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Sales down 4.6% at Charming Shoppes in Q1 FY'12
02
Jun '12
Charming Shoppes Inc. a leading apparel retailer specializing in women's plus-size apparel, reported sales and operating results for the three months ended April 28, 2012.

First Quarter Consolidated Results

• Net sales were $481.3 million for the first quarter ended April 28, 2012, a decrease of 4.6% compared to $504.4 million for the prior year period. The $23.1 million decrease includes the impact of operating 157 fewer stores than in the prior year period, partially offset by an increase of 18% in e-commerce sales.

• First quarter comparable store sales were flat compared to the prior year, including a 1% comparable store sales increase for Lane Bryant, a 5% comparable store sales increase for Catherines, and a 3% comparable store sales decrease for Fashion Bug.

• The inclusion of e-commerce sales with the bricks and mortar comparable store sales would result in a comparable sales increase of 2% for the quarter.

• Gross profit was $261.7 million or 54.4% of sales in the quarter, compared to $285.3 million or 56.6% of sales in the same quarter last year.

• SG&A and Occupancy and Buying expenses as a percent of sales improved by a combined 290 basis points and decreased $24.9 million to $219.1 million or 45.5% of sales in the quarter, compared to $244.0 million or 48.4% of sales in the prior year period.

• Decreased expenses were attributable to expense reductions across the Company and the operation of 157 fewer stores than in the prior year period.

• Adjusted EBITDA for the quarter increased 3.1% to $42.6 million or 8.9% of sales. This compares to $41.3 million or 8.2% of sales in the prior year period, reflecting an improvement of $1.3 million.

• On a non-GAAP basis, income from operations improved 60 basis points as a percent of sales to $28.4 million or 5.9% as a percent of sales in the quarter. This compares to income from operations of $26.9 million or 5.3% as a percent of sales for the prior year period. Both periods excluded restructuring and other items.

• The income tax provision of $6.8 million for the first quarter resulted primarily from an increase in the Company's liability for unrecognized tax benefits and certain state and foreign income taxes payable as well as required deferred taxes.

Commenting on the quarter, Anthony M. Romano, President and Chief Executive Officer of Charming Shoppes, Inc. said, "We are pleased to have delivered our sixth consecutive quarter of improved year over year Adjusted EBITDA results, with an increase of $1.3 million, or 3.1%, to $42.6 million for the first quarter.

“Although we generated healthy gross margins during the quarter, our gross margins continued to be impacted by increases in product costs compared to a year ago. We also executed deeper discounts to ensure seasonal unit sell-throughs as we experienced continuing challenging traffic trends.

“Nonetheless, we were able to fully offset the impacts to our gross margin through strong expense management at each of our brands in both SG&A and Occupancy and Buying expenses. At each of our brands, we produced improved conversion rates and higher Average Unit Retails.

“We maintained our disciplined inventory management to reduce overall inventory levels. Our consolidated comparable store inventories at cost at the end of the period were 7% lower than the prior year period, with units decreasing by 16%."

Charming Shoppes Inc

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