Women’s wear retailer Cache Inc managed to meet the high end of its revised second quarter earnings guidance but described the period as a “difficult” one with increased markdowns to clear spring and summer sportswear merchandise.
Net income for the 13 weeks to 30 June was $1.3m, or $0.08 per share compared with $1.7m, or $0.10 per share in the same period last year. This year’s quarter included a charge of $0.04 per share in legal settlement costs.
Net sales at the 294-store chain were $71.0m, flat with the second quarter of fiscal 2006 which included $4.6m million in sales from the former Lillie Rubin business. Comparable store sales increased 1%;
Operating income fell 38% to $1.3m, from $2.1m last time and includes legal settlement costs of $1.0m.
Gross profit was $33.9m, or 47.8% of net sales, compared to $35.3m, or 49.2% of net sales last year, with the weaker margin attributed to higher markdowns, partially offset by improved sourcing costs.
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By GlobalDataBrian Woolf, Cache’s chairman, said the retailer is “cautiously optimistic” as it looks ahead. “We are experiencing encouraging results within our sportswear category coupled with better focused and higher-impact marketing.”
He added that the acquisition of its largest supplier, Adrienne Victoria Designs, in May will help reduce sourcing costs.
For the 26 week period, profit slipped 59% to $1.4m from $3.4m on net sales that were flat with the first half last year at $135.4m. Same-store sales increased 1%.
The company expects full-year earnings per share to be in the range of $0.47 to $0.51 on sales of $271m to $275m, with 10 new stores opening in the year.
