CHARMING SHOPPES TO CLOSE 290 UNITS
NEW YORK — Charming Shoppes Inc. said Monday it expects to take a $65 million pretax charge in the fourth quarter to close 290 underperforming stores.
A spokesman estimated that 2,500 employees will lose their jobs due to the closings and that about 400 employees are expected to be absorbed into other locations.
Charming is just the latest retailer to announce massive closings. Among the other chains downsizing are Kmart, Edison Bros., Elder Beerman, Petrie Stores, Merry-Go-Round and Jamesway, which is being totally liquidated. Charming, based in Bensalem, Pa., said the stores are losing about $20 million a year before fixed overhead charges. In the fourth quarter last year, Charming earned $5.16 million, or 5 cents a share, on sales of $345.3 million.
Charming added that it will close 120 stores in January, prior to the end of the fiscal year. More than half of the remaining 170 units will be closed during the first half of next fiscal year. The store closings are part of an overall restructuring of the company’s real estate, sourcing and administrative areas. The plan is ongoing and should result in an additional fourth-quarter charge from sourcing and administrative expenses, the company said.
As reported this month, Charming received a $157 million asset-backed working capital facility and reached an agreement with existing commercial lenders to restructure $90 million in short-term debt.
The company has already begun to reduce costs by laying off 100 people from its corporate offices. This year the company has closed 52 stores and opened 47.
In the nine months ended Oct. 28, Charming lost $32.2 million against a profit of $39.5 million. Sales dropped 15.8 percent to $780.6 million.
The company currently operates 1,423 stores in 46 states under the names Fashion Bug and Fashion Bug Plus. Charming stock closed at 2 1/2, up 1/16, in over-the-counter trading Monday.