(Source: Associated Press/AP Online)
NEW YORK - Amid a year-long turnaround plan teen clothing retailer Charlotte Russe Holding Inc. says it will consider selling itself, and warned that continued sales weakness will drive a larger-than-expected loss for the fiscal second quarter.
The company forecast a quarterly loss of 10 cents to 20 cents per share, excluding one-time items, and said it will open fewer new stores in fiscal 2009 than initially planned. Late Wednesday, Charlotte Russe said its board is assessing all options and has already received interest from third parties.
On average, analysts surveyed by Thomson Reuters are expecting a smaller second-quarter loss of 8 cents per share and sales of $188.6 million.
Jeffrey Klinefelter of Piper Jaffray said in a client note that $5 per share would fairly value the company, given concerns that it can maintain profitability. Charlotte Russe shares closed Wednesday at $4.93, off 76 percent from the $20.61 they peaked at last February.
The San Diego-based company has been in a turnaround effort for about a year. In November, it opposed a nearly $200 million takeover offer from KarpReilly and H.I.G. Capital, saying it wanted to stick to its restructuring plan but got some complaints from shareholders over that decision.
Charlotte Russe cautioned that sales will likely stay soft in the fiscal second quarter due to the economic downturn and a shift in the timing of the Easter holiday. It also will open 20 stores this year, not the up to 25 locations that the company had planned.
The retail industry has been squeezed as shoppers continue to tighten spending due to the prolonged housing slowdown, rising food costs, eroding credit and unemployment concerns.
Charlotte Russe anticipates it will post a mid- to high-single digit second-quarter same-store sales decline.
Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones.
Also on Wednesday, the company said it swung to a fiscal first-quarter loss of $2.9 million, or 14 cents per share, compared with a profit of $14 million, or 56 cents per share, a year ago. Excluding $2.2 million related to a management change, Charlotte Russe posted a loss of $1.5 million, or 7 cents per share, for the quarter.
Analysts expected higher fiscal first-quarter profit of 11 cents per share.
In November the retailer named a new chief executive, chief financial officer and chief merchandising officer.
Charlotte Russe operated 495 stores in 45 states and Puerto Rico as of Dec. 27, 2008.
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