Charming Shoppes Reports Third Quarter Results
BENSALEM, Pa., Dec. 2 /PRNewswire-FirstCall/ -- Charming Shoppes, Inc. (Nasdaq: CHRS) a leading multi-brand apparel retailer specializing in women's plus-size apparel, today reported sales and operating results for the three and nine month periods ended October 31, 2009.
Results for the quarter, compared to the same quarter of the prior year, include:
- A net sales decrease of $92.8 million or 16.8%, reflecting a 13% decrease in comparable store sales, the impact of 115 net store closings, and a 6% increase in e-commerce sales. Same store inventories decreased 17%;
- Gross Profit was $236.8 million in the quarter, reflecting a decrease of $17.1 million, or 6.7%. Gross margin rate improved 560 basis points to 51.5% of sales, somewhat offsetting the 16.8% sales decline;
- Decreases in total operating expenses of $47.3 million, or 16%, excluding certain charges (refer to GAAP to non-GAAP reconciliation, below);
- Loss from operations excluding certain charges improved by $30.3 million, or 72% (refer to GAAP to non-GAAP reconciliation, below);
- Loss from continuing operations improved by $11.5 million, or 19%. Loss from continuing operations was $48.4 million in the quarter, or $0.42 per diluted share, and included a $0.04 loss per diluted share related to the tax provision recorded during the quarter. This compares to loss from continuing operations of $59.9 million, or $0.52 per diluted share, which included $0.10 earnings per diluted share related to the tax benefit recorded in the year ago period;
- An increase in the Company's overall cash position during the quarter ended October 31, 2009 of approximately $107.2 million to $224.3 million;
- Total liquidity of $421 million, including $224 million in cash and $197 million of net availability on the Company's undrawn committed line of credit;
- The repurchase of $17.5 million face value of the Company's 1.125% Convertible Notes due 2014 (the "Notes") during the quarter and an additional $16.1 million face value of Notes subsequent to the end of the quarter. Year to date, as of the end of November, the Company has repurchased Notes with an aggregate principal amount of $85.4 million for an aggregate purchase price of $50.6 million.
Commenting on the results for the quarter, Jim Fogarty, President and Chief Executive Officer of Charming Shoppes, Inc. said, "During the quarter, we closed on the sale of our private label credit operations, significantly bolstering our liquidity and leverage profile. At the end of the quarter, liquidity totaled $421 million and our leverage reflected debt, net of cash, of $14 million."
Fogarty continued, "We remain focused on our five key priorities: (1) Focus on the Customer; (2) Stabilize and Begin to Grow Profitable Revenue; (3) Increase EBITDA; (4) Increase Cash Flow, and; (5) Employee Empowerment with Accountability.
"In our 'Grow Profitable Revenue' pursuit, as we previously indicated, we came into the third quarter with much less seasonal carry-over inventory. Throughout the quarter we avoided the impulse to solely drive sales and we remained focused on profitable revenue. While our gross margin rate improved 560 basis points, our gross profit decreased 7% as rate improvement did not fully offset our sales declines. Our expense management more than offset these gross profit declines and allowed us to make progress on our key financial priorities, enumerated above.
"While pleased with forward momentum on our earning power, we fell short on our 'Focus on the Customer'. Our same store sales comp improved from -14% in the second quarter to -13% in the third quarter, and although we improved our quality of sale, we should have delivered more profitable revenue. While we had relative strength in accessories and intimates, we did not provide our customer with a strong enough core tops and bottoms assortment. In addition, in the context of substantial reductions in markdowns on our selling floor and the current difficult economic environment, we did not have a strong enough entry price assortment, nor did we plan strong enough product promotions. Finally, our bottoms assortment did not have sufficient depth in sizing and alternative lengths. We are listening more closely to our customer and are better aligning our assortments as we work into Spring 2010 and beyond. Finally, similar to the beginning of the third quarter, we entered the fourth quarter with much less seasonal carry-over inventory than in the prior year."
