UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
FEBRUARY 7, 2007
CACHE, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 0 -10345 59 -1588181
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(STATE OR OTHER (COMMISSION FILE NUMBER) (IRS EMPLOYER
JURISDICTION OF IDENTIFICATION
INCORPORATION) NUMBER)
1440 BROADWAY, NEW YORK, NEW YORK 10018
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 575-3200
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On February 7, 2007, the Company issued a press release (the "Press
Release") announcing its results for the thirteen- and fifty-two week periods
ending December 31, 2006, providing guidance for the first quarter and fiscal
2007, and announcing its store opening plans for fiscal 2007 and its January
2007 comparable store sales. The Press Release is attached as Exhibit 99.1 to
this Current Report on Form 8-K.
ITEM 9.01 EXHIBITS
99.1 Press release regarding results for the thirteen- and fifty-two week
periods ending December 31, 2006, guidance for the first quarter and
fiscal 2007, and store opening plans for fiscal 2007 and January 2007
comparable store sales.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED HEREUNTO DULY AUTHORIZED.
DATED: FEBRUARY 13, 2007 CACHE, INC.
BY: /S/ BRIAN WOOLF
---------------------------------
BRIAN WOOLF
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
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Exhibit 99.1
FEBRUARY 7, 2007
FINAL FOR IMMEDIATE RELEASE
CACHE, INC.
NASDAQ COMMON STOCK SYMBOL CACH
Cache Reports Fourth Quarter 2006 Earnings of $0.28 Per Share
Fourth Quarter Diluted EPS Includes $0.02 Higher Than Expected Lillie Rubin
Costs Introduces Fiscal 2007 Diluted EPS Guidance Range of $1.15-$1.20 Per Share
Reports 10% Increase in January 2007 Comparable Store Sales
New York, New York - February 7, 2007 - Cache Inc., (NASDAQ: CACH), a
specialty chain of women's apparel stores with 295 stores currently open,
reported results for the thirteen and 52-week periods ended December 30, 2006.
FOR THE THIRTEEN WEEK PERIOD ENDED DECEMBER 30, 2006:
o Net sales rose by 5.4% to $83.6 million compared to $79.3 million for
the same period last year and comparable store sales gained 6%;
o Gross profit increased 6.9% to $40.3 million, or 48.3% of sales, as
compared to $37.7 million, or 47.6% of net sales for the same period
last year;
o Net income totaled $4.6 million, or $0.28 per diluted share and
included: (i) $159,000, or $0.01 per diluted share related to Lillie
Rubin exit costs; (ii) $3.2 million, or $0.12 per diluted share in
increased marketing expenditures, and (iii) $283,000, or $0.01 per
diluted share in stock option expense. This compares to net income of
$7.5 million, or $0.47 per diluted share for the same period last
year; and
o Lillie Rubin net loss was $422,000 or $0.03 per diluted share in the
fourth quarter of fiscal 2006 compared to a net loss of $865,000 or
$0.05 per diluted share in the fourth quarter last year.
Commenting on the results, Mr. Brian Woolf, Cache Chairman and Chief
Executive Officer, stated: "Fiscal 2006 marked a year in which we positioned
Cache to report sustained growth in sales and profitability. During the fall,
with our merchandise assortments resonating with our core customers, and the
exit of Lillie Rubin substantially complete, we began to implement marketing
initiatives aimed at increasing customer loyalty and awareness of our Cache
brand. We also extended Cache's reach by appealing to a higher income consumer
with the launch of Cache Luxe. Finally, we began to take advantage of sourcing
opportunities that have already produced higher gross margins for our Company.
Nonetheless, we were disappointed in our fourth quarter performance, as we did
not experience the expected lift in sales during late December. As a result, we
were unable to offset our investment in marketing. We were also negatively
affected by our decision to take early markdowns on fur trim and leather
outerwear. That said, sales trends in January were robust, increasing 10% on a
comparable store basis. During the month, we benefited from the shift in New
Year's Eve business to January this year and a solid response to our product
offerings. With marketing expense growth moderating from last year, and an
expectation of continued benefits from sourcing, along with our launch of our
loyalty program, we believe we are well positioned to achieve our 2007 goals."
