Women's specialty retailer Charming Shoppes on Thursday (24 May) reported lower earnings for the first quarter and an exclusive licensing arrangement that will bring the Gitano brand to its Fashion Bug stores.

Charming has been licensed by the Wrangler Apparel subsidiary of VF Corp to carry Gitano brand merchandise in its Fashion Bug division. Casual misses and plus-size merchandise, as well as footwear, will begin arriving in time for fall selling.

In the three months ended 5 May, net income at the Bensalem, Pennsylvania-based plus-size specialist fell 18% to US$26.3m, or $0.20 a diluted share, matching analysts' consensus estimates. Year-ago net income was $32.1m, or $0.24.

Net sales rose 6.8%, to $784.7m from $734.9m, but were flat on a same-store basis. Same-store sales were best at the Catherines Stores unit, up 5%, but flat at Lane Bryant and down 2% at Fashion Bug.

Direct-to-consumer sales dropped 8% to $98.4m as response rates from the core mailing list fell, a problem the company addressed when it recently promoted Lori Twomey to president of its Crosstown Traders unit.

"As has widely been the experience throughout the retail apparel industry, our performance was negatively impacted by unfavourable weather trends during the quarter," said Dorrit Bern, chairman, president and CEO of the company.

"We had previously stated that we anticipated challenging trends for the first quarter and in response we managed inventories well and controlled expenses. As a result, despite these challenges, we met our earnings expectations for the quarter.

"Entering the second quarter, we are well positioned in our seasonal inventory levels and are confident in the positioning of our fashion offerings," she added.

The company projected second quarter earnings of $0.25 to $0.27 a diluted share, below analysts' current view of $0.30. The estimate is based on anticipated sales of between $795m and $805m, a low-single digit gain in same-store sales and a continued decline in apparel catalogue sales.

Of the Gitano license, Bern said: "We are planning a marketing campaign to support this exciting brand offering for the fall season, and expect Gitano, along with other brand initiatives, to position Fashion Bug as a destination for exclusive and compelling lifestyle brands with a strong value proposition."

Charming Shoppes ended the first quarter with 1008 Fashion Bug and Fashion Bug Plus stores, 877 Lane Brant and Lane Bryant Outlet stores, 465 Catherines stores and 46 Petite Sophisticate Outlet stores. Crosstown Traders' catalogues include Lew Magram, Monterey Bay Clothing and Intimate Appeal.
By Arnold J Karr.