8-K

UNITED STATES

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) March 15, 2006

CHARMING SHOPPES, INC.

(Exact name of registrant as specified in its charter)

PENNSYLVANIA	000-07258	23-1721355
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

450 WINKS LANE, BENSALEM, PA	19020
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (215) 245-9100

NOT APPLICABLE

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)  

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)  

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))  

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))  

Item 2.02. Results of Operations and Financial Condition.

On March 15, 2006 we issued a press release announcing our sales and earnings for the fourth quarter and fiscal year ended January 28, 2006 and re-affirming our earnings outlook for the first quarter ending April 29, 2006. The earnings announcement is attached as Exhibit 99.1 to this report.

In accordance with general instruction B.2 to Form 8-K, the information included in this Item 2.02, and the exhibit attached hereto, shall be deemed to be “furnished” and shall not be deemed to be “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Item 9.01. Financial Statements and Exhibits.

Exhibit No.	Description
99.1	Press Release dated March 15, 2006

1

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)
Date: March 15, 2006	/S/ERIC M. SPECTER
	Eric M. Specter
	Executive Vice President
	Chief Financial Officer

2

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release dated March 15, 2006

3

EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

CHARMING SHOPPES REPORTS FOURTH QUARTER

NET INCOME OF $19.2 MILLION, AN INCREASE OF 294% OVER PRIOR YEAR;

REPORTS RECORD SALES AND EARNINGS FOR FISCAL YEAR 2006;

REAFFIRMS 1^ST QUARTER EARNINGS OUTLOOK

Bensalem, PA, March 15, 2006 - Charming Shoppes, Inc. (NASDAQ:CHRS) a leading multi-brand, multi-channel specialty apparel retailer specializing in women's plus-size apparel, today reported sales and earnings for the fourthquarter and fiscal year ended January 28, 2006. The Company’s reported results for the three and twelve month periods ended January 28, 2006 include sales and earnings from Crosstown Traders, Inc., since its acquisition on June 2, 2005.

Three Months Ended January 28, 2006

For the three months ended January 28, 2006, net income increased 294% to $19.2 million or $0.15 per diluted share. For the corresponding period ended January 29, 2005, net income was $4.9 million or $0.04 per diluted share. The increase in net income is attributable to the combination of solid increases in sales and operating margin for the Company’s retail stores segment, and the earnings contribution from Crosstown Traders, which was acquired on June 2, 2005, as well as a reduction in the Company’s tax rate for the quarter.

Net sales for the three months ended January 28, 2006 increased 36% to $799.6 million, compared to sales of $588.0 million for the three months ended January 29, 2005. Net sales for the Company’s direct-to-consumer segment were $155.8 million. Net sales for the Company’s retail stores segment increased 9% to $643.8 million. Consolidated comparable store sales for the Company’s retail store brands increased 7% during the three months ended January 28, 2006.

Commenting on sales and earnings, Dorrit J. Bern, Chairman, Chief Executive Officer and President of Charming Shoppes, Inc., said, “We are pleased to report strong year-over-year improvement for our fourth quarter. The increase was led by healthy sales and operating margin improvements at our Lane Bryant and Catherines Plus Sizes brands, which resulted in an overall increase in gross margin at our retail store brands of 80 basis points. Additionally, in our direct-to-consumer segment, Crosstown Traders met our profit objectives during the quarter, delivering the accretive earnings anticipated in our operating plan.”

Twelve Months Ended January 28, 2006

For the twelve months ended January 28, 2006, net income increased 54% to a record $99.4 million or $0.76 per diluted share. For the corresponding period ended January 29, 2005, net income was $64.5 million or $0.52 per diluted share. The Company’s reported results for the twelve month period ended January 28, 2006 include sales and earnings from Crosstown Traders, Inc. since its acquisition on June 2, 2005.

Net sales for the twelve months ended January 28, 2006 increased 18% to a record $2.756 billion, compared to sales of $2.335 billion for the twelve months ended January 29, 2005. Net sales for the Company’s direct-to-consumer segment for the period June 2, 2005 through January 28, 2006 were $298.9 million. Net sales for the Company’s retail stores segment for the twelve months ended January 28, 2006 increased 5% to $2.457 billion. Consolidated comparable store sales for the Company’s retail store brands increased 3% for the twelve months ended January 28, 2006.

