By  on September 25, 2006

As some department stores scale back their petite size offerings, Charming Shoppes is embracing the segment by repositioning Petite Sophisticate — a brand the retailer acquired earlier this year.

Charming Shoppes, which caters to plus-size consumers, opened the first Petite Sophisticate outlet store in Franklin Mills Mall in Philadelphia early this month and has plans to expand the brand following a test of 45 stores. It acquired the trade name from Retail Brand Alliance.

“We are experienced in fits in special sizes, specifically in plus sizes. So we decided to extend our expertise to other special sizes,” said Gayle Coolick, director of investor relations for Charming Shoppes.

The company struck a deal with Retail Brand Alliance in January 2006, assuming the leases of Casual Corner stores and reopening them as Lane Bryant outlets. They also received the Petite Sophisticate name and Internet rights.

Currently, the company introduced 78 new Lane Bryant stores. And since the Casual Corner real estate is so vast, the retailer decided to open 45 Petite Sophisticate stores adjacent to 45 of the Lane Bryant shops, Coolick said.

The 44 remaining Petite Sophisticate stores will open around the country on Sept. 29. Each store will supply career and casual sportswear in petite sizes 0 to 14, while utilizing 2,800 square feet of real estate.

While the Petite Sophisticate stores will not impact earnings for the rest of the year, Coolick said the brand will provide an opportunity for earnings growth in the future.

Believing women’s petite is a $10 billion market, Charming Shoppes said Petite Sophisticate has a strong future. “Retailers are pulling back on petite offerings,” Coolick said. “Saks announced the closure of their petite department, but then brought it back due to a strong outcry. It is an underserved market.”

However, there is some skepticism about the future success of the Petite Sophisticate brand. “We admittedly are not familiar with the economics of the former Petite Sophisticate business, but we tend to think that the overall strategy for the concept was not much of a success story, given Retail Brand Alliance’s decision to abort it,” said Roxanne Meyer, retail analyst at CIBC World Markets, in a research report.While the Petite Sophisticate store “test” has not been referenced on quarterly conference calls or investor conferences, Meyer said the opening of 45 stores shouldn’t be ignored. Meyer said she foresees three possible scenarios for the line: ending the Petite Sophisticate test and converting the space to support other Charming Shoppes’ businesses, ending the test and selling the leases or pursuing the Petite Sophisticate outlets with the potential to extend to Internet and retail stores.

“Should Charming Shoppes forge ahead, we believe it will likely want to grow sales to the equivalent of about 100 stores as quickly as possible in order to gain enough scale to directly source and reduce merchandise costs,” Meyer said.

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