SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) November 21, 2002
Charming Shoppes, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Pennsylvania
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(State or Other Jurisdiction of Incorporation)
000-07258 23-1721355
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(Commission File Number) (I.R.S. Employer Identification No.)
450 Winks Lane
Bensalem, Pennsylvania 19020
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(Address of Principal Executive Offices) (Zip Code)
(215) 245-9100
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events and Regulation FD Disclosure
On November 21, 2002, Charming Shoppes, Inc. (the "Company") issued a press
release announcing its third quarter earnings results and re-projected earnings
guidance for the fourth quarter and fiscal year 2003. The following is an
excerpt of financial information included in the text of the release:
CHARMING SHOPPES REPORTS THIRD QUARTER EARNINGS RESULTS AND RE-PROJECTS
EARNINGS GUIDANCE FOR FOURTH QUARTER AND FISCAL YEAR 2003
Bensalem, PA., November 21, 2002 - Charming Shoppes, Inc. (NASDAQ:CHRS) the
retail apparel chain specializing in women's plus-size apparel, today reported
earnings and sales for the third quarter ended November 2, 2002.
For the three months ended November 2, 2002, net income was $502,000 or
$0.00 per diluted share. Net income includes a pretax restructuring credit in
the amount of $1,351,000, related to a restructuring charge recorded on January
28, 2002. Excluding the restructuring credit, net loss was $321,000, or $0.00
per diluted share, compared to net income of $160,000 or $0.00 per diluted share
for the corresponding period last year.
Sales for the quarter ended November 2, 2002 decreased 1% to $542,332,000,
compared to sales of $549,295,000 during the corresponding period of the prior
year. Sales for the three months include sales from Lane Bryant from the August
16, 2001 date of acquisition. Comparable store sales for the corporation
decreased 4% for the quarter ended November 2, 2002.
For the nine months ended November 2, 2002, net income was $42,362,000 or
$0.35 per diluted share, before the cumulative effect of an accounting change,
described below. Net income includes a pretax restructuring credit in the amount
of $1,351,000, related to a restructuring charge recorded on January 28, 2002.
Excluding the restructuring credit and the cumulative effect of an accounting
change, net income was $41,538,000, or $0.34 per diluted share, an increase of
78% compared to net income of $23,388,000 or $0.22 per diluted share for the
corresponding period last year.
Sales for the nine months ended November 2, 2002 increased 35% to
$1,811,255,000 compared to sales of $1,346,756,000 during the corresponding
period of the prior year. Sales for the nine months include sales from Lane
Bryant from the August 16, 2001 date of acquisition. Comparable store sales for
the corporation decreased 1% for the nine months ended November 2, 2002.
The Company has re-projected earnings per share of $0.00 for the fourth
quarter Fiscal 2003, based on revised comparable store sales projections for a
negative low-to-mid single digit comp. This projection is based on fourth
quarter comparative store sales for Lane Bryant in the negative mid-to-high
single digit range, and positive low single digits for Fashion Bug and
Catherines.
The Company has also re-projected earnings per share of $0.34 for the
Fiscal Year 2003, excluding a restructuring credit and the cumulative effect of
an accounting change, as compared to $0.19 per share for Fiscal Year 2002,
excluding a pre-tax restructuring charge of $37.7 million, which was recorded on
January 28, 2002.
Related to the adoption of FASB Statement 142, "Goodwill and Other
Intangible Assets", the Company had previously recorded a cumulative effect of
an accounting change in the amount of $43,975,000, or $0.33 per diluted share,
effective as of the beginning of the current fiscal year. Net loss after the
cumulative effect of an accounting change and the restructuring credit was
$1,613,000 or $0.01 income per diluted share for the nine months ended November
2, 2002.
At the end of the quarter, Charming Shoppes, Inc., operated 2,340 stores in
48 states under the names LANE BRYANT(R), FASHION BUG(R), FASHION BUG PLUS(R),
CATHERINE'S PLUS SIZES(R), MONSOON(R) and ACCESSORIZE(R). Monsoon and
Accessorize are registered trademarks of Monsoon Accessorize Ltd. During the
nine months ended November 2, 2002, the Company opened 59, converted 41,
relocated 32, and closed 163 stores. The Company ended the quarter with 1,159
Fashion Bug and Fashion Bug Plus stores, 696 Lane Bryant stores, 475 Catherine's
Plus Sizes stores, and 10 Monsoon/Accessorize stores. The Company ended the
quarter with approximately 16,568,000 square feet of leased space. Please visit
www.charmingshoppes.com for additional information about Charming Shoppes, Inc.
This press release contains certain forward-looking statements concerning
the Company's operations, performance, and financial condition. These
forward-looking statements include statements regarding future performance,
including earnings, sales performance, and other matters. Such forward-looking
statements are subject to various risks and uncertainties that could cause
actual results to differ materially from those indicated. Such risks and
uncertainties may include, but are not limited to: failure to achieve successful
integrations, failure to successfully implement the restructuring plan, failure
to successfully implement the Company's business plan for increased
profitability and growth in the plus-size women's apparel business, the
availability of suitable store locations on appropriate terms, changes in or
miscalculation of fashion trends, extreme or unseasonable weather conditions,
economic downturns, a weakness in overall consumer demand, the ability to hire
and train associates, trade restrictions and political or financial instability
in countries where goods are manufactured, the interruption of merchandise flow
to the Company's retail stores from its centralized distribution facilities,
competitive pressures, and the adverse effects of acts or threats of war,
terrorism, or other armed conflict on the United States and international
economies. These, and other risks and uncertainties, are detailed in the
Company's filings with the Securities and Exchange Commission, including the
Company's Annual Report on Form 10-K for the fiscal year ended February 2, 2002.
