US: Charming Shoppes Q2 profit falls 44%, reaffirms FY outlook
Women's plus-size apparel retailer Charming Shoppes Inc yesterday (22 August) posted a 44% slump in second quarter profit on deeper than planned markdowns to clear spring and summer merchandise at its stores and catalogues.
For the three months to 4 August, net income fell to $18.3m, or $0.14 per diluted share, from $32.6m or $0.24 per diluted share in the same period last year.
Net sales for the three months rose 1% to $770.9m, from $763.4m in last year's quarter.
Retail store sales at its Lane Bryant, Fashion Bug and Catherines nameplates were up 2.5% to $686.5m from $669.8m last time, driven by the addition of the outlet business and better e-commerce sales. Same-store sales fell 3%.
Net sales for the company's direct-to-consumer segment were down 11.5% to $81.7m.
Dorrit J Bern, chairman, chief executive officer and president of Charming Shoppes, said the company is "approaching the fall season cautiously," and reducing expenses and lowering inventory levels for the second half of the year.
However, Bern believes sales during the second half of this year will be helped by the launch of the Right Fit by Lane Bryant system to help customers select better fitting jeans and trousers, a new licensing deal signed by the Fashion Bug brand with Gitano, and the launch of its Lane Bryant catalogue in November.
For the half-year period, net income slipped 31% year on year to $44.6m, or $0.35 per diluted share, from $64.6m or $0.48 per diluted share. Net sales were up 4% to $1.556bn, from $1.498bn. Retail store sales rose 5.8% to $1.372bn but same-store sales slipped 2%. Direct-to-consumer sales dropped 10% to $180.1m.
For the third quarter, diluted earnings per share are expected to be in the range of $0.11 - $0.13, which is lower than last year's $0.15.
For the fiscal year ending in February 2008, the company has reaffirmed projections for diluted earnings per share in the range of $0.65 - $0.68, compared to diluted earnings per share of $0.81 for the year before, on net sales of $3.10bn to $3.15bn.
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