Knobias Clip Report (01-22-20009) CHIC
Submitted By Knobias ClipReport
CHIC: CEO Comments on Q1 Results and Discusses Growth Initiatives
By Fain Hughes, fhughes@knobias.com
Shares of Charlotte Russe Holding, Inc. (CHIC) were weaker on Thursday after the Company reported its financial results for the first quarter ended December 27, 2008.
First quarter fiscal 2009 net sales increased 1.0% to $240.7 million, compared to $238.2 million in the first quarter of fiscal 2008. Comparable store sales for the period decreased 9.1%. Diluted loss per share for the 2009 first quarter was $0.14 compared to diluted earnings per share of $0.56 for the same period in 2008.
Management expects sales trends to remain soft during the second quarter of fiscal 2009, reflecting the macro environment, the Easter shift and the seasonality of the Company’s business model. Comparable store sales are expected to be in the negative mid- to high-single digits, and non-GAAP net loss per diluted share is expected to be in the range of $0.10 to $0.20. The Company has reduced its new store opening and capital expenditure plans to 20 locations and $30 million, respectively, in fiscal 2009.
John Goodman, “Our first quarter was very disappointing. We were encouraged by our performance in October and November, but sales trends deteriorated significantly in the final month of the quarter. This led to a substantial build-up of inventory throughout December. In order to enter January in an appropriate inventory position, it was necessary to take significant mark-downs in December.”
He continued, “We believe that we can drive improvement in this business, even in a challenging environment. In the past, we have over-assorted and had too much product in our stores. Today, we are fostering a singular merchandising vision that is supported by better assortment planning, more efficient buying and shorter delivery flows.”
Mr. Goodman said, “Our brand and product development initiatives will be supported by compelling visual representation and aspirational marketing campaigns. In fact, this is an area that has been under-utilized. Going forward, marketing will play an important role in communicating our refined brand positioning and fashion perspective.”
He explained, “We believe that we have the ability to improve sales per square foot by tailoring our new store size and format to a smaller footprint of approximately 5,500 square feet; taking advantage of opportunistic deals in mall locations; offering more compelling product and achieving stronger sell-throughs; implementing a more effective planning and allocation process; and merchandising that makes our stores easy to shop. We also believe that we have the opportunity to improve and grow our outlet business. There is clearly potential to make this business more productive. We expect these initiatives to begin to bear fruit this Spring and have a meaningful impact in the Fall.”
Mr. Goodman added, “When I look at the competitive landscape, target customer, product, real estate and capabilities within this organization, I see a great deal of runway for building the brand into its fullest potential.”
The Company also announced that its Board of Directors is engaged in a review of strategic alternatives, including a possible sale of the Company, to maximize value for shareholders. The Company has received potential expressions of interest from third parties. The Company does not plan to comment further until the review is complete. As a result, the Company has cancelled its Analyst and Investor Day on January 28 in New York.
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