Charming Shoppes hurt by slow store traffic
BENSALEM, Pa. Charming Shoppes today reported that for the three months ended Aug. 4, net income was $18.3 million, or 14 cents per diluted share, compared to net income of $32.6 million or 24 cents per diluted share for the three months ended July 29, 2006. During the quarter, the company experienced downward trending store traffic levels at each of its brands, and as a result, the company experienced a lower sell-through of spring and summer merchandise. Additionally, the company experienced lower sales in its apparel-related catalogs. In response, the company was more aggressive in clearing seasonal inventory, leading to deeper than planned markdowns.
Net sales for the three months ended Aug. 4 increased 1% to $770.9 million, compared to net sales of $763.4 million for the three months ended July 29, 2006. Net sales for the company's retail stores segment were $686.5 million during the three months ended Aug. 4, compared to $669.8 million during the three months ended July 29, 2006. This increase of 2% was driven by the addition of the outlet business, as well as net sales increases at each of the company's retail brands related e-commerce businesses. Consolidated comparable-store sales for the company's retail stores segment decreased 3% during the three months ended Aug. 4, compared to a 2% increase during the three months ended July 29, 2006.
For the six months ended Aug. 4, net income was $44.6 million, or 35 cents per diluted share, compared to net income of $64.6 million or 48 cents per diluted share for the six months ended July 29, 2006. The year-over-year decline in net income is primarily attributable to negative expense leverage and a decline in gross margins on lower than planned sales. Additionally, the company experienced lower sales in its apparel-related catalogs. In response, the company was more aggressive in clearing seasonal inventory, leading to deeper than planned markdowns.
Net sales for the six months ended Aug. 4 increased 4% to $1.556 billion, compared to net sales of $1.498 billion for the six months ended July 29, 2006. Net sales for the company's retail stores segment were $1.372 billion during the six months ended Aug. 4, compared to $1.297 billion during the three months ended July 29, 2006. This increase of 6% was driven by the addition of the outlet business, as well as net sales increases at each of the company's retail brands related e-commerce businesses. Consolidated comparable-store sales for the company's retail stores segment decreased 2% during the six months ended Aug. 4, compared to a 1% increase during the six months ended July 29, 2006.
For the third quarter ending Nov. 3, the company has projected diluted earnings per share in the range of 11 cents to 13 cents. This projection assumes total sales in the range of $700 million to $705 million, a moderation in the decline in sales from the company's apparel-related catalogs, and flat consolidated comparable-store sales for the company's retail stores segment, compared to a 1% comparable-store sales increase in the corresponding period of the prior year. For the corresponding period ended Oct. 28, 2006, diluted earnings per share were 15 cents.
For the fiscal year ending Feb. 2, 2008, the company has reaffirmed projections for diluted earnings per share in the range of 65 cents to 68 cents, compared to diluted earnings per share of 81 cents for the corresponding period ended Feb. 3. The company's projection also includes net sales in the range of $3.10 billion to $3.15 billion, compared to net sales of $3.07 billion for the 53-week period ended Feb. 3. The company's projection assumes low single-digit percentage decreases in consolidated comparabl- store sales for the company's retail stores segment, compared to a 1% consolidated comparable-store sales increase in the prior year.