• Q1 net profit falls 31.7% to $17.8m
  • Net sales slumped 4.6% to $481.3m
  • Gross margins were impacted by increases in product costs

Plus-size apparel specialist Charming Shoppes saw its first-quarter net profit fall 31.7% on the back of higher product costs.

The company, which is in the process of being acquired by Ascena Retail Group, yesterday (6 June) said net income for the three months ended 28 April was US$17.8m, compared to $26m in the same period last year.

Income from operations fell 14.6% to $27.4m. Net sales slumped 4.6% to $481.3m, which includes the impact of operating 157 fewer stores, partially offset by an 18% increase in e-commerce sales.

Comparable store sales were flat compared to the same period last year, including a 1% increase at Lane Bryant, a 5% increase at Catherines, and an 18% rise in e-commerce sales.

"Although we generated healthy gross margins during the quarter, our gross margins continued to be impacted by increases in product costs compared to a year ago," said Anthony Romano, president and CEO.

"We also executed deeper discounts to ensure seasonal unit sell-throughs as we experienced continuing challenging traffic trends."

Last week, Ascena Retail Group saw third-quarter net income fall 4.6% to $49.4m, which it attributed to the $6.8m in costs relating to the pending acquisition of Charming Shoppes.