Christopher & Banks Corporation (NYSE:CBK) Q3 2018 Earnings Conference Call Transcript
Dec 04, 2018 • 08:30 am ET
Greetings, and welcome to the Christopher & Banks Corporation Third Quarter 2018 Conference Call. (Operator Instructions) As a reminder this conference is being recorded.
It is now my pleasure to introduce your host, Jean Fontana with ICR. Please go ahead.
Thank you, Kevin. Good morning everyone. Thank you for joining us for today for Christopher & Banks Corporation third quarter fiscal 2018 earnings conference call. Presenting on today's call will be Keri Jones, President and CEO; and Richard Bundy, CFO.
(Forward-Looking Cautionary Statements)
With that, I will turn the call over to Keri Jones.
Thank you, Jean, and thank you for joining us on today's call. While we are disappointed in our third quarter performance, I am no less confident in our path forward. We have cycled past some short term shipment delays and excess spring-summer inventory which impacted our third quarter results. We've been encouraged by the response to the newer product as deliveries hit our stores. In fact, fourth quarter to date comparable sales are positive at expanded gross margin rates.
Importantly we have done an abundance of work over the last eight months focused on building a stronger leadership team, strengthening our merchandising strategy, developing a more impactful marketing approach, enhancing our omni-channel capabilities, making process improvements and reducing our costs. As we have laid this groundwork, we remain confident that the steps we are taking will drive improved sales, cash flow and operating results for our Company. As such we are initiating our preliminary outlook for fiscal 2019, which Richard will lay out following his review of our third quarter performance.
Before I discuss our path forward in more detail, let me briefly walk you through our third quarter results. Net sales for the quarter decreased 7.3% as a result of a 7.5% decline in comparable sales. Gross margin contracted 400 basis points and adjusted net loss per share was $0.15 versus an adjusted net loss per share of $0.05 in the third quarter last year. On our last earnings call we discussed taking a more measured approach to flowing inventory this fall season. The intention was to run on slightly leaner inventory levels and flowing product more frequently to ensure that we offered newness each month. Last year much of the newness was front loaded into the beginning of the quarter.
Coupled with lower planned inventory levels, we had supply chain issues largely due to delayed shipments out of China. Course were backed up as a result of retailers pushing through shipment prior to the tariff impact. With this backdrop, we experienced significant shipping delays throughout the entire third quarter resulting in average inventory 17% lower than last year's level. This clearly had an impact on our sale. As of mid November our supply chain is caught up and we have taken actions with our ocean carriers to mitigate the risk of this happening again. Simultaneous to owning less fall inventory, we had a spring and product overhang that we had to discount more deeply than