Blog: Charming Shoppes lacks lustre
Leonie Barrie | 6 February 2008
The decision by apparel retailer Charming Shoppes to cut 200 full-time jobs and close 150 underperforming stores is a shock but not altogether a surprise.
The retailer is hopeful that the changes – including shuttering 100 loss-making Fashion Bug locations and its four Petite Sophisticate stores – will result in about $20m in annual savings. But the actions are just the latest in a line of warnings and restructuring attempts to get the company back on track.
In January, Charming Shoppes said same-store sales were down 7% during the key holiday season, and added that it expects to post a wider fourth quarter loss in March. And at the end of last year it announced plans to cut around 200 jobs by consolidating its human resources and finance functions across several brands and relocating its Catherines chain’s headquarters.
To make matters even worse, the company also lost a key executive yesterday. Diane M Paccione, who had been in charge of Charming Shoppes’ Fashion Bug and Catherines Plus Sizes brands, was named chief executive officer of Philadelphia-based rival Deb Shops Inc.
And as if this wasn’t already enough to contend with, there is pressure from Charming Shoppes investors including Crescendo Partners to make changes to boost share price, including a refocus of its core women's plus-size business and a curb on store expansions.
Some of these problems are unique to Charming Shoppes, but others aren’t. In fact, it is the fifth retailer to take drastic moves to try to boost profit as consumer spending slows and sales slump.
Analysts by and large believe that in a difficult retail environment, changes need to be made – particularly in the crowded women's apparel sector. One said: “We view corporate belt tightening as a positive for Charming Shoppes and the sector at large. If more companies follow suit, we think the sector will be in much better shape for a rebound when the market improves.”
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