0000019353-95-000005.txt : 19950914
0000019353-95-000005.hdr.sgml : 19950914
ACCESSION NUMBER: 0000019353-95-000005
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 19950729
FILED AS OF DATE: 19950911
SROS: NASD
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CHARMING SHOPPES INC
CENTRAL INDEX KEY: 0000019353
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-WOMEN'S CLOTHING STORES [5621]
IRS NUMBER: 231721355
STATE OF INCORPORATION: PA
FISCAL YEAR END: 0131
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-07258
FILM NUMBER: 95572919
BUSINESS ADDRESS:
STREET 1: 450 WINKS LANE
CITY: BENSALEM
STATE: PA
ZIP: 19020
BUSINESS PHONE: 2152459100
MAIL ADDRESS:
STREET 1: 450 WINKS LANE
CITY: BENSALEM
STATE: PA
ZIP: 19020
10-Q
1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 29, 1995
OR
( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-7258
CHARMING SHOPPES, INC.
Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1721355
------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 WINKS LANE BENSALEM, PA 19020
------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(215) 245-9100
--------------
(Registrant's telephone number, including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES (X) NO ( )
103,033,899 common shares were outstanding as of July 29, 1995.
CHARMING SHOPPES, INC. AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
July 29, 1995 and January 28, 1995.....................1-2
Consolidated Statements of Income
Thirteen weeks ended July 29, 1995 and
July 30, 1994............................................3
Consolidated Statements of Income
Twenty-six weeks ended July 29, 1995 and
July 30, 1994............................................4
Consolidated Statements of Cash Flows
Twenty-six weeks ended July 29, 1995 and
July 30, 1994............................................5
Notes to Consolidated Financial Statements..................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............7-9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..................10
CHARMING SHOPPES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
July 29, January 28,
1995 1995
(In Thousands)
ASSETS
Current Assets
Cash and cash equivalents $ 22,860 $ 43,923
Available-for-sale securities 20,744 40,180
Merchandise inventories 316,897 258,552
Prepayments and other 67,934 89,060
-------- --------
Total Current Assets 428,435 431,715
Property, equipment and leasehold improvements 500,212 483,372
Less: accumulated depreciation and amortization 219,330 197,119
-------- --------
Net property, equipment and leasehold
improvements 280,882 286,253
Available-for-sale securities (including fair
value adjustments of ($427) and $($2,591),
respectively) 78,146 76,988
Other assets 55,458 45,853
-------- ---------
Total Assets $842,921 $840,809
======== =========
See Notes to Unaudited Consolidated Financial Statements
(1)
CHARMING SHOPPES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
July 29, January 28,
1995 1995
(In Thousands Except Shares)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $160,858 $137,622
Accrued expenses 86,931 97,276
Current portion - long-term debt 5,004 5,002
-------- --------
Total Current Liabilities 252,793 239,900
Deferred taxes 24,789 24,789
Long-term debt 15,939 17,298
Stockholders' Equity
Common Stock $.10 par value
Authorized 300,000,000 shares
Issued and outstanding 103,033,899 and
102,849,239 shares 10,303 10,289
Additional paid in capital 55,763 55,176
Deferred employee compensation (4,319) (5,025)
Unrealized losses on Available for Sale
Securities (net of income taxes of
$150 and $906, respectively) (277) (1,685)
Retained earnings 487,930 500,067
-------- --------
Total Stockholders' Equity 549,400 558,822
-------- --------
Total Liabilities and Stockholders' Equity $842,921 $840,809
======== ========
See Notes to Unaudited Consolidated Financial Statements
(2)
CHARMING SHOPPES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For Twenty-six Weeks Ended
(In Thousands Except Share and July 29, July 30,
