Charming Shoppes Inc. (CHRS), the operator of the plus-size Lane Bryant chain, is exploring a sale of its Fashion Bug stores, according to a person with knowledge of the matter.
Moelis & Co. is advising the retailer on a possible deal, said the person, who declined to be named because the process isn’t public. A sale of the unit may be a few weeks away, the person said. Fashion Bug, aimed at women aged 30 to 50, makes up about a third of the chain’s more than $2 billion in sales.
Chief Executive Officer Tony Romano is devoting resources to the more profitable Lane Bryant label to revive earnings after almost $500 million in losses since 2007. While demand for plus-size apparel is growing, Fashion Bug’s challenge as a lower-priced retailer is to deliver stylish clothing without sacrificing margins, said McMillan Doolittle LLP’s Neil Stern.
"You have a really difficult apparel market that really hasn’t gotten its footing in say, five years,’’ said Stern, a senior partner at the retail consulting firm in Chicago.
Fashion Bug operated about 740 stores as of Jan. 29, mostly in strip malls, according to regulatory filings. The Bensalem, Pennsylvania-based company operated almost 2,100 locations at the end of last year, including about 850 Lane Bryant stores and outlets and 475 Catherines, aimed at women 45 and older.
Charming Shoppes rose 8 cents, or 2 percent, to $4.07 at 4 p.m. New York time in Nasdaq Stock Market trading. Earlier the shares advanced as much as 10 percent.
Gayle Coolick, a spokeswoman for Charming Shoppes, said she couldn’t immediately comment. Andrea Hurst, a spokeswoman for New York-based Moelis, declined to comment.
Fashion Bug’s sales at stores open at least 13 months rose 4 percent last year, outpacing the company’s average. So-called same-store sales are considered a key gauge of retail performance because they strip out the impact of store closings and openings. Charming Shoppes is scheduled to report first- quarter results on June 2.
Charming Shoppes began more than 70 years ago when the Sidewater brothers opened a single apparel store in Philadelphia. The purchase of the Lane Bryant chain a decade ago turned Charming Shoppes into the largest plus-size retailer in the U.S., according to the company’s website.