Charming Shoppes, Inc. (CHRS)

Investors Charm!!!

Charming Shoppes is a specialty apparel retailer primarily focused on plus-size women’s apparel. The company offers three distinct brands namely LANE BRYANT, FASHION BUG and CATHERINE PLUS SIZES. They sell their offerings primarily through retail stores and direct channel. Charming Shoppes operates 2,386 retail stores across 48 states in U.S.

The $ 32 billion plus-size apparel market is estimated to grow more than 10% in the next 5 years. It is also estimated that plus size represents the fastest growing category in the women’s apparel market, with junior plus-size as the fastest growing segment within the demographic. This portends well for Charming Shoppes, which has a 40% market share in the women’s plus-size apparel market, and derives 77% of its revenues from plus-sizes.

Third quarter results have been healthy with 8% rise in retail sales that form 87% of the revenues. Net income grew by whooping 80% due to well-controlled administrative expenses and upswing in LANE BRYANT revenues. The new store concept of side-by-side CACIQUE store has worked well for the company and they plan to open or relocate 80% of their LANE BRYANT stores in the same format in 2007. Further, management anticipates Active wear, especially its own V SPORT private label, and sweaters to drive future revenues.

Bottom lines are likely to improve with rising proportion of sales through strip centers’ stores which carry lower rent and occupancy structure. Further, strong performance has encouraged the management to expect better fourth quarter results, which indicates about 12% full year revenue growth. All these factors make Charming Shoppes’ every investor charm.