Per Share Amounts) 1995 1994
Net sales $512,790 $621,028
Other income 3,827 4,571
-------- --------
Total Revenue 516,617 625,599
-------- --------
Cost of goods sold, buying and
occupancy expenses 394,508 440,450
Selling, general and administrative expenses 134,025 136,772
Interest expense 1,020 1,151
-------- --------
Total Expenses 529,553 578,373
-------- --------
Income (loss) before income taxes (12,936) 47,226
Income tax expense (benefit) (5,433) 15,207
-------- -------
Net Income (Loss) $ (7,503) $ 32,019
======== ========
Weighted average number of common shares
outstanding 102,961,990 107,830,329
=========== ===========
Per Share Data:
Net Income (Loss) $(.07) $.30
==== ====
Cash Dividends $.0450 $.0450
====== ======
See Notes to Unaudited Consolidated Financial Statements
(4)
CHARMING SHOPPES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For Thirteen Weeks Ended
(In Thousands Except Share and July 29, July 30,
Per Share Amounts) 1995 1994
Net sales $268,448 $323,417
Other income 1,920 2,396
-------- --------
Total Revenue 270,368 325,813
-------- --------
Cost of goods sold, buying and
occupancy expenses 207,731 229,735
Selling, general and administrative expenses 69,023 68,849
Interest expense 481 585
-------- --------
Total Expenses 277,235 299,169
-------- --------
Income (loss) before income taxes (6,867) 26,644
Income tax expense (benefit) (3,734) 8,580
-------- -------
Net Income (Loss) $ (3,133) $ 18,064
======== ========
Weighted average number of common shares
outstanding 103,001,599 107,515,611
=========== ===========
Per Share Data:
Net Income (Loss) $(.03) $.17
==== ====
Cash Dividends $.0225 $.0225
====== ======
See Notes to Unaudited Consolidated Financial Statements
(3)
CHARMING SHOPPES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For Twenty-six Weeks Ended
July 29, July 30,
(In Thousands) 1995 1994
Operating Activities
Net income (loss) $(7,503) $32,019
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred income taxes 0 1,000
Depreciation & amortization 24,393 22,130
Amortization of deferred compensation expense 1,011 1,293
Gain on sale of available-for-sale securities (50) (184)
Changes in operating assets and liabilities:
Prepayments & other 20,356 (5,163)
Merchandise inventories (58,345) (54,388)
Accounts payable 23,236 52,318
Accrued expenses (10,345) (11,731)
Income taxes payable 0 (5,867)
------- -------
Net Cash Provided by (Used in) Operating Activities (7,247) 31,427
------- --------
Investing Activities
Investment in capital assets (16,840) (35,476)
Sales of available-for-sale securities 25,510 65,314
Purchases of available-for-sale securities (5,018) (28,594)
Increase in other assets (11,786) (52)
-------- --------
Net Cash Provided by (Used in) Investing Activities (8,134) 1,192
-------- --------
Financing Activities
Reduction of long-term debt (1,357) (359)
Proceeds from exercise of stock options 309 415
Dividends paid (4,634) (4,625)
-------- --------
Net Cash Used in Financing Activities (5,682) (4,569)
-------- --------
Increase (Decrease) in Cash and Cash Equivalents (21,063) 28,050
Cash and Cash Equivalents, Beginning of Year 43,923 52,390
-------- --------
Cash and Cash Equivalents, End of Period $ 22,860 $ 80,440
======== ========
See Notes to Unaudited Consolidated Financial Statements
(5)
CHARMING SHOPPES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Consolidated Financial Statements
The consolidated balance sheet as of July 29, 1995, the consolidated
statements of income for the three and six month periods ended July 29, 1995
and July 30, 1994 and the consolidated statements of cash flows for the six
month periods then ended have been prepared by the Company, without audit. In
the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at July 29, 1995 and for all periods
presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's January 28,
1995 annual report on Form 10-K. The results of operations for the periods
ended July 29, 1995 and July 30, 1994 are not necessarily indicative of the
operating results for the full year.
