Cache, Inc. (CACH)

Cache operates as a specialty retailer of social occasion sportswear and dresses targeting style-conscious women. The company owns and operates two separate store concepts, Cache and Cache Luxe. As of March 8, 2007, it operated 296 Cache and Cache Luxe stores in 44 states, the Virgin Islands, and Puerto Rico. Company targets women between the ages of 25 and 45.

The fiscal 2006 result of the company was fair with about 4.75% surge in the revenues. This was fuelled by good performance from the dresses and accessories business, which together contribute over 34% to the revenues. The prime concern for the company has been slowing sales of the sportswear segment, which forms approximately 66% of the revenues. However, strong acceptance for their dress business and the coming spring, which could generate more demand for dresses, is likely to offset the weakness in the sportswear segment. One of the strategic move of the company has been exiting from the loss making Lillie Rubin business in fiscal 2006 to focus on their core Cache brand. In order to extend Cache’s reach, company launched Cache Luxe in May 2006, which is appealing to a higher income consumer.

On the operational front, company’s gross margin are likely to improve in future as it plans to undertake direct sourcing of 25% of its merchandise in 2007. Further, to expand its business, Cache has plans underway to open 15 to 20 stores in the fiscal ‘07. In the light of these factors, management expects minimum revenue growth of over 6% in fiscal 2007 along-with 25% growth in EPS. The growth story looks quiet intact and hence it is wise to catch Cache before it rolls ahead.