Christopher & Banks Corp.’s stock dropped sharply Tuesday after the retailer said sales fell in the second quarter.
The specialty women’s apparel retailer recorded a net loss of $3.9 million or a loss of 11 cents a share, versus last year’s loss of $700,000 or 2 cents a share. The FactSet estimate was for a loss of 6 cents a share.
Net sales declined 4.3 percent to $89.9 million from last year’s $94 million and missed the FactSet estimate for sales of $94.9 million. Comparable sales also dropped 5.8 percent, which was an improvement over last year’s comp-sales drop of 12.4 percent. Gross margins increased to 33.5 percent of sales, an improvement of 60 basis points.
The retailer’s shares fell 22.3 percent Tuesday to close at $1.62.
“Overall, results for the second quarter were below our expectations and we acknowledge that the significant changes we have made for the long term have led to some sales volatility in the short term,” said president and chief executive officer LuAnn Via. The disappointing sales were blamed on softness in the outlet channel, a change in the e-commerce platform, a shift in a sales event and basically not having product that the customer wanted.
On a positive note, Via said August comps were positive and the changes the company had made were resonating with customers. The retailer shortened its product development cycle and reduced its vendor structure in order to buy closer to the season.
Via also noted that the retailer had lost customers by not having the right size inventory. It has now re-merchandised the stores with misses’ and large sizes together. The improvement in August comps was related to a replenishment initiative in denim.
Looking ahead, Christopher & Banks is forecasting total net sales in the third quarter to be in the range of $102 million to $106 million. FactSet’s estimate was for sales of $108 million in the third quarter. Gross margins are expected to be between 35 and 36 percent for the third quarter.