Charming Shoppes cutting staff, closing stores, retailoring business

It was a tough day at Charming Shoppes Inc.

The Bensalem women's-apparel retailer yesterday lost a key executive to a local rival; announced that it was cutting its management staff by 150, or 13 percent; and would be closing 150 stores, 100 of them in its popular Fashion Bug chain.

It also cut back plans for new stores, reducing this year's capital spending 30 percent. And the company's stock declined almost 6 percent.

Charming Shoppes and analysts blamed the moves on "the continuing weak retail and economic environment." Last month, the firm reported that same-store sales, a key retail measure, were down 7 percent during the holiday shopping season from the same period the year before.

The executive who left, Diane M. Paccione, was yesterday named chief executive officer of the smaller Philadelphia retailer Deb Shops Inc. She had been with Charming for four years and was in charge of its Fashion Bug and Catherines Plus Sizes brands.

Paccione said in an interview yesterday that she was lured to Deb by "the opportunity for growth. . . . It has been in business for 75 years and still has a lot of growth potential." The trendy retailer has 340 stores in 43 states, including a dozen in the Philadelphia area.

Charming Shoppes has 2,453 stores in 48 states and four major brands - Fashion Bug, Lane Bryant, Catherines and Petite Sophisticate.

Paccione "leaves a big hole. They were sorry to see her leave," said analyst Erin Moloney, a senior vice president of Merriman, Curhan, Ford & Co., of Portland, Ore., who said she talked with Charming Shoppes executives soon after yesterday's announcement.

Charming Shoppes announced in the fall that it would move the headquarters of its Catherines brand - which it acquired in 2000 - from Memphis, Tenn., to Bensalem, to get the operation closer to Paccione's base.

Charming, which reported revenue last year of $1.1 billion, is under pressure from Crescendo Partners L.P. and other activist investors restless for a stock-price boost. The shares have fallen 59 percent in the last 52 weeks. They lost 37 cents yesterday to close at $5.48.

In a November conference call with analysts, company chairman Dorrit J. Bern acknowledged merchandise problems with its Lane Bryant brand, which led to the replacement last summer of the chain's president and buyer.