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Christopher & Banks undertaking review after sales shocker

Last updated: 14:06 14 Aug 2015 EDT, First published: 12:06 14 Aug 2015 EDT

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The share price was ripped to shreds

Womenswear seller Christopher & Banks (NYSE:CBK) was the worst performing US stock on Friday morning after a results shocker.

Net sales for the second quarter of the year came in at around US$94mln, a long way short of the company's guidance of sales of between US$100mln and US$103mln.

In the same quarter last year the retailer clocked up sales of US$106.6mln, albeit from 545 stores compared to the 521 stores still trading in the second quarter of this year.

Same store, or like-for-like, sales tumbled by around 12.4%, and margins took a hit as well, with the company indicating it expected gross margin would decline by 250 basis points, or 2.5 percentage points, from the same quarter of last year, as lower sales hit its buying power.

The company had previously indicated gross margin would at least match last year's level and could be up to 50 basis points higher.

"We are disappointed by our financial results for the second quarter as we saw sales weaken significantly in late June and in July across all product categories," said LuAnn Via, president and chief executive officer of Christopher & Banks.

The market was somewhat more than disappointed, savaging the stock and more or less halving the market value of the retailer. 

"While sales were lower in all of our channels during the latter part of the quarter, our eCommerce business achieved plan for the quarter with strong double digit growth as compared to last year’s second quarter," said Via, clutching at straws. 

"Overall, we believe that our business continued to be impacted by unfavorable macro challenges and the weakness in mall traffic. In addition, reduced levels of clearance merchandise and a more aggressive promotional environment were also contributing factors to the sales shortfall," she added.

Not surprisingly, the company is conducting a comprehensive review of its business, and is calling in an outside consultant to advise on how to arrest the sales collapse.

"Based on our findings, we will take measures to address opportunities for near-term improvement and position the business for long term growth," Via said.

The shares were down 48% at US$1.68 in lunchtime trading, and are off more than 70% year-to-date.

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