Women’s plus-size apparel retailer Charming Shoppes Inc has swung to a second quarter loss, blaming lower sales and heavy discounting to clear seasonal merchandise.
The company, which operates the Lane Bryant, Fashion Bug and Catherines stores, posted a loss of $8.6m or $0.07 per share, compared to a profit of $5.0m or $0.04 per share a year ago.
Sales for the three months to 31 July fell 1.8% to $517.6m from $527.2m last time, in part due to the closure of 150 stores during the past years. Despite this, same-store sales increased 1% – the first positive comp result in 15 quarters – including a 3% rise in comparable retail segment sales.
“Our customer base had declined significantly during 2009, and in order to stem the decline, we went on ‘offense’ with our assortments, we were more promotional, and we invested in additional marketing,” president and CEO Jim Fogarty.
“Our year-round and seasonal core assortments generally performed well. However, our teams struggled with seasonal non-core merchandise, including novelty and fashion tops and bottoms, and we ultimately were over-receipted in the depth of those choices.
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By GlobalData“In addition, EBITDA was further impacted by heavier discounting than expected to effectively clear seasonal merchandise in an already promotional environment.”
He said the company is working to address its merchandising issues and generally improve its assortments – focusing on the right products in the right quantities.
Gross profit fell by 5.6% to $249.1m, compared to $263.9m last year, reflecting a decrease in the gross margin rate, as well as lower sales volumes. Gross margin was down 190 basis points to 48.1%.
