Christopher & Banks swings to a profit that beats expectations

Back to basics is working out for Christopher & Banks.

The company beat expectations with its latest profit report Wednesday, more evidence that a transformation of merchandising and consolidation of stores is paying off for the Plymouth-based women's retailer.

The company over the past year honed in on some of the basic categories, such as denims and bottoms, it earlier abandoned. It added more career options, such as jackets. And it rebalanced the merchandise so its customers, who tend to avoid risky fashions, can be relevant without becoming victims of swift-moving trends.

"Our customers continued to respond well to our refined merchandise assortment," CEO LuAnn Via told analysts on Wednesday afternoon in a discussion of second-quarter results.

Executives also said that accelerated efforts to convert more of stores into a format that combines CJ Banks stores, which sells plus-sized apparel, with Christopher & Banks stores, where missy and petite sizes were emphasized, has been paying off with higher sales productivity.

Sales at stores open at least a year rose 2.6 percent in the second quarter. But executives noted that metric, usually a benchmark for a retailer's health, didn't tell the whole story. That's because about 20 percent of its stores weren't included in the figure since they were relocated or converted to the newer combined format in recent months.

The retailer ended the quarter with 138 stores of its 546 stores in the combined format and plans to bump that number to 200 by the end of the year. It expects to close all stand-alone CJ Banks stores over the next few years.

"We delivered solid results for the quarter in a difficult retail environment, and we expect those challenges to continue this quarter," Via said.

But despite those head winds, executives said they expect higher sales and gross margins in the third quarter.

Christopher & Banks floundered coming out of the recession, but is now in the midst of a turnaround. The retailer reported its first profitable year in the last fiscal year following three years of losses.

One analyst during the call asked executives if they had already felt any benefit from the bankruptcy and store closings of competitor Coldwater Creek earlier this year.

"We do believe there is an opportunity, but it's just a little too early to tell at this moment," Via said.

In late September, Christopher & Banks will launch a combined website for its CJ Banks and Christopher & Banks brands, mirroring the conversion happening in many of its stores.

And Via said the retailer will also be testing new product categories such as active wear.

Kavita Kumar • 612-673-4113