natural lease expiration date Expiration Date The day on which an options or futures contract is no longer valid and, therefore, ceases to exist. Notes: The expiration date for all listed stock options in the U.S. and plans to close 20 Lillie Rubin stores. During the second quarter, the Company opened 10 new stores and has opened a total of 12 new stores during the first half of 2006. The Company has scheduled a total of 4 additional Cache store openings for the third quarter. At year end, the Company expects to operate approximately 300 stores. Interested stockholders and other persons are invited to listen to the second quarter earnings conference call scheduled for today, Wednesday Wednesday: see week. July 26, 2006 at 9:00 a.m. Eastern Time. To participate in Cache's conference call dial 1-888 802-2280 approximately five minutes prior to the 9:00am Eastern start time. The call will also be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at http://www.cache.com. An online archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. will be available immediately following the call and will be accessible until October 26, 2006. Certain matters discussed within this press release may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. . 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, ability to successfully open new stores, introduction of the Cache Luxe concept, dependence on management, dependence on vendors and distributors, reliance on foreign manufacturers, material weakness in our internal controls, industry trends, merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain and fashion trends, competition, seasonality and changes in general economic conditions and consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. patterns, as 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
(Unaudited)
July 1, December 31, July 2,
ASSETS 2006 2005 2005
------------- ------------- -------------
Current assets:
Cash and equivalents $ 35,578,000 $ 16,753,000 $ 17,166,000
Marketable securities 20,426,000 36,520,000 25,964,000
Receivables, net 3,176,000 5,734,000 3,511,000
Inventories 30,147,000 32,785,000 30,165,000
Deferred income taxes, net 720,000 691,000 662,000
Prepaid expenses and other
current assets 5,850,000 4,777,000 1,141,000
------------- ------------- -------------
Total current assets 95,897,000 97,260,000 78,609,000
Equipment and leasehold
improvements, net 50,781,000 52,760,000 49,502,000
Other assets 434,000 864,000 856,000
------------- ------------- -------------
Total assets $147,112,000 $150,884,000 $128,967,000
============= ============= =============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,569,000 $ 18,404,000 $ 11,370,000
Accrued compensation 1,542,000 2,624,000 1,427,000
Accrued liabilities 13,420,000 12,446,000 9,487,000
------------- ------------- -------------
Total current liabilities 26,531,000 33,474,000 22,284,000
Other liabilities 15,450,000 16,309,000 14,557,000
Deferred income taxes, net 1,926,000 2,105,000 2,246,000
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock 158,000 158,000 157,000
Additional paid-in capital 36,278,000 35,455,000 34,988,000
Retained earnings 66,769,000 63,383,000 54,735,000
------------- ------------- -------------
Total stockholders' equity 103,205,000 98,996,000 89,880,000
------------- ------------- -------------
Total liabilities and
stockholders' equity $147,112,000 $150,884,000 $128,967,000
============= ============= =============
CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
FOR THE TWENTY-SIX WEEKS ENDED
(Unaudited)
July 1, July 2,
2006 2005
------------- -------------
Net sales $135,503,000 $129,763,000
Cost of sales, including occupancy and
buying costs 71,024,000 72,264,000
------------- -------------
Gross profit 64,479,000 57,499,000
------------- -------------
Expenses
Store operating expenses 44,725,000 41,871,000
General and administrative expenses 9,734,000 8,160,000
Lillie Rubin exit costs 5,662,000 ---
------------- -------------
Total expenses 60,121,000 50,031,000
------------- -------------
Operating income 4,358,000 7,468,000
Other income:
Interest income 1,193,000 400,000
------------- -------------
Income before income taxes 5,551,000 7,868,000
Income tax provision 2,165,000 3,111,000
------------- -------------
Net income $ 3,386,000 $ 4,757,000
============= =============
Basic earnings per share $0.21 $0.30
============ ============
Diluted earnings per share $0.21 $0.30
============ ============
Basic weighted average shares outstanding 15,781,000 15,700,000
============ ============
Diluted weighted average shares
outstanding 16,151,000 15,830,000
============ ============
Stores open, at end of period 309 297
Square footage, at end of period 611,000 600,000
CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
FOR THE THIRTEEN WEEKS ENDED
(Unaudited)
July 1, July 2,
2006 2005
------------ ------------
Net sales $71,682,000 $66,970,000
Cost of sales, including occupancy and
buying costs 36,385,000 36,604,000
------------ ------------
Gross profit 35,297,000 30,366,000
------------ ------------
Expenses
Store operating expenses 22,671,000 21,278,000
General and administrative expenses 4,910,000 4,371,000
Lillie Rubin exit costs 5,662,000 ---
------------ ------------
Total expenses 33,243,000 25,649,000
------------ ------------
Operating income 2,054,000 4,717,000
Other income:
Interest income 664,000 243,000
------------ ------------
Income before income taxes 2,718,000 4,960,000
Income tax provision 1,060,000 1,960,000
------------ ------------
Net income $ 1,658,000 $ 3,000,000
============ ============
Basic earnings per share $0.11 $0.19
=========== ===========
Diluted earnings per share $0.10 $0.19
=========== ===========
Basic weighted average shares outstanding 15,785,000 15,712,000
=========== ===========
Diluted weighted average shares outstanding 16,168,000 15,950,000
=========== ===========
Stores open, at end of period 309 297
Square footage, at end of period 611,000 600,000
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