Fashion retailer Charming Shoppes Inc. (CHRS) fourth-quarter earnings release reported a narrower loss than expected by Wall Street.
The company announced that same store sales fell 15% during the quarter ending January 31 as net income fell to a negative $108.5 million. Excluding good will and store impairment charges, the loss amounted to 0.34 per share, Analysts had expected a loss of $0.38.
Charming owns and operates mall based stores under the label Lane Bryant, Fashion Bug and Catherines. Until recently the company also published Figure Magazine, which was discontinued this month, and conducted e-sale business through its web site shoetraders.com, which will be shut down in the first quarter. Business will continue to be conducted at the company’s other web sites.
Fashion retailers throughout the spectrum are struggling to stay afloat as consumers defer buying or move to lower cost alternatives. Recently reported earnings for retail stores have shown a wide range of results.
Stores catering to younger buyers with quality merchandise at lower prices, such as Aeropostale (ARO), Buckle (BKE) and Hot Topic (HOTT), have reported strong sales and earnings even in the face of declining retail activity.
Other retailers have not fared as well. American Eagle Outfitters (AEG) and Gap (GPS) reported losses in their most recent quarterly releases. The difference in performance results from a combination of inventory management, price and quality merchandise.
The outlook for Charming Shoppes is for continued losses through the first quarter. The company is expecting another period of double digit sales decline and forecasts a loss of $0.03 to $0.07 per share. Analysts on average are projecting a loss of $0.06.
Charming Shoppes has a relatively strong balance sheet with which to protect the company in the event of a prolonged period of consumer lethargy. The company has over $100 million in cash and equivalents as of year-end and has no borrowings on its line of credit, which does not expire until July of 2010. Its $50 million credit card securitization facility was recently renewed through March 10, 2010.
Current assets of $651.5 million and current liabilities of $273 million result in a current ratio of 2.4. Long term debt at the company is a reasonable $307 million
CHRS last week dropped to a new low for the trailing 52 weeks, trading at a price of $0.45 per share. The price has rallied back over one dollar, currently trading at $1.35, up nearly 14% for the day.
This article was written by Jamie Dlugosch, contributor to InvestorPlace Media. For more actionable insights likes this, visit www.InvestorPlace.com.