Bern continued, “Our solid improvement in net income for fiscal year 2006 follows a strong 70% increase in net income during fiscal year 2005. Our margin on Income From Operations has improved by 100 basis points in each of the last two years, resulting in meaningful progress toward our goal for significant expansion in the Income From Operations margin.”

Bern added, “Looking ahead to the current fiscal year, we have aggressive plans for accelerating store growth, including the roll-out of Lane Bryant’s new Cacique side-by-side store, and our entry into the outlet channel through Lane Bryant Outlet stores. The addition of Crosstown Traders catalog business has also provided growth for our direct to consumer business including further acceleration in our rapidly growing e-commerce businesses.”

Outlook Reaffirmed for the First Quarter ending April 29, 2006

For the first quarter ending April 29, 2006, the Company has reaffirmed its projections for diluted earnings per share in the range of $0.23 - $0.25. This projection assumes total sales in a range of $735 to $745 million and comparable store sales increases of low single digits for the consolidated corporation. For the corresponding period ended April 30, 2005, which included record net income for the first quarter, diluted earnings per share were $0.23.

Charming Shoppes, Inc. will host its fourth quarter fiscal year 2006 earnings conference call today at 9:15 am Eastern time. To listen to the conference call, please dial 866-225-4091 approximately 10 minutes prior to the scheduled event. The conference call will also be simulcast at http://phx.corporate-ir.net/phoenix.zhtml?c=106124&p=irol-audioArchives. The general public is invited to listen to the conference call via the webcast or the dial-in telephone number.

This press release, a transcript of prepared conference call remarks, and certain other financial and statistical information will be available, prior to today’s conference call, on the Company’s corporate website, at http://phx.corporate-ir.net/phoenix.zhtml?c=106124&p=irol-audioArchives. An audio rebroadcast of the conference call will be accessible at http://phx.corporate-ir.net/phoenix.zhtml?c=106124&p=irol-audioArchives, following the live conference.

The conference call will be recorded on behalf of Charming Shoppes, Inc. and consists of copyrighted material. It may not be re-recorded, reproduced, transmitted or rebroadcast, in whole or in part, without the Company's express written permission. Accessing this call or the rebroadcast represents consent to these terms and conditions. Participation in this call serves as consent to having any comments or statements made appear on any transcript, broadcast or rebroadcast of this call.

At January 28, 2006, Charming Shoppes, Inc. operated 2,236 retail stores in 48 states under the names LANE BRYANT^®, FASHION BUG^®, FASHION BUG PLUS^®, and CATHERINES PLUS SIZES^®. Additionally, apparel, accessories, footwear and gift catalogs, including the following titles, are operated by Charming Shoppes’ Crosstown Traders: Old Pueblo Traders, Bedford Fair, Willow Ridge, Lew Magram, Brownstone Studio, Regalia, Intimate Appeal, Monterey Bay Clothing Company, Coward Shoe and Figi's. During the fifty-two weeks ended January 28, 2006 the Company opened 70, relocated 66, and closed 55 retail stores. The Company ended the period with 1,025 Fashion Bug and Fashion Bug Plus stores, 748 Lane Bryant stores, 463 Catherines Plus Sizes stores, and approximately 15,355,000 square feet of leased space. Additionally, Crosstown Traders operates 3 outlet stores. Please visit www.charmingshoppes.com for additional information about Charming Shoppes, Inc.

This press release contains and the Company’s conference call will contain certain forward-looking statements concerning the Company's operations, performance, and financial condition. 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 implement the Company’s business plan for entry into the outlet store distribution channel, the failure to implement the Company’s business plan for increased profitability and growth in the Company’s retail stores and direct-to-consumer segments, the failure to successfully implement the Company’s expansion of Cacique through new store formats, the failure to successfully implement the Company’s integration of operations of and the business plan for Crosstown Traders, Inc., adverse changes in costs vital to catalog operations, such as postage, paper and acquisition of prospects, declining response rates to catalog offerings, failure to maintain efficient and uninterrupted order-taking and fulfillment in our direct-to-consumer business, changes in or miscalculation of fashion trends, extreme or unseasonable weather conditions, economic downturns, a weakness in overall consumer demand, failure to find suitable store locations, the ability to hire and train associates, trade and security restrictions and political or financial instability in countries where goods are manufactured, the interruption of merchandise flow from its centralized distribution facilities, competitive pressures, and the adverse effects of natural disasters, war, acts of terrorism or threats of either, 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 January 29, 2005 and other Company filings with the Securities and Exchange Commission. 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.

