Zacks_Analysts' Blog : Charming Shoppes Loss Narrows - Analyst Blog

Charming Shoppes Inc. (CHRS) reported fiscal 2009 fourth-quarter results on Tuesday. The company posted a narrower GAAP net loss of $28.0 million, compared to a loss of $114.0 million in the year-ago quarter. Excluding certain special items, adjusted loss per share came in at 10 cents, ahead of the Zacks Consensus Estimate for a 16-cent loss.



Charming Shoppes operates women's specialty apparel stores under the names Lane Bryant, Cacique, Fashion Bug, Fashion Bug Plus and Catherines Plus Sizes. As of Jan 30, 2010, the company operated 2,121 retail stores across 48 states in the U.S.



Charming Shoppes recorded a 14.7% decline in net sales to $539.0 million during the quarter, compared to $631.9 million in the year-ago quarter. The decrease was mainly attributable to a 12% reduction in same-store sales coupled with the closure of 160 stores in the last one-year period.



Charming Shoppes’ gross profit slipped 10.8% year-over-year to $235.4 million, while gross margin grew by 190 basis points (bps) to 43.7%. The increase in gross margin was primarily the result of improved performance of direct-to-consumer segment coupled with lower markdowns on Lane Bryant merchandise.



Occupancy and buying expense reduced 15.0% to $92.6 million, primarily due to a decrease in rentals. Selling, general and administrative expense decreased 10.0% to $155.7 million as a result of stringent cost containment initiatives and closure of underperforming stores. Charming Shoppes posted an operating loss of $48.7 million during the quarter, compared to an operating loss of $108.6 million in the year-ago quarter.



The company ended the quarter with cash and cash equivalents of $186.6 million, compared to $93.8 million in the year-ago period. During fiscal 2009, Charming Shoppes’ generated $114.2 million of cash from operations primarily due to inflow of $85.4 million from sale of credit card receivables program. Major uses of cash during the fiscal included $50.6 million towards repurchase of senior convertible notes and $22.7 million towards capital expenditure.



Moving forward, Charming Shoppes plans to close 100 to 120 underperforming stores during fiscal 2010 and expects to incur $7 million to $9 million in costs, mainly attributable to lease termination charges. Meanwhile, the Zacks Consensus Estimate on the company’s earnings for the year ending January 2011 has dipped by 7 cents over the past 2 months and currently stands at 9 cents per share.
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