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Charming Shoppes (CHRS)Stock (Apparel Stores Industry, Fashion Industry, Retail Industry)
[edit] Business and FinancialsCharming Shoppes, Inc. is divided into a number of segments:
Charming Shoppes' performance has been poor during Fiscal 2008, reporting a net loss of $87 million. This decrease in net income is due in large part to lower numbers of people actually entering its stores and overall lower demand for its products.[12] In response to its poor performance during the past fiscal year, Charming Shoppes has focused on decreasing costs wherever it can. For example, it has taken steps to have the headquarters of Catherines moved from Memphis, TN to Bensalem, PA. The company plans to share facilities with Fashion Bug, resulting in savings of $8 million. In addition, Charming Shoppes plans to close 150 underperforming stores, which combined lose $5 million annually. Also, by January 31, 2008 the company had eliminated 150 corporate and field management positions, which it believes will save $14 million in annual expenses. Charming Shoppes has also ended the Petite Sophisticate Outlet chain in order to focus on its more established chains, i.e. Lane Bryant, Lane Bryant Outlet, Fashion Bug and Catherines Plus Sizes.[13]
From the above chart it is evident that, through increasing the numbers of Lane Bryant and Catherines stores and decreasing the number of Fashion Bug stores, Charming Shoppes is attempting to focus more on its more established businesses and spend less energy on its less established divisions, especially in light of its hard times. [edit] Trends and Forces[edit] Plus-Size Market Means Good News for Charming ShoppesThe above chart demonstrates the increasing rate of obesity in America. According to Obesity in America, approximately 62% of American women are considered overweight, meaning that they compose a large part of the plus-size market.[16] Charming Shoppes, whose stores (with the exception of Petite Sophisticate) provide clothing to the plus-size demographic, is in a good position to take advantage of this market segment. In addition, obesity is most prevalent in low-income neighborhoods[17], once again a demographic that Charming Shoppes serves. The trend of growing rates of obesity, especially within low income neighborhoods means that the market for Charming Shoppes' goods is expanding. [edit] Decreasing Sales leads to Consolidation for Charming ShoppesCharming Shoppes' sales have decreased substantially from Fiscal 2007 to Fiscal 2008, going from positive to negative net income. Charming Shoppes has attributed this decrease in sales to lower consumer traffic at its stores and fewer overall purchases-store sales decreased by 5% in the past year.[18] Charming Shoppes is trying to cut costs in response to its decreasing net income. The company plans to close 150 underperforming stores, close all its Petite Sophisticate stores, move the headquarters of Catherines in order to share operations with Fashion Bug, eliminate 150 management positions, decrease spending and control inventory much more tightly. Charming Shoppes claims these actions will save an estimated $26 million. [19] [edit] Charming Shoppes Insulated Against Credit CrisisWith home equity dried up, many consumers have started to rack up increasing amounts of credit card debt. As of 2007, the average credit card balance increased by 7%, as opposed to an average of 2% over the last six years.[20] As credit card balances rise, so does the probability of consumers defaulting on them. For example, in the third quarter of 2007 delinquency rates-the amount of loans that are past due divided by the total amount of loans outstanding-at the country's 100 largest banks increased from 4.24% to 4.47%. From 2004 to 2006, when people were still able to refinance their homes or take out home equity loans to pay off mounting credit card debt, delinquency rates rarely surpassed 4%.[21] The increased delinquency rate is bad news not only for credit card companies but for those retailers, such as Lane Bryant, that extend lines of credit to its consumers. Lane Bryant has $600 million in outstanding credit, which is an average of $260 or $270 per customer, and the minimum monthly repayments average $15 to $20 per month.[22] Lane Bryant has an advantage over other retailers that extend lines of credit to its consumers due to the fact that Lane Bryant credit cards are usable only in Lane Bryant stores, whereas other retailers collaborate with Visa or MasterCard, making cards which can be used anywhere. The unrestricted use of these cards leads to larger balances, potentially reaching tens of thousands of dollars.[23] The smaller size of average customer debt on the Lane Bryant credit makes it more likely that debt will be repaid. [edit] Competition
Charming Shoppes' net sales are higher than Dress Barn but lower than Redcats and TJX Companies. Dress Barn sells clothing and accessories to low-to-middle class women. Both the company’s divisions, Dress Barn and Maurices, also offer plus-size apparel. Redcats is the number 3 home shopping company worldwide in fashion and home decoration. It has over 60 merchant websites, over 30 catalogues, and 600 stores internationally. 91.8% of its revenues come from catalog and internet orders. Redcats operates 37 brands, encompassing men's, women's, and children's apparel, furniture, home appliances, and discount retailers.[30] TJX Companies is the parent company of some of the largest discount retailers in the world, such as T.J. Maxx, Marshall's, and A.J. Wright.
 Charming Shoppes2004 Data 2005 Data 2006 Data 2007 Data 2008 Data Most Recent Data Available [edit] References
Categories: Retail | Fashion | Apparel Stores | Mature |
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