Charming Shoppes posts 3Q loss, updates 2008 outlook

BENSALEM, Pa. Charming Shoppes on Wednesday posted a third-quarter loss, hurt by lower-than-planned sales and a decline in gross margins, and cut its fiscal 2008 outlook for the fourth time this year.

The company reported a net loss of $3.6 million, or 3 cents per diluted share, compared to a net income of $19.4 million, or 15 cents per diluted share, for the prior year period. Its forecast for 2008 earnings is 24 cents to 26 cents a share, compared with its prior view of 45 cents to 50 cents a share.

The revised view includes charges of about 3 cents a share related to the relocation of Catherines Plus Sizes operations and an investment of about 5 cents a share related to the launch of the Lane Bryant catalog, the company said in a statement.

Charming Shoppes expects net sales of $3.02 billion to $3.03 billion, compared with its prior view of $3.07 billion to $3.10 billion.

During the quarter, Charming Shoppes experienced downward trending store traffic levels at each of its brands and, as a result, a lower sell-through of Fall merchandise. In response, the company was more aggressive in clearing seasonal inventory, leading to deeper than planned markdowns.

Net sales for the quarter decreased 4% to $669.4 million, compared to net sales of $695.3 million for year prior period. The decrease was driven by net sales decreases at each of the company's retail brands, partially offset by the addition of the outlet business and net sales increases at each of the company's retail brands related e-commerce businesses. Net sales for the company's Retail Stores segment were $588.8 million, compared to $615.3 million the year prior. Consolidated comparable-store sales for the company's Retail Stores segment decreased 8% during the quarter, compared to a 1% increase the year prior.

"Our disappointing performance during our third quarter was reflective of downward traffic trends, which both we and our industry experienced." said chairman, ceo and president Dorrit J. Bern. "Our Fall selling season had a very slow start, particularly at our Lane Bryant brand, and we expect the holiday season to be highly promotional throughout our industry. Given this, we are executing on a number of near-term actions to enable us to manage through this difficult retail environment ... [including] enhancements in merchandise and marketing at our retail brands, improvements at our catalog businesses and the introduction of a loyalty and rewards credit card program for our Lane Bryant customers. Additionally, we are streamlining the operations of our organization, reducing expenses, decreasing the current year's capital budget and reducing inventory levels for the remainder of the year."