Charming Shoppes Inc. is the latest retailer to adopt restructuring plans, saying on Tuesday it will close 150 underperforming stores and cut about 200 jobs in an effort to boost profits.
The plus-size women's retailer will also slash its 2009 capital budget to $103 million from $143 million, by reducing new store openings by 50 percent.
Charming Shoppes will join apparel retailers such as Ann Taylor Stores, Eddie Bauer, Talbots and J.C. Penney, which have recently announced restructuring plans.
As of Jan. 31, Charming Shoppes eliminated 150 jobs, or 13 percent of its corporate and field management workforce, and an additional 50 jobs were lost when the company moved its headquarters to Bensalem, Pa.
The store closings will include about 100 Fashion Bug locations, as well as the elimination of the four-store Petite Sophisticate concept. The company said the stores targeted to close are currently generating a pretax loss of about $6 million annually.
The overhaul is expected to save about $20 million annually, and the company will incur one-time charges of about $10.8 million, or 9 cents a share, related to severance and lease termination costs.
"These were difficult but necessary actions, and we are confident that by streamlining our operations, realigning our field management structure and reducing the number of positions at our corporate headquarters, we will further strengthen Charming Shoppes' operational and financial performance," said Dorrit J. Bern, chairman, chief executive officer and president.
Despite tepid sales, the company continuously invested and focused on growth, said Scott Krasik, retail analyst at C.L. King & Associates. "Investors wanted the company to take a step back and this will be the first time they are really looking at how they can cut costs and improve margins," he said.
Separately, Charming Shoppes announced the appointment of Joseph M. Baron as interim president, after Diane M. Paccione left the company to head Deb Shops. Charming Shoppes is currently conducting a search for a new president.
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