Beleaguered plus-size clothing retailer Charming Shoppes Inc. said yesterday it filed a federal lawsuit against several activist shareholders, likening them to "corporate raiders" trying to destabilize the company.

The investors whose efforts to shake up operations at Charming Shoppes provoked the lawsuit responded by saying the suit was "baseless" and an attempt "to usurp corporate democracy and disenfranchise shareholders."

The lawsuit marks an increasingly hostile phase in a fight for control of the Bensalem company that runs Lane Bryant, Fashion Bug and other stores. In mid-January, two hedge funds said they wanted to nominate three new members to the board of directors as the company's profits and sales continued to lag.

The company has been struggling to boost sales and profits in an environment that has been harsh for retailers - especially plus-size clothing stores, said Erin Moloney, senior vice president of Merriman, Curhan, Ford & Co. in Portland, Ore.

"It's going to take some time for them to fix the business," said Moloney, adding that plus-size and discount consumers typically cut back on spending early in an economic crunch.

The defendants named in the lawsuit filed Friday in U.S. District Court in Philadelphia, Crescendo Partners and Myca Partners, hold a combined 7.9 percent stake in Charming Shoppes.

Charming Shoppes accused the funds of having filed "materially misleading and incomplete documents" with the U.S. Securities and Exchange Commission in a bid to win shareholder support for their nominees in a proxy fight.

The company said the hedge funds did not disclose to the SEC that they were working together, possibly as early as Jan. 8, to hatch a fight for board influence.

It was not until Jan. 15, the lawsuit said, that the two companies disclosed their association, and on that day they said they intended to make board nominations.

The shareholders' true intent in trying to gain board influence, the company alleges, is to shake up management "in order to force Charming Shoppes to sell Company assets, or borrow money and then repurchase the Defendants' shares at a profit."

"Defendants' actions will irreparably harm Charming Shoppes and its shareholders," the lawsuit said.

In documents filed on Feb. 28 with the SEC, the hedge funds, which are waging the nomination effort under the name Charming Shoppes Full Value Committee, said board failures are to blame for a litany of financial problems, including what they called the company's "disastrous stock performance."

They also singled out Charming Shoppes president, chairman and chief executive Dorrit J. Bern for scorn, pointing to laggard financial results under her 11-year leadership.

Eric Rosenfeld, president and chief executive of Crescendo Partners, said in a prepared statement yesterday that his group was looking out for shareholders and would not be deterred by the lawsuit.

"We only wish the Board and management of Charming Shoppes would focus their energy and resources on improving the business rather than spending shareholders' money on this frivolous lawsuit," Rosenfeld said.

Officials on both sides yesterday declined requests for interviews.

Charming Shoppes shares closed yesterday at $4.99, which was above the 12-month low of $4.14 on Jan. 11. Last April, well before the retail economy began to sour, shares were trading at $13.11.

The proxy battle and ensuing lawsuit have come during what is shaping up to be a year of belt-tightening and relative instability at Charming Shoppes.

The company last month lost a key executive in charge of its retail operations and announced management staff reductions, in addition to saying it would close 150 stores, including 100 of its Fashion Bug locations and its Petite Sophisticate concept. As of February, the suit said, the company operated 2,378 stores in 48 states.