The reorganization plan's major components include the closing of the company's Added Dimensions/Answer chain's 77 stores, shutting down operations at 130 underperforming Fashion Bug stores and converting 44 Fashion Bug locations to Lane Bryant stores. Charming Shoppes completed the acquisition of Lane Bryant last August in a $335-million deal.
"Since our acquisition of Lane Bryant, we have been reviewing our entire business to determine which of our brands would yield the highest returns for the company," says Charming Shoppes chairman and CEO Dorrit J. Bern. "Closing our Added Dimensions chain of stores results from our decision to redeploy our resources to our other brands."
The company says it will realize $37.5 million ($23 million after tax) as a result of the plan. Of that amount, $20 million is expected to come from lease terminations and $17.5 million will derive from the write-down of fixed assets including store fixtures and improvements. The majority of the store closings will occur during the second half of the fiscal year ending Feb. 1, 2003 with improved earnings projected by the end of January 2004. The company's credit agreement with its lenders has been amended to accommodate the restructuring plan.
The firm's Added Dimensions chain, which is part of Charming Shoppes' Catherine's Stores brand, currently operates 77 stores in 23 states, concentrated in the Northeast and Southeast, under the names Added dimensions and The Answer. Stores average 3,900 sf and are primarily located in strip shopping centers. The chain occupies an aggregate 300,000 sf, which represents roughly 2% of Charming Shoppes total lease commitments. Roughly 20% of the Added Dimensions locations will be rebranded as Catherine's Stores by midyear.
Most of the underperforming Fashion Bug stores will close during the quarter ending Feb. 1, 2003, resulting in a reduction of 1.1 million sf or 6% of Charming Shoppes' total leaseholds. The 130 stores are scattered across the country with no regional concentration.
As it shuts down poor performers, Charming Shoppes plans to open roughly 60 stores during fiscal 2003 including 25 Lane Bryant stores (excluding conversions), 25 Catherine's Plus Size stores, 8 Fashion Bug stores and 2 Monsoon stores.
Charming Shoppes operates 2,446 stores in 48 states under the names Lane Bryant, Fashion Bug, Fashion Bug Plus, Chatherine's Plus Sizes, The Answer, Added dimensions, Monsoon and Accessorize.
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