NEW YORK — Higher sales and lower costs ignited earnings for Charlotte Russe Holding Inc. in the third quarter.
For the quarter ended June 26, the San Diego, Calif.-based value-priced specialty retailer saw earnings soar 98.8 percent to $5.5 million, or 23 cents a diluted share, compared with earnings of $2.8 million, or 12 cents, in the year-ago period, while sales spiked 24.1 percent to $133 million from $107.2 million. Comparable-store sales gained 7.1 percent.
“The retail environment for our chains continues to improve, and our customer is gravitating toward more feminine and pretty fashion trends,” said Mark Hoffman, chief executive officer, in a statement.
While sales ballooned, the company successfully whittled costs. Cost of goods sold, at $96.7 million, declined 280 basis points to 72.7 percent of sales from 75.5 percent, or $80.9 million, in the year-ago quarter.
Hoffman said the company is beginning to see the benefits of a new strategy focused on improving merchandise assortments, store organization and technology. Since last fall, the company added five executives to its senior management team, including two general merchandise managers, a supply chain and systems vice president, a real estate and construction position and a stores organization leader.
“The collective impact of our changes, I would assess, we are currently only about a third of the way there,” said Hoffman on the company conference call with investors.
S.G. Cowen analyst Lauren Cooks Levitan characterized the results as a near-term victory, but believes competition in the segment could limit the extent of the turnaround. “Further multiple expansion will require evidence of improved competitive positioning as well as sustained restoration of positive comps and earnings growth,” said Levitan in a report following the call. “As such, we await consistency in the business before getting more positive in our long-term outlook.”
Earnings for the nine months to date were even more impressive, vaulting 127.7 percent to $12.1 million, or 51 cents a share, from $5.3 million, or 23 cents, in the same period a year ago, while sales rose 20.2 percent to $401.1 million from $333.6 million.
— Ross Tucker