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Charming Shoppes sees wider loss in third quarter
11
Oct '08
Charming Shoppes Inc a leading multi-brand, multi-channel specialty apparel retailer specializing in women's plus-size apparel, provided an updated outlook for the third quarter ending November 1, 2008 and an outlook for the fourth quarter ending January 31, 2009.

Alan Rosskamm, Interim Chief Executive Officer and Chairman of the Board of Charming Shoppes Inc. commented on the Company's announcement.

"We are announcing a material revision to our sales and earnings outlook for the balance of this fiscal year, as a result of a series of decisive actions we are taking in response to the increasingly challenging environment in which we are currently operating.

Third quarter-to-date, we are experiencing sales performance which is considerably lower than planned. These difficult trends worsened in September, with accelerating weakness in consumer demand during this deteriorating economy.

"Given this environment, we are taking very strong actions with regard to our inventory position, particularly at our Fashion Bug brand.

Last month, we announced that Jay Levitt joined Charming Shoppes as the President of our Fashion Bug brand. Following Jay's assessment of the current sales trends of Fall merchandise at Fashion Bug, we have decided to accelerate our markdowns of in-season Fall product in order to increase the sell-through of Fall merchandise and meet our fiscal year end inventory plans.

To a lesser extent, we have also accelerated price reductions at our Lane Bryant and Catherines brands. By taking these actions at this time, we expect to have a clean inventory position at year end, which will positively impact our ability to improve upon our performance during fiscal year 2010.

"These actions, together with decisions we made earlier this year to reduce both corporate and capital expenditures and to sell our non-core misses apparel catalogs, will enable us to maintain our cash balances and sustain our strong balance sheet.

Currently, we are in a cash positive position and have not drawn upon our fully committed revolving credit facility. Further, we expect to end the fiscal year with cash balances of approximately $70 million and no borrowings under our committed revolving credit facility.

Notwithstanding the current strength of our balance sheet, we are executing on additional initiatives, including decreases in our Spring inventory levels and further reductions in our capital and operating expenditures, which are designed to preserve cash and maintain a strong balance sheet through fiscal year 2010."

Outlook for the Third Fiscal Quarter ending November 1, 2008 and Fourth Fiscal Quarter ending January 31, 2009.

The Company's outlook excludes the operating results of the non-core misses apparel catalog titles within the Company's Direct-to-Consumer segment, which were classified as a "discontinued operation" and which were sold during the Company's current fiscal quarter.

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