The country's largest retailer of plus-size women's apparel, Charming Shoppes, Inc (Nasdaq:
CHRS) is closing 150 underperforming stores, laying off 150 employees (13% of its management staff), and reducing the amount of stores it will open in fiscal 2009. The closures will leave Charming Shoppes with approximately 900 Fashion Bug stores, 923 Lane Bryant stores and 471 Catherine's stores.
The company stated the actions are being taken "as a result of the Company's ongoing business review and in response to the continuing weak retail and economic environment."
The closures are comprised of 100 Fashion Bug stores, its only four full-line Petite Sophisticate stores, and the remaining closures are among Lane Bryant and Catherine's stores. The company said its 52 Petite Sophisticate Outlet stores will not be affected. Fashion Bug stores are typically located in Class B community shopping centers and average 8,800 square feet. Petite Sophisticate stores average 2,700 square feet, Catherine's Plus stores average 4,200 square feet and Lane Bryant stores average 5,900 square feet.
The company acquired the Petite Sophisticate brand in early 2006 when it assumed 75 leases from the Retail Brand Alliance. However, the bulk of the stores were outlet locations and the company turned about 30 into Lane Bryant Outlets. It didn't open its first full-price Petite Sophisticate until October 2007, and proceeded to test the concept by opening three more stores.
In an interview with CoStar early last year, Gayle Coolick, director of investor relations for Charming Shoppes commented on the company's 2007 plans for Fashion Bug, which involved opening only 10 stores, relocating 25 stores and closing 22 stores. She told CoStar that the company's relocations are usually a result of leases coming due, creating an opportunity to move to a newer, better nearby location that will boost traffic to stores. Coolick also said that although stores chosen for closing are underperforming stores, this is usually not a result of a poor location choice, and instead other factors have come into play, such as losing an anchor tenant in a center.
In the most recent store closing announcement, Charming Shoppes stated, "In a majority of cases, the closing store is in a market area supported by a number of our stores, and the Company will take advantage of opportunities for sales transfers to remaining area stores." As a result, the company predicts the closed stores will only amount to a $6 million pre-tax loss.
In regards to the slowdown of store expansion plans, Charming Shoppes says it will save 30% on its capital spending budget as compared to last year when it store opening guidance was 90-100 new stores. The new plan calls for a 50% reduction in new store openings, a 20% reduction in relocations, and reductions in infrastructure spending. And the store openings that will occur are primarily leases that the company has already entered into at this point; mostly Lane Bryant stores.
The company provided a fourth quarter update in early January, which showed that net sales at retail stores were up only 1% over the previous 48-week period and that comparable store sales had declined 4% over the same time frame. In the report, the company stated, "Throughout the holiday season, we continued to be challenged by decreases in traffic levels to the stores, compounded by lackluster consumer spending." While retail stores aren't doing that well, Charming Shoppes e-commerce and catalog segments have performed much stronger over the last year.
This article appears in "CoStar's Retail News Roundup: Feb. 3 to Feb. 9, 2008," a weekly feature written by CoStar News Senior Editor Sasha M. Pardy. In this issue, CoStar reports on Simon Property Group's year-end results; expansion plans at Tractor Supply and Under Armour; new retail developments in IN, FL, and TX; acquisition, merger, or sale activity at Nexcen and Great American Cookie Company, Wendy's and Café Express, and Restoration Hardware, Sears and Catterton; store closings or bankruptcy at Fortunoff, Starbucks, Ann Taylor, Friedman's and Crescent Jewelers, Boston Market and Domain Home; sustainability at Costco; personnel announcements at ICSC and METRO Commercial, and more.