Minneapolis—Christopher & Banks slid into a wider first quarter loss Tuesday due to its turnaround strategy that includes “aggressive” markdowns on assortments.
For the quarter ended April 28, Christopher & Banks posted a net loss of $13.4 million, or 38 cents a share, compared with a loss of $8.2 million, or 23 cents a share, a year ago. The results include a 2 cents a share credit related to asset impairment and restructuring charges.
Net sales dropped 15% to $93.6 million, with comparable store sales also down 15%.
According to Joel Waller, president/ceo assumed his position four months ago, the results were anticipated given the assortments. In fact, inventory levels were up 22% during the quarter.
“Our financial results reflect continued customer resistance to the residual merchandise assortment that consisted of styles that were too updated and priced too high while lacking in key categories,” Waller said. “While we were able to impact a small portion of the first quarter merchandise assortment with improved styles and a better price/value proposition, the majority of the assortment needed to be aggressively marked down.”
New Merchandise Team in Place
Christopher & Banks, which suffered a $22.2 million loss in fiscal 2011, has been trying to improve its situation which has been further clouded by larger markdowns to clear inventory from holiday and early spring as well as restructuring charges and closing more than 100 stores.
Waller has added a new merchandising team whose results should be seen in stores by September. In April Peter Michielutti was named chief financial officer. Michielutti was the CFO at Wilsons Leather, Fingerhut and CSM Corp., a commercial real estate company,
Furthermore, Waller said in a conference call with analysts that he’s seen “encouraging signs” in new merchandise offerings now being tested and a new private label credit card the company added in April.
So far, 80% of the cards were opened by existing customers, another 10% by shoppers who haven’t been in the store in more than a year, and 10% who have never shopped there.
“We think this is a very big upside for us,” Waller said.
Waller spelled out four priorities for the company:
●Reducing the number of styles and SKUs offered in fall deliveries and rebalancing the assortment toward more good and better product offerings with fewer best styles.
● Improving price/value proposition for fall by offering more attractive opening price points and reducing the variety of ticket prices.
● Improving inventory flow beginning with the September assortment by reducing the number of major floor sets by half, while maintaining freshness with deliveries between sets.
●Developing an enhanced promotional strategy with more targeted, unique promotions and fewer storewide events.
While the company didn’t provide an earnings guidance for the second quarter or full year, executives said they expect to see positive comp store sales in the second half and inventory return to “acceptable levels” by the end of September.
Christopher & Banks now operates 393 Christopher & Banks stores, 183 C.J. Banks stores for plus-sizes, 64 dual stores and 25 outlets. During the quarter the company closed 27 stores bringing the total closed as part of its restructuring efforts to 101 out of 103 slated for shuttering.