CHARLOTTE RUSSE NET UP 64.2%
NEW YORK — Strong sales in both new and established stores and its quick-turn approach to merchandising catapulted first-quarter earnings of teen retailer Charlotte Russe Holding Inc. dramatically higher.
Earnings for the first quarter ended Dec. 30 were up 64.2 percent to $8 million, or 35 cents a diluted share, against $4.9 million, or 22 cents, during the year-ago quarter. Excluding a $311,000 extraordinary loss from early debt retirement in the 1999 period, earnings would have increased 54.5 percent.
Revenues jumped 47.8 percent for the period to $93 million from $62.9 million a year ago. A calendar shift added additional holiday selling time to the quarter, adding about $3 million to sales and 2 cents a share to earnings, the company said.
Bernard Zeichner, chairman and chief executive, noted in a statement, “Sales from new stores drove significantly higher sales and therefore we achieved higher leverage on our operating expenses.” More established stores performed above plan as well, producing a comparable-store sales increase of 3.7 percent, which he described on a conference call as “a pleasant surprise.”
This solid performance in “a somewhat mixed retail environment,” according to the ceo, “shows how our test-and-reorder philosophies allow us to deliver the fashion that young women want, while we maintain consistent financial results.”
On the call, Daniel Carter, executive vice president and chief financial officer, called the test-and-reorder strategy the management of the company’s “fashion risk.”
The company’s network of domestic resources allows Charlotte Russe to stock tested merchandise back in stores within three to six weeks. Carter said the company turns its inventory about nine times a year.
“We let our customer tell us what she wants, rather than making that decision for her months in advance,” said Zeichner.
The San Diego-based specialty retailer — parent of the Charlotte Russe, Rampage and Charlotte’s Room juniors retail chains — expects earnings per share to grow in the 45 percent to 50 percent range in the first half, taking into account the calendar shift.
In a separate development, the company filed a statement with the Securities and Exchange Commission to sell a total of 3.5 million shares of common stock.
Of the total, some 3.4 million shares are to be offered by shareholders and the remaining 100,000 shares by the San Diego-based company.
“Frankly, we have a significant interest by Saunders Karp & Megrue, LLC and they are looking to sell some of their shares” said Carter.
The company said it will not receive any proceeds from the sale of shares by selling shareholders. The sale of the company’s shares will be used for general corporate purposes, said Carter.
At the end of the first quarter, the company operated a total of 151 locations.