Christopher & Banks Corporation (NYSE:CBK) Q2 2020 Earnings Conference Call - Final Transcript

Sep 11, 2020 • 08:30 am ET

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Christopher & Banks Corporation (NYSE:CBK) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Richard Bundy

turning to the balance sheet. Cash and cash equivalents totaled $2.8 million with $4.6 million in short-term borrowings and net availability of $5.9 million under the credit facility as of the end of the second quarter. As we discussed last quarter, we qualified for a $10 million PPP loan. We are applying these loan proceeds towards the payment of qualified payroll expenses in accordance with the conditions of the loan agreement and believe that the loan principal will be forgiven under the CARES Act. We also delivered a substantial improvement in cash flows in the second quarter compared to the first quarter.Due to the benefits of our expense reduction, inventory actions and cash management activities, we generated $5.1 million in cash from operations during the second quarter. This compares to $24 million in net cash used from operations in the first quarter.

The cash flow from operations, combined with the PPP loan proceeds enable us to improve our liquidity position as we reduced the outstanding borrowings under our credit facility by $12.2 million and ended the quarter with $2.8 million in cash. Total inventory was $36 million at the end of the second quarter of 2020, down 26% compared to $48.7 million at the end of the same period last year. This compares to a 21% increase in the same period last year as we pulled forward product to mitigate higher tariff cost imposed during 2019.

In addition, our end -- our in-transit inventory declined $6.5 million to last year due to a large portion of fall receipts shifting out approximately three weeks due to COVID-related impacts to our supply chain. We are pleased to have worked through a large portion of our spring-summer seasonal merchandise and believe that we have the right level and balance of inventory to drive sales and mitigate markdown pressure in the back half of the year.

Capital expenditures for the second quarter of 2020 were $0.3 million compared to $0.4 million in last year's second quarter. This primarily reflects the investments as we -- reflect store investments as we paused non-essential capex for the remainder of the year.

We opened four stores during the second quarter, which were locations under construction prior to the pandemic. We continue to work aggressively to adapt to the current environment, protecting cash through cost savings and financing activities. While we are not providing guidance for the second half due to the low visibility related to COVID and other macro factors, we believe that the work we have done to reduce costs, protect cash and drive sales will leave us with sufficient liquidity as we navigate the back half of the year. While the environment continues to be challenging, we remain committed to managing our business through this crisis and setting ourselves up to regain the momentum we were driving prior to COVID.

Now we will turn the call over to the operator to bring in the Q&A session.