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Charming Shares Take a Hit

NEW YORK — Shares of Charming Shoppes Inc. dived 19.1 percent Tuesday as the plus-size specialty retailer warned its third-quarter results would fall short of Wall Street’s expectations and reported September same-store sales declined 6...

NEW YORK — Shares of Charming Shoppes Inc. dived 19.1 percent Tuesday as the plus-size specialty retailer warned its third-quarter results would fall short of Wall Street’s expectations and reported September same-store sales declined 6 percent.

The Bensalem, Pa.-based operator of 2,338 stores cited inventory problems and double-digit sales declines at Lane Bryant during the month for its downward revision, which transformed expectations of 3 cents a share for the quarter into a break-even outlook. The full-year earnings-per-share projection was adjusted accordingly without a change in fourth-quarter expectations.

Acting on their displeasure, investors sent CS shares down $1.02 to $4.33 in Nasdaq trading, 53.5 percent off its 52-week high of $9.14, reached April 11. Shares drifted as low as $3.86 during the day, establishing a new 52-week low.

For the day, the overall market snapped a four-day losing streak as the Dow Jones Industrial Average closed up 78.65 points, or 1.1 percent, to 7,501.49 and the Standard and Poor’s Retail Index rose 11.86, or 4.7 percent, to 265.54. Spurred by buying opportunities created through weeks of price erosion and optimism about a possible end to the Pacific dock strike, specialty stores, department stores, discounters and off-price retailers alike experienced beefy run-ups in their stock prices.

Other retailers failing to capitalize on the day’s retail bounce-back included Delia’s, off 10 cents, or 20 percent, to 40 cents, and United Retail, down 27 cents, or 5.7 percent, to $4.43. Sears, which saw its shares plunge 14.3 percent on Monday, as reported, weathered another 1.5 percent drop, closing at $31.77.

In a far more upbeat report on September results, Mothers Work Inc., a retailer of maternity apparel, said its comps rose 2.6 percent, despite having one fewer Saturday in the latest month. The Philadelphia-based retailer said having four Saturdays instead of five reduced comps by about 4 percent. On a combined basis for August and September, in which there were nine Saturdays this year and last year, MW delivered a comp increase of 5.6 percent.

Charming Shoppes, however, said it now expects to report break-even results in the third quarter, 3 cents off of consensus estimates. It also lowered comparable-store sales guidance to a low-single-digit decline from low-single-digit growth. Earnings for the fourth quarter were reaffirmed with “tempered caution” at 8 cents, and include comp expectations of a low-single-digit advance. For the full year, earnings are expected to range between 40 and 42 cents a share, as compared with 19 cents in 2002, exclusive of a pretax restructuring charge.

Lower customer traffic and insufficient inventory levels in certain key items made Lane Bryant’s month go from fair to worse, the firm said.

“Sales performance during the first three weeks of September trended to a flat sales comp for the corporation, slightly below our projections for the month,” Dorrit J. Bern, chief executive officer, said in a statement. “The last two weeks of the month were extremely disappointing, as we experienced double-digit decreases, primarily at our mall-based Lane Bryant stores, where there was a decrease in customer traffic from last year.”

In response, Bern said CS will increase its advertising efforts as well as maintain a tighter control on selling and administrative costs through the rest of the year.

By division, comps declined 14 percent at LB and 2 percent at Fashion Bug stores, offsetting a 3 percent increase at Catherines stores.

Mothers Work, which operates 909 maternity locations under the nameplates Motherhood Maternity, A Pea in the Pod and Mimi Maternity, also said net sales for the month rose 16.5 percent to $38.5 million from $33 million. For the fourth quarter ended Sept. 30, comps rose 6 percent and net sales increased 20.1 percent to $111.2 million from $92.6 million in the same period last year.

Rebecca Matthias, president and chief operating officer, said in a statement: “We continue to realize meaningful gross margin increases over last year, primarily due to our success at reducing product costs through our aggressive sourcing initiatives.” In addition, she noted inventory management has enabled the retailer to maintain an overall inventory level only slightly higher than last September, while delivering a 20 percent sales increase for the fourth quarter and providing stock for 138 additional locations since September.

She also said since June, MW routed all ocean shipments to East Coast ports to reduce potential impact on deliveries of the labor disruptions at West Coast ports.