CHARLOTTE RUSSE NET UP 10%
Byline: Jennifer Weitzman
NEW YORK — New store growth and strong margins drove third-quarter profits up nearly 10 percent at Charlotte Russe, although comparable-store sales fell victim to the softening economy.
The San Diego-based specialty retailer, which offers value-priced trendy merchandise under the nameplates Charlotte Russe, Rampage and Charlotte’s Room, reported Thursday earnings for the quarter ended June 30 of $4.8 million, or 20 cents a share, beating consensus estimates by a penny. Results are a 9.9 percent rise from the $4.4 million, or 19 cents, earned in the year-ago period.
Sales rose 33.6 percent to $78.4 million from $58.7 million, while comparable-store sales decreased 6.6 percent.
Chairman and chief executive Bernard Zeichner said on a conference call, “I do not see any sign of an improvement in our sales patterns over the past several weeks.”
However, he said he believes CR is well positioned to “compete aggressively” in all departments and classifications.
Harriet Sustarsic, CR’s president, said third-quarter comp inventory rose 7.7 percent, of which roughly half was derived from denim. The balance came from incentive buys like sweatercoats and outerwear, which have higher average retail value, she said. In addition, she said the company is planning strong initial markups to allow flexibility in pricing.
“Both CR and Rampage are are poised and ready for b-t-s in all the appropriate trends,” Sustarsic said.
Over the past five years, the the 177-unit chain has benefited from strong merchandise margins resulting from high inventory turnover and its test-and-reorder strategies, allowing it to more easily increase or decrease inventory since 95 percent of merchandise is sourced domestically.
During the quarter, the firm opened 14 CR, four Rampage and three units under the name Charlotte’s Room, its new concept offering mostly gifts and accessories aimed at girls 11 to 19. It said it expects to open about 40 CR, 10 Rampages and three or four Charlotte’s Room test stores next year.
The company warned June 18 that third-quarter earnings per share would at least equal last year’s, but would be less than previous expectations due to weak sales in May and June.
For the nine months, profits increased 40.9 percent to $16.2 million, or 69 cents a share. Sales improved 39.4 percent to $235.5 million and comps rose 0.6 percent.