CHRS sees relative strength in accessories & intimates
Charming Shoppes, Inc. a leading multi-brand apparel retailer specializing in women's plus-size apparel, reported sales and operating results for the three and nine month periods ended October 31, 2009.
Commenting on the results for the quarter, Jim Fogarty, President and Chief Executive Officer of Charming Shoppes, Inc. said, "During the quarter, we closed on the sale of our private label credit operations, significantly bolstering our liquidity and leverage profile. At the end of the quarter, liquidity totaled $421 million and our leverage reflected debt, net of cash, of $14 million."
Fogarty continued, "We remain focused on our five key priorities: (1) Focus on the Customer; (2) Stabilize and Begin to Grow Profitable Revenue; (3) Increase EBITDA; (4) Increase Cash Flow, and; (5) Employee Empowerment with Accountability.
"In our 'Grow Profitable Revenue' pursuit, as we previously indicated, we came into the third quarter with much less seasonal carry-over inventory. Throughout the quarter we avoided the impulse to solely drive sales and we remained focused on profitable revenue. While our gross margin rate improved 560 basis points, our gross profit decreased 7% as rate improvement did not fully offset our sales declines. Our expense management more than offset these gross profit declines and allowed us to make progress on our key financial priorities, enumerated above.
"While pleased with forward momentum on our earning power, we fell short on our 'Focus on the Customer'. Our same store sales comp improved from -14% in the second quarter to -13% in the third quarter, and although we improved our quality of sale, we should have delivered more profitable revenue. While we had relative strength in accessories and intimates, we did not provide our customer with a strong enough core tops and bottoms assortment. In addition, in the context of substantial reductions in markdowns on our selling floor and the current difficult economic environment, we did not have a strong enough entry price assortment, nor did we plan strong enough product promotions. Finally, our bottoms assortment did not have sufficient depth in sizing and alternative lengths. We are listening more closely to our customer and are better aligning our assortments as we work into Spring 2010 and beyond. Finally, similar to the beginning of the third quarter, we entered the fourth quarter with much less seasonal carry-over inventory than in the prior year."
Results for the quarter, compared to the same quarter of the prior year, include:
• A net sales decrease of $92.8 million or 16.8%, reflecting a 13% decrease in comparable store sales, the impact of 115 net store closings, and a 6% increase in e-commerce sales. Same store inventories decreased 17%;
• Gross Profit was $236.8 million in the quarter, reflecting a decrease of $17.1 million, or 6.7%. Gross margin rate improved 560 basis points to 51.5% of sales, somewhat offsetting the 16.8% sales decline;