Amid a heated proxy fight and mounting criticism of company leadership, women's apparel titan Charming Shoppes Inc. said yesterday that it had hired two investment banks to evaluate what to do with some of its unprofitable catalog businesses.

The Bensalem retailer, which runs the Lane Bryant and Fashion Bug chains, said it had retained Banc of America Securities and Lehman Bros. Holdings Inc. to explore "a broad range of operating and strategic alternatives" for the catalogs.

The announcement capped a week of intensified rhetoric between Charming Shoppes and dissident investors who are waging the proxy fight to win representation on the company's board of directors. The company is suing in federal court to block them.

The catalog business is one of the unprofitable assets the dissidents have singled out for criticism. They say poor executive decisions have caused a steep decline in profits and share price over the last year.

Charming Shoppes' shares have lost 60 percent of their value in the last year, closing yesterday at $5.15. In its latest fiscal year, the company lost $83.4 million.

While stopping short of saying the company would sell the catalog businesses in question, chairman and chief executive Dorrit J. Bern said it had "received a number of inquiries from qualified third parties."

Bern, whose board seat is among three being targeted in a heated fight with the activists, said the goal was "enhancing shareholder value."

Bern's announcement came two weeks before a May 8 shareholder meeting during which New York investment firms Crescendo Partners and Myca Partners hope to win three seats on the eight-member board.

Analyst Scott Krasik of C.L. King & Associates in New York said company officials said on the phone yesterday that their hiring of the banking firms had nothing to do with the proxy fight. Krasik disagreed.

"I think it's a response to the dissident shareholder group as well as a strategic initiative that they probably should undertake," he said.

Analyst Holly Guthrie of Janney Montgomery Scott L.L.C. in Philadelphia said she did not see a link. Charming Shoppes has taken similar measures during other downturns, she said.

The company's announcement came a day after an independent shareholder advisory firm issued a report about the proxy fight. Krasik said the report was a "mixed bag" for Charming Shoppes.

In a 14-page proxy paper, Glass Lewis & Co. lead analyst Katy Davis urged shareholders to support just one of the three dissident board nominees - retail turnaround man Michael C. Appel of Quest Turnaround Advisors in New York.

"In light of the company's continuing performance troubles, we believe the presence of a new director on the board may provide a fresh perspective to tackle the company's operational challenges," the report said.

The report urged shareholders to withhold support for the other two nominees, Arnaud Ajdler of Crescendo and Robert Frankfurt of Myca.

On Thursday, after portions of the report had been made public, Charming Shoppes issued a statement that it was "pleased" that Glass Lewis had not recommended two of the dissident nominees. But is said even Appel lacked experience to be on the board.

Charming Shoppes left out of that statement a less flattering finding: Glass Lewis gave the company an "F" grade for executive compensation. It said that until changes were made a few months ago, executives were generously rewarded despite weak financial results.

"The company paid significantly more compensation to its top executives but performed worse than its peers," the report said.

Glass Lewis recommended that the board's compensation committee eventually be removed. None of its members is up for reelection next month.

Two of the three dissident nominees did not return calls for comment yesterday. The third declined comment.

In its own statement Thursday, the dissident group, called the Charming Shoppes Full Value Committee, reiterated its attacks on the company, accusing it of putting out "carefully spun 'home-cooked' numbers."

Charming Shoppes has likened the activists to "corporate raiders" with an agenda to turn a short-term profit at the expense of the company's long-term health.

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