Third Quarter Consolidated Results
- Net sales for the three months ended October 31, 2009 decreased $92.8 million or 16.8% to $460.2 million, compared to $553.1 million for the three months ended November 1, 2008. The decrease in sales was primarily as a result of a comparable store sales decrease of 13% and the impact of 125 store closings and 10 store openings during the last four quarters. E-commerce sales increased 6% to $21.7 million, compared to $20.5 million in the year ago period. Comparable store sales declined 14%, 14% and 5% at the Company's Lane Bryant, Fashion Bug and Catherines brands, respectively.
- Gross Profit decreased $17.1 million, or 6.7% to $236.8 million in the third quarter, compared to $253.9 million in the same quarter last year, primarily related to lower sales volumes, partially offset by improvement in the gross margin rate. The gross margin rate improved by 560 basis points to 51.5% for the quarter ended October 31, 2009, compared to 45.9% for the quarter ended November 1, 2008, as a result of lower inventories and reduced markdowns on seasonal merchandise.
- Occupancy and Buying expense decreased $11.5 million, or 10.8% to $95.0 million in the third quarter, compared to $106.6 million in the same quarter last year, primarily related to the operation of fewer stores and rent reductions related to lease renegotiations.
- Selling, general and administrative expense decreased $30.9 million, or 18.6% to $135.5 million in the third quarter, compared to $166.3 million in the same quarter last year, primarily related to expense reduction initiatives and the closing of under-performing stores. SG&A expense as a percent of sales was 29.4%, a 70 basis point improvement compared to the year ago period.
- Depreciation and Amortization expense decreased $4.9 million, or 21.1% to $18.3 million in the quarter, compared to $23.1 million in the same quarter last year, primarily related to operating fewer stores than in the year ago period. D&A expense, as a percent of sales, was 4.0% and essentially flat year over year.
- Restructuring charges of $14.7 million recorded during the quarter ended October 31, 2009 primarily include lease termination charges and accelerated depreciation on discontinued or divested catalog businesses. $1.8 million of these charges were non-cash charges. The quarter ended November 1, 2008 included charges of $20.2 million for the impairment of store assets and restructuring charges of $6.4 million related to previously announced consolidation and streamlining initiatives, of which $1.0 million were non-cash charges.
- Loss from operations excluding certain charges improved by $30.3 million, or 72%. Loss from operations was $11.9 million, excluding restructuring charges of $14.7 million and a one-time, non-recurring charge of $13.4 million on the sale of our proprietary credit card receivables program. The prior year period loss from operations was $42.2 million, excluding impairment and restructuring charges of $26.6 million (refer to GAAP to non-GAAP reconciliation, below).
- Loss from continuing operations improved by $11.5 million, or 19%. On a non-GAAP basis, loss from continuing operations before income tax was $43.4 million, or $0.37 loss per diluted share, compared to loss from continuing operations before income tax of $71.7 million, or $0.62 loss per diluted share. On a GAAP basis, loss from continuing operations was $48.4 million in the quarter, or $0.42 per diluted share, and included $0.04 loss per diluted share related to the tax provision recorded during the quarter. This compares to loss from continuing operations of $59.9 million, or $0.52 per diluted share, which included $0.10 earnings per diluted share related to the tax benefit recorded in the year ago period (refer to GAAP to non-GAAP reconciliation, below).
Commenting on the quarter and the Company's liquidity, Eric M. Specter, Executive Vice President and Chief Financial Officer said, "Our cash position increased by $107.2 million during the quarter, primarily as a result of proceeds from the sale of the credit card receivables program, cash freed up that was previously set aside to satisfy regulatory requirements in the operation of the Company's former credit card bank, and the receipt of a federal income tax refund received during the quarter, somewhat offset by seasonal working capital needs and repurchases of the Company's Notes.
"Including repurchases subsequent to the end of the quarter, our strong liquidity allowed us to opportunistically repurchase $33.6 million of principal amount of Notes at a 29% discount, for a cash purchase price of $24.0 million. Year to date, as of the end of November, including those subsequent repurchases, we have reduced the principal amount of the Notes from an initial $275 million to $190 million."
During the third quarter the Company decided to close the Petite Sophisticate Outlet stores and convert the majority of the space to Catherines outlet locations. Five stores have already been converted, with an additional 28 stores to be converted to Catherines outlet locations by February 2010.