CONTACT:	Gayle M. Coolick
	Director of Investor Relations
	215-638-6955

CHARMING SHOPPES, INC.
(Unaudited)
			4th Quarter						4th Quarter
			Ended						Ended
	Percent		Jan. 28,			Percent			Jan. 29,			Percent
(in thousands, except per share amounts)	Change		2006			of Sales (a)			2005 (b)			of Sales (a)
Net sales		36.0	$	799,620			100.0		$	587,952			100.0
Cost of goods sold, buying, catalog, and occupancy		34.4		578,346			72.3			430,281			73.2
Selling, general, and administrative		32.8		193,951			24.3			146,041			24.8
Total operating expenses		34.0		772,297			96.6			576,322			98.0
Income from operations		134.9		27,323			3.4			11,630			2.0
Other income, principally interest		56.2		2,352			0.3			1,506			0.3
Interest expense		12.7		(4,477	)		(0.6	)		(3,971	)		(0.7	)
Income before income taxes		174.9		25,198			3.2			9,165			1.6
Income tax provision		40.6		6,044			0.8			4,300			0.7
Net income		293.7	$	19,154			2.4		$	4,865			0.8
Basic net income per share			$	0.16					$	0.04
Weighted average shares outstanding				120,785						118,362
Net income per share, assuming dilution			$	0.15					$	0.04
Weighted average shares and equivalents outstanding				138,351						120,311
(a) Results do not add due to rounding.
(b) Certain prior year amounts have been reclassified to conform to the current-year presentation.

 

Twelve Months	Twelve Months
Ended	Ended

	Percent	Jan. 28,	Percent	Jan. 29,	Percent
(in thousands, except per share amounts)	Change	2006(a)	of Sales (c)	2005 (b)	of Sales (c)

Net sales	18.0		$	2,755,725		100.0		$	2,334,735		100.0
Cost of goods sold, buying, catalog, and occupancy	16.4			1,911,275		69.4			1,642,649		70.4
Selling, general, and administrative	18.3			683,231		24.8			577,301		24.7
Expenses related to cost reduction plan	(100.0	)		0		-			605		0.0
Total operating expenses	16.8			2,594,506		94.1			2,220,555		95.1
Income from operations	41.2			161,219		5.9			114,180		4.9
Other income, principally interest	193.5			9,093		0.3			3,098		0.1
Interest expense	14.7			(17,911	)	(0.6	)		(15,610	)	(0.7	)
Income before income taxes	49.9			152,401		5.5			101,668		4.4
Income tax provision	42.8			53,044		1.9			37,142		1.6
Net income	54.0		$	99,357		3.6		$	64,526		2.8
Basic net income per share			$	0.83				$	0.56
Weighted average shares outstanding				119,831					116,196
Net income per share, assuming dilution			$	0.76				$	0.52
Weighted average shares and equivalents outstanding				137,064					133,174
(a) Includes results of operations for Crosstown Traders from the acquisition date (June 2, 2005).
(b) Certain prior year amounts have been reclassified to conform to the current-year presentation.
(c) Results do not add due to rounding.

