Charming Shoppes posts wider-than-expected loss; to close 90 to 150 stores
Bensalem, Pa. -- Charming Shoppes Inc. recorded a wider-than-expected loss for its fourth quarter as higher product costs and discounts at its Lane Bryant division cut into margins. The chain said plans to close between 90 to 105 underperforming stores this year.
Charming Shoppes, which hired Barclays Capital in December to help it review its options, posted a loss of $13.2 million for the three months ended January 28, 2012, compared with a loss of $30.4 million a year ago.
Sales fell 2.9% to $559.1 million, but beat market expectations of $542.3 million. The decrease, which includes the impact of operating 207 fewer stores than in the prior-year period, was partially offset by a consolidated same-store sales increase of 1%.
“Our fourth quarter results … were below our expectations as the impact of higher product costs and a challenging promotional environment created gross profit pressures, specifically at Lane Bryant,” said Anthony M. Romano, president and CEO, Charming Shoppes. “In response, we went on the offensive and chose to offer deeper-than-planned discounts to ensure seasonal unit sell-throughs. Nonetheless, we were able to fully offset the impact of these pressures through reductions in both SG&A and Occupancy and Buying expenses.”
The chain said in 2012 it plans to open approximately 20 stores (12 at Lane Bryant and eight in its outlet channel) relocate 25 mall locations to lifestyle and power centers, and refresh 40 stores through a newly initiated stores refurbishment program.
Of the stores to be shuttered, approximately 35-40 are Fashion Bug stores, including 19 stores closed in February, and 35 to 40 are under the Catherines banner. Lane Bryant plans to close 20-25 stores, many due to lease expirations without an immediate, acceptable and strategic opportunity for relocation.
During the next several years, Charming Shoppes is planning for approximately 125 new locations and 125 relocations from malls into lifestyle and power strip centers with stronger operating metrics.
In December, Charming Shoppes said it was getting rid of its Fashion Bug business and would focus on its flagship Lane Bryant brand going forward.
Net sales were $1.992 billion for the fiscal year ended January 28, 2012, a decrease of 3.4% compared with $2.062 billion for the prior year. Same-store sales for the year were flat compared with the prior year and included a 3% comparable store sales increase for Lane Bryant and an increase of 16% in e-commerce sales. The inclusion of e-commerce sales with the brick-and-mortar comparable store sales would result in a comparable sales increase of 1% for the year.