For the nine months ended October 31, 2009, loss from continuing operations improved by $16.4 million, or 25%. On a non-GAAP basis, loss from continuing operations before income tax was $39.6 million, or $0.34 loss per diluted share, compared to loss from continuing operations before income tax of $81.7 million, or $0.71 loss per diluted share for the nine months ended November 1, 2008. On a GAAP basis, loss from continuing operations was $49.9 million, or $0.43 per diluted share for the nine months ended October 31, 2009, and included $0.09 loss per diluted share related to the tax provision recorded during the nine months. This compares to loss from continuing operations of $66.4 million, or $0.58 per diluted share, which included $0.13 earnings per diluted share related to the tax benefit recorded in the year ago period (refer to GAAP to non-GAAP reconciliation, below).
Sales results for the three month periods ended October 31, 2009 and November 1, 2008 were:
Comparable Store
Net Sales for Net Sales for Sales Change
the Three the Three Total Net for the Three
Months Ended Months Ended Sales Months Ended
10/31/09 11/1/08 Change 10/31/09
------------- ------------- --------- ----------------
($ millions) ($ millions)
Lane Bryant Stores(1) $218.0 $257.2 -15% -14%
Fashion Bug Stores 155.0 191.1 -19% -14%
Catherines Stores 71.3 74.2 -4% -5%
Catalog Sales 9.4 21.3 -56% NA
Other (2) 6.5 9.3 -30% NA
-------- --- --- --- ---
Consolidated $460.2 $553.1 -17% -13%
Sales results for the nine month periods ended October 31, 2009 and November 1, 2008 were:
Comparable Store
Sales Change
Net Sales for Net Sales for Total Net for the Nine
the Nine Months the Nine Months Sales Months
Ended 10/31/09 Ended 11/1/08 Change Ended 10/31/09
--------------- --------------- --------- ---------------
($ millions) ($ millions)
Lane Bryant Stores(1) $718.8 $839.6 -14% -14%
Fashion Bug Stores 523.1 659.8 -21% -15%
Catherines Stores 227.2 244.3 -7% -7%
Catalog Sales 35.2 70.8 -50% NA
Other (2) 21.3 28.5 -25% NA
------------- ---- ---- --- ---
Consolidated $1,525.6 $1,843.0 -17% -14%
(1) Includes Lane Bryant Outlet Stores; (2) Includes Petite Sophisticate
Retail and Outlet Stores, Corporate and Other.
Charming Shoppes, Inc. will host its third quarter earnings conference call today at 9:15 am Eastern time. To listen to the conference call, please dial 877-407-8293 approximately 10 minutes prior to the scheduled event. The conference call will also be simulcast and rebroadcast at http://phx.corporate-ir.net/phoenix.zhtml?c=106124&p=irol-audioArchives . The general public is invited to listen to the conference call via the webcast or the dial-in telephone number.
A transcript of prepared remarks for the conference call will be accessible at http://phx.corporate-ir.net/phoenix.zhtml?c=106124&p=irol-audioArchives following the conference call on Wednesday, December 2, 2009.
The conference call will be recorded on behalf of Charming Shoppes, Inc. and consists of copyrighted material. It may not be re-recorded, reproduced, transmitted or rebroadcast, in whole or in part, without the Company's express written permission. Accessing this call or the rebroadcast constitutes consent to these terms and conditions. Participation in this call serves as consent to having any comments or statements made appear on any transcript, broadcast or rebroadcast of this call.
