US: Charming Shoppes widens Q3 loss, to begin restructuring
Plus-size women's wear retailer Charming Shoppes is to discontinue its loss-making Lane Bryant Woman catalogue and close around 100 stores in 2010, after widening its third quarter loss.
The company posted a loss from continuing operations of US$57.8m in the quarter, compared to a loss of $1.7m in the same period last year.
The company also announced details of a restructuring plan to generate $100-$125m in expense savings, with $75m earmarked in fiscal 2010.
Pre-tax charges of $34.1m were recorded during this year's third quarter, including $20.2m related to store impairment and $5.4m related to the termination of the Lane Bryant Woman catalogue.
Net sales fell 8% to $553.1m, from $599.7m a year earlier. Same-store sales dropped 9% in the quarter, compared to an 8% decrease last year.
For the 39 weeks to 1 November, losses widened to $60.8m from $45.6m. Net sales were down 7% to $1.843bn and same-store sales fell 11%.
Alan Rosskamm, chairman of the board and interim CEO of Charming Shoppes, said: "Our October sales and margin performance improved from the very difficult levels we experienced during September, which allowed us to deliver results that exceeded our previous guidance."
For the fiscal year ending 30 January 2010, the company is cutting its capital expenditures to $22m - more than 50% below the current year's $51m.
These plans include further reductions in inventories on a same store basis.
The company, which operates the Fashion Bug, Lane Bryant, Catherines stores and Petite Sophisticate Outlet chains, said it has engaged the services of management consultants AT Kearney for its restructuring and cost reduction efforts.
It will discontinue the operations of its Lane Bryant Woman catalogue by the end of the first quarter of fiscal year 2010, at a cost of $4.2m for inventory write-downs and $1.2m for severance costs.
The retailer's plans to close 100 stores - in 2010 - come on top of its decision to close 150 stores this year. 100 of these closures have been completed, and the rest will be shuttered by 31 January 2009.
The company continues its conservative approach in planning for the fourth quarter of fiscal year 2009, projecting a diluted loss per share from continuing operations in the range of $0.32 to $0.38.
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