2. Stockholders' Equity
During the six months ended July 29, 1995, shareholders' equity changed
to reflect the following items: net loss of $7,503,000; dividends paid of
$4,634,000; amortization of deferred compensation expense of $1,011,000; an
increase in common stock and additional paid in capital of $296,000 from the
exercise of options for common stock; and an increase in stockholders' equity
of $1,408,000 from a reduction in the unrealized loss on available-for-sale
securities.
(6)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
RESULTS OF OPERATIONS
The following table sets forth, as a percentage of net sales, certain
items appearing in the Consolidated Statements of Income for the thirteen week
and twenty-six week periods ended July 29, 1995 and July 30, 1994.
Thirteen Weeks Ended Twenty-six Weeks Ended
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
-------------------- --------------------
Net Sales 100.0% 100.0% 100.0% 100.0%
-------------------- --------------------
Cost of Goods Sold,
Buying, and Occupancy 77.4 71.0 76.9 70.9
-------------------- --------------------
Selling, General and
Administrative 25.7 21.3 26.1 22.0
-------------------- --------------------
Interest Expense .2 .2 .2 .2
-------------------- --------------------
Income Tax Expense (Benefit) (1.4) 2.6 (1.0) 2.4
-------------------- --------------------
Net Income (Loss) (1.2)% 5.6% (1.5)% 5.2%
-------------------- --------------------
Thirteen Weeks Ended July 29, 1995 and July 30, 1994
Net sales for the second quarter of the fiscal year ending February 3,
1996 ("Fiscal 1996") totaled $268,448,000 as compared to $323,417,000 for the
corresponding period of the fiscal year ended January 28, 1995 ("Fiscal
1995"), a 17.0% decrease. The Company had a 20.7% decrease in sales of
existing stores compared to Fiscal 1995. 6.0% of sales for the second quarter
of Fiscal 1996 are attributable to stores opened since the second quarter of
Fiscal 1995. Sales for stores closed since the second quarter of Fiscal 1995
accounted for 2.3% of sales during that quarter. The decrease in sales from
existing stores was primarily attributable to the lack of consumer acceptance
of the Company's merchandise assortment and a general weakness in women's
apparel sales.
(7)
The number of retail stores increased from 1,368 on July 30, 1994 to
1,415 on July 29, 1995. During the second quarter of Fiscal 1996 the Company
opened 7 new stores and closed 8 existing stores. The Company expects to open
approximately 47 stores during Fiscal 1996 and plans to close approximately 45
stores prior to December 1995. The Company may also close additional stores
during January of 1996.
Cost of goods sold, buying and occupancy expenses expressed as a
percentage of sales increased 6.4% in the second quarter of Fiscal 1996 as
compared with the corresponding period of Fiscal 1995. The cost of goods sold
portion of the gross margin increased 2.0% over last year as aggressive
promotions were initiated to stimulate consumer demand. This caused markdowns
to be taken earlier and more frequently then planned. In dollar terms
occupancy expenses increase at a rate less than the increase in average
selling square footage. However, the decline in sales caused occupancy
expenses expressed as a percentage of sales to increase 3.8%.
The decline in sales caused selling, general and administrative
expenses expressed as a percentage of sales to increase 4.4% in the second
quarter. Expressed in dollar terms the increase in these expenses was limited
to .3% compared to the corresponding period of Fiscal 1995. Store payrolls
were lower than last year even with a 4% increase in the number of stores.
The reductions in payroll were offset by corresponding increases in
advertising and promotional expenses.
Since the second quarter of Fiscal 1996, sales of existing stores
compared to the corresponding period of Fiscal 1995 have continued to decline.
Sales of existing stores during August, 1995 declined 24% as compared to the
corresponding period of Fiscal 1995. The Company intends to pursue an
aggressive promotional sales plan to attempt to address these declining sales
level. Furthermore , the Company anticipates an operating loss for the third
quarter of Fiscal 1996 which will exceed the loss incurred during the second
quarter of Fiscal 1996.
