For the quarter ended Jan 28, Charming Shoppes posted a net loss of $13.1 million, or 11 cents a share, compared to a loss of $30.4 million, or 26 cents a share, a year ago. Excluding restructuring charges and other items, the company’s per share loss was 6 cents versus 8 cents a share a year ago.
Net sales fell 2.9% to $559.1 million, a decrease the company said was due to fewer stores in operation than a year ago. Gross margin narrowed to 42% from 43% on deeper promotions at Lane Bryant.
Analysts’ average estimate expected a loss of only 2 cents a share, but the company’s sales exceeded their estimate of $542 million.
“Our fourth quarter results were below our expectations as the impact of higher product costs and a challenging promotional environment created gross profit pressures, specifically at Lane Bryant,” said Anthony M. Romano, president/ceo. “In response, we went on the offensive and chose to offer deeper-than-planned discounts to ensure seasonal unit sell-throughs.”
Closing 105 Underperforming Stores Now; To Add 125 Lane Bryant Stores
Charming Shoppes is amid a turnaround strategy that will bring greater focus on Lane Bryant. In December, the company hired Barclays Capital to help it review its options and announced it would shed its Fashion Bug division, too.
In addition, the company plans to close 90 to 105 underperforming stores this year, including 35 to 40 Fashion Bug stores, (19 stores closed in February); its Catherines division plans to close 35 to 40 stores, (including 15 stores outlet centers), and, Lane Bryant plans to close 20 to 25 stores, many due to lease expirations “without an immediate, acceptable and strategic opportunity for relocation.”
But the company’s future plans call for about 125 new Lane Bryant locations and 125 relocations from mall venues to “lifestyle and power strip centers with strong operating metrics” over the next few years. This year, the company plans 20 new stores—12 at Lane Bryant and 8 outlet stores–, to relocate 25 mall locations to strip centers and “refresh 40 stores through a newly initiated stores refurbishment program.”
“We enter 2012 with more confidence than ever in our plans to drive growth at our Lane Bryant flagship brand, and in our plans for transforming and improving our operations to drive significantly lower costs,” Romano said.
On the marketing side, Romano said Lane Bryant will focus on the plus-sized consumers’ needs and engage and communicate with her. That includes a new store design that will “provide an atmosphere that is easy to navigate and effortless to shop and make her shopping experience fun.”
Strategic Review Continues
The company also plans three digital launches per year to drive increased traffic and new customers to its websites. Earlier this week, Charming Shoppes promoted Jeffrey H. Liss to senior vice president, general manager of Charming Direct, the company’s direct-to-consumer business.
Liss, who previously served as senior vice president and chief operating officer of Charming Direct, will have full responsibility for Charming Shoppes’ direct-to-consumer and e-commerce businesses, including the company’s retail brands’ related e-commerce businesses and Figi’s, its food and gift business.
Noting that the company’s strategic review continues, Romano said the company is upgrading to a more efficient information technology and distribution infrastructure, one that will speed execution and reduced costs by some $25 million to $30 million by 2014.