Charlotte Russe Trims Outlook; Shares Fall
With the holiday shopping season supposedly in high gear, Charlotte Russe Holding Inc.’s stock fell 8% on Tuesday after the seller of clothes for teens and young women said its profit this quarter would probably be much lower than expected because of disappointing sales.
The San Diego-based parent of nearly 370 Charlotte Russe and Rampage stores said after the market closed Monday that it expected earnings of 7 cents to 11 cents a share for its fiscal first quarter ending Dec. 25, instead of the 24 cents to 28 cents it had forecast earlier.
The company also said it expected a “mid to high single-digit” decline in same-store sales in the quarter instead of the “low single-digit” increase that it had previously predicted.
“Our holiday merchandise at the Charlotte Russe stores has not met with the level of customer acceptance we expected, and the progression of improvements at the Rampage stores has been slower than anticipated,” Chief Executive Mark Hoffman said in a statement. The company declined to comment further.
Charlotte Russe’s stock tapped a 52-week low of $8.84 in Nasdaq trading Tuesday before making a partial recovery to close at $10.09, down 82 cents.
Also Monday, the retailer announced that Donna Desrosiers, general merchandise manager for its namesake chain, had resigned for personal reasons. Former Wet Seal Inc. Chief Executive Kathy Bronstein is consulting for Charlotte Russe but said she wasn’t interested in taking over the vacated position.
Bronstein said she was working with the division’s merchandise team to evaluate how it selects merchandise and forecasts trends, “analyzing the whole process, soup to nuts.”
Analyst Adrienne Tennant, with Wedbush Morgan Securities, downgraded the company’s stock to “hold” from “buy” on Tuesday.
Analysts say Charlotte Russe has been struggling over the last couple of years to win back customers that it lost to competitors such as Forever 21, a Los Angeles company that now has 200 stores in 28 states, including 67 in California. Charlotte Russe also is working to reposition its smaller Rampage chain, which caters to a slightly older customer.
