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Charming Shoppes reports Q2 results
28
Aug '08
Charming Shoppes Inc reported sales and operating results for the second quarter ended August 2, 2008. The Company today also provided its initial earnings outlook for the second half ending January 31, 2009.

Thirteen Weeks Ended August 2, 2008:
For the thirteen weeks ended August 2, 2008, the Company reported a loss from continuing operations of $(3.7) million, or $(0.03) per diluted share. This compares to income from continuing operations of $20.9 million, or $0.16 per diluted share for the thirteen weeks ended August 4, 2007.

The Company's loss from continuing operations for the second quarter ended August 2, 2008 includes after-tax charges of $5.8 million, or $0.05 per diluted share, related to the severance agreement between Charming Shoppes and its former Chief Executive Officer, and $3.5 million, or $0.03 per diluted share, related to previously announced consolidation and streamlining initiatives.

The Company's second quarter and first half results for the current and prior year periods exclude the operating results of the non-core misses apparel catalog titles within the Company's Direct-to-Consumer segment, which have been classified as a "discontinued operation." This financial presentation is related to the Company's April 25, 2008 announcement on the Company's exploration of the sale of its non-core misses apparel catalog titles, and the subsequent August 25, 2008 announcement of an agreement of sale of such catalog titles.

Net sales from continuing operations for the thirteen weeks ended August 2, 2008 decreased 7% to $648.6 million, compared to net sales from continuing operations of $694.4 million for the thirteen weeks ended August 4, 2007.

• Net sales for the Company's Retail Stores segment were $622.0 million during the thirteen weeks ended August 2, 2008, a decrease of 9% compared to $685.1 million during the thirteen weeks ended August 4, 2007. Consolidated comparable store sales for the Company's Retail Stores segment decreased 10% during the thirteen weeks ended August 2, 2008, compared to a 3% decrease in comparable store sales during the thirteen weeks ended August 4, 2007.

• Net sales from continuing operations for the Company's Direct-to- Consumer segment were $22.5 million during the thirteen weeks ended August 2, 2008, compared to $4.2 million during the thirteen weeks ended August 4, 2007. The increase is related to incremental sales related to the launch of the Lane Bryant Woman catalog in November 2007.

Commenting on sales and operating results for the quarter, Alan Rosskamm, Chairman and Interim Chief Executive Officer of Charming Shoppes, Inc. stated, "As we manage through this challenging environment, it has been our strategy to operate with leaner inventories, execute on cost savings and streamlining opportunities, and realign our businesses in order to focus our energies on our core brands - Lane Bryant, Fashion Bug and Catherines.

"We have made progress on a number of initiatives that have contributed to the generation of significant free cash flow, year to date. We are committed to continue managing our inventories tightly, and plan to end the fiscal year with lower levels of inventory. We have begun to realize decreases in overall SG&A expenses through our implementation of several cost reduction initiatives. Furthermore, we believe additional savings opportunities exist. Despite our disappointing comparable store sales performance during the quarter, we were able to maintain our SG&A ratio to sales as compared to a year ago.


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