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Charlotte Russe swings to Q2 loss on lower margins
17
Apr '09
Charlotte Russe Holding Inc announced financial results for the second quarter and six months ended March 28, 2009.

Second quarter fiscal 2009 net sales increased 3.3% to $191.2 million, compared to $185.1 million in the second quarter of fiscal 2008. Comparable store sales for the period decreased 8.0%. Net loss for the 2009 second quarter was $0.8 million, or $0.04 per diluted share compared to net income of $4.2 million, or $0.17 per diluted share for the same period in 2008.

In the second quarter of fiscal 2009, the Company recorded cash charges of $1.5 million for expenses related to proxy solicitation, management transition and severance, as well as costs related to the review of strategic alternatives and subsequent sale process. The Company also recorded a non-cash charge of $1.6 million for store impairment. Diluted earnings per share, excluding the aforementioned expenses, were $0.04. At quarter-end, comparable store inventories were down 18.4%. The Company opened one new store during the period.

Net sales for the six month period ended March 28, 2009 were $431.9 million compared to $423.3 million in the same period of fiscal 2008. Comparable store sales for the period decreased 8.6%. Net loss for the first six months of fiscal 2009 was $3.7 million, or $0.18 per diluted share compared to net income of $18.2 million, or $0.73 per diluted share, in the year ago period.

In the first six months of fiscal 2009, the Company recorded cash charges of $3.8 million for expenses related to proxy solicitation, management transition and severance, as well as costs related to the review of strategic alternatives and subsequent sale process. The Company also recorded a non-cash charge of $1.6 million for store impairment. Diluted loss per share, excluding the aforementioned expenses, was $0.03.

At March 28, 2009, the Company had $51 million in cash and no long-term debt. Cash flow from operations in the first six months of fiscal 2009 totaled $17.7 million.

“Our results for the second quarter reflect our aggressive actions to reduce inventories, limit our promotional activity and lower expenses,” said John D. Goodman, Chief Executive Officer. “This drove better than anticipated gross margin performance and resulted in non-GAAP diluted earnings per share significantly above our previous financial guidance.”

Mr. Goodman continued, “We are encouraged by the progress we have made toward transforming Charlotte Russe into a top-tier specialty retailer. We are enhancing our merchandise assortments, delivering a more cohesive and compelling presentation in stores, providing an engaging shopping experience for the customer and supporting our brand positioning with aspirational marketing. As we continue to execute on our strategic and operational initiatives, we believe our efforts will strengthen our competitive position, enabling Charlotte Russe to capture a greater share of the fast fashion market over the long-term.


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