At October 31, 2009, Charming Shoppes, Inc. operated 2,227 retail stores in 48 states under the names LANE BRYANT®, LANE BRYANT CACIQUE®, LANE BRYANT OUTLET®, FASHION BUG®, FASHION BUG PLUS®, CATHERINES PLUS SIZES®, and PETITE SOPHISTICATE OUTLET®. The Company also operates the Figi's Gifts in Good Taste catalog, specializing in holiday fare, gift-giving convenience, and exclusive and personalized items. During the nine months ended October 31, 2009 the Company opened 9, relocated 6, converted 5 and closed 83 retail stores. The Company ended the period with 879 Lane Bryant and Lane Bryant Outlet stores, 848 Fashion Bug and Fashion Bug Plus stores, 463 Catherines stores, and 37 Petite Sophisticate Outlet stores, comprising approximately 14,604,000 square feet of leased space. Please visit www.charmingshoppes.com for additional information about Charming Shoppes, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
Income / (Loss) from operations on a non-GAAP basis
For the Three and Nine Months Ended October 31, 2009 and November 1, 2008*
3 Months 3 Months 9 Months 9 Months
Ended Ended Ended Ended
10/31/09 11/1/08 10/31/09 11/1/08
$ millions $ millions $ millions $ millions
(pre-tax) (pre-tax) (pre-tax) (pre-tax)
--------- --------- --------- ---------
(Loss) from operations, on
a GAAP basis $(40.1) $(68.8) $(38.8) $(70.2)
Impact of restructuring charges 14.7 6.4 31.2 24.9
Impact of impairment charges - 20.2 - 20.2
Impact of one-time, non-recurring
charge on sale of proprietary
credit card program 13.4 - 13.4 -
Income /(Loss) from operations,
excluding the above items, on
a non-GAAP basis $(11.9) $(42.2) $5.8 $(25.0)
Results may not add due to rounding.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Loss) from continuing operations, before income tax, on a non-GAAP basis
For the Three and Nine Months Ended October 31, 2009 and November 1, 2008*
3 Months 3 Months 9 Months 9 Months
Ended Ended Ended Ended
10/31/09 11/1/08 10/31/09 11/1/08
-------- ------- -------- -------
$ millions EPS $ millions EPS $ millions EPS $ millions EPS
--- --- --- ---
(Loss) from
continuing
operations,
on a GAAP
basis $(48.4) $(0.42) $(59.9) $(0.52) $(49.9) $(0.43) $(66.4) $(0.58)
Impact of
tax
provision
(benefit) 4.9 0.04 (11.9) (0.10) 10.3 0.09 (15.3) (0.13)
(Loss) from
continuing
operations,
before income
tax, on a
non-GAAP
Basis $(43.4) $(0.37) $(71.7) $(0.62) $(39.6) $(0.34) $(81.7) $(0.71)
Results may not add due to rounding
Reconciliation of GAAP to Non-GAAP Financial Measures
Total Operating Expenses, on a non-GAAP basis
For the Three and Nine Months Ended October 31, 2009 and November 1, 2008*
3 Months 3 Months 9 Months 9 Months
Ended Ended Ended Ended
10/31/09 11/1/08 10/31/09 11/1/08
$millions $millions $millions $millions
(pre-tax) (pre-tax) (pre-tax) (pre-tax)
--------- --------- --------- ---------
$276.9 $322.6 $827.1 $953.8
Total Operating Expenses
Restructuring charges 14.7 6.4 31.2 24.9
Impairment charges - 20.2 - 20.2
One-time, non-recurring charge
on sale of proprietary credit
card program 13.4 - 13.4 -
Total Operating Expenses
excluding the above items $248.8 $296.0 $782.5 $908.6
Results may not add due to rounding.
*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 one-time charges, 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. 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.
