NEW YORK — Charlotte Russe Holding warned Tuesday it expects to report a second-quarter loss and said it plans to close all 10 of its Charlotte’s Room stores.
This story first appeared in the March 27, 2003 issue of WWD. Subscribe Today.
The San Diego-based specialty retailer, which operates 268 stores under the Charlotte Russe and Rampage store nameplates, said it has decided to discontinue testing the Charlotte’s Room concept, a lifestyle accessory store for tweens and young teens, as soon as possible because the concept has failed to deliver the necessary sales to justify a full rollout.
During the current quarter, the retailer said it expects to record a $6 million pre-tax charge, reducing earnings per share by 15 cents, associated with exiting this concept. Included in this figure is approximately $3 million for store asset write-offs and $3 million for all other costs, primarily occupancy-related payments.
In addition, Bernard Zeichner, chief executive, said the firm has “experienced a significant and persistent drop in comparable-store sales at the Charlotte Russe and Rampage chains in this, our seasonally slowest quarter of the year.” He noted that, in February, the company experienced negative comps and, to date, March hasn’t shown any improvement.
As a result, the company said it expects to report a decline in comparable-store sales of 11 to 12 percent for the quarter ending March 29. It also said it anticipates a net loss of 5 cents to 7 cents a diluted share, excluding the $6 million pretax loss on closing the Charlotte’s Room stores.
On Jan. 23, CR said it expected low-single-digit comparable-store sales increases during the second and third quarters of fiscal 2003 and earnings per share between 13 cents and 15 cents for the second quarter, compared with 15 cents last year, and 28 cents to 30 cents for the third quarter, compared to 24 cents last year.
In the first quarter ended Dec. 28, comps were off 3.6 percent as net income rose 1 percent to $7.4 million, or 32 cents a diluted share.
CR made the announcement after the close of the markets on Tuesday. On Wednesday, investors sent shares of the stock down $1.02, or 11.5 percent, to close at $7.83 in Nasdaq trading. The stock hit a new 52-week low of $6.73 early in the day’s session.