Charming Shoppes reports Q1 results

28 May '09

5 min read

Charming Shoppes Inc, a leading multi-brand apparel retailer specializing in women's plus-size apparel, reported sales and operating results for the first quarter ended May 2, 2009.

Results for the quarter, compared to the same quarter of the prior year, include:
• A net sales decrease of $103.2 million or 16.1%, reflecting a 13% decrease in comparable store sales and the impact of store closings;
• Decreases in total expenses (excluding restructuring charges) were $103.3 million or 16.3%, with a decrease in cost of goods sold, buying, catalog and occupancy expense of $74.6 million or 16.7%, and a decrease in selling, general and administrative expense of $28.7 million or 15.4%;
• Improvement in the merchandise margin, as a percent of sales, of 190 basis points, with a decrease in same store inventories of 21%;
• Income from operations, excluding restructuring charges, was $7.4 million, essentially flat year over year, despite a 16% sales decline;
• Total liquidity was $331 million, including $124 million in cash and net availability of $207 million on the Company's unused line of credit;
• Cash was $124 million, reflecting an increase of $24 million from the period ended January 31, 2009;
• The repurchase of $13.5 million face value of the Company's 1.125% Convertible Notes due 2014 (the "Notes") during the quarter, at a cost of $5.6 million. An additional $16.5 million face value of the Notes were repurchased subsequent to the closing of the first quarter at a cost of $8.2 million. In aggregate, the Company has repurchased $30.0 million of Notes, as of May 26, 2009, at a cost of $13.9 million.

For the thirteen weeks ended May 2, 2009, the Company reported a loss from continuing operations of ($6.6) million or ($0.06) per diluted share, compared to the Company's previous guidance for a loss of ($0.09) - ($0.13) per diluted share. This compares to a loss from continuing operations for the thirteen weeks ended May 3, 2008 of $(0.9) million or $(0.01) per diluted share, which included restructuring charges and non-cash interest related to the adoption of FSP APB 14-1 (further detail provided below) of $0.03 per diluted share.

The Company's loss from continuing operations of ($6.6) million or ($0.06) per diluted share includes net charges of $0.07 per diluted share related to restructuring charges, a gain on the repurchase of Notes, and non-cash interest related to the adoption of FSP APB 14-1.

Jim Fogarty, President and Chief Executive Officer of Charming Shoppes Inc, said, "While our performance for the first quarter reflected a difficult retail environment and did exceed our earnings guidance, our results were nevertheless disappointing. Our results reflect comparable store sales performance that was not on par with other retailers, and a disappointing level of earning power for our brands. We are focused on improving our business model and our marketing. We are also focusedon improving our merchandise assortment planning to reflect more balanced and compelling offerings across our brands."

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