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MINNEAPOLIS-Christopher & Banks Corp. (CBK)has completed the acquisition of 21 Acorn stores in nine states, which Bill Prange, chairman and CEO of the retailer called “a differentiated yet complementary third retail concept, which will allow us to reach a more upscale customer demographic” in a statement this week. But is it what CBK needs? Observers of the company disagree on the matter.

The Acorn stores, which Kalamazoo, MI-based Gilmore Brothers Inc. sold to CBK for about $7 million, join the retailer’s two other brands, 463 Christopher & Banks stores, and 150 C.J. Banks stores. Acorn caters primarily to middle-aged women at both mall and non-mall locations, typically offering clothes at higher price points than the other two stores, more directly competing with Talbots or Chico’s.

Regarding the acquisition, Credit Suisse First Boston analysts Richard N. Baum and Tracy Kogan write, “We reiterate our Outperform rating. Serving the attractive mature woman demographic segment largely underserved by specialty stores, Acorn is a good fit for CBK and provides the company with a potential future leg of growth, beyond Christopher & Banks and CJ Banks.”

By contrast, Robin Murchison, an analyst with Jefferies & Co., tells GSR that she would prefer that CBK gets its base on track before it makes acquisitions. “Management has made some changes to the merchandise mix since late last year, but apparently not enough to boost same store sales this year, at a time when fashion sales have been extremely strong,” she says.

CBK’s same-store sales figures for October will be out at the end of this week, but August and September were down 4% and 7% respectively. Murchison points out that with a few exceptions, same store sales numbers for the retailer have been down since November 2002. “It’s a fairly small acquisition, but even so should it be put onto the management team’s shoulders?” she asks. Murchison rates CBK as a “hold” with a “neutral” position on stock purchases.

Though same-store sales were down for the retailer in August and September, total sales went up compared with the same months in 2003: up 9% to $29.8 million in August, and up 5% to 31.7 million in September. In the second quarter of 2004, CBK reported net income of $5.6 million ($0.15 per share), compared with net income of $8.5 million ($0.22 per share) in the second quarter of 2003. Christopher & Banks did not return calls from GSR about this article.

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