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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 Coherus BioSciences Inc. 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.

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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.