Christopher Banks promises a smoother road in Q3
With a new executive team in place, its back to basics this fall at Christopher Banks stores.
While CEO Keri Jones said the retail chain has made important progress in its latest turnaround effort and comparable sales were up for the second quarter, high store inventories impeded a higher margin.
The Plymouth-based Christopher Banks recorded a loss of $7.4 million, or 20 cents a share, during the second quarter, slightly better results than the same period a year ago. Sales were up 0.9 percent to $87.4 million.
The company had concluded last year it needed to overhaul its inventory and make it more fashion-forward. Jones said on a conference call with analysts that while the strategy was paying off, the company was too aggressive with the volume of clothing.
It was not easy to shop and frankly made it much too difficult for her to create an outfit, said Jones, who joined the company in February after a career at Target and Dicks Sporting Goods. We will be taking a more-disciplined approach to inventory and sale, and you will see this take shape this fall season.
The good news is that the chain ended the quarter with inventory down 4 percent. It was up 10 percent at the end of the first quarter, so the company sold more clothes even if profit margins were not as high as officials wanted.
This fall, the stores have staggered the arrivals of inventory, so new styles will be in the stores each month, hopefully increasing frequency of visits, Jones said.
In addition, Jones said the Bon-Ton chains closure should add business to 55 of the chains 462 stores. Already, customers have opened credit cards at those Christopher Banks stores, citing the closure of Bon-Ton stores including Herbergers.
Just last week, we saw an improvement in those markets once Bon-Ton completed [its] liquidation, she said.
Christopher Banks has been reaching out to customers in those markets and in some has partnered with Goodwill, which held an annual bag sale at Bon-Ton each year.
During the quarter, Jones added two industry veterans to her executive management team, fellow Target alumna Andrea Kellick as chief merchant and Richard Bundy, formerly a vice president at Chicos, as chief financial officer.
The two new executives were up to speed quickly and already having a positive effect on our business, Jones said.
The turnaround plan calls for a measurable change in financial results next fiscal year.
Part of the plan is a complete review of its stores performances led by Bundy. The leases on nearly two-thirds of the companys stores will expire in the next three years.
We like that we have flexibility to make changes where needed, Bundy said.
Jones said that the company is not entering the process with preconceived ideas. Well let the numbers talk, she said. That means the chain may exit some markets and add stores in others.
Christopher Banks also hopes big changes in its e-commerce operations will start producing measurable results as well. While online sales increased 15 percent in the second quarter, they had grown 22 percent in the same period a year ago.
After a three-store pilot program, the chain now is fulfilling online orders from 70 of its stores, in similar fashion to how Target and Best Buy have evolved their online strategies. By the end of the third quarter, 100 of the stores will be filling orders, Jones said.
The chain also will add in-store pickup later this fall, she said.
We have a strong and loyal customer base, Jones said. But the chain must grow the number of regular customers by making it easy to shop in the store and online.
It also wants to increase the number of people who have activated their store credit cards. The number of new activations grew 33 percent in the quarter, and those with credit cards spent two times more than other customers, she said.
The companys stock fell 14 cents Wednesday to close at 84 cents a share.
The company had received a notice in June from the New York Stock Exchange that it was in danger of being delisted because the 30-day average stock price was under $1. Bundy said NYSE has accepted the companys plan to stay on the exchange.
Catherine Roberts 612-673-4292