Christopher & Banks Corporation (CBKCQ) Earnings Call Transcript & Summary

Good morning, everyone. I am Kent Kleeberger, Chair of the Board of Directors of Christopher & Banks Corporation. On behalf of the company's Board of Directors and executive management team, we thank you for joining us, and welcome you to our virtual Annual Stockholders' Meeting. In my role as Chair of the company's Board, I will be serving as Chair of today's meeting. Our annual meeting is being conducted virtually via the Internet. As a preliminary matter, a virtual meeting is one that takes place via electronic format. An audio feed from this meeting is being webcast as we speak. This webcast incorporates stockholder validation capabilities which means that any stockholder can vote in real-time during the meeting until the polls are officially closed, and any stockholder may submit questions while the meeting is in progress. We believe that holding our annual meeting virtually will expand stockholder access. Hosting the meeting virtually increases the availability -- or I'm sorry, the ability of our stockholders in any part of the country to attend the meeting and nonstockholders can listen to this webcast over the Internet. If you are a stockholder, you may log in as a stockholder by using your 16-digit control number that appears on your proxy card or proxy notice. Otherwise, you will be unable to vote your shares or submit questions during this meeting. Before we begin the meeting, I'd like to remind everybody we have established rules of conduct for the meeting, which appear on the screen. Please review them if you have not already done so. And now allow me to remind you of a few key rules of the meeting. We have allotted 10 minutes for questions at the end of the meeting. [Operator Instructions] Also as noted in the rules, certain subjects and types of questions are not appropriate for this meeting. For the sake of an orderly meeting, we will ask everyone to follow these rules. I will now call the meeting to order. I would like to start the meeting with some introductions. Let me begin by introducing our directors who join me as nominees for election and are participating here with me or via the Internet. In alphabetic order, they are: Jonathan Duskin, Chief Executive Officer of Macellum Capital Management, LLC; Seth Johnson, former Chief Executive Officer of Pacific Sunwear; Keri Jones, President and Chief Executive Officer of Christopher & Banks Corporation; and William Sharpe, III, partner at Pathfinder Companies, LLC; Allison Wing, Chief Marketing Digital Officer for Bright Health; and I'm Kent Kleeberger, an independent retail consultant and former Executive Vice President and Chief Operating Officer of Chico's FAS, Inc. And of course, Keri Jones, our President and Chief Executive Officer, is present at the meeting and will be making a few remarks after the official portion of the meeting. Keri?

Thank you, Kent, and good morning, everyone.

Also present from the company are Richard Bundy, Senior Vice President, Chief Financial Officer and Corporate Secretary. Richard is serving as Secretary of the meeting. Tony Carideo from the Carideo Group, an agent of Broadridge Financial Services, who is our stock transfer agent, is serving as the Inspector of Elections. Tony, the Inspector of Elections has taken the customary oath of office, which was provided to Mr. Bundy in his role as Secretary of the meeting. Also present at today's meeting is Kirsten Vosen representing Deloitte & Touche LLP, our independent registered public accounting firm. One of our agenda items is voting on the ratification of D&T as our independent registered public accounting firm. Following the visual portion of today's meeting, there will be a short management presentation and a question-and-answer session, should there be any stockholder questions. I now declare the polls to vote online are open. If you have already voted, you need not vote again because the persons designated as proxies will vote for you. However, you may revoke your proxy at any time by voting virtually at this meeting. After the official portion of the meeting and management's representation -- I'm sorry, management's presentations, Keri and I will answer questions submitted on the website in the field provided for stockholders. We may not have enough time to answer all questions submitted during the meeting, so if you would like a direct response after this meeting, please provide your contact information along with your question. Now I'd like to turn the meeting over to Richard Bundy, Secretary for today's meeting. Richard?

Thank you, Kent. The Board fixed April 20, 2020, as the record date for determining stockholders entitled to vote at this meeting. I have been provided an affidavit of mailing attesting to the fact that notices of the meeting, the proxy statement and the annual report to stockholders were mailed or made available to all stockholders of record beginning around May 5, 2020. Mr. Carideo is here and has taken his oath as Inspector of Elections for this meeting. He is responsible for tabulating the votes and providing us with the voting results. Available for inspection by the stockholders at the offices of the company are copies of the notice of meeting and proxy statement, annual report to stockholders and an affidavit of mailing certifying to the timely mailing of the proxy materials to all stockholders of record as of the record date. Copies of the proxy statement and the company's annual report are also posted on the virtual meeting site and our company's investor site. Mr. Carideo has submitted his report as follows: on the record date, a total of 38,372,857 shares of common stock were outstanding and entitled to vote at this meeting. According to the most recent data available to us, we are at 66.2% of all the shares entitled to vote at this meeting and that's affirmatively met the quorum. The final vote, tabulation and results will be available in our 8-K filing, which will be available within 4 business days of this meeting. Because holders of a majority of the shares entitled to vote at this meeting are present in person or by proxy, the meeting is duly convened. Now we will conduct the formal business of the meeting. There are 4 items to be voted on today, each of which is described in detail in the proxy statement. The first item of business is to elect 6 directors as nominated by our Board to each serve a 1-year term. The director nominees are Jonathan Duskin, Seth Johnson, Keri Jones, Kent Kleeberger, William Sharpe and Allison Wing. No other nominations were received in accordance with the established nomination process, and the director nominations are closed. The second proposal is to approve, on an advisory basis, the compensation of our named executive officers. The third proposal is to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending January 30, 2021. The fourth and final proposal is to authorize the company's Board of Directors in its discretion to effect a reverse stock split at a ratio of 1-for-5 to 1-for-10, such ratio to be determined by the Board in its discretion. Next on the agenda is voting on the 4 proposals. The polls are now open. Stockholders who have sent in proxies need not take any further action with respect to any of the matters to be voted on today unless they wish to change their vote. Please vote your shares now with respect to these matters if you have not already voted or submitted a proxy before this mailing. [Voting]

