Christopher & Banks Corp (NYSE:CBK)

CAPS Rating: 2 out of 5

A Minneapolis-based retailer of women's specialty apparel, which operates retail stores through its wholly-owned subsidiaries, Christopher & Banks, Inc., Christopher & Banks Company and Christopher & Banks Services Company.


Player Avatar TSIF (99.96) Submitted: 10/5/2011 5:27:57 PM : Underperform Start Price: $3.61 CBK Score: +17.52

Clothing retailers have had a rough go of things lately, but many have managed to weather the continued slowdown. Clothing is difficult as in some cases it's discretionary and in some cases it's a necessity. When you MISS the trend in Women's apparel, however, while in a recession, you've really bungled things. Christopher & Banks Co attempted to mix up their offerings and claimed to have found the recipe. In reality they missed again and now have NO window to stock for winter/Christmas season. They admitted in their earnings report this evening that they are now "targeting" "Spring" for a comeback for the company. While they are opening new stores, they are closing others.

What has saved them so far is reasonably good management of thier cash / cash flow. The $72 Million or so in cash provides a buffer, but they are bleeding it off steadily with the recent losses. The dividend no doubt attracts some investors and at only about $2 Million a quarter outlay, they may try to hold it in place for now, but based on their declining sales and decreased store traffic the target of improving by Spring had better be a reality rather than the dream it has been so far.

While share count and volume is relatively low and while CBK has already bled off 50% from their July high, it's hard to believe the 88% institutional investors will stay loyal when the outlook for the next two quarters minimum is loses. CBK, however, is trading below book although I find it hard to value $35 Million of "unwanted" inventory. CBK is also about the size that other retailers or private equity firms might be interested in them.

So overall, I don't see a rosy outlook for at least six months, if then, and I believe the market has no patience for those who expect to book loses. On the other side, this is not a slam dunk downthumb if the Markets show some recovery in general as there are always buyers on low volume stocks that have shed 50%, even if the value was not properly aligned at the peak AND rumors or speculation can influence this one.

Personal target, sub $2.80 over the next 4-6 weeks before the Market gets the Christmas Spirit, Mr. Market may disagree.

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