OCTOBER 26, 2005
NOT FOR IMMEDIATE RELEASE
CACHE, INC.
NASDAQ COMMON STOCK SYMBOL CACH.
CACHE REPORTS IMPROVED THIRD QUARTER RESULTS AND RAISES GUIDANCE
Third Quarter Diluted Earnings Per Share Rises to $0.07
Net Sales Increase 15.8%
Raises Earnings Guidance Range to $0.83 - $0.85
New York, New York - October 26, 2005 - Cache Inc., (NASDAQ: CACH), a
specialty chain of women's apparel stores with 301 stores currently open,
reported results for the 13 and 39 week periods ended October 1, 2005.
For the 13 week period ended October 1, 2005 ("Third Quarter"):
- Net sales increased 15.8% to $57.3 million compared to $49.4 million
in the third quarter of 2004 and comparable store sales rose 8.0%;
- Operating income totaled $1.5 million, or 2.7% of net sales, as
compared to an operating loss of $1.0 million in the third quarter
of 2004;
- Net income was $1,107,000, or $0.07 per diluted share, as compared
to a net loss of $521,000, or ($0.03) per diluted share in the
third quarter of 2004;
- Working capital increased $8.6 million to $56.2 million, as compared
to $47.6 million at September 25, 2004.
For the 39 week period ended October 1, 2005 ("Nine Months"):
- Net sales increased 10.9% to $187.0 million, as compared to $168.7
million in the first nine months of 2004 and comparable store sales
gained 5.0%;
- Operating income totaled $9.0 million, or 4.8% of net sales, as
compared to $11.3 million, or 6.7% of net sales in the first nine
months of 2004;
- Net income totaled $5.9 million, or $0.37 per diluted share,
compared to $7.1 million or $0.44 per diluted share last year.
Mr. Brian Woolf, Cache's Chairman commented: "We attribute our strong
third quarter results to our offerings of fashion-right casual sportswear and
accessories. This led to an 8% increase in comparable store sales for the
quarter and a notable improvement in gross margin. In addition, the quarter
benefited from leverage in store operating expenses. In spite of the challenges
in the current retail environment, we are pleased to report a substantial
increase in revenues and earnings in our third quarter, and to have exceeded
our recently raised earnings guidance."
Additionally, during the third quarter, the Company:
- Opened 5 stores and at quarter-end operated 301 stores in 43 states;
as well as locations in the U.S. Virgin Islands and Puerto Rico.
- Remodeled 6 stores with 53.1% of its Cache store base in the new
store format at quarter-end.
Gross profit in the third quarter was $26.1 million, or 45.6% of net
sales, compared to $19.6 million, or 39.6% of net sales, in the third quarter
of 2004. The increase in third quarter gross profit versus the year ago
period was primarily due to better initial markups and greater full-priced
selling. For the first nine months of fiscal 2005, gross profit rose to $83.6
million, or 44.7% of net sales, compared to $74.4 million, or 44.1% of net
sales, in the prior year period. The improvement in gross profit margin for
the first nine months of fiscal 2005 also reflected higher initial merchandise
markups versus the prior year period.
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In total, operating expenses for the third quarter were $24.6 million,
or 42.9% of net sales compared to $20.6 million, or 41.6% of net sales in the
third quarter of fiscal 2004. For the first nine months of fiscal 2005, total
operating expenses were $74.6 million, or 39.9% of net sales compared to $63.1
million, or 37.4% of net sales in the prior year period. The rise in total
operating expenses for the third quarter and first nine months of fiscal 2004
was primarily due to the increase in the number of stores opened since the same
periods last year, as well as an increase in payroll related expenses and
incentive compensation expense, which raised general and administrative
expenses, primarily in the third quarter, as compared to the same period last
year.
At October 1, 2005, cash and marketable securities totaled $47.3
million, rising $10.4 million from $36.9 million at September 25, 2004.
Inventory was $35.6 million, as compared to $31.1 million at September 25,
2004, primarily due to the number of new stores added over the past 12 months.
Mr. Woolf continued: "As we look ahead, we are delighted to experience
strengthening comparable store sales results in October - a terrific indication
that our assortments and store layout are resonating with our customers. While
the holiday selling season still lies ahead of us, we believe our strategies
have us poised to deliver solid increases in sales and earnings during the
fourth quarter."
A table summarizes financial results follows:
Thirty-nine Weeks Ended Thirteen Weeks Ended
----------------------- --------------------
Oct. 1, Sept. 25, Oct. 1, Sept. 25,
2005 2004 2005 2004
---- ---- ---- ----
($ Thousands, except for per share data)
Sales $ 187,025 $ 168,711 $ 57,262 $ 49,430
Operating income (loss) $ 9,009 $ 11,292 $ 1,541 $ (961)
Net income (loss) $ 5,864 $ 7,089 $ 1,107 $ (521)
Basic earnings (loss) per share $ 0.37 $ 0.46 $ 0.07 $ (0.03)
Diluted earnings (loss) per share $ 0.37 $ 0.44 $ 0.07 $ (0.03)
Basic weighted average
shares outstanding 15,728,000 15,569,000 15,742,000 15,634,000
Diluted weighted average
shares outstanding 15,906,000 15,967,000 16,078,000 15,634,000
Number of stores open
at end of period 301 276 301 276
Guidance
--------
Based on better than expected third quarter results, the Company is
increasing its guidance for fiscal 2005 diluted earnings per share. The
Company currently estimates fiscal 2005 net sales in the range of $270 million
to $274 million, as compared to actual fiscal 2004 net sales of $247.3 million.