FOR THE FIFTY-TWO WEEK PERIOD ENDING DECEMBER 30, 2006:
o Net sales rose by 4.8% to $279.0 million compared to $266.3 million,
in the fifty-two week period in 2005 and comparable store sales
gained 6%;
o Gross profit increased 9.6% to $133.1 million, or 47.7% of sales, as
compared to $121.4 million, or 45.6% of net sales for the same period
last year;
o Net income totaled $8.6 million, or $0.53 per diluted share and
included: (i) $5.7 million, or $0.21 per diluted share related to
Lillie Rubin exit costs; (ii) $4.2 million, or $0.16 per diluted
share in
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increased marketing expenditures, and (iii) $1.1 million, or $0.04 per
diluted share in stock option expense. This compares to net income of
$13.4 million, or $0.83 per diluted share last year;
o Lillie Rubin net loss was $3.2 million, or $0.20 per diluted share in
fiscal 2006 compared to a net loss of $2.5 million, or $0.16 per
diluted share in fiscal 2005; and
o Adjusted diluted earnings per share for fiscal 2006, which excludes
exit costs and losses related to Lillie Rubin were $0.94 and compares
to adjusted diluted earnings per share for fiscal 2005 of $0.99 in
fiscal 2005.
Additionally in Fiscal 2006: The Company
o Exited its 39-store Lillie Rubin chain to focus solely on its Cache
brand;
o Launched a new concept, Cache Luxe with 16 locations;
o Opened a net of 10 new Cache stores ending the year with 277 Cache
locations;
o Expanded its marketing program; and
o Completed 11 Cache remodels with 66% of its Cache store base in the new
store format at year-end.
In total, operating expenses for the fourth quarter of fiscal 2006 were
$33.2 million, or 39.8% of net sales, as compared to $26.8 million, or 33.7% of
net sales in the fourth quarter of 2005. The increase in operating expenses was
primarily due to: (i) $159,000 in exit costs related to Lillie Rubin; and (ii)
$3.2 million in expenses related to the Company's expanded marketing effort.
Additionally, higher payroll expense of $1.4 million, as well as $283,000 in
costs associated with the adoption of FAS 123R contributed to the rise in
operating expenses in the fourth quarter of fiscal 2006. The Company did not
record any stock option expense in Fiscal 2005. For the fiscal year, total
operating expenses were $121.2 million, or 43.4% of net sales compared to $101.4
million, or 38.1% of net sales in the prior year period. The increase in
operating expenses for fiscal 2006 was primary due to a $5.7 million charge to
exit the Company's Lillie Rubin business. Additionally, a $4.3 million increase
in payroll expense along with a $4.2 million increase in advertising expense, as
well as higher depreciation expense, legal fees and costs associated with the
Company's software implementation contributed to increase in operating expenses
in fiscal 2006. Also, impacting operating expenses in fiscal 2006, was stock
option expense of $1.1 million, with no comparable expense in fiscal 2005.
The increase in sales and gross margin was more than offset by the
increase in total operating expenses and produced operating profit for the
fourth quarter of fiscal 2006 of $7.1 million, as compared to $11.0 million for
the fourth quarter of fiscal 2005. For the fiscal 2006 year, operating profit
totaled $11.9 million, as compared to $20.0 million in fiscal 2005.
The Company's balance sheet remained strong. At December 30, 2006, cash
and marketable securities totaled $61.5 million, rising $8.2 million from $53.3
million at December 31, 2005. Inventories were on plan and current at $34.8
million, as compared to $32.8 million at December 31, 2005. On a comparable
basis, including the Company's Cache locations, inventory increased
approximately 5% per store. Working capital increased by $19.4 million to $83.2
million from $63.8 million at December 31, 2005.
