WWD.com/business-news/financial/charming-shoppes-to-close-100-120-stores-3017480/
government-trade
government-trade

Charming Shoppes to Close 100-120 Stores

The nation’s premier plus-size specialty retailer, Charming Shoppes, will continue to downsize in 2010.

The nation’s premier plus-size specialty retailer will continue to downsize in 2010.

This story first appeared in the March 31, 2010 issue of WWD.  Subscribe Today.

After closing 160 stores in 2009, cutting expenses and reducing its fourth-quarter loss, Charming Shoppes Inc. plans to close another 100 to 120 of its 2,121 stores this year at a cost of $7 million to $9 million, principally to cover lease termination charges.

Despite modest improvement in recent sales trends, continuing declines in same-store sales in the first quarter helped send shares down $1.04, or 15.5 percent, to $5.66 in Nasdaq trading Tuesday. Among the 172 stocks tracked by WWD, only Zale Corp. turned in a worse performance, falling 18.8 percent to $2.63 despite being granted an extension by Citibank on a $6 million fee to cover a shortfall on credit card transactions. The deadline for that payment, originally Thursday, has been moved to April 30.

The Bensalem, Pa.-based operator of Lane Bryant, Fashion Bug and Catherines on Tuesday reported that, in the three months ended Jan. 30, it cut net losses by more than three quarters, to $28 million, or 24 cents a diluted share, from $114 million, or 99 cents, in the year-ago quarter. Excluding impairment charges and other items, the loss came to $12.1 million, or 10 cents a share, less than the 13-cent loss expected by analysts polled by Yahoo Finance.

Quarterly revenue slid 14.7 percent to $539 million from $631.9 million a year earlier. By division, sales at Lane Bryant fell 17 percent to $226.9 million while revenue at Fashion Bug declined 13.7 percent to $161.2 million. Catherines saw sales contract 4 percent to $65.6 million.

Comparable-store sales were down 12 percent with declines of 15 percent, 8 percent and 6 percent at the company’s Lane Bryant, Fashion Bug and Catherines brands, respectively.

On the company conference call, Jim Fogarty, president and chief executive officer, said comps so far in the first quarter were down 4 percent, which, while “still lousy,” reflected improvement across all brands.

“What was not working in the [fourth] quarter was an understanding of our customer and her need for fit and value, sufficient depth and sizing in lengths and lack of a strong core tops and bottoms assortment,” Fogarty said.

The firm, he noted, did register improvements in a number of areas. Combined occupancy and buying costs and selling, general and administrative expenses totaled $248.2 million, an 11.9 percent reduction over year-ago levels of $281.9 million. Gross margin as a percentage of sales improved to 43.7 percent, versus 41.8 percent in the year-ago quarter.

Additionally, cash and cash equivalents nearly doubled year-over-year, to $186.6 million from $93.8 million, and long-term debt dropped to $171.6 million from $232.7 million at the close of fiscal 2008.

For the year, the retailer’s net loss from continuing operations totaled $78 million, or 67 cents a diluted share, versus a loss of $189.4 million, or $1.57 a share. Annual sales dropped 16.6 percent to $2.06 billion from $2.47 billion.