NEW YORK — Despite a 9.8 percent rise in first-quarter revenues, Cache Inc.’s net earnings fell 45.9 percent due to a shift in customer preferences as well as higher store operating expenses. Results matched analysts’ expectations.
The company also revised its full-year earnings per share forecast and its sales expectations to below Wall Street’s consensus.
In addition, the retailer promoted its vice president of finance, Margaret Feeney, to chief financial officer.
In the 13 weeks ended April 2, New York-based Cache posted earnings last week that fell to $1.8 million, or 11 cents a diluted share, from $3.3 million, or 20 cents, in the year-earlier period on sales that climbed to $62.8 million from $57.2 million.
Chairman Brian Woolf said in a statement that the quarter’s results “were below our original expectations due to a more significant fashion shift favoring casual lifestyle apparel versus our emphasis on classification styles.” He added the firm “quickly worked to rebalance our assortment, [but] earnings were negatively impacted by lower-than-expected sales and margins.”
The gross profit margin declined to 43.3 percent from 44.9 percent in the first quarter of 2004. The company cited a sales shortfall in March, in which same-store sales were flat with the prior year, increased promotions and a shift in sales toward lower-margin dresses for the drop in the gross margin rate.
Store-operating expenses during the quarter rose 21.9 percent to $20.6 million from $16.9 million a year ago, the company said.
Regarding its forecasts, the retailer expects EPS of 75 to 78 cents in fiscal year 2005, which compares with a prior estimate of 79 to 82 cents. Analysts’ estimates are pegged at 79 cents. Meanwhile, net sales are seen coming in between $268 million to $272 million, compared with a prior estimate of $270 million to $275 million. The Wall Street consensus is $275.1 million.
Cache said it plans to open 20 Cache and 10 Lillie Rubin stores, for a total of 320 stores by the end of its fiscal year.
Regarding the promotion of Feeney, Tom Reinckens, chief operating officer of Cache, said in an interview that Feeney, who has worked at the company since 1992 in various financial and operational roles, took over the cfo position from him effective May 1.