US: Charming Shoppes' cautious Q1 outlook, new direct chief
Charming Shoppes Wednesday (21 March) reported higher fourth-quarter earnings, a cautious first-quarter forecast and the appointment of a new president of its troubled Crosstown Traders direct-to-consumer business.
Lori Twomey, formerly divisional vice president and general merchandise manager of direct-to-consumer sales at Eddie Bauer, has been appointed president of Charming Shoppes' Crosstown Traders division.
Twomey reports to Joseph Baron, executive vice president and chief operating officer of the firm, who served as interim president of the division since Steven Lightman left the firm in February.
A poor performance by Crosstown Traders was one of the few soft spots in a strong first-quarter performance by the Bensalem, Pennsylvania-based women's plus-size specialty chain.
Net income for the three months ended 3 February rose 30% to US$24.9m, or $0.19 a diluted share, matching the consensus estimate. Year-ago net income was $19.2m, or $0.15.
Sales in the 14-week quarter rose 9.3% to $874m from $799.6m in its 13-week predecessor. Comparable-store sales, after elimination of the extra week in 2006, decreased 1%. Comps were up 2% at Catherines Stores, but down 3% at Lane Bryant and down 1% at Fashion Bug Stores.
Direct-to-consumer sales dropped to $148.2m from $155.8m, a decline attributed to decreased catalogue circulation, lower response rates and the disruptive effect of the consolidation of catalogue offices in Tucson, Arizona.
Dorrit Bern, chairman and chief executive officer of the Bensalem, Pennsylvania-based specialty chain, commented: "Our customer has strongly embraced our Lane Bryant Outlet and Lane Bryant intimate apparel side-by-side store concepts, and the further expansion of these concepts is underway."
She reiterated that the Lane Bryant catalogue will launch in November of this year.
The company laid out guidance for earnings per diluted share of $0.85 to $0.89 for the current fiscal year, up from $0.81 in the just concluded year.
However, the firm said it expects EPS to drop to $0.19 to $0.21 from last year's level of $0.24. Same-store sales are expected to be flat, and Charming Shoppes expects "continued weakness" in its apparel catalogues.
The outlook contributed to a decline in Charming Shoppes' stock on a day when the US equity markets advanced strongly. Shares of Charming Shoppes closed at $11.51 in Nasdaq trading Wednesday, down $0.54, or 4.5%.
For the full year, net income rose 9.6% to $108.9m, or $0.81 a diluted share, from $99.4m, or $0.76. Sales leaped 11.2% to $3.07bn from $2.76bn in 2005. Same-store sales were up 1%, led by a 4% spike at Catherines. Lane Bryant's comps were up 1% and Fashion Bug declined 1%.
Charming Shoppes operated 2,378 specialty stores in 48 states at the end of the fourth quarter.
By Arnold J Karr.
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