Safe Harbor Statement
This press release contains and the Company's conference call may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning the Company's operations, performance, and financial condition. Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those indicated. Such risks and uncertainties may include, but are not limited to: the failure to realize the benefits from the sale of our credit card program to, and the operation of our credit card program by, our third-party provider, the failure to implement the Company's business plan for increased profitability and growth in the Company's retail stores and direct-to-consumer segments, the failure to effectively implement the Company's plans for a new organizational structure and enhancements in the Company's merchandise and marketing, the failure to effectively implement the Company's plans for the transformation of its brands to a vertical specialty store model, the failure to continue receiving financing at an affordable cost through the availability of credit we receive from our bankers, suppliers and their agents, the failure to effectively implement our planned consolidation, cost and capital budget reduction plans and store closing plans, the failure to achieve increased profitability through the adoption by the Company's brands of a vertical specialty store model, the failure to achieve improvement in the Company's competitive position, the failure to maintain efficient and uninterrupted order-taking and fulfillment in our direct-to-consumer business, changes in or miscalculation of fashion trends, extreme or unseasonable weather conditions, economic downturns, escalation of energy costs, a weakness in overall consumer demand, the failure to find suitable store locations, increases in wage rates, the ability to hire and train associates, trade and security restrictions and political or financial instability in countries where goods are manufactured, the interruption of merchandise flow from the Company's centralized distribution facilities, competitive pressures, and the adverse effects of natural disasters, war, acts of terrorism or threats of either, or other armed conflict, on the United States and international economies. These, and other risks and uncertainties, are detailed in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2009, our report on Form 8-K dated June 19, 2009, our Quarterly Reports on Form 10-Q and other Company filings with the Securities and Exchange Commission. Charming Shoppes assumes no duty to update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
CHARMING SHOPPES, INC.
(unaudited)
3rd
3rd Quarter
Quarter Ended
Ended Percent Nov. 1 Percent
Percent Oct. 31, of 2008 (as of
Change 2009 Sales(a) adjusted) Sales (a)
------ ------- ------- -------- --------
(in thousands, except
per share amounts)
Net sales (16.8)% $460,237 100.0% $553,066 100.0%
Cost of goods sold (25.3) 223,421 48.5 299,196 54.1
----- ------- ---- ------- ----
Gross profit (6.7) 236,816 51.5 253,870 45.9
---- ------- ---- ------- ----
Occupancy and buying (10.8) 95,020 20.6 106,552 19.3
Selling, general, and
administrative (18.6) 135,479 29.4 166,338 30.1
Depreciation and
amortization (b) (21.1) 18,260 4.0 23,131 4.2
Sale of proprietary credit
card receivables programs
(c) n/a 13,379 2.9 0 0.0
Impairment of store assets
(d) n/a 0 0.0 20,216 3.7
Restructuring charges (e) 130.7 14,746 3.2 6,391 1.2
----- ------ --- ----- ---
Total operating expenses (14.2) 276,884 60.2 322,628 58.3
----- ------- ---- ------- ----
Loss from operations 41.7 (40,068) (8.7) (68,758) (12.4
Other income, principally
interest (f) (89.4) 198 0.0 1,876 0.3
Gain on repurchase of debt n/a 1,264 0.3 0 0.0
Non-cash interest expense
(g) (15.5) (2,352) (0.5) (2,782) (0.5)
Interest expense 18.8 (2,470) (0.5) (2,080) (0.4)
---- ------ ---- ------ ----
Loss from continuing
operations before income
taxes 39.5 (43,428) (9.4) (71,744) (13.0)
Income tax provision/
(benefit) (h) (141.6) 4,934 1.1 (11,858) (2.1)
------ ----- --- ------- ----
Loss from continuing
operations 19.2 (48,362) (10.5) (59,886) (10.8)
Loss from operations of
discontinued component
(including increase to loss
on disposal of $3,968),
net of tax (i) n/a 0 0.0 (23,875) (4.3)
--- --- --- ------- ----
Net loss 42.3% $(48,362) (10.5)% $(83,761) (15.1)%
==== ======== ===== ======== =====
Loss per share:
Basic:
Loss from continuing
operations $(0.42) $(0.52)
Loss from discontinued
operations, net of tax 0.00 (0.21)
---- -----
Net loss $(0.42) $(0.73)
====== ======
Weighted average
shares outstanding 115,816 114,877
======= =======
Diluted:
Loss from continuing
Operations $(0.42) $(0.52)
Loss from discontinued
operations, net of tax 0.00 (0.21)
---- -----
Net loss $(0.42) $(0.73)
====== ======
Weighted average shares
outstanding 115,816 114,877
======= =======
(a) Results may not add due to rounding.
(b) Excludes amortization of deferred financing fees included as a
component of interest expense.
(c) Primarily relates to contract termination and transaction related
costs, and severance & retention costs as a result of the sale of our
credit card receivables programs completed on October 30, 2009.
