Charming Shoppes' Earnings Show Possibilities For Acquirer Ascena Retail Group

| About: Ascena Retail (ASNA)

Charming Shoppes (NASDAQ:CHRS) reported earnings on Friday for the company's first quarter. The company, whose brands include Catherine's, Lane Bryant, and Fashion Bug, is set to be acquired by Ascena Retail Group (NASDAQ:ASNA).

Net income for the first quarter was $17.8 million. The company earned $0.15 per share for the quarter. Last year in the first quarter, Charming Shoppes earned $0.22 per share including the sale of office property. Net sales decreased to $481.3 million, compared to $504.4 million the previous year. The company ended the quarter with $214.1 million in cash, up from a previous $168.6 million.

Same stores sales by brand:

· Lane Bryant +1%

· Catherines +1%

· Fashion Bug -3%

· Charming Shoppes Total 0%

Sales for Charming Shoppes brands were flat with two brands seeing positive and the company's discount brand seeing negative trends. In the most recent quarter, all three of Ascena's brands saw positive increases in same store sales. The biggest bright spot for Charming Shoppes was its 18% increase in E-commerce sales.

Sales by brand were (last year's):

· Lane Bryant and Lane Bryant Outlet: $261.1 million ($262.8 million)

· Fashion Bug: $127.0 million ($150.0 million)

· Catherines: $77.9 million ($77.8 million)

· Direct to Consumer (Figi's): $15.3 million ($13.8 million)

· Total: $481.3 million ($504.4 million)

Charming Shoppes operated 157 fewer stores in the first quarter, compared to last year's first quarter. The company ended the quarter with 1,832 stores in 48 states. The company opened 8 stores, relocated 5, and closed a total of 33 stores in the first quarter.

My recent article discussed the positive impact for Ascena Retail Group and the integration of the three clothing brands from Charming Shoppes. Ascena Retail Group owns Justice, Maurices, and Dressbarn. Charming Shoppes shares trade close to their acquisition target. There really isn't a play on shares of Charming Shoppes here, but I highly recommend taking a look at acquiring company Ascena Retail. Ascena Retail has taken acquired brands, like Justice, and transformed them under its ownership. The possibility of maximizing sales in the plus size women's clothing market, led by Charming Shoppes. I have a price target on Ascena Retail of $30.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in ASNA over the next 72 hours.