Update: Christopher & Banks Earnings

| About: Christopher & (CBK)

Summary

The company beat 2Q consensus on the top and bottom lines, boosting the stock 10%.

We’re still bullish related to the company’s turnaround but note the valuation makes it a hold.

The recent quarterly earnings beat was well within our expectations as margin growth was beyond expectations.

Christopher & Banks (NYSE:CBK) managed to post 2Q earnings that was $0.09 a share - topping $0.03 consensus - and revenues of $106.6 million just marginally beat consensus. Shares have popped 10% earlier this week. Sales were up just 2.3% and same-store sales up 2.6%. However, gross margin was up to 35.3%, versus 33.5% in 2Q 2013.

Shares are up 70% since we first covered it back in March, where we debunked that it would be the next, now bankrupt, Coldwater Creek. One of the standouts was Christopher's revamp of its outlet operations, noting,

And unlike what some of the other apparel retailers do, Christopher is creating merchandise that's exclusive to its outlet stores. This is helping it create a sub-brand of sorts. By the end of fiscal 2015, about a quarter of its outlet merchandise should be "exclusive."

But it's now trading at 24x forward earnings, which is above our justified 20x multiple. With the run up in shares and the valuation more in line with peers, it would be advisable to hold off on going long here.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.