Charming Shoppes Plans Job Cuts, Reports Earnings Rise
The cost-cutting measures will save $45 million in pre-tax income by fiscal year 2005, said Dorrit J. Bern, chairman, CEO and president of the Bensalem, PA, retailer. The company will take a pre-tax charge of $10 million to $12 million related to the closures and severance pay.
Separately, Charming Shoppes lowered its earnings outlook for the current quarter because of weak sales in February, but it reported fourth-quarter net income of $1.85 million, excluding an after-tax restructuring credit of $2.1 million. A year ago, the company had a net loss of $3.3 million, excluding a $24.5 million after-tax charge for restructuring. For the quarter ended Feb. 1, sales totaled $601.2 million, down 7 percent from $647.1 million a year ago.
For the year, the company reported a net loss of $2.8 million, including the effect of accounting charges. Before the charges, income totaled $46.3 million. By comparison, it recorded a net loss of $4.4 million a year ago, including a $24.5 million after-tax charge for restructuring. For the year, sales totaled $2.4 billion, up 21 percent from $1.99 billion a year ago.
"We have grown our revenue base rapidly, from $1 billion a few years ago to $2.4 billion in 2002," Bern said, "yet we have not sufficiently rationalized our operations and realized all the efficiencies available to us in order to improve our profitability."
Charming Shoppes said it plans to cut 160 positions in the corporate and divisional home offices, or 14 percent of its related work force, and close its Hollywood, FL, credit operations. It will consolidate that work into the Milford, OH, facility, cutting another 75 jobs.
It will cut another 50 positions by consolidating distribution operations for Lane Bryant and Catherine's Plus Sizes into space in White Marsh, MD. The company also will close nine Monsoon/Accessorize stores operated under a joint venture with Monsoon PLC.
Charming Shoppes operates 2,242 stores under the names Lane Bryant, Fashion Bug, Fashion Bug Plus, Catherine's Plus Sizes, Monsoon and Accessorize.