Sterne Agee Neutral On Christopher & Banks Corporation (CBK)

Sterne Agee has a Neutral rating and a $7 price target on shares of Christopher & Banks Corporation CBK. In a note to clients, Sterne Agee writes, "Specific Q1 guidance was not offered but guidance includes a mid single-digit decline in comps with gross margins off 900-1000 bp with SG&A flat in dollars. This leads us to lower our Q1 estimate to a loss of $0.08 from earnings of $0.08 (FC was at $0.09 in EPS). Our full-year estimates are lowered to a loss of $0.44 from a loss of $0.24 with FY13 (end Feb 13) unchanged at $0.09 loss. The Q1 or spring season historically has been CBK's most profitable quarter. While comps to date likely match the full quarterly plan, CBK has a number of marketing events planned designed to build traffic. On an encouraging note, it has added a new branded line to 85 stores with sharply higher price points which has been well received. And further, with the new lines in stores in August, CBK plans to take prices up mid to high teens to reflect the improved quality and fashion that the new line represents which also affords the firm the opportunity to offset rising input costs. Price points at CBK are well below the competition and in some cases (in pants), prices have not been raised in ten years. We note inventories at year end were up 1.9% to $39.2 million and rose 4% on a per-store basis above the rate of comps excluding eCommerce which gained 13% in Q4 and rose high single digits as a percentage of sales. Inventories are planned to be up mid to high teens at the end of Q1 although wherever possible CBK is cancelling orders if quality standards are not met." Shares of CBK are down 31 cents in early Friday trading to $6.08, a loss of 4.85%.