Charming Shoppes Swings to Loss

Third-quarter results come in below Wall Street estimates, and the retailer lowers guidance.
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Charming Shoppes

(CHRS) - Get Report

, like many of its fellow retailers, weathered a painful third quarter.

The company, which operates Lane Bryant and other women's plus-size-apparel chain stores, swung to a loss of $3.6 million, or 3 cents a share, vs. last year's profit of $19.4 million, or 15 cents a share. Analysts were looking for a loss of 2 cents a share, according to Thomson Financial.

Those results were helped, said Charming, by a $4.7 million net pretax gain related to the purchase of its Lane Bryant credit-card portfolio from a third party. The benefit was recorded as a reduction in selling, general and administrative costs.

The Bensalem, Pa., company blamed the shortfall on the downward traffic trends that have been plaguing the sector, which affected all of its retail brands. That left a great deal of fall merchandise unsold, which in turn forced the company to offer deeper discounts so as to clear inventory for the next season.

Internet-based sales showed improvement across the board, said the company, but total revenue still slipped 3.7% year over year to $669.4 million. That misses the average Wall Street target by $6.9 million. Comparable sales, which generally refer to stores that have been open for more than a year, fell by 8% from last year at retail locations.

Charming also sliced at least another 19 cents a share off its fiscal 2008 earnings outlook to between 24 cents and 26 cents a share -- a range that includes 3 cents worth of relocation costs and a nickel-a-share in expenses from the launch of its new Lane Bryant catalog. The move follows several downward revisions over the past few months. Analysts, who typically exclude one-time items, are looking for 36 cents a share.

As for the fourth quarter, it's now projected to yield a loss of 6 cents to 8 cents a share, also including the above-mentioned costs, against the average 4-cent brokerage call. Revenue was estimated at $795 million to $805 million, well under expectations for $840.7 million.

Charming shares were trading deeply in negative territory this morning before lately recovering to the flat line at $6.20.