Fiscal 2005 diluted earnings per share are estimated in the range of $0.83 to
$0.85, compared to the Company's previous guidance range of $0.80 to $0.83 per
share and actual fiscal 2004 diluted earnings per share of $0.83.
2
For the fourth quarter of fiscal 2005, the Company estimates net sales
in the range of $83 million to $87 million, as compared to actual fourth
quarter fiscal 2004 net sales of $78.6 million. Fourth quarter comparable store
sales are expected to increase in the mid-single digit range. Fourth quarter
fiscal 2005 diluted earnings per share are estimated in the range of $0.46 to
$0.48, as compared to actual fourth quarter fiscal 2004 diluted earnings per
share of $0.39.
Store opening plans
-------------------
The Company expects to open approximately 20 new stores in fiscal 2005.
During the third quarter, the Company opened five new stores and closed one
store. For the first nine months of fiscal 2005, the Company opened 14 new
stores and closed four stores. At fiscal year-end, the Company expects to
operate approximately 307 stores, expanding square footage by approximately 3%
to 615,000 square feet.
Conference Call
---------------
Interested stockholders and other persons are invited to listen to the
third quarter earnings conference call scheduled for today, Wednesday, October
26, 2005 at 9:00 a.m. Eastern Time. To participate in Cache's conference call
dial 1-800-289-0572 approximately ten minutes prior to the 9:00 a.m. Eastern
start time. The call will also be broadcast live over the Internet at
http://www.cache.com. An online archive will be available immediately following
the call and will be accessible until November 2, 2005.
Certain matters discussed within this press release may constitute
forward-looking statements within the meaning of the federal securities law.
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.
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CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
October 1, January 1, September 25,
ASSETS 2005 2005 2004
As restated
------------- ------------- -------------
Current Assets:
Cash and equivalents $ 22,263,000 $ 16,848,000 $ 12,830,000
Marketable securities 25,023,000 25,874,000 24,094,000
Receivables, net 5,039,000 6,545,000 5,308,000
Inventories 35,604,000 32,296,000 31,067,000
Deferred income taxes, net 541,000 567,000 468,000
Prepaid expenses and other current assets 1,668,000 1,948,000 1,954,000
------------- ------------- -------------
Total current assets 90,138,000 84,078,000 75,721,000
Equipment and leasehold improvements, net 51,139,000 47,118,000 43,378,000
Other assets 863,000 832,000 830,000
------------- ------------- -------------
Total assets $ 142,140,000 $ 132,028,000 $ 119,929,000
============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 21,176,000 $ 17,055,000 $ 17,333,000
Accrued compensation 2,533,000 1,927,000 1,192,000
Accrued liabilities 10,219,000 11,627,000 9,602,000
------------- ------------- -------------
Total current liabilities 33,928,000 30,609,000 28,127,000
------------- ------------- -------------
Other liabilities 15,415,000 13,556,000 12,142,000
Deferred income taxes, net 1,455,000 3,023,000 1,427,000
STOCKHOLDERS' EQUITY
Common stock 157,000 157,000 156,000
Additional paid-in capital 35,343,000 34,705,000 34,307,000
Retained earnings 55,842,000 49,978,000 43,770,000
------------- ------------- -------------
Total Stockholders' Equity 91,342,000 84,840,000 78,233,000
------------- ------------- -------------
Total Liabilities and Stockholders' Equity $ 142,140,000 $ 132,028,000 $ 119,929,000
============= ============= =============
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CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTY-NINE WEEKS ENDED
(Unaudited)
October 1, September 25,
2005 2004
------------- -------------
Net sales $ 187,025,000 $ 168,711,000
Cost of sales, including occupancy and buying costs 103,413,000 94,278,000
------------- -------------
Gross profit 83,612,000 74,433,000
------------- -------------
Expenses
Store operating expenses 62,379,000 53,624,000
General and administrative expenses 12,224,000 9,517,000
------------- -------------
Total expenses 74,603,000 63,141,000
------------- -------------
Operating income 9,009,000 11,292,000
Other income :
Interest income (net) 677,000 309,000
Other income (net) 2,000 20,000
------------- -------------
Income before income taxes 9,688,000 11,621,000
Income tax provision 3,824,000 4,532,000
------------- -------------
Net income $ 5,864,000 $ 7,089,000
============= =============
Basic earnings per share $0.37 $0.46
============= =============
Diluted earnings per share $0.37 $0.44
============= =============
Basic weighted average shares outstanding 15,728,000 15,569,000
============= =============
Diluted weighted average shares outstanding 15,906,000 15,967,000
============= =============
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CACHE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN WEEKS ENDED
(Unaudited)
October 1, September 25,
2005 2004
------------- -------------
Net sales $ 57,262,000 $ 49,430,000
Cost of sales, including occupancy and buying costs 31,149,000 29,834,000
------------- -------------
Gross profit 26,113,000 19,596,000
------------- -------------
Expenses
Store operating expenses 20,508,000 18,287,000
General and administrative expenses 4,064,000 2,270,000
------------- -------------
Total expenses 24,572,000 20,557,000
------------- -------------
Operating income (loss) 1,541,000 (961,000)
Other income:
Interest income 277,000 107,000
Other income (net) 2,000 0
------------- -------------
Income (loss) before income taxes 1,820,000 (854,000)
Income tax provision (benefit) 713,000 (333,000)
------------- -------------
Net income (loss) $ 1,107,000 $ (521,000)
============= =============
Basic earnings (loss) per share $0.07 ($0.03)
============= =============
Diluted earnings (loss) per share $0.07 ($0.03)
============= =============
Basic weighted average shares outstanding 15,742,000 15,634,000
============= =============
Diluted weighted average shares outstanding 16,078,000 15,634,000
============= =============
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