Charlotte Russe Holding, Inc. (Nasdaq: CHIC) today announced
preliminary financial results for the second quarter of fiscal 2009
ended March 28, 2009.
Second quarter net sales increased 3.3% to $191.2 million
compared to $185.1 million in the prior year period. Comparable
store sales for the period declined 8.0%, in line with prior
guidance of a mid- to high-single digit decline, and versus a
comparable store sales increase of 2.5% in the second quarter of
fiscal 2008. Diluted loss per share is expected to be in the range
of $(0.06) to $(0.03)1, which compares to diluted earnings per
share of $0.17 in the second quarter of fiscal 2008, or $0.19 per
diluted share on a non-GAAP basis after excluding an impairment
charge in the period of $0.8 million.
Non-GAAP diluted earnings per share for the second quarter of
2009 are expected to be in the range of $0.02 to $0.051 after
excluding anticipated expenses for cash charges in the range of
$1.4 million to $1.6 million related to proxy solicitation,
management transition and severance, as well as costs associated
with the review of strategic alternatives and subsequent sale
process, and a non-cash charge in the range of $1.5 million to $1.7
million for store impairment. This compares to the Company�s prior
guidance of a non-GAAP diluted loss per share in the range of
$(0.20) to $(0.10), exclusive of these anticipated expenses.
The preliminary results are primarily attributable to better
than expected gross margin performance, as well as careful expense
control. Comparable store inventories were down 18.4% at the end of
the period. As of March 28, 2009, the Company had no long-term debt
and expects its quarter-end cash balance to be in the range of $49
million to $52 million.
John D. Goodman, Chief Executive Officer, stated, �We are
pleased to report better than expected preliminary earnings results
despite the difficult retail climate and the negative impact of the
Easter shift. The results reflect our actions to control
inventories, limit promotional activity and generate improved
full-price sell through. While the macro environment continues to
present significant challenges, we are staying focused on our core
strategies to drive improvement in the business. These include
brand positioning, merchandise assortments, inventory optimization,
real estate and capital utilization. Our Charlotte Russe team is
working diligently to execute our plans and achieve our goals.
�Our strategies are starting to gain traction, marked by
effective planning and allocation, compelling product and
merchandising, and a cohesive presentation in stores. Although we
are just beginning to see improvement, we believe the opportunity
for the Charlotte Russe brand is substantial and expect to build
additional momentum as we approach the Fall season.�
Goodman concluded, �In today�s market environment, we are
concentrating on the customer � delivering fashion-right product at
a great perceived value, providing a well-edited shopping
environment and communicating a distinct fashion point of view, all
supported by our new marketing initiatives. We believe these
actions will allow us to build increased awareness and excitement
around the Charlotte Russe brand, while also driving new customers
into the stores. In addition, we will continue to carefully manage
inventories and tightly control costs. Over the long-term, we are
committed to maintaining our strong financial position and
delivering greater value to our shareholders.�
Outlook
For the third quarter of fiscal 2009, the Company expects
comparable store sales to be in the negative low-single digit to
positive low-single digit range, versus a comparable store sales
decline of 6.5% in the third quarter of fiscal 2008. Non-GAAP
diluted earnings per share are expected to be in the range of $0.17
to $0.271, exclusive of anticipated cash charges related to proxy
solicitation, management transition and severance, as well as the
review of strategic alternatives and subsequent sale process. This
compares to diluted earnings per share of $0.31 in the prior year
period.
Update on Sale Process
On January 21, 2009, Charlotte Russe announced that it was
engaged in a process to evaluate strategic alternatives, including
a possible sale of the Company. Charlotte Russe's financial
advisor, Cowen and Company, LLC, has initiated a sale process as
part of that strategic review. The Company reported today that it
is encouraged by the progress of the ongoing sale process,
including the level of interest from potential buyers.
Second Quarter Financial Results and Conference Call
Information � Thursday, April 16, 2009
Charlotte Russe will issue full second quarter financial results
on Thursday, April 16, 2009, after the close of the market. The
Company will hold a conference call the same day at 4:30 p.m.