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A table summarizing financial results follows:
52 Weeks 52 Weeks 13 Weeks 13 Weeks
Ended Ended Ended Ended
---- ---- ---- ----
Dec. 30, Dec. 31, Dec. 30, Dec. 31,
2006 2005 2006 2005
---- ---- ---- ----
($ Thousands, except for per share data)
Sales $ 278,992 $ 266,345 $ 83,554 $ 79,320
Lillie Rubin exit costs $ 5,677 $ 0 $ 159 $ 0
Operating income $ 11,902 $ 20,008 $ 7,070 $ 10,999
Operating income before
Lillie Rubin exit costs $ 17,579 $ 20,008 $ 7,229 $ 10,999
Net income $ 8,643 $ 13,405 $ 4,567 $ 7,541
Basic earnings per share 0.55 $ 0.85 $ 0.29 $ 0.48
Diluted earnings per share $ 0.53 $ 0.83 $ 0.28 $ 0.47
Per share - Lillie Rubin exit costs $ 0.21 $ 0.00 $ 0.01 $ 0.00
Per share - loss related to
Lillie Rubin $ 0.20 $ 0.16 $ 0.03 $ 0.05
Diluted earnings per share
excluding exit costs and net
loss related to Lillie Rubin $ 0.94 $ 0.99 $ 0.32 $ 0.52
Basic weighted average
shares outstanding 15,849,000 15,726,000 16,002,000 15,645,000
Diluted weighted average
shares outstanding 16,216,000 16,150,000 16,467,000 16,060,000
Number of stores open
at end of period 296 306 296 306
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GUIDANCE
The Company estimates fiscal 2007 net sales in the range of $296
million to $302 million compared to actual net sales of $279.0 million in fiscal
2006. Fiscal 2007 diluted earnings per share is estimated in the range of $1.15
to $1.20. This compares to actual diluted earnings per share of $0.53 in fiscal
2006. Adjusted actual diluted earnings per share for fiscal 2006, which excludes
exit costs and losses related to Lillie Rubin, were $0.94. For the first
quarter, the Company continues to expect net sales to range between $67 million
and $69 million compared to actual net sales of $63.8 million in the first
quarter of fiscal 2006. Net sales excluding Lillie Rubin were $58.9 million in
the first quarter of fiscal 2006. The Company continues to expect comparable
store sales for the first quarter of fiscal 2007 to increase in the mid-single
digit range. First quarter fiscal 2007 diluted earnings per share continue to be
estimated in the range of $0.17 to $0.19, which compares to actual diluted
earnings per share of $0.11 in the first quarter of fiscal 2006.
Mr. Woolf concluded: "We remain very enthusiastic regarding our growth
prospects both in the near and long term. Our brand is vibrant and with
intensified marketing, terrific product and lower sourcing costs, we believe we
are poised to deliver to our expectations and further our position as a key
shopping destination among sophisticated fashion conscious consumers."
STORE OPENING PLANS
The Company also noted that it has plans to open between 15 and 20 new
stores in fiscal 2007. The Company plans to end the year with approximately 310
locations, increasing square footage by approximately 5% to approximately
630,000 square feet. The Company also indicated that it expects to open
approximately 5 stores during the first half of the year.
JANUARY 2007 COMPARABLE STORE SALES
Separately, the Company announced January 2007 comparable store sales.
Comparable store sales (sales for stores open at least one year or more)
increased 10% during the four week January 2007 period, as compared to the same
period in 2006. Total revenues for the four-week period ended January 27, 2007
increased $0.9 million, or 6.4% to $15.3 million. Revenues for the fiscal 2006
period include sales for the former Lillie Rubin chain.
CONFERENCE CALL
The Company also announced that it will conduct a conference call to
discuss its fourth quarter and fiscal 2006 results today, Wednesday, February 7,
2006 (sic) at 9:00 a.m. Eastern Time. Investors and analysts interested in
participating in the call are invited to dial (800) 936-9754, 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 14, 2007 and can be accessed by dialing (877) 519-4471 and entering
code 8341302.
