Charming Shoppes Swings into Q2 Loss

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Charming Shoppes Inc. swung to a second quarter loss last week, 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 $8.6 million or $0.07 per share, compared to a profit of $5.0 million or $0.04 per share a year ago. Sales for the three months to July 31 fell 1.8% to $517.6 million  from $527.2 million 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,” Jim Fogarty, president/ceo. “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.

“In addition, EBITDA was further impacted by heavier discounting than expected to effectively clear seasonal merchandise in an already promotional environment,” Fogarty added.

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