Eastern Time (1:30 p.m. Pacific Time). The call will be hosted by
John Goodman, Chief Executive Officer, Emilia Fabricant, President
and Chief Merchandising Officer, and Fred Silny, Chief Financial
Officer. To access the call, please dial (888) 841-5034
approximately ten minutes prior to the start of the call. The
conference call will also be webcast live and archived at
www.charlotterusse.com. A telephone replay of this call will be
available until April 23, 2009, and can be accessed by dialing
(800) 642-1687 and entering code 89467054.
About Charlotte Russe
Charlotte Russe Holding, Inc. is a mall-based specialty retailer
of fashionable, value-priced apparel and accessories targeting
young women in their teens and twenties. As of March 28, 2009, the
Company operated 496 stores in 45 states and Puerto Rico. For more
information about the Company, please visit
http://www.charlotterusse.com.
IMPORTANT INFORMATION: Charlotte Russe Holding, Inc. filed a
definitive proxy statement with the U.S. Securities and Exchange
Commission on March�23, 2009 relating to Charlotte Russe�s
solicitation of proxies from the stockholders of Charlotte Russe
with respect to the Charlotte Russe 2009 annual meeting of
stockholders. Charlotte Russe and its directors and certain of its
officers and other employees may be deemed to be participants in
the solicitation of proxies for the 2009 annual meeting. The proxy
statement contains detailed information regarding the names,
affiliation and interests of individuals who may be deemed
participants in the solicitation of proxies of Charlotte Russe�s
stockholders. Charlotte Russe has filed a proxy statement and other
relevant documents, including a white proxy card. CHARLOTTE RUSSE
ADVISES SECURITY HOLDERS TO READ THE PROXY STATEMENT AND OTHER
RELEVANT DOCUMENTS THAT HAVE BEEN AND WILL BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, BECAUSE THEY CONTAIN IMPORTANT
INFORMATION. Charlotte Russe�s proxy statement and other relevant
documents may be obtained without charge from the SEC�s website at
www.sec.gov and from Charlotte Russe at www.charlotterusse.com. You
may also obtain a free copy of Charlotte Russe�s definitive proxy
statement by writing to the Corporate Secretary at 4645 Morena
Boulevard, San Diego, California 92117.
USE OF NON-GAAP FINANCIAL MEASURES: This press release includes
non-GAAP financial measures involving the presentation of the
Company�s diluted earnings per share excluding expenses associated
with proxy solicitation, management transition, severance and the
review of strategic alternatives and subsequent sale process, as
well as store impairment, which the Company believes provides
useful additional information to investors. The Company believes
that the exclusion of such amounts facilitates the comparability of
the Company�s results from period to period and provides a basis
for comparing current results against future results by eliminating
amounts that it believes are not comparable between periods. The
Company will use its results excluding these amounts to evaluate
its operating performance and to discuss its business with
investment institutions, the Company�s Board of Directors and
others. These non-GAAP measures should be considered in addition
to, not as a substitute for, measures of financial performance
prepared in accordance with GAAP.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995: Except for the historical information contained
herein, this press release contains forward-looking statements.
Such statements include, but are not limited to, projections of the
Company�s second quarter and third quarter financial results, as
well as the impact of the Company�s new executive management team
and business strategies, including future growth, customer
penetration and value creation. Such forward-looking statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from historical results or from any
results expressed or implied by such forward-looking statements.
These risks and uncertainties include, but are not limited to, the
risks that the Company will not achieve anticipated financial
results or comparable store sales increases, the Company will not
be able to execute its new strategic plan as intended, the Company
will not open new Charlotte Russe stores or remodel existing stores
in the numbers or on the schedule anticipated, general and regional
economic conditions, industry trends, consumer demands and
preferences, competition from other retailers and uncertainties
generally associated with women's apparel and accessory retailing.
A complete description of these factors, as well as others that
could affect the Company's business, is set forth in the Company's
annual report on Form 10-K and quarterly reports on Form 10-Q,
filed with the Securities and Exchange Commission.
1 The Company�s anticipated tax rate is 47.0% and 44.4% for the
second and third quarters of fiscal 2009, respectively.
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