Mark Hoffman, CEO of the chain, said that the company decided to expand faster "in light of Charlotte Russe's strong sales performance during the past three fiscal quarters, and the continued strength of our debt-free balance sheet." Hoffman delivered his comments in the company's quarterly earnings announcement and a conference call with financial analysts to discuss those financial results.
The 66-store Rampage chain "continued to struggle with itsbrand repositioning" during the recent quarter, representing about 16% of Charlotte Russe Holdings' store count but contributing only about 10% to revenue in the second quarter.
In addition, the Rampage chain remained a drag on profits. Its store-level operating losses amounted to about $9 million during the first half of fiscal 2006, with almost 65% of thatloss occurring in the second quarter ended March 25.
Due in part to a non-cash write-down of $22.5 million associated with the Rampage chain, Charlotte Russe incurred a net loss of $11.6 million as compared to a netloss of $762,000 in the same quarter last year. The loss per share of 52 cents compared to a loss of three cents for the same quarter of the previous year. Net sales for the second quarter increased 34.7% to $171.1 million, with comparable store sales increasing 16.6% versus a decrease of 3.1% for the second quarter of fiscal 2005.
Excluding the Rampage non-cash charge with its 60-centimpact per share and the impact of other one-time factors, earnings per share would have improved to three cents in the quarter, compared to a loss of three cents for the same quarter last year. The company operated a total of 420stores in 43 states and Puerto Rico as of March 25, consisting of 354 Charlotte Russe and 66 Rampage locations.
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