Capital base & liquidity profile remain solid, Charming CEO
Charming Shoppes, Inc., a leading multi-brand apparel retailer specializing in women's plus-size apparel, today reported sales and operating results for the three month period ended May 1, 2010.
Results for the quarter, compared to the same quarter of the prior year, include:
• Net sales decreased $33.3 million or 6.2% to $504.8 million, reflecting the impact of 144 net store closings over the previous twelve months, a 2% decrease in comparable store sales, a decrease in the Company's Direct-to-Consumer Segment's sales related to the closing of the Lane Bryant Woman catalog and shoetrader.com in the first half of fiscal year 2009, and a 36% increase in e-commerce sales. For the quarter, period-end same store inventories on a cost basis increased 9%;
• Gross profit was $276.6 million in the quarter, reflecting a decrease of $11.0 million, or 3.8%. Gross margin improved 140 basis points to 54.8% of sales, partially offsetting the impact of the 6.2% sales decline;
• Income tax benefit was $0.7 million in the current quarter, related to a reduction in the valuation allowance, compared to an income tax provision of $4.7 million in the year ago period, related to an increase in the liability for unrecognized tax benefits;
• An increase in the Company's cash position for the quarter ended May 1, 2010 to $191 million, compared to $187 million for the period ended January 30, 2010;
• Total liquidity of $336 million, including $191 million in cash and $145 million of net availability under the Company's undrawn committed line of credit.
Commenting on the results for the quarter, Jim Fogarty, President and Chief Executive Officer of Charming Shoppes, Inc. said, "Our capital base and liquidity profile remain solid. During the quarter, we began to make progress in our efforts to stabilize and begin to grow our business. Our same store sales comp improved from (13)% and (12)% in the third and fourth quarters of last year, respectively, to (2)% in the first quarter. For the quarter, our adjusted EBITDA was $25.2 million compared to $27.5 million in the year ago period, as we partially mitigated our comp-driven decline in gross profit dollars with expense reductions and margin rate improvement from the elimination of certain businesses.
"During the third quarter of last year, we reassessed direction for Lane Bryant's assortments, and as a result of that work, made a number of improvements in our Spring 2010 assortments, including refocusing on our core moderate customer, and launching core tops programs, such as Supima Cotton knit tops (the cashmere of cotton), and casual woven shirts (the perfect shirt), and introducing new assortments in swimwear and footwear. Our Lane Bryant same store sales comp for the first quarter was (3)%, which contrasted to (14)% and (15)% in the third and fourth quarters of last year, respectively. Late in the quarter, we introduced a national media campaign which, coupled with a controversy surrounding our 'sexy' Cacique spot, created phenomenal excitement for our customer and our brands. During the fourth quarter of last year, we reassessed direction for Fashion Bug's assortments and as a result repositioned our customer targeting, beginning to bring the fun, sexy and sassy side back to Fashion Bug's assortments. Our Fashion Bug same store sales comp for the first quarter was (2)%, which contrasted to (14)% and (8)% in the third and fourth quarters of last year, respectively. Finally, our consolidated internet business was up 36% for the quarter, benefiting from the August 2009 launch of our new websites and the February 2010 launch of our universal shopping cart along with 'free ship to store' and '$7 ship to home'. We remain focused on our 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."