LARGE SIZES LEAD CHARMING SHOPPES
Byline: Arnold J. Karr
NEW YORK — Charming Shoppes is raising expectations for its large-size business next year, even as it lowers those for its earnings.
The Bensalem, Pa.-based specialty retailer said Monday that it expected large-size sales to “approach $1 billion” by the end of the next fiscal year. With fiscal 2002 sales projected to reach $1.7 billion, its large-size business would account for nearly 59 percent of total revenues versus its current level of 54 percent.
At the lower percentage, the large-size portion of Charming’s business will translate to more than $860 million of the company’s projected total for the current fiscal year of $1.6 billion in sales.
Charming operates 1,789 specialty stores under names including Fashion Bug and Catherines Plus Sizes. Large-size lines account for 41 percent of Fashion Bug unit sales and all revenues at Fashion Bug Plus and Catherines Plus Sizes.
Charming is taking several steps to reach its ambitious sales targets for large sizes, including the elimination of girls’ apparel from its Fashion Bug stores at the conclusion of the current winter season. Girls’ wear currently generates about $38 million in sales in Fashion Bug stores, or about 3 percent of divisional revenues, and Charming plans for large sizes to receive both the space and inventory commitments formerly directed toward girls’ wear.
That move alone would boost the large-size portion of Fashion Bug sales to 44 percent, according to a company spokeswoman.
Charming said that it expected to open between 125 and 140 stores during the next fiscal year and that expansion “will be focused on supporting growth in the large-size businesses.” The spokeswoman said that a breakdown of stores by nameplate wasn’t yet available since real estate plans for the coming year were incomplete. However, she indicated that many of the new Fashion Bug units will bear the designation “Plus.”
In a statement, Dorrit Bern, chairman and chief executive of Charming, noted that large sizes have “consistently outperformed our other sportswear businesses. Gross margins for large-size sportswear continue to be the strongest of all our sportswear categories, and growth in large sizes will add to the overall profitability of Charming Shoppes.”
Charming’s intensifying involvement in the large-size business was announced in tandem with revised earnings projections for the current year and also fiscal 2002.
Analysts had expected Charming to earn 60 cents a share in the approaching fiscal year, but the company said Monday that it now expected earnings to fall 3 to 5 cents a share short of that.
Earnings for the current fiscal year were pegged at between 48 and 50 cents a share versus consensus estimates of 49 cents and earnings of 43 cents during fiscal 2000.
Through the first nine months of the current fiscal year, Charming earned 41 cents a diluted share, meaning that fourth-quarter earnings, originally expected to be about 10 cents, will fall 1 to 3 cents shy of that mark. The chain’s December comps were down 4 percent.
Wall Street had a muted reaction to the news as Charming Shoppes’ shares were down 18 cents, or 3.1 percent, to close at $5.88 in Nasdaq trading Monday.
The sales projection would translate into a 34 percent increase in revenues for Charming for the current fiscal year, when it acquired the Catherines and Modern Woman specialty chains. To get to $1.7 billion in revenues next year, Charming would need to increase sales 6 to 8 percent. Comparable-store sales are expected to advance in the low-single digits, the company said.
In setting forth its plans, Charming cited industry research, in which large sizes have grown to about 27 percent, or about $26 billion, of the women’s apparel retail market.
The large-size market, Bern said, “represents the fastest growing women’s apparel segment, with growth of approximately 10 percent over the last 18 months.”
She noted that the acquisitions of Catherines and Modern Woman “have enhanced our position as the leading women’s large-size specialty apparel retailer in the strip center” and pegged market share at 20 percent of women’s large-size specialty apparel volume.
“Through our family of stores, we appeal to all women’s age groups, spanning all moderate income levels, and we merchandise to an ethnically diverse woman consumer, with varying fashion tastes,” she noted. “When the American large-size woman thinks of Fashion Bug Plus or Catherines or The Answer or Added Dimensions, I want her to think of us as the plus-size authority.”
In addition to its plans for the large-size business, Charming Shoppes’ joint venture with Monsoon PLC to bring the British company’s Monsoon and Accessorize retail concepts to the U.S. kicks off this year. Beginning late spring, about 20 stores, the majority of them under the Accessorize name, are expected to open this year.