Thursday, September 3, 2015

'Challenging' times has Charming Shoppes retooling Fashion Bug

The Bensalem retailer reported an annual loss for the second straight year, but said it's making progress in cutting costs.

'Challenging' times has Charming Shoppes retooling Fashion Bug

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Given all the lousy earnings reports, bad news is a matter of degree these days.

Yesterday, Charming Shoppes Inc. said it lost $108.5 million on net sales of $631.9 million in its fourth quarter ended Jan. 31. And it lost money for all of 2008.

Interim CEO Alan Rosskamm told analysts on a conference call, “Challenging environment, challenging numbers we announced today. But under the surface, a lot of good forward momentum and my feeling is that, at least at Charming, the glass here is half-full.”

Some investors must have agreed. Shares closed up 31 cents, or 26 percent, to $1.50.

That’s still on the low end of the 52-week range of 48 cents, reached 10 days ago, and the closing price of $6.07 on May 15, a few days after the end of a proxy fight for control of the Bensalem operator of the Lane Bryant and Fashion Bug chains.

Charming Shoppes has been furiously cutting costs for months. It closed 156 stores last year. It plans to close 100 more this year.

And in case of stores that are generating negative cash flow, Charming Shoppes is giving its shopping-center landlords a choice: Reduce the rent or face the prospect of an empty storefront. Apparently, many landlords are willing to renegotiate.

Perhaps the most interesting part of the analysts call, though, dealt with Charming Shoppes’ effort to reinvent “our most neglected brand,” as Rosskamm called it.

Of the company’s 2,301 stores, 897 are Fashion Bug or Fashion Bug Plus stores. But the Lane Bryant chain, with nearly as many stores, has received more attention in recent years.

Six months ago, Rosskamm hired Jay Levitt to run Fashion Bug, with orders to focus it on a particular demographic, rather trying to be a clothing colony for all.

Starting in August, Levitt says that Fashion Bug will target the 35-year-old larger misses and plus-size customer. Gone are the girls’ and juniors’ departments. And prices will be more Target and Old Navy rather than Kohl’s and J.C. Penney’s.

Financially, Charming Shoppes seems to have breathing room. But retail success depends on getting shoppers into the stores.

Will the new Bug be able to do that?

Inquirer Columnist
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Mike Armstrong Inquirer Columnist
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