Charming Shoppes Q1 profit surges on cost-cutting
Bensalem, Pa. — Charming Shoppes said Thursday that its first-quarter net income more than quintupled, but its revenue was flat and the profit rise was driven largely by cost cutting.
The CEO sounded a cautious tone for the future, saying the company needs to reignite store traffic and cope with rising cotton costs.
The company, which operates Lane Bryant, Catherines and Fashion Bug stores, said its net income for February through April was $26 million, up from $3.9 million in the same period last year.
CEO Anthony Romano credited "more fashionable" offerings and an increase in online sales. The company said it also benefited from "aggressive inventory management," and "expense reductions" at Lane Bryant stores. It also sold its Hong Kong office in favor of renting an office there and closed stores.
Same-store sales rose 2%, driven by a 7% increase in sales at Lane Bryant.
Net revenue, which includes all stores, fell 0.1% to $504.4 million. Over the past year, the company closed 139 stores.
Retailers turn in mixed results for May; Costco, Macy’s and Saks shine
New York City — A sluggish economy, cool weather and high prices at the pump tempered retail sales in May, as retailers reported mixed results for the month. Retail Metrics projected an increase of 5.1% for the 25 chains tracked, which would mark the 21st straight monthly gain from September 2009.
Among the May standouts was Costco Wholesale Corp., with a 13% rise in same-store sales. Analysts were expecting an 11.2% increase. However, without gasoline sales and beneficial foreign exchange rates, Costco’s same-store sales would have been 7%.
BJ’s Wholesale Club also benefited in May from gasoline sales. The chain reported a 7.4% increase in same-store sales with a contribution from sales of gas of 4.4%. Excluding the impact of gas sales, same store sales increased by 3%. BJ’s reported that sales of food increased by about 4%, driven primarily by demand for fresh food. Sales of general merchandise were approximately flat.
Other retailers who turned in strong performances in May included Macy’s, with a 7.4% rise in same-store sales when a 5.6% increase was expected. The company lifted its full-year same-stores sales estimate.
"The consumer is still in slow recovery mode," said FBR Capital Markets analyst Liz Dunn. "They are being selective … and really consolidating purchases around places where they feel like there is better fashion."
The luxury segment continued to show signs of a strong recovery as both Saks and Nordstrom outdid expectations. Saks’ same-store sales climbed 20%, easily topping the consensus estimate calling for a 6.5% increase. Strong categories at Saks Fifth Avenue stores for the month included women’s designer apparel, shoes, handbags and accessories; men’s clothing, shoes and accessories; jewelry; cosmetics; and fragrances.
Nordstrom reported a 7.4% increase, better than analysts had expected.
Lower-priced department stores did not fare as well. Both J.C. Penney and Kohl’s turned in disappointing performances. J.C. Penney Co.’s same-store sales fell 1%. Analysts had forecast a 3.3%. The chain said bad weather, shifting some promotions and eliminating others weighed on its sales and traffic. Stronger categories included children’s and women’s clothing and accessories and the in-store Sephora beauty boutiques.
Kohl’s Corp.’s same-store sales rose 0.8%, compared with analysts’ forecasts for a 2.8% increase. The retailer said its best performing categories were accessories, home and children’s. The strongest regions included the Mid-Atlantic, Northeast and Southeast.
At Target Corp., same-store sales rose 2.8%, but shoppers remained cautious and the figure fell short of Wall Street’s 3.5% forecast increase. Chairman, president and CEO Gregg Steinhafel said in a statement that customer traffic slowed during the second half of the month. He said higher gas prices and other inflationary pressures crimped customer spending and slowed growth more than Target expected.
The chain also said last month that gas and food price hikes made shoppers more cautious during the first quarter.
Discount retailer Fred’s said its same-store sales inched up 0.2% for May, but the performance missed Wall Street’s estimate.
In the specialty apparel segment, Zumiez continued on its hot streak, reporting a slightly better-than-expected rise of 7.8%. The Buckle also outdid expectations, as sales increased 8.8%.
Gap’s same-store sales fell 4% in May, missing analysts’ estimates for a 1% decline. North America, sales fell the most at Banana Republic stores — a 6% decline, compared with a 4% decline at Gap and a 1% decline at Old Navy. International revenue fell 9%.
Limited, operator of the Victoria’s Secret chain, posted an increase of 6%, below the analysts’ average forecast of 7%. Wet Seal also fell short of analysts’ expectations, with a 2.9% increase.
Hot Topic said its same-store sales edged up 0.4%, as revenue dropped at its Hot Topic stores.
TJX Cos. reported a 2% increase in same-store sales, in line with its expectations.
Winn-Dixie helps customers prepare for hurricane season
JACKSONVILLE, Fla. — Winn-Dixie Stores has announced its creation of a “hurricane preparedness kit” in advance of what is expected to be an extremely active year.
“Our guests can find the supplies to stock their hurricane kits at their neighborhood stores, and it can be done on a budget by using our customer reward card and taking advantage of this week’s hurricane preparedness stock up and save sale in our stores,” Winn-Dixie’s group VP marketing Mary Kellmanson said. “We are offering a number of buy one, get one sales, 10 for $10 items, and ‘Save ’til’ offers. That’s in addition to our Winn-Dixie brand products, which are better than or equal in quality to national brands at a significant cost savings.”
The timing of the announcement corresponded to the official start to the Atlantic hurricane season.
Kellmanson noted that the American Red Cross and emergency management officials urge people to have a “hurricane kit” with enough medicine, bottled water, canned and nonperishable foods, paper products, flashlights and batteries to last at least three days.
According to Winn-Dixie, a typical “hurricane kit” should include:
3-pack of gallon bottles of drinking water or 24-pack of 16-oz. bottles of water;
32-oz. bottle of Gatorade or 20-oz. bottle of Propel vitamin water or sports drink;
10-pack of Kool-Aid Jammers;
7.5-oz. or 15-oz. cans of spaghetti (Chef Boyardee);
4-pack of Kraft Handi-Snacks pudding and gel cups;
16-oz. jar of peanut butter;
16-oz. jar of jam or jelly;
6-pack of canned tuna or chicken;
5-oz. can of Vienna sausage;
12-oz. can of Spam or Hormel corned beef or 10-oz. can of Hormel Compleats or Chili Meals;
3.5-oz. package of beef jerky;
150-count foam plates;
50-count of 16-oz. red or clear plastic cups;
15-count of 13-gallon tall kitchen or 30-count of 4-gallon trash bags;
8-roll package of paper towels;
182-oz. bottle of liquid bleach;
Flashlights (one per person);
Batteries (D-cell, C-cell and AA-cell);
NOAA emergency alert weather radio;
10-in. battery-operated fan;
2.5-gallon plastic gasoline can
1-quart bottle of Coleman Liquid Fuel;
Magic Lamp with refill;
1 box of kitchen matches; and
1 bag of charcoal briquettes.
Experts predict the 2011 Atlantic hurricane season will have 12 to 18 named storms, six to 10 of which are predicted to become hurricanes. Forecasters expect three to six of those will strengthen to major hurricanes (Category 3 or higher on the Saffir-Simpson scale) with sustained winds of at least 111 miles per hour.