Charming Shoppes Reports First Quarter 2012 Results

BENSALEM, Pa., June 1, 2012 /PRNewswire/ -- Charming Shoppes, Inc. (NASDAQ: CHRS), a leading apparel retailer specializing in women's plus-size apparel, today reported sales and operating results for the three months ended April 28, 2012. 

First Quarter Consolidated Results

Commenting on the quarter, Anthony M. Romano, President and Chief Executive Officer of Charming Shoppes, Inc. said, "We are pleased to have delivered our sixth consecutive quarter of improved year over year Adjusted EBITDA results, with an increase of $1.3 million, or 3.1%, to $42.6 million for the first quarter.  Although we generated healthy gross margins during the quarter, our gross margins continued to be impacted by increases in product costs compared to a year ago.  We also executed deeper discounts to ensure seasonal unit sell-throughs as we experienced continuing challenging traffic trends.  Nonetheless, we were able to fully offset the impacts to our gross margin through strong expense management at each of our brands in both SG&A and Occupancy and Buying expenses.  At each of our brands, we produced improved conversion rates and higher Average Unit Retails.  We maintained our disciplined inventory management to reduce overall inventory levels.  Our consolidated comparable store inventories at cost at the end of the period were 7% lower than the prior year period, with units decreasing by 16%."

• Net sales were $481.3 million for the first quarter ended April 28, 2012, a decrease of 4.6% compared to $504.4 million for the prior year period. The $23.1 million decrease includes the impact of operating 157 fewer stores than in the prior year period, partially offset by an increase of 18% in e-commerce sales.  First quarter comparable store sales were flat compared to the prior year, including a 1% comparable store sales increase for Lane Bryant, a 5% comparable store sales increase for Catherines, and a 3% comparable store sales decrease for Fashion Bug.  The inclusion of e-commerce sales with the bricks and mortar comparable store sales would result in a comparable sales increase of 2% for the quarter.
• Gross profit was $261.7 million or 54.4% of sales in the quarter, compared to $285.3 million or 56.6% of sales in the same quarter last year.
• SG&A and Occupancy and Buying expenses as a percent of sales improved by a combined 290 basis points and decreased $24.9 million to $219.1 million or 45.5% of sales in the quarter, compared to $244.0 million or 48.4% of sales in the prior year period. Decreased expenses were attributable to expense reductions across the Company and the operation of 157 fewer stores than in the prior year period. 
• Adjusted EBITDA for the quarter increased 3.1% to $42.6 million or 8.9% of sales. This compares to $41.3 million or 8.2% of sales in the prior year period, reflecting an improvement of $1.3 million. (Refer to GAAP to non-GAAP reconciliation below.)
• On a non-GAAP basis, income from operations improved 60 basis points as a percent of sales to $28.4 million or 5.9% as a percent of sales in the quarter. This compares to income from operations of $26.9 million or 5.3% as a percent of sales for the prior year period.  Both periods excluded restructuring and other items. (Refer to GAAP to non-GAAP reconciliation below.)
• The income tax provision of $6.8 million for the first quarter resulted primarily from an increase in the Company's liability for unrecognized tax benefits and certain state and foreign income taxes payable as well as required deferred taxes.
• On a GAAP basis, net income was $17.8 million or $0.15 per diluted share for the first quarter, compared to net income of $26.0 million or $0.22 per diluted share in the first quarter of the prior year.  Net income on a GAAP basis in the prior year included a gain from sale of office premises of $5.2 million or $0.04 per diluted share.
• On a non-GAAP basis, net income was $0.16 per diluted share for the first quarter, compared to net income of $0.18 per diluted share in the first quarter of the prior year. Both periods excluded restructuring and other items. (Refer to GAAP to non-GAAP reconciliation below.)
• The Company's cash position at April 28, 2012 was $214.1 million, compared to $168.6 million at January 28, 2012.

Sales results for the three month periods ended April 28, 2012 and April 30, 2011 were:

*SEC REGULATION G -- Charming Shoppes, Inc. reports its financial results in accordance with generally accepted accounting principles (GAAP). However, management believes that non-GAAP performance measures, which exclude certain charges that the Company does not consider part of its ongoing operating results when assessing the performance of the Company, present the operating results of the Company on a basis consistent with those used in managing the Company's business, and provide users of the Company's financial information with a more meaningful report on the condition of the Company's business. We believe that Adjusted EBITDA, along with other measures, provides a useful pre-tax measure of our ongoing operating performance and our ability to meet debt service and capital requirements on a comparable basis excluding the impact of certain items and capital-related non-cash charges.  We use Adjusted EBITDA to monitor and evaluate the performance of our business operations and we believe that it enhances our investors' ability to analyze trends in our business, compare our performance to other companies in our industry, and evaluate our ability to service our debt and capital needs.  In addition, we use Adjusted EBITDA as a component of our compensation programs.  Management believes that income per diluted share without effect of certain charges is a useful measure in evaluating the Company's operating performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.

Charming Shoppes, Inc. operates 1,832 retail stores in 48 states under the names LANE BRYANT®, CACIQUE®, LANE BRYANT OUTLET®, FASHION BUG®, FASHION BUG PLUS® and CATHERINES PLUS SIZES®. The Company also operates the Figi's family of brands, including the holiday food and gifts catalog Figi's® Gifts in Good Taste®, the home and gifts catalog Figi's® Gallery and its wholesale unit Figi's Business Services, and Sonsi, an online marketplace featuring over 300 brands, and one of the largest online assortments for full figured women. During the three months ended April 28, 2012 the Company opened 8, relocated 5, and closed 33 stores.  The Company ended the period with 801 Lane Bryant and Lane Bryant Outlet stores, 601 Fashion Bug and Fashion Bug Plus stores and 430 Catherines stores, comprising approximately 11,620,500 square feet of leased space.  For more information about Charming Shoppes and its brands, please visit www.charmingshoppes.com, www.lanebryant.com, www.cacique.com, www.fashionbug.com, www.catherines.com, www.loop18.com, www.sonsi.com, www.figis.com, and www.figisgallery.com.

SOURCE Charming Shoppes, Inc.