(d) Based on our assessments of the carrying value of long-lived assets
conducted in accordance with ASC 360-10 (formerly known as SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets")
in the 3rd Quarter of Fiscal 2008, we identified approximately 120
stores with asset carrying values in excess of such stores' respective
forecasted undiscounted cash flows. Accordingly, we incurred non-cash
charges of $20.2 million to write down these stores to their
respective fair values.
(e) Fiscal 2009 costs primarily relate to lease termination charges and
non-cash accelerated depreciation for the facilities and fixed assets
retained from the sale of the non-core misses apparel catalog
business that ceased operations in the 3rd Quarter of Fiscal 2009.
Fiscal 2008 costs primarily represent severance for the shutdown of
Lane Bryant Woman catalog, the elimination of corporate positions,
lease termination charges, relocation charges and accelerated
depreciation charges related to the consolidation and streamlining
initiatives announced during the 4th Quarter of Fiscal 2007.
(f) 3rd Quarter of Fiscal 2008 included $1,392 of interest related to
refunds from amended tax returns filed.
(g) The Company adopted ASC 470-20 (formerly known as FSP APB 14-1
"Accounting for Convertible Debt Instruments That May Be Settled in
Cash Upon Conversion (Including Partial Cash Settlements)") on
February 1, 2009, which required retrospective application.
Accordingly, the Company's operating results since the issuance of the
Senior Convertible Notes in Fiscal 2007 and future operating results
until maturity will reflect additional non-cash interest expense.
(h) As part of our quarterly closing and reporting process we evaluated
our deferred income taxes and determined that based on our cumulative
three years of losses and other available evidence, a tax valuation
allowance against our existing deferred tax assets was required.
Accordingly, the tax benefit for the 3rd Quarter of Fiscal 2008 is net
of a valuation allowance of $17,922 and $18,304 for continuing
operations and discontinued operations, respectively.
(i) Loss from operations of discontinued component for the 3rd Quarter of
Fiscal 2008 represents the results of operations and an increase to
the loss on disposal as a result of the closing of the sale of the
non-core misses apparel catalog businesses on September 18, 2008, net
of the reversal of $12,698 of previously recognized tax benefit for
the non-core misses apparel catalog businesses.
CHARMING SHOPPES, INC.
(unaudited)
Nine
Nine Months
Months Ended
Ended Percent Nov. 1 Percent
Percent Oct. 31, of 2008 (as of
Change 2009 Sales(a) adjusted) Sales (a)
------ ------- ------- -------- --------
(in thousands, except
per share amounts)
Net sales (17.2)% $1,525,590 100.0% $1,843,028 100.0%
Cost of goods sold (23.1) 737,340 48.3 959,409 52.1
----- ------- ---- ------- ----
Gross profit (10.8) 788,250 51.7 883,619 47.9
----- ------- ---- ------- ----
Occupancy and buying (6.7) 297,660 19.5 318,900 17.3
Selling, general, and
administrative (17.4) 427,260 28.0 517,119 28.1
Depreciation and
amortization (b) (20.8) 57,534 3.8 72,630 3.9
Sale of proprietary credit
card receivables programs
(c) n/a 13,379 0.9 0 0.0
Impairment of store assets
(d) n/a 0 0.0 20,216 1.1
Restructuring charges (e) 25.1 31,219 2.0 24,947 1.4
---- ------ --- ------ ---
Total operating expenses (13.3) 827,052 54.2 953,812 51.8
----- ------- ---- ------- ----
Loss from operations 44.7 (38,802) (2.5) (70,193) (3.8)
Other income, principally
interest (f) (78.7) 679 0.0 3,183 0.2
Gain on repurchase of debt n/a 12,828 0.8 0 0.0
Non-cash interest expense
(g) (5.0) (7,786) (0.5) (8,199) (0.4)
Interest expense 1.2 (6,541) (0.4) (6,466) (0.4)
--- ------ ---- ------ ----
Loss from continuing
operations before income
taxes 51.5 (39,622) (2.6) (81,675) (4.4)
Income tax provision/
(benefit) (h) (167.4) 10,318 0.7 (15,317) (0.8)
------ ------ --- ------- ----
Loss from continuing
operations 24.7 (49,940) (3.3) (66,358) (3.6)
Loss from operations of
discontinued component
(including loss
on disposal of $46,736),
net of tax (i) n/a 0 0.0 (74,922) (4.1)
--- --- --- ------- ----
Net loss 64.7% $(49,940) (3.3)% $(141,280) (7.7)%
==== ======== ==== ========= ====
Loss per share:
Basic:
Loss from continuing
operations $(0.43) $(0.58)
Loss from discontinued
operations, net of tax 0.00 (0.65)
---- -----
Net loss (a) $(0.43) $(1.23)
====== ======
Weighted average shares
outstanding 115,536 114,602
======= =======
Diluted:
Loss from continuing
operations $(0.43) $(0.58)
Loss from discontinued
operations, net of tax 0.00 (0.65)
---- -----
Net loss (a) $(0.43) $(1.23)
====== ======
Weighted average shares
outstanding 115,536 114,602
======= =======
(a) Results may not add due to rounding.