CHARMING SHOPPES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	January 28,			January 29,
(Dollars in thousands, except share amounts)	2006			2005
ASSETS
Current assets
Cash and cash equivalents	$	130,132		$	273,049
Available-for-sale securities		86,978			52,857
Accounts receivable, net of allowances of $6,588 in 2006		38,603			0
Merchandise inventories		376,409			285,120
Deferred advertising		20,591			0
Deferred taxes		36,083			15,500
Prepayments and other		89,245			86,382
Total current assets		778,041			712,908
Property, equipment, and leasehold improvements - at cost		888,481			786,028
Less accumulated depreciation and amortization		525,882			465,365
Net property, equipment, and leasehold improvements		362,599			320,663
Trademarks and other intangible assets		250,074			169,818
Goodwill		154,553			66,666
Available-for-sale securities		240			240
Other assets		44,748			33,476
Total assets	$	1,590,255		$	1,303,771
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	50,000		$	0
Accounts payable		133,236			127,819
Accrued expenses		222,544			154,681
Current portion - long-term debt		14,765			16,419
Total current liabilities		420,545			298,919
Deferred taxes and other non-current liabilities		162,800			101,743
Long-term debt		191,979			208,645
Stockholders’ equity
Common stock $.10 par value
Authorized - 300,000,000 shares
Issued - 133,954,852 shares and 132,063,290 shares		13,395			13,206
Additional paid-in capital		275,147			249,485
Treasury stock at cost - 12,265,993 shares		(84,136	)		(84,136	)
Deferred employee compensation		(13,453	)		(8,715	)
Accumulated other comprehensive loss		(3	)		0
Retained earnings		623,981			524,624
Total stockholders’ equity		814,931			694,464
Total liabilities and stockholders’ equity	$	1,590,255		$	1,303,771
Amounts are preliminary and subject to reclassifications and adjustments.

CHARMING SHOPPES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Year Ended
	January 28,			January 29,			January 31,
(In thousands)	2006			2005			2004
Operating activities
Net income	$	99,357		$	64,526		$	38,042
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		91,309			79,606			84,534
Deferred income taxes		(12,004	)		11,521			6,067
Net (gain)/loss from disposition of capital assets		(725	)		736			1,537
Gain from securitization of Catherines portfolio		(759	)		0			0
Tax benefit related to stock plans		4,233			6,469			23
Other, net		0			185			(142	)
Changes in operating assets and liabilities:
Accounts receivable		(38,603	)		0			0
Merchandise inventories		(20,051	)		24,875			(23,523	)
Accounts payable		(6,481	)		(7,958	)		(12,175	)
Deferred advertising		(7,797	)		0			0
Prepayments and other		13,215			(28,888	)		16,802
Income taxes payable		(3,602	)		(1,128	)		(6,016	)
Accrued expenses and other		49,263			17,178			(5,849	)
Net cash provided by operating activities		167,355			167,122			99,300
Investing activities
Investment in capital assets		(104,538	)		(60,565	)		(54,028	)
Proceeds from sales of capital assets		3,432			0			500
Gross purchases of available-for-sale securities		(52,976	)		(30,887	)		(35,440	)
Proceeds from sales of available-for-sale securities		18,849			48,206			31,463
Acquisition of Crosstown Traders, Inc., net of cash acquired		(256,717	)		0			0
Purchase of Catherines receivables portfolio		(56,582	)		0			0
Securitization of Catherines receivables portfolio		56,582			0			0
Securitization of Crosstown Traders, Inc. apparel-related receivables		50,000			0			0
Increase in other assets		(4,607	)		(6,984	)		(6,704	)
Net cash used by investing activities		(346,557	)		(50,230	)		(64,209	)
Financing activities
Proceeds from short-term borrowings		382,573			186,173			221,423
Repayments of short-term borrowings		(332,573	)		(186,173	)		(221,423	)
Proceeds from long-term borrowings		0			18,098			1,557
Repayments of long-term borrowings		(22,212	)		(18,530	)		(14,566	)
Payments of deferred financing costs		(1,371	)		(350	)		(1,500	)
Proceeds from issuance of common stock		9,868			33,158			1,173
Net cash provided/(used) by financing activities		36,285			32,376			(13,336	)
Increase/(decrease) in cash and cash equivalents		(142,917	)		149,268			21,755
Cash and cash equivalents, beginning of year		273,049			123,781			102,026
Cash and cash equivalents, end of year	$	130,132		$	273,049		$	123,781
Non-cash financing and investing activities
Equipment acquired through capital leases	$	3,892		$	5,399		$	17,466
Certain prior-year amounts have been reclassified to conform to the current-year presentation.
Amounts are preliminary and subject to reclassifications and adjustments.