Christopher & Banks (CBK)

Introduction

Christopher & Banks Corporation (NYSE: CBK) is a women’s apparel retailer targeting women ages 40 to 60. The company operates two casual lifestyle brands, Christopher & Banks and CJ Banks that brought in net sales of 455.4 million in fiscal 2010 (ended in February, 27 2010). The US economic climate has significantly impacted CBK’s operations, especially in fiscal 2009; Operating income dropped 139.6% to 14.1 million in losses and Net income dropped 174.7% to 12.7 million in losses.

In response to the economic recession, CBK focused on controlling costs and took a conservative approach to store growth by widening its selection of merchandise. For fiscal 2010,

Competition and forces

Company Overview

Christopher & Banks Corp. is a women’s apparel retailer targeting 40 to 60 year old women of the baby boomer demographic. As of May 3rd 2010 The Company operates 797 stores in 46 states and 2 e-Commerce websites for its two brands, Christopher & Banks and CJBanks. Christopher & Banks is casual lifestyle brand offering clothing in misses sizes 4 to 16. CJBanks is a plus size brand offering similar clothing to Christopher & Banks in plus sizes 14W to 26W. During fiscal 2010, the company introduced two dual concept stores offering petite, misses, and plus sizes. The two e-Commerce websites offer exclusive sizing and styles for the company’s two brands.

The American economic recession has severely hurt CBK; Customers faced heavier economic pressures that gave rise to an increasingly difficult retail industry. Operating income fell 31.6% from 53.5 million to 35.6 million in fiscal 2008 and another 139.6% to -14.1 million in 2009. Same store sales escalated 1% in 2008 and declined 12% in 2009. Net income fell 49.4% from 33.6 million to 17.0 million in fiscal 2008 and another 174.7% to -12.7 million in 2009.

In response to the economic recession, CBK reduced costs by 2.3% in 2010 and increased product offerings to widen its selection of merchandise. New store merchandise introduced in 2010 includes jewelry and more sizing options such as petites. CBK has also begun synergizing the two brands by creating duel concept stores and capsule stores where both brands are showcased. Additionally, CBK has developed a customer loyalty program and an in-store service that allows customers to order products online.

Fiscal 2010 Performance

CBK’s fiscal 2010 performance slightly improved from fiscal 2009. Net sales dropped 14.1% from 530.7 million in fiscal 2009 to 455.4 million in fiscal 2010. Fiscal 2010 same store sales dropped by 15%. Operating income improved from a 14.1 million loss, or -2.6% of fiscal 2009 sales, to 1.4 million loss, or -.03% of fiscal 2010 sales. EPS improved from a $0.36 loss in fiscal 2009 to $0.00 in fiscal 2010. Net income grew from a 12.7 million loss in fiscal 2009 to a .2 million profit in fiscal 2010. The company’s better performance was due to 2.3% improvement in cost controls via strict inventory discipline and significant savings in SG&A.

Q1 Fiscal 2011 Performance

CBK achieved a solid financial start for Q1 2011. Net sales were $126.2 million compared to $120.4 million in the Q1 fiscal 2010. Q1 fiscal 2011 same-store sales increased 5%. Operating income for the Q1 fiscal 2011 totaled $10.6 million, or 8.4% of sales, compared to $2.5 million, or 2.0% of sales for Q1 fiscal 2010. Net income was $6.3 million compared to $1.7 million for the first quarter of fiscal 2010.

Business Segments

Christopher & Banks and C.J. Banks two separate operating segments that are incorporated into one reportable segment based because of the similarities between the two brands. There are 533 Christopher & Banks stores, 262 C.J. Banks stores, and two dual-concept stores showcasing both brands.

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