Apparel retail chain Charming Shoppes has reported a loss from continuing operations in the second quarter of $3.7m, compared to income of $20.9m for the prior year period.

Its loss includes after-tax charges of $5.8m related to the severance agreement between Charming Shoppes and its former chief executive officer, the company said, and $3.5m related to previously announced consolidation and streamlining initiatives.

Net sales from continuing operations for the quarter decreased 7% to $648.6m, compared to $694.4m for the thirteen weeks ended 4 August 2007.

Net sales for the company's Retail Stores segment were $622.0m, a decrease of 9% compared to Q2 last year. Same-store sales for the company's retail stores segment decreased 10% during the period.

Net sales from continuing operations for the company's direct-to-consumer segment were $22.5m, compared to $4.2m last year, related to incremental sales related to the launch of the Lane Bryant Woman catalogue in November 2007, it said.

Alan Rosskamm, chairman and interim chief executive officer of Charming Shoppes, said: "As we manage through this challenging environment, it has been our strategy to operate with leaner inventories, execute on cost savings and streamlining opportunities, and realign our businesses in order to focus our energies on our core brands - Lane Bryant, Fashion Bug and Catherines.

"We have made progress on a number of initiatives that have contributed to the generation of significant free cash flow, year to date. We are committed to continue managing our inventories tightly, and plan to end the fiscal year with lower levels of inventory. We have begun to realise decreases in overall SG&A expenses through our implementation of several cost reduction initiatives.

"Furthermore, we believe additional savings opportunities exist. Despite our disappointing comparable store sales performance during the quarter, we were able to maintain our SG&A ratio to sales as compared to a year ago. We have closed 78 of the 150 underperforming stores identified for closure during this fiscal year, which is expected to contribute to improvements in our operating performance in future periods. Also, the relocation of our Catherines' home office operations to Bensalem was completed on schedule during the first quarter, and during the second quarter, we completed the sale of our Memphis, Tennessee distribution centre, which provided $4.8m in cash proceeds."

Earlier this week, Charming Shoppes signed an agreement for the sale of its non-core misses catalogue titles to Orchard Brands, and announced plans to explore the sale of its Figi's Gifts in Good Taste catalogue business, based in Wisconsin.

For the twenty-six weeks ended 2 August, the company reported a loss from continuing operations of $3.1m, compared to income from continuing operations of $47.4m in the first half of last year.

For the third quarter, the company has projected diluted loss per share from continuing operations in the range of $0.11 to $0.09, compared to diluted loss per share from continuing operations of $0.01 for the corresponding period ended 3 November last year.