Charming Shoppes assumes no duty to update or revise its forward-looking
statements even if experience or future changes make it clear that any projected
results expressed or implied therein will not be realized.
CHARMING SHOPPES, INC.
3rd Quarter 3rd Quarter
Ended Ended
Percent November 2, Percent November 3, Percent
(in thousands except per share amounts) Change 2002(a) of Sales 2001(b) of Sales
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Net sales .............................................. (1.3)% $542,332 100.0% $549,295 100.0%
Cost of goods sold, buying, and occupancy .............. (1.6) 389,748 71.9 396,026 72.1
Selling, general, and administrative ................... 1.4 148,323 27.3 146,248 26.7
Restructuring credit ................................... N/A (1,351) (0.2) 0 0.0
Amortization of goodwill ............................... (100.0) 0 0.0 1,221 0.2
Total operating expenses ............................... (1.2) 536,720 99.0 543,495 99.0
Income from operations ................................. (3.2) 5,612 1.0 5,800 1.0
Other income, principally interest ..................... (36.4) 698 0.1 1,098 0.2
Interest expense ....................................... (29.7) (4,667) (0.8) (6,636) (1.2)
Income before income taxes ............................. 527.1 1,643 0.3 262 0.0
Income tax provision ................................... N/A 1,177 0.2 102 0.0
Income before minority interest ........................ 191.3 466 0.1 160 0.0
Minority interest in net loss of consolidated subsidiary N/A 36 0.0 0 0.0
Net income ............................................. 213.8 % $ 502 0.1% $ 160 0.0%
Basic net income per share ............................. $ -- $ --
Weighted average shares outstanding .................... 115,605 109,579
Net income per share, assuming dilution ................ $ -- $ --
Weighted average shares and equivalents outstanding .... 116,611 110,543
(a) Results of operations for the quarter ended November 2, 2002 include a
pre-tax restructuring credit of $1.4 million. Excluding the restructuring
credit, net loss for the quarter ended November 2, 2002 was $321, or $.00 per
diluted share.
(b) Results of operations for the quarter ended November 3, 2001 include the
results of operations of Lane Bryant, Inc.from August 16, 2001 (the date of
acquisition).
CHARMING SHOPPES, INC.
Nine Months Nine Months
Ended Ended
Percent November 2, Percent November 3, Percent
(in thousands except per share amounts) Change 2002(a) of Sales 2001(b) of Sales
Net sales .............................................. 34.5 % $1,811,255 100.0% $1,346,756 100.0%
Cost of goods sold, buying, and occupancy .............. 30.4 1,269,802 70.1 973,483 72.3
Selling, general, and administrative ................... 41.4 458,870 25.4 324,489 24.1
Restructuring credit ................................... N/A (1,351) (0.1) 0 0.0
Amortization of goodwill ............................... (100.0) 0 0.0 3,664 0.2
Total operating expenses ............................... 32.7 1,727,321 95.4 1,301,636 96.6
Income from operations ................................. 86.0 83,934 4.6 45,120 3.4
Other income, principally interest ..................... (58.7) 1,861 0.1 4,503 0.3
Interest expense ....................................... 50.3 (17,147) (0.9) (11,407) (0.9)
Income before income taxes and cumulative effect of
accounting change ...................................... 79.6 68,648 3.8 38,216 2.8
Income tax provision ................................... 80.6 26,773 1.5 14,828 1.1
Income before minority interest and cumulative effect
of accounting change ................................... 79.0 41,875 2.4 23,388 1.7
Minority interest in net loss of consolidated subsidiary N/A 487 0.0 0 0.0
Income before cumulative effect of accounting change ... 81.1 42,362 2.3 23,388 1.7
Cumulative effect of accounting change(c) .............. N/A (43,975) (2.4) 0 0.0
Net income (loss) ...................................... (106.9)% $ (1,613) 0.0% $ 23,388 1.7%
Basic net income (loss) per share:
Income before cumulative effect of accounting change ... $ 0.37 $ 0.22
Cumulative effect of accounting change(c) .............. (0.38) 0.00
Net income (loss) ...................................... $(0.01) $ 0.22
Weighted average shares outstanding .................... 114,323 104,067
Net income (loss) per share, assuming dilution:
Income before cumulative effect of accounting change ... $ 0.35 $ 0.22
Cumulative effect of accounting change(c) .............. (0.33) 0.00
Net income (loss)(d) ................................... $ 0.01 $ 0.22
Weighted average shares and equivalents outstanding .... 132,002 105,056
(a) Results of operations for the nine months ended November 2, 2002 include a
pre-tax restructuring credit of $1.4 million and a cumulative effect of an
accounting change of ($43,975). Excluding the restructuring credit and the
cumulative effect of an accounting change, net income for the nine months ended
November 2, 2002 was $41,538, or $.34 per diluted share.
(b) Results of operations for the nine months ended November 3, 2001 include the
results of operations of Lane Bryant, Inc.from August 16, 2001 (the date of
acquisition).
(c) Write-down of non-deductible goodwill in connection with adoption of FASB
Statement No. 142, "Goodwill and Other Intangible Assets."
(d) Results may not add due to rounding.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHARMING SHOPPES, INC.
(Registrant)
Dated: November 21, 2002 By: /S/ Eric. M. Specter
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Name: Eric M. Specter
Title: Executive Vice President