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, ability to successfully open new
stores, introduction of the Cache Luxe concept, dependence on management,
dependence on vendors and distributors, reliance on foreign manufacturers,
material weakness in our internal controls, industry trends, merchandise and
fashion trends, competition, seasonality and changes in general economic
conditions and consumer spending patterns, as well as other risks outlined from
time to time in the filings of Cache, Inc. with the Securities and Exchange
Commission.
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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.
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CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, December 30,
2005 2006
---------------------- ---------------------
CURRENT ASSETS
Cash and equivalents $ 16,753,000 $ 19,363,000
Marketable securities 36,520,000 42,094,000
Receivables, net 5,734,000 4,794,000
Inventories 32,785,000 34,829,000
Prepaid expenses and other current assets 5,468,000 7,329,000
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Total Current Assets 97,260,000 108,409,000
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net 52,760,000 50,457,000
OTHER ASSETS 864,000 439,000
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Total Assets $ 150,884,000 $ 159,305,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 18,404,000 $ 11,702,000
Accrued compensation 2,624,000 1,689,000
Accrued liabilities 12,446,000 11,770,000
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Total Current Liabilities 33,474,000 25,161,000
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OTHER LIABILITIES 16,309,000 15,494,000
DEFERRED INCOME TAXES, net 2,105,000 2,118,000
STOCKHOLDERS' EQUITY
Common stock 158,000 163,000
Additional paid-in capital 35,455,000 44,343,000
Retained earnings 63,383,000 72,026,000
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Total Stockholders' Equity 98,996,000 116,532,000
Total Liabilities and Stockholders' Equity $ 150,884,000 $ 159,305,000
===================== =====================
CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
52 Weeks Ended 52 Weeks Ended
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DECEMBER 31, DECEMBER 30,
2005 2006
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NET SALES $ 266,345,000 $ 278,992,000
COST OF SALES, including buying and occupancy 144,984,000 145,929,000
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GROSS PROFIT 121,361,000 133,063,000
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EXPENSES
Store operating expenses 85,529,000 94,506,000
General and administrative expenses 15,824,000 20,978,000
Lillie Rubin exit costs 0 5,677,000
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TOTAL EXPENSES 101,353,000 121,161,000
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OPERATING INCOME 20,008,000 11,902,000
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OTHER INCOME (EXPENSE)
Interest income 1,071,000 2,523,000
Miscellaneous income (net) 1,000 0
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TOTAL OTHER INCOME 1,072,000 2,523,000
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INCOME BEFORE INCOME TAXES 21,080,000 14,425,000
INCOME TAX PROVISION 7,675,000 5,782,000
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NET INCOME $ 13,405,000 $ 8,643,000
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BASIC EARNINGS PER SHARE $0.85 $0.55
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DILUTED EARNINGS PER SHARE $0.83 $0.53
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BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 15,726,000 15,849,000
===================== =====================
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 16,150,000 16,216,000
===================== =====================
CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
13 Weeks Ended 13 Weeks Ended
----------------- -----------------
DECEMBER 31, DECEMBER 30,
2005 2006
----------------- -----------------
NET SALES $ 79,320,000 $ 83,554,000
COST OF SALES, including buying and occupancy 41,571,000 43,236,000
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GROSS PROFIT 37,749,000 40,318,000
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EXPENSES
Store operating expenses 23,150,000 $ 27,451,000
General and administrative expenses 3,600,000 $ 5,638,000
Lillie Rubin exit costs 0 159,000
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TOTAL EXPENSES 26,750,000 33,248,000
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OPERATING INCOME 10,999,000 7,070,000
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OTHER INCOME (EXPENSE)
Interest income 394,000 $ 673,000
Miscellaneous income (net) -1,000 0
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TOTAL OTHER INCOME 393,000 673,000
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INCOME BEFORE INCOME TAXES 11,392,000 7,743,000
INCOME TAX PROVISION 3,851,000 3,176,000
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NET INCOME $ 7,541,000 $ 4,567,000
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BASIC EARNINGS PER SHARE $0.48 $ 0.29
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DILUTED EARNINGS PER SHARE $0.47 $ 0.28
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BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 15,645,000 16,002,000
============== ===============
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 16,060,000 16,467,000
============== ===============