Charming Shoppes plans to divest Fashion Bug biz
Charming Shoppes Inc reported sales and operating results for the three and nine month periods ended October 29, 2011. Additionally, the Company announced that it is undertaking a comprehensive strategic review of its operations to determine how best to enhance shareholder value. The Company also announced that it has decided to divest its Fashion Bug business and accelerate the growth of its Lane Bryant flagship brand.
For the third quarter ended October 29, 2011, the Company reported net sales of $429.7 million, compared to $463.6 million for the prior year period. Comparable store sales for the third quarter decreased 4% compared to the prior year period and included a flat comparable store sales result for Lane Bryant. Adjusted EBITDA for the quarter increased 100% to $8.0 million or 1.9% of sales.
This compares to Adjusted EBITDA of $4.0 million or 0.9% of sales in the prior year period, reflecting an improvement of $4.0 million. On a GAAP basis, the Company reported a net loss of $(13.0) million, or $(0.11) per diluted share for the third quarter, compared to a net loss of $(18.8) million or $(0.16) per diluted share for the third quarter of the prior year. On a non-GAAP basis, excluding restructuring and other charges, net loss per diluted share was $(0.08) for the third quarter, compared to a net loss per diluted share of $(0.13) in the third quarter of the prior year.
Anthony M. Romano, President and Chief Executive Officer of Charming Shoppes, Inc. said, "We are currently engaged in a number of initiatives that we believe will further improve our business and enhance shareholder value. The first substantive step is our decision to divest our Fashion Bug business. While we have made progress in improving Fashion Bug's profitability, we believe that it does not fit within our future strategic plan. Concurrent with this process, we are assessing the appropriate expense structure for the Company in light of the planned divestiture of Fashion Bug."
As noted above, the Company also announced that it is undertaking a strategic and financial review of all of its businesses. This review is expected to focus on optimizing the use of the Company's strong cash position, driving the potential of the flagship Lane Bryant brand, as well as evaluating other alternatives to further enhance shareholder value.
In that regard, the Company's Board and management will explore a full range of strategic alternatives for Charming Shoppes, and have engaged Barclays Capital as its financial advisor to assist in the process. The Company noted that there can be no assurance that this review will result in any specific course of action beyond the planned divestiture of Fashion Bug, and the Company does not intend to comment further on this review until completed. A timeframe for the divestiture of Fashion Bug or the completion of the strategic review has not yet been determined.
Romano continued, "For our Company, our financial and operational resources are better spent on focusing on our more profitable iconic Lane Bryant brand. With that retail nameplate as our foundation, we expect to invest in and focus on that business, using its strong consumer franchise and leading market position to drive our sales and profits.