(b) Excludes amortization of deferred financing fees included as a
component of interest expense.
(c) Primarily relates to contract termination and transaction related
costs, and severance & retention costs as a result of the sale of our
credit card receivables programs completed on October 30, 2009.
(d) Based on our assessments of the carrying value of long-lived assets
conducted in accordance with ASC 360-10 (formerly known as SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets")
in the 3rd Quarter of Fiscal 2008, we identified approximately 120
stores with asset carrying values in excess of such stores' respective
forecasted undiscounted cash flows. Accordingly, we incurred non-cash
charges of $20.2 million to write down these stores to their
respective fair values.
(e) Fiscal 2009 costs primarily include lease termination charges and non-
cash accelerated depreciation for the facilities and fixed assets
retained from the sale of the non-core misses apparel catalog business
that ceased operations in the 3rd Quarter of Fiscal 2009 and other
costs related to our multi-year transformational initiatives. Fiscal
2008 costs primarily represent lease termination charges, severance
for our former CEO, severance for the shutdown of Lane Bryant Woman
catalog and the elimination of corporate positions, relocation charges
and accelerated depreciation related to the consolidation and
streamlining initiatives announced during the 4th Quarter of Fiscal
2007.
(f) Nine Months ended November 1, 2008 included $1,392 of interest related
to refunds from amended tax returns filed.
(g) The Company adopted ASC 470-20 (formerly known as FSP APB 14-1
"Accounting for Convertible Debt Instruments That May Be Settled in
Cash Upon Conversion (Including Partial Cash Settlements)") on
February 1, 2009, which required retrospective application.
Accordingly, the Company's operating results since the issuance of the
Senior Convertible Notes in Fiscal 2007 and future operating results
until maturity will reflect additional non-cash interest expense.
(h) As part of our quarterly closing and reporting process we evaluated
our deferred income taxes and determined that based on our cumulative
three years of losses and other available evidence, a tax valuation
allowance against our existing deferred tax assets was required.
Accordingly, the tax benefit for the Nine Months ended November 1,
2008 is net of a valuation allowance of $17,922 and $18,304 for
continuing operations and discontinued operations, respectively.
(i) Loss from operations of discontinued component for the Nine Months
ended Nov. 1, 2008 represents the results of operations and an
increase to the loss on disposal as a result of the closing of the
sale of the non-core misses apparel catalog businesses on September
18, 2008, net of the reversal of $24,004 of previously recognized tax
benefit for the non-core misses apparel catalog businesses.