Twenty-six Weeks Ended July 29, 1995 and July 30, 1994
Net sales for the first two quarters of Fiscal 1996 totaled
$512,790,000 as compared to $621,028,000 for the corresponding period of
Fiscal 1995, a 17.4% decrease. The Company had a 21.7% decrease in sales of
existing stores compared to Fiscal 1995. 6.4% of sales for the first two
quarters of Fiscal 1996 are attributable to stores opened since the second
quarter of Fiscal 1995. Sales for stores closed since the second quarter of
Fiscal 1995 accounted for 2.1% of sales during the first two quarters of
Fiscal 1995.
Cost of goods sold, buying and occupancy expenses expressed as a
percentage of sales increased 6.0% in the first two quarters of Fiscal 1996 as
compared with the corresponding period of Fiscal 1995. The primary reasons
for this increase were the effect of lower comparative store sales on
relatively fixed buying and occupancy costs and a decline in merchandise
margins as compared to the prior year.
(8)
Selling, general and administrative expenses expressed as a percentage
of sales increased 4.1% in the first two quarters of Fiscal 1996 as compared
to the corresponding period of Fiscal 1995. The primary reason for the
increase was the effect of lower comparative store sales on relatively fixed
general and administrative expenses.
The Company has recorded an income tax benefit of $5,433,000 for the
six month period ended July 29, 1995. This benefit is 42% of the Company's
pretax loss for the period as compared to a benefit of 28% of the pretax loss
recorded in the first quarter of this fiscal year. This increase is the
result of the effect of permanent tax benefits and credits on a lower
estimated pretax income.
LIQUIDITY AND CAPITAL RESOURCES
At July 29, 1995, the Company had working capital of $175,642,000 as
compared with $191,815,000 at January 28, 1995. The ratio of current assets
to current liabilities was 1.7 to 1 at July 29, 1995 and 1.8 to 1 at January
28, 1995.
Operating activities used $7,247,000 in cash during the first six
months of Fiscal 1996 as compared to providing $31,427,000 in cash during the
corresponding period of Fiscal 1995. This $38,674,000 decrease was primarily
due to the decline in net income. An increase in the Company's net investment
in inventory (inventory increase less accounts payable increase) was offset by
a decrease in prepaid expenses and other current assets. This reduction was
achieved by withdrawing the cash value of certain Company owned life insurance
policies as well as reducing the prepaid portion of other employee benefit
related expenses.
Through July 29, 1995, capital expenditures amounted to $16,840,000.
During Fiscal 1996, the Company anticipates incurring capital expenditures of
approximately $25 million primarily for the construction of 47 new stores, the
remodeling and expansion of existing stores, and completing the expansion of
the distribution facility in Greencastle, Indiana. It is anticipated that the
capital required for expenditures will be financed principally through
internally generated funds.
Cash dividends were $4,634,000 for the six months ended July 29, 1995
as compared to $4,625,000 for the comparable period of Fiscal 1995.
(9)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended July 29, 1995
(10)
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 thereunto duly authorized.
CHARMING SHOPPES, INC.
----------------------------------
(Registrant)
Date: September 11, 1995 S/Philip Wachs
------------------ -----------------------------------
Philip Wachs
(Chairman of the Board)
Date: September 11, 1995 S/Ivan Szeftel
------------------ ------------------------------------
Ivan Szeftel-Executive Vice
President Finance (Chief Financial
Officer)
--
EX-27
2
5
1000
6-MOS
FEB-03-1996
JUL-29-1995
22,860
20,744
0
0
316,897
428,435
500,212
219,330
842,921
252,793
15,939
10,303
0
0
539,097
842,921
512,790
512,790
394,508
394,508
0
0
1,020
(12,936)
(5,433)
(7,503)
0
0
0
(7,503)
(0.07)
(0.07)