FEBRUARY 8, 2006
FOR IMMEDIATE RELEASE
CACHE, INC.
NASDAQ COMMON STOCK SYMBOL CACH
CACHE REPORTS RECORD FOURTH QUARTER 2005 EARNINGS OF $0.47 PER SHARE
Fourth Quarter Net Income Rises 21.5% to $7.5 million
Introduces Fiscal 2006 Guidance of $1.00-$1.02 per Share,
Excluding Option Expense
New York, New York - February 8, 2006 - Cache Inc., (NASDAQ: CACH), a
specialty chain of women's apparel stores with 301 stores open, reported results
for the thirteen and fifty-two week periods ended December 31, 2005. The Company
noted that fiscal 2004 was a 53 week year and compares to a 52 week year in
fiscal 2005. On a comparable basis, assuming a 52 week period for fiscal 2004,
net sales would have risen by 7.3% and 10.1%, for the fiscal 2005 quarter and
year, respectively.
For the thirteen week period ended December 31, 2005, as compared to the
fourteen week period in fiscal 2004:
- Net sales rose by 0.9% to $79.3 million compared to $78.6 million, in
the fourteen week 2004 period and comparable store sales gained 4%;
- Operating income increased by 14.9% to $11.0 million, or 13.9% of net
sales, as compared to $9.6 million, or 12.2% of net sales in 2004;
- Net income grew by 21.5% to $7.5 million, or 9.5% of net sales, as
compared to $6.2 million, or 7.9% of net sales in 2004; and
- Diluted earnings per share increased by 20.5% to $0.47 compared to
$0.39 in 2004, and as compared to the First Call consensus estimate of
$0.46.
Commenting on the results, Mr. Brian Woolf, Cache Chairman and Chief
Executive Officer, stated: "Our ability to connect with our customers through
enticing assortments and innovative marketing led to the strong fourth quarter
results we reported today. We reported a 20% increase in fourth quarter earnings
per share and a 170 basis point improvement in operating margins. We look
forward to continuing this positive momentum in 2006."
For the fifty-two week period, as compared to the fifty-three week period in
fiscal 2004:
- Net sales rose by 7.7% to $266.3 million compared to $247.3 million,
in the fifty-three week period in 2004 and comparable store sales
gained 4%;
- Operating income decreased by 4.1% to $20.0 million, or 7.5% of net
sales compared to $20.9 million, or 8.4% of net sales, in 2004;
- Net income rose slightly to $13.4 million, or 5.0% of net sales
compared to $13.3 million, or 5.4% of net sales in 2004; and
- Diluted earnings per share were flat at $0.83 on 16.2 million shares
compared to $0.83 on 16.0 million shares in 2004, and as compared to
the First Call consensus estimate of $0.83.
Additionally, during 2005 the Company:
- Opened 17 Cache and 2 Lillie Rubin stores and at year-end operated 306
stores in 43 states;
- Completed 20 Cache remodels with 58.4% of its Cache store base in the
new store format at year-end;
Gross profit in the fourth quarter rose by 1.7% to $37.7 million, or 47.6%
of net sales, compared to $37.1 million, or 47.2% of net sales, in the fourth
quarter of 2004. The improvement in gross profit margin resulted from improved
markups, as well as better control of markdowns. In total, operating expenses
were $26.8 million, or 33.7% of net sales compared to $27.5 million, or 35.1% of
net sales in the fourth quarter of 2004, as the Company generated positive
leverage over expenses.
Fiscal year gross profit rose by 8.8% to $121.4 million, or 45.6% of net
sales, compared to $111.6 million, or 45.1% of net sales, in fiscal 2004. In
total, operating expenses were $101.4 million, or 38.1% of net sales compared to
$90.7 million, or 36.7% of net sales in Fiscal 2004.
The Company's balance sheet remained strong. At December 31, 2005, cash and
marketable securities totaled $56.5 million, rising $13.8 million from $42.7
million at January 1, 2005. Inventories were on plan and current at $32.8
million, as compared to $32.3 million at January 1, 2005, and were down about 3%
on a per store basis. Working capital increased by $9.8 million to $63.3 million
from $53.5 million at January 1, 2005.
