Christopher & Banks Corp (CBK)

I have just started researching this company. I became interested because it is a favorite of both my wife and many of her peers. When I shop there (for Christmas and birthday gifts for my wife) the service is helpful and friendly, there appear to be many other shoppers, and the merchandise is attractive.

When I first looked at the key statistics in Yahoo! Finance, I was presently surprized that the company has no debt and lots of cash (in fact, at one point it looked like at its lowest market cap it was trading at about the value of its cash on hand but unfortunately it has appreciated since then), is profitable, and it pays a decent dividend now.

I have just started to read its latest 10K and so far am comfortable with its business plans. It is doing the right things to support future growth (i.e. upgrading its computer system, adding some inventory tracking and predicting software, expanding its buyer supplier networks, etc.). It is suffering along with all other retailers.

At the present time, it markets to women of the baby boomer generation, which is a large and affuent demographic group, thus ensuring a fairly good market segment. However, as more and more of this group retire, their fixed incomes may or may not support the same level of spending. The 10K did not mention any plans to expand its marketing to other demographic groups.

The management appear to be conservative and seasoned (although there have been some recent changes).

I believe that the company is worth more now than its present market cap of $155M. With a P/B of only 0.67 it seems to present the classic Graham value stock (where one can buy shares for less than its liquidation value--it carries no goodwill and little intangible assets on its balance sheet). The big question mark is its future sales. Sales fell in the last quarter compared to the same period last year. How long will this economic climate affect sales? I don't know. However, with a current ratio over 3, shareholder equity greater than the market cap (shareholder equity is about 72% of assets and P/B of 67%), and free cash flow positive, this looks like a company that can weather a protracted recession.