CHARMING SHOPPES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
October 31, January 31,
(In thousands, except share amounts) 2009 2009
---- ----
(As Adjusted)
ASSETS
Current assets
Cash and cash equivalents $223,944 $93,759
Available-for-sale securities 400 6,398
Accounts receivable, net of allowances of
$2,017 and $6,018 4,100 33,300
Investment in asset-backed securities 0 94,453
Merchandise inventories 334,462 268,142
Deferred taxes 3,439 3,439
Prepayments and other 131,166 155,430
------- -------
Total current assets 697,511 654,921
------- -------
Property, equipment, and leasehold
improvements - at cost 1,067,100 1,076,972
Less accumulated depreciation and
amortization 734,768 693,796
------- -------
Net property, equipment, and
leasehold improvements 332,332 383,176
------- -------
Trademarks and other intangible assets 187,132 187,365
Goodwill 23,436 23,436
Other assets 25,497 28,243
------ ------
Total assets $1,265,908 $1,277,141
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $163,142 $99,520
Accrued expenses 184,344 166,631
Current portion - long-term debt 6,470 6,746
----- -----
Total current liabilities 353,956 272,897
------- -------
Deferred taxes 48,730 46,197
Other non-current liabilities 188,979 188,470
Long-term debt, net of debt discount of
$47,962 and $72,913 183,630 232,722
Stockholders' equity
Common Stock $.10 par value:
Authorized - 300,000,000 shares
Issued - 154,098,888 shares and
153,482,368 shares 15,410 15,348
Additional paid-in capital 502,339 498,551
Treasury stock at cost - 38,514,410 shares
and 38,482,213 shares (347,877) (347,730)
Accumulated other comprehensive income 0 5
Retained earnings 320,741 370,681
------- -------
Total stockholders' equity 490,613 536,855
------- -------
Total liabilities and stockholders' equity $1,265,908 $1,277,141
========== ==========
Amounts are preliminary and subject to reclassifications and adjustments
CHARMING SHOPPES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Thirty-nine Weeks Ended
-----------------------
October 31, November 1,
(In thousands) 2009 2008
---- ----
(As Adjusted)
Operating activities
Net loss $(49,940) $(141,280)
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation and amortization 58,908 73,498
Stock-based compensation 4,301 4,708
Sale of proprietary credit card receivables
programs 13,379 0
Net loss/(gain) from disposition of capital
assets 182 (722)
Net loss/(gain) from securitization activities (2,465) 531
Accretion of discount on 1.125% Senior
Convertible Notes 7,786 8,199
Loss on disposition of discontinued operations 0 46,736
Impairment of store assets 0 20,216
Deferred income taxes 2,536 11,025
Gain on repurchases of 1.125% Senior
Convertible Notes (12,828) 0
Write-down of deferred taxes related to
stock-based compensation 0 (1,352)
Write-down of capital assets 8,935 2,456
Changes in operating assets and liabilities
Accounts receivable, net 29,200 29,058
Merchandise inventories (66,320) (65,430)
Accounts payable 63,622 51,768
Prepayments and other (13,369) (11,322)
Accrued expenses and other 5,395 (8,971)
Proceeds from sale of retained interests
in proprietary credit card receivables 85,050 0
------ ---
Net cash provided by operating activities 134,372 19,118
------- ------
Investing activities
Investment in capital assets (16,313) (49,498)
Proceeds from sale of certificates related to
proprietary credit card receivables 51,250 0
Proceeds from sales of capital assets 1,719 4,813
Net proceeds from sale of discontinued operations 0 34,440
Gross purchases of securities (2,448) (3,935)
Proceeds from sales of securities 8,588 11,651
Decrease in other assets 4,357 6,635
----- -----
Net cash provided by investing activities 47,153 4,106
------ -----
Financing activities
Proceeds from long-term borrowings 0 108
Repayments of long-term borrowings (5,076) (6,813)
Repurchases of 1.125% Senior Convertible Notes (39,323) 0
Net payments for settlements of hedges on
convertible notes (31) 0
Payments of deferred financing costs (7,308) (47)
Purchases of treasury stock 0 (10,969)
Net proceeds from shares issued under employee
stock plans 398 484
--- ---
Net cash used by financing activities (51,340) (17,237)
------- -------
Increase in cash and cash equivalents 130,185 5,987
Cash and cash equivalents, beginning of period 93,759 61,842
------ ------
Cash and cash equivalents, end of period $223,944 $67,829
======== =======
Non-cash financing and investing activities
Assets acquired through capital leases $0 $5,959
=== ======
Amounts are preliminary and subject to reclassifications and adjustments
SOURCE Charming Shoppes, Inc.
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