Christopher & Banks (NYSE: CBK) has reported its sales figures for the month of January. Net sales increased 4% during the month, but comparable same-store sales (revenues derived from those stores open for more than a year), a more accurate reflection of the current state of the brand, actually declined by 4%.
The writing was pretty much on the wall for this one, considering that the company finished off the third quarter with comps falling into negative territory. This is a remarkable turn of events, in light of the fact that in the second quarter, comps were up a robust 8%.
The reason for the misfortune is quite simple. After catching a cold in the third quarter, management reported that the winter merchandise line was too dressy and unfit for its core customer, who was looking for something a little more casual.
It is a bit odd to me, however, how Christopher & Banks managed to drop the ball on this one. The company knew from the strong second quarter that its core customers responded well to casual "wear now" items, so why try to fix what isn't broken?
Two terms have come up over and over again in the past few quarters for women's apparel retailers: "casual" and "wear now." Chico's FAS (NYSE: CHS) was bonked on the head for having too few "wear now" items on hand, while Ann Taylor (NYSE: ANN) and Dress Barn (Nasdaq: DBRN) both benefited from carrying the right assortment of casual wear.
Will casual wear be the theme in 2007, like it was in 2006? I don't know, but it is clear to Christopher & Banks' leadership that customers were not quite ready to shift to a dressier look just yet.
In the meantime, expect the company to clear through the remainder of its ill-fated winter merchandise by the end of this quarter. In fact, CEO Matt Dillon reported that its spring floor set is already hitting stores this week, which means that by quarter's end we should get an early read on what customers are finding fashionable in 2007.
Will Christopher & Banks see a brighter spring? Stay tuned.
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Fool contributor Jeremy MacNealy has no financial interest in any company mentioned. The Motley Fool has a disclosure policy.
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