While we are waiting, I would like to remind you that statements made today, which are not historical or current facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. They reflect management's current expectations or belief. Future results could differ materially from those in this presentation depending on many risk factors, including but not limited to, those presented in the company's most recent SEC Forms 10-K and 10-Q. The company disclaims any obligation to revise forward-looking statements made today based on future events or information.

Thank you, Richard. I now declare the polls to be closed, and this concludes the voting portion of the meeting. Based on a preliminary count of the proxies and ballot, each director nominee has been elected to the Board of Directors by the vote of more than a majority of all votes cast at this meeting. As for the second item, a majority of shares present were cast in favor of the approval of advisory vote on the compensation of the company's named executive officers. As to the third item, the selection of Deloitte & Touche as the company's independent registered public accounting firm has been ratified. Finally, as to the fourth item, authorizing reverse stock split, the majority of the total shares outstanding were voted in favor. We have completed the 4 agenda items set forth in the notice of the meeting, and I now declare the formal business of our virtual Annual Stockholders' Meeting completed and the official meeting adjourned. Final voting results are expected to be included in the company's Form 8-K report, which will be filed within 3 business days with the SEC. Thank you, everyone. I would now like to turn the meeting over to Keri Jones, our President and Chief Executive Officer, who will provide a brief presentation regarding our company.

Good morning, everyone. In the past 2 years, we've built a new leadership team of experienced and highly accomplished retail executives, leaders like myself who believe in the potential of this brand. It was clear to me at the outset that we needed to become a more customer-oriented organization, improve our operations and processes and build a winning culture within the organization. Our turnaround plans focused on 4 core strategies: first, improving our shopping experience to drive competitive advantage. We modernized our assortment, elevated our in-store presentation and branding, improved our inventory flow and in-stocks, and last but not least, launched a world-class style and selling model. Second, becoming more omnichannel. We've aligned promotions and marketing across channels, and importantly, are leveraging our stores at fulfillment centers as well as deploying Buy Online Pick Up In Store. Third, we needed to modernize our marketing and grow our customer base. We are a value retailer, but we needed to balance promotion with emotion. Our new tagline, Effortless Style for Real Life, embodies that. Additionally, we needed to better leverage data and analytics to improve our marketing spend and productivity, and we needed to lean into the all-important social media channels. Last but not least, we needed to reduce costs, and we have done that across multiple areas, resulting in meaningful savings for our company. We have made tremendous progress against each of these initiatives. This was reflected in our strong performance last fall with our strong comparable sales growth, our expanding margins and growing customer file and a nearly breakeven EBITDA for the back half of 2019. All of these trends pointed to a very promising future for Christopher & Banks. Over the last 3 months, we have experienced a global health and financial crisis that is more severe than anything we've ever seen before. I would like to thank our associates across our organization for their hard work and dedication to our brand. We are also grateful for our loyal customers who have remained engaged with us throughout these uncertain times. When the pandemic hit, we reacted quickly and decisively to protect our business and our future. As a result of these actions, we are in a position to reopen and resume our turnaround strategies. As of now, we have over 90% of our stores open, and we are seeing sales volume ramp up each week and currently are hitting our expectations. Additionally, our direct business continues to grow at a 50% increase and that is not slowing as stores reopen. This is certainly a volatile time in the retail business. As challenging as this situation has been, I believe that our brand will be positioned to thrive as we emerge from this crisis. First, we have an extremely loyal customer base who is telling us that she misses coming into our stores and engaging with our associates. We have created a special bond with our customers through merchandise that is designed especially for her in an environment that she loves, where she connects with her stylist whom she trusts. Now more than ever, personal relationships and trust are critical, and she finds that in her Christopher & Banks community. Second, we present a great value proposition. With a softening economy, she will choose to spend where she gets great value and service. With an average out-the-door retail of $20, combined with specialty store service, we are well positioned to gain share from our current customers as well as attract new customers. Third, our casual style aesthetic is well suited to her lifestyle. Our brand identity, Effortless Style for Real Life, could not be more relevant than it is today. Last but not least, we are an omnichannel retailer with a strong direct business. Prior to the pandemic, as we advanced our turnaround strategies, we made progress in deepening our connection with our customers and drawing in new and lapsed customers to the brand. As we emerge from this crisis, we see further opportunity to gain market share, given the market disruption and based on our competitive position within the changing retail landscape. Thank you for your interest in Christopher & Banks. And at this point, I'll open it up for questions.

Okay. Thank you, Keri. Richard, have you compiled a list of questions from shareholders, and will you start with the first question?

Kent, at this point in time, we have no questions.

Well, since there are no more questions or there are no more questions that meet the rules of conduct of the meeting, therefore, I would like to adjourn the meeting and thank everyone for participating in this year's virtual annual meeting. Thanks, and have a good day.

Ladies and gentlemen, this concludes your call. You may now disconnect.