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SAN DIEGO, CA-Same-store sales dipped 0.9% at Charlotte Russe Holding Inc. in the third quarter ended June 25, but management notes that its Rampage division posted double-digit comp gains, and the company forecasts improvement. The sliding comps came during a quarter when net income and earnings per share both dropped, and the chain sustained a financial hit from an employee lawsuit.

Net income for the quarter decreased 39% to $3.3 million from $5.4 million during the same quarter last year. On a per-share basis, earnings slipped to 14 cents for the quarter, compared with 23 cents for the same quarter of fiscal 2004. Among the factors dragging down earnings was a pre-tax charge of $500,000, or 1 cent per share, associated with the tentative settlement of a lawsuit related to the classification of the company’s California store managers for wage and hour purposes.

The decline in same-store sales contrasted with the company’s performance in the third quarter of last year, when comparable store sales increased 7.1%. The drop in same-store sales for the recent quarter occurred despite a 10.4% increase in total sales to $146.9 million from $133 million for the third quarter last year.

Despite the dips in profit and same-store sales, CEO Mark Hoffman sounded positive during the company’s conference call with financial analysts. “While it is hard to see in the numbers just reported for the quarter, I believe that much progress was made by the merchandising team in both Charlotte Russe and Rampage during the quarter,” Hoffman said. “The improving sales trends in each brand, specifically in the months of May and June, give me confidence in the impact of our strategies.”

Specifically, Hoffman cited double-digit gains in same-store sales for the Rampage division during May and June, and he offered guidance that both Charlotte Russe and Rampage will post positive comp results in the coming months. The company operated a total of 388 stores in 40 states and Puerto Rico as of the quarter’s end on June 25, of which 321 were Charlotte Russe stores and 67 were Rampage stores. It has opened 28 new stores during the first nine months of fiscal 2005 and expects to open up to 50 new stores during the fiscal year that will ending in September. The mall-based specialty retailer targets women in their teens and twenties.

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