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Charming Shoppes Anything But

Posted: Aug 29, 2008 13:44 PM by Glenn Curtis

Tickers in this Article: DBRN, TJX, CHRS

Specialty apparel retailer Charming Shoppes (Nasdaq:CHRS), known for its Fashion Bug and Lane Bryant concepts, saw its shares get hit on August 27, 2008 because of its outlook for the second half of the year.

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Disappointment Expected Down the Backstretch
In the period ended August 2, 2008 it earned 2 cents a share excluding a severance charge. That wasn't bad given that the company was expected to lose a penny a share.

Per the earnings release, "the Company has projected a diluted loss per share (Diluted EPS) from continuing operations in the range of 9 to 11 cents, compared to diluted loss per share from continuing operations of a penny for the corresponding period ended November 3, 2007."

This is disappointing because the company had been expected to lose just a penny a share.

Again per the release in the fourth quarter, "the Company anticipates narrowing its diluted loss per share from continuing operations, as compared to the corresponding period ended February 2, 2008."

The Street had been looking for a gain of 3 cents.

Its outlook is concerning because what's the incentive for investors to hop aboard? Why not wait until things start to turn around or for some more guidance heading into next year before investing in the shares? (Explore the controversies surrounding companies commenting on their forward looking expectations in Can Earnings Guidance Accurately Predict The Future?)

What About it's Comps?
What about the company's comps? In the period the company reported a comparable store sales decline of 10%. That's not a sharp drop given that it was going up against a pretty easy comparison. In fact, in Q2 last year it reported a comp store decline of 3%.

Back in May in conjunction with its third quarter numbers competitor Dress Barn (Nasdaq:DBRN) issued fiscal 2008 guidance of $1.05 to $1.10. Further in the release it said that the, "estimate is based upon various assumptions, including a mid-single digit decrease in comparable store sales for the remainder of the year." I'd also point out that another comparable, TJX Companies (NYSE:TJX) saw its second quarter consolidated comp store numbers rise 4%.

Bottom Line
Charming Shoppes may make a comeback. After all, it has a big name, and some enviable locations. But there will be a better entry point somewhere down the line, perhaps toward the end of the year.

By Glenn Curtis

Glenn Curtis started his career in the 1990s as an equity analyst for a regional firm in New Jersey. There, he covered companies in the technology, entertainment, and gaming industries. Curtis has since worked as a financial writer at a series of both web and print publications, including TheStreet.com and Registered Rep Magazine. He has held his series 6,7,24, and 63 securities licenses.

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