Charlotte Russe Holding Inc. said Tuesday third-quarter profits slid 4.9 percent, but the women’s specialty retailer beat analysts’ estimates, targeting inventory and cost management.
For the period ended June 27, the San Diego-based retailer said net income fell to $6.3 million, or 29 cents a diluted share, compared with profit of $6.6 million, or 31 cents a share, in the year-ago quarter.
Excluding $1.3 million in costs related to putting itself up for sale, management transition and severance, earnings per share rose to 33 cents. On the company call to analysts and investors, executives said the sale process, which was initiated in March after the threat of a proxy fight by activist investors, is “ongoing.”
Net sales expanded 4.9 percent to $202.7 million from $193.2 million in 2008, as quarterly comparable-store sales dipped 3.6 percent. Analysts surveyed by Yahoo forecasted EPS of 24 cents on revenues of $207.6 million.
The company said fewer markdowns on merchandise helped improve sales.
The new markdown strategy, along with tight inventory controls and a refined planning and allocation process, also helped drive quarterly gross margin to 27.6 percent from 26.7 percent a year earlier.
John Goodman, chief executive officer, said despite an environment that’s “extremely challenging, we believe there is a tremendous opportunity for Charlotte Russe to improve its leadership position in the fast-fashion category. Importantly, we’re engaging the customer with trend-right merchandise and providing her with a compelling shopping environment, both in-store and online.”
Net income for the nine months shrank 89.8 percent to $2.5 million, or 12 cents a share, versus $24.8 million, or $1.04, last year. Sales for the period rose 2.9 percent to $634.6 million from $616.5 million, and comparable-store sales declined 7.1 percent.
For the fourth quarter, Russe said comps are expected to decline in the low- to midsingle digits, while EPS is anticipated to be between 18 and 26 cents, not including charges. Analysts forecasted earnings of 16 cents a share, on revenues of $215.7 million.
Results were released after the close of the market. During the day, shares dropped 3.4 percent to $12.07 but rallied 8.7 percent in after-hours trading to $13.12.
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