A table summarizing financial results follows:
52 Weeks 53 Weeks 13 Weeks 14 Weeks
ENDED ENDED ENDED ENDED
------------------------- -------------------------
Dec. 31, Jan. 1, Dec. 31, Jan. 1,
2005 2005 2005 2005
---- ---- ---- ----
($ Thousands, except for per share data)
Sales $266,345 $247,300 $ 79,320 $ 78,589
Operating income $ 20,008 $ 20,868 $ 10,999 $ 9,576
Net income $ 13,405 $ 13,297 $ 7,541 $ 6,208
Basic earnings per share $ 0.85 $ 0.85 $ 0.48 $ 0.40
Diluted earnings per share $ 0.83 $ 0.83 $ 0.47 $ 0.39
Basic weighted average
shares outstanding 15,726,000 15,589,000 15,761,000 15,645,000
Diluted weighted average
shares outstanding 16,150,000 16,004,000 16,209,000 16,060,000
GUIDANCE
- --------
The Company estimates fiscal 2006 net sales in the range of $278
million to $284 million compared to actual net sales of $266.4 million in fiscal
2005. Fiscal 2006 diluted earnings per share is currently estimated in the range
of $1.00 to $1.02, or $0.96 to $0.98, inclusive of $0.04 in stock option
expense. This compares to actual diluted earnings per share of $0.83 in fiscal
2005, which represents growth of 21.7% at the mid-point of the range prior to
option expense in fiscal 2006. For the first quarter, the Company estimates net
sales to range between $62 million and $64 million compared to actual net sales
of $62.8 million in the first quarter of fiscal 2005. The Company estimates
first quarter 2006 diluted earnings per share in the range of $0.12 to $0.14,
inclusive of $0.01 per diluted share related to stock option expense and
compared to actual diluted earnings per share of $0.11 in the first quarter of
fiscal 2005. Effective January 1, 2006, the Company adopted FAS 123R
"Share-Based Payment," a new accounting pronouncement requiring the expensing of
stock-based compensation. Under this pronouncement, the Company has elected to
apply the standard prospectively, and prior year results have not been restated.
The earnings guidance after stock option expense for the 2006 fiscal year
includes costs of $1.1million pre-tax, or $0.04 per diluted share, related to
stock option expense.
Mr. Woolf continued: "As we begin fiscal 2006, we remain confident and
enthusiastic regarding our growth. Consumers have responded well to our spring
assortments and the new initiatives we have in place should enable us to take
our business to the next level. To drive sales we will continue our store
expansion, build a true customer loyalty program on a national level and expand
our marketing efforts. We also expect our gross margins to benefit from sourcing
initiatives. We expect fiscal 2006 to represent a year of significant
accomplishments for Cache."
STORE OPENING PLANS
- -------------------
The Company also noted that it has plans to open between 15 and 20 new
stores in fiscal 2006. The Company plans to end the year with approximately 320
locations, increasing square footage by approximately 5% to approximately
645,000 square feet. The Company also indicated that it expects to open
approximately 10 stores during the first half of the year. The Company closed 5
stores in January 2006, as part of its ongoing efforts to enhance store
productivity.
CONFERENCE CALL
- ---------------
The Company also announced that it will conduct a conference call to
discuss its fourth quarter and fiscal 2005 results today, Wednesday, February 8,
2006 at 9:00 a.m. Eastern Time. Investors and analysts interested in
participating in the call are invited to dial (800) 289-0533, approximately ten
minutes prior to the start of the call. The conference call will also be
web-cast live at www.cache.com. A replay of this call will be available until
February 15, 2006 and can be accessed by dialing (888) 203-1112 and entering
code 5899145.
Certain matters discussed within this press release may constitute
forward-looking statements within the meaning of the federal securities laws.
Although Cache, Inc. believes the statements are based on reasonable
assumptions, there can be no assurance that these expectations will be attained.
Actual results and timing of certain events could differ materially from those
projected in or contemplated by the forward-looking statements due to a number
of factors, including, without limitation, industry trends, merchandise and
fashion trends, competition, changes in general economic conditions and consumer
spending patterns, vendor procurement issues and the ability to obtain
financing, as well as other risks outlined from time to time in the filings of
Cache, Inc., with the Securities and Exchange Commission.
Financial Tables Follow:
For further information contact Thomas E. Reinckens, President, Chief
Operating Officer, Cache, Inc., 1440 Broadway, New York, New York 10018, (212)
575-3246.
CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
JANUARY 1, DECEMBER 31,
2005 2005
---------------- -----------------
CURRENT ASSETS
CASH AND EQUIVALENTS $ 16,848,000 $ 19,953,000
MARKETABLE SECURITIES 25,874,000 36,520,000
RECEIVABLES, NET 6,545,000 5,734,000
INVENTORIES 32,296,000 32,785,000
DEFERRED INCOME TAXES AND OTHER TAX ASSETS 567,000 549,000
PREPAID EXPENSES 1,948,000 922,000
-------------------- --------------------
TOTAL CURRENT ASSETS 84,078,000 96,463,000
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET 47,118,000 52,760,000
OTHER ASSETS 832,000 864,000
-------------------- --------------------
TOTAL ASSETS $ 132,028,000 $ 150,087,000
==================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 17,055,000 $ 18,404,000
INCOME TAXES PAYABLE --- ---
ACCRUED COMPENSATION 1,927,000 2,624,000
ACCRUED LIABILITIES 11,627,000 12,121,000
-------------------- --------------------
TOTAL CURRENT LIABILITIES 30,609,000 33,149,000
-------------------- --------------------
OTHER LIABILITIES 13,556,000 16,309,000
DEFERRED INCOME TAXES, NET 3,023,000 1,637,000
STOCKHOLDERS' EQUITY
COMMON STOCK 157,000 158,000
ADDITIONAL PAID-IN CAPITAL 34,705,000 35,451,000
RETAINED EARNINGS 49,978,000 63,383,000
-------------------- --------------------
TOTAL STOCKHOLDERS' EQUITY 84,840,000 98,992,000
-------------------- --------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 132,028,000 $ 150,087,000
==================== ====================
CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
53 WEEKS ENDED 52 WEEKS ENDED
----------------- -----------------------
JANUARY 1, DECEMBER 31,
2005 2005
-------------------- -------------------
NET SALES $ 247,300,000 $ 266,345,000
COST OF SALES, INCLUDING BUYING AND OCCUPANCY 135,745,000 144,984,000
----------------- ----------------
GROSS PROFIT 111,555,000 121,361,000
----------------- ----------------
EXPENSES
STORE OPERATING EXPENSES 76,466,000 85,529,000
GENERAL AND ADMINISTRATIVE EXPENSES 14,221,000 15,824,000
----------------- ----------------
TOTAL EXPENSES 90,687,000 101,353,000
----------------- ----------------
OPERATING INCOME 20,868,000 20,008,000
----------------- ----------------
OTHER INCOME (EXPENSE)
INTEREST INCOME 439,000 1,071,000
MISCELLANEOUS INCOME (NET) 20,000 1,000
----------------- ----------------
TOTAL OTHER INCOME 459,000 1,072,000
----------------- ----------------
INCOME BEFORE INCOME TAXES 21,327,000 21,080,000
INCOME TAX PROVISION 8,030,000 7,675,000
----------------- ----------------
NET INCOME $ 13,297,000 $ 13,405,000
==================== ===================
BASIC EARNINGS PER SHARE $0.85 $0.85
================= ================
DILUTED EARNINGS PER SHARE $0.83 $0.83
================= ================
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 15,589,000 15,726,000
================= ================
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 16,004,000 16,150,000
================= ================
NUMBER OF STORES OPEN AT END OF PERIOD 291 306
SQUARE FOOTAGE AT END OF PERIOD 596,000 614,000
CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
14 WEEKS ENDED 13 WEEKS ENDED
-------------------- -------------------
JANUARY 1, DECEMBER 31,
2005 2005
-------------------- -------------------
NET SALES $ 78,589,000 $ 79,320,000
COST OF SALES, INCLUDING BUYING AND OCCUPANCY 41,467,000 41,571,000
----------------- ----------------
GROSS PROFIT 37,122,000 37,749,000
----------------- ----------------
EXPENSES
STORE OPERATING EXPENSES 22,842,000 23,150,000
GENERAL AND ADMINISTRATIVE EXPENSES 4,704,000 3,600,000
----------------- ----------------
TOTAL EXPENSES 27,546,000 26,750,000
----------------- ----------------
OPERATING INCOME 9,576,000 10,999,000
----------------- ----------------
OTHER INCOME (EXPENSE)
INTEREST INCOME 130,000 394,000
MISCELLANEOUS INCOME (NET) 0 -1,000
----------------- ----------------
TOTAL OTHER INCOME 130,000 393,000
----------------- ----------------
INCOME BEFORE INCOME TAXES 9,706,000 11,392,000
INCOME TAX PROVISION 3,498,000 3,851,000
----------------- ----------------
NET INCOME $ 6,208,000 $ 7,541,000
==================== ===================
BASIC EARNINGS PER SHARE $0.40 $0.48
================= ================
DILUTED EARNINGS PER SHARE $0.39 $0.47
================= ================
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 15,645,000 15,761,000
================= ================
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 16,060,000 16,209,000
================= ================
NUMBER OF STORES OPEN AT END OF PERIOD 291 306
SQUARE FOOTAGE AT END OF PERIOD 596,000 614,000