Charming Shoppes Expands

Charming's sales projections assume comparable store sales increases of low single digits for the corporation, which operates women's retail shops specializing in plus sizes under the names Lane Bryant, Fashion Bug, Fashion Bug Plus and Catherines Plus Sizes. The corporation will continue to locate mainly in strip centers, with 2006 to continue its previously stated strategy of long-term store growth primarily in the Lane Bryant and Catherines chains.

One reason for the focus on strip centers is that "availability of strip center retail space continues to significantly outpace mall expansion," the company has said, and another is that "we benefit in strip centers from substantially lower occupancy costs as compared to occupancy costs in malls." Approximately 70% of the company's locations are in strip shopping centers, with the balance in community and regional malls, and most of the sites are located in suburban areas and small towns. The 81 new stores planned for fiscal 2006 will include 60 Lane Bryants, 15 Fashion Bugs and six Catherine Plus Sizes.

The company expects gross margins of about 30% or slightly higher for the year, expecting to achieve those results through "improved merchandise assortments at each of the brands, primarily from continued improvement at Lane Bryant and improving margins at Catherines Plus Sizes. It expects to spend $85 million to $90 million on capital expenditures, about 75% of which will go toward store openings, relocations and improvements, with the remainder of the capital improvements budget primarily planned for improvements in the company's information technology and corporate infrastructure.

For the full year, earnings per share are projected to be in the range of 58 cents to 62 cents. For the first quarter that will end April 30, earnings per share are projected at 22 cents to 23 cents, based on total sales of $600 million to $610 million and comparable store sales increases of low single digits. For the corresponding period ended May 1, 2004, which included record net income for the first quarter, diluted earnings per share were 22 cents.