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E-commerce sales of Charming Shoppes' up

03
Dec '10
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 30, 2010.

Commenting on the results for the quarter, Anthony M. Romano, Executive Vice President and Chief Operating Officer of Charming Shoppes, Inc. said, "We continue to make progress on executing our merchandise strategies. We experienced increases in our total and comparable store sales performance, while increasing our gross margin 60 basis points during the period. Our strong and competitive promotional activity drove improved traffic, especially later in the quarter. Additionally, our online businesses continued to perform strongly, driving a 40% increase in e-commerce sales for the quarter."

Romano continued, "Our customer is responding to our seasonal and year round merchandise offerings; however, this response requires compelling promotions in order to drive traffic and sales results. We expect this challenging and competitive environment to continue into the fourth quarter and have planned aggressive marketing and merchandising programs in order to compete effectively.

"With regard to our inventory position, inventories increased 17% on a comparable cost basis for the quarter as compared to the prior year for three reasons. First, our merchandising strategy to re-launch our Right Fit program means increases in the inventory of core pants including three fits and three lengths in each of the styles. Second, the success of Intimate Apparel across all three of our brands has led to growth of our in-stock inventory programs in bras, panties and basic camisoles. These first two strategic drivers comprise approximately 75% of the overall inventory increase and are less vulnerable to seasonality. With careful size management and occasional style updates, they should be less susceptible to significant markdown risk. The remainder of the inventory increase can be attributed to the addition of several key merchandise classifications including shoes, boots, juniors and gifting categories and to the fact that we placed our Holiday floor set at the end of October, two weeks earlier than last year.

"As to our profitability, we continue to be disappointed by our current EBITDA performance. We recognize that in order to improve on our results we must consistently deliver on our brand promise --- offer compelling product assortments that are trend right and easy to outfit, and offer a consistent and comfortable fit, all with the proper value for her lifestyle needs. Accordingly, we are diligently working to further improve our merchandise strategies and assortments, with renewed emphasis and focus on sound inventory management principles.

“Our year over year decrease in EBITDA for the third quarter was as a result of a 190 basis point increase in Selling, General and Administrative expense as a percent of sales. This increase was primarily associated with lower income of approximately $6.5 million, year over year, from our private-label credit card operations. This relates to the difference in the income when the program was operated by the Company compared to the income earned from its current credit processor, and represented 140 basis points of the 190 basis point increase. Without the impact of the lower income from our credit card operations, SG&A deleveraged by 50 basis points, as a result of increased costs, year over year, primarily related to marketing expense."

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Charming Shoppes Inc


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