Strength in Cache Inc.’s dress assortments was insufficient to offset declines in casual and accessories offerings and weak traffic, leading to reductions in net and same-store sales.
In the 13 weeks ended March 29, the New York-based specialty retailer’s net loss hit $10.8 million, or 51 cents a diluted share, above the loss of 42 cents a share expected, on average, by Wall Street analysts. The year-ago loss was $17.8 million, or $1.33, including a $10.1 million charge for an adjustment in tax valuation allowance and $1.5 million in employee separation charges.
Revenues declined 11.4 percent to $47.4 million from $53.5 million and were off 8.9 percent on a comparable-store basis. Gross margin fell to 27.3 percent of sales from 31.7 percent in the prior-year quarter.
“We had a disappointing start to the year with strength across our dress assortments more than offset by too narrow of an assortment in key casual bottoms, and the decision not to move forward with certain casual and accessories offerings that were inconsistent with our brand positioning,” said Jay Margolis, chairman and chief executive officer. “This, along with lower mall traffic throughout the quarter, store closings as a result of winter snowstorms and the later Easter holiday impacted our sales and profitability.”
Margolis said that second-quarter trends have shown improvement. “We have seen a favorable reaction to our prom offerings and, while traffic continues to be challenging, the trend has improved. We are investing in denim and crop pants to satisfy our customer’s needs in these important casual categories and we are elevating our accessories assortment, which we believe represents a significant area for growth going forward,” he noted.
At the end of the first quarter, dresses represented 55 percent of sales, up from 44 percent in the 2013 period.
The company on Friday initiated a rights offering with holders of its common stock that, if fully subscribed, could generate $15 million, minus expenses, in proceeds to working capital. At the end of the first quarter, cash and cash equivalents were $806,000, about half the level of one year ago.
The company currently operates 242 stores.