BENSALEM, Pa., Aug. 20 /PRNewswire-FirstCall/ -- Charming Shoppes, Inc. (Nasdaq: CHRS) the retail apparel chain specializing in women's plus-size apparel, today reported earnings and sales for the second quarter ended August 3, 2002. The Company has also announced the recording of the cumulative effect of an accounting change related to the adoption of FASB Statement 142, "Goodwill and Other Intangible Assets."

For the three months ended August 3, 2002, net income increased 72% to $25,549,000 or $0.20 per diluted share, compared to net income of $14,860,000 or $0.14 per diluted share for the corresponding period last year.

Sales for the quarter ended August 3, 2002 increased 59% to $638,307,000, compared to sales of $402,700,000 during the corresponding period of the prior year. The current period's total sales include sales from Lane Bryant, which was acquired August 16, 2001. Comparable store sales for the corporation increased 1% for the quarter ended August 3, 2002.

Net income for the six months ended August 3, 2002 increased 80% to $41,860,000 or $0.33 per diluted share, before the cumulative effect of an accounting change, as described below. This compares to net income of $23,228,000 or $0.22 per diluted share for the corresponding period last year.

Related to the adoption of FASB Statement 142, "Goodwill and Other Intangible Assets", the Company has recorded a cumulative effect of an accounting change in the amount of $43,975,000, or $0.33 per diluted share, effective as of the beginning of the current fiscal year. Net loss after the cumulative effect of an accounting change was $2,115,000 or $0.00 per diluted share for the six months ended August 3, 2002. The non-cash charge represents the write-down of goodwill related to the acquisition of the Catherines Stores Corporation on January 7, 2000. The majority of the write-down is attributable to the value of unrecorded trademarks.

Sales for the six months ended August 3, 2002 increased 59% to $1,268,923,000, compared to sales of $797,461,000 during the corresponding period of the prior year. The current period's total sales include sales from Lane Bryant, which was acquired August 16, 2001. Comparable store sales for the corporation were flat for the six months ended August 3, 2002.

Commenting on earnings, Dorrit J. Bern, Chairman, CEO and President of Charming Shoppes, Inc., said, "We are pleased to report an earnings increase of 72% for our second quarter. Merchandise margins improved across all of our brands, as compared to the prior year, benefiting from well managed inventories and strong sell through of Summer merchandise, allowing us to exceed our earnings projections."

During the quarter, the Company repurchased 2.7 million shares of its common stock for approximately $18.3 million, and ended the quarter with approximately 122.3 million outstanding common shares.

The Company has reaffirmed earnings per share projections for the second half of fiscal 2003, with comparable store sales for the third and fourth quarters projected in the positive low single digits. Based on these sales projections, earnings per share for the third and fourth quarters is projected to be approximately $0.03, and $0.08, respectively, resulting in a full year earnings per share projection of approximately $0.44, before the cumulative effect of an accounting change.

The Company will host its Second Quarter Fiscal 2002 earnings conference call today at 9:15 am (EDT). Prepared remarks will be made on second quarter performance, and an outlook for fiscal year 2003, and will be followed by a question and answer period.

To listen to the conference call, please dial 1-888-689-9348 followed by the passcode 2594# approximately 10 minutes prior to the scheduled event. The conference call will also be simulcast at www.companyboardroom.com and can be accessed by going to the ticker symbol (CHRS) and clicking on the speaker icon in the "listen" column. The general public is invited to listen to the conference call via the webcast or the dial-in telephone number.

A transcript of prepared remarks and an audio replay of the conference call will be accessible at www.charmingshoppes.com starting at approximately 2:00 pm (EST) on Tuesday, August 20, 2002. An audio replay of this call will also be accessible at www.companyboardroom.com by going to the ticker symbol (CHRS) and clicking on the speaker icon in the "listen" column. The replay will remain available for approximately one week.

The conference call will be recorded on behalf of Charming Shoppes, Inc. and consists of copyrighted material. It may not be re-recorded, reproduced, transmitted or rebroadcast, in whole or in part, without the Company's express written permission. Accessing this call or the rebroadcast represents consent to these terms and conditions. Participation in this call serves as consent to having any comments or statements made appear on any transcript, broadcast or rebroadcast of this call.

At the end of the quarter, Charming Shoppes, Inc., operated 2,334 stores in 48 states under the names LANE BRYANT(R), FASHION BUG(R), FASHION BUG PLUS(R), CATHERINE'S PLUS SIZES(R), MONSOON(R) and ACCESSORIZE(R). Monsoon and Accessorize are registered trademarks of Monsoon Accessorize Ltd. During the six months ended August 3, 2002, the Company opened 32, converted 9, relocated 14, and closed 125 stores. The Company ended the quarter with 1,208 Fashion Bug and Fashion Bug Plus stores, 650 Lane Bryant stores, 467 Catherine's Plus Sizes stores, and 9 Monsoon/Accessorize stores. The Company ended the quarter with approximately 16,649,000 square feet of leased space. Please visit www.charmingshoppes.com for additional information about Charming Shoppes, Inc.

This press release contains certain forward-looking statements concerning the Company's operations, performance, and financial condition. These forward- looking statements include statements regarding future performance, including earnings, sales performance, and other matters. Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those indicated. Such risks and uncertainties may include, but are not limited to: failure to achieve successful integrations, failure to successfully implement the restructuring plan, failure to successfully implement the Company's business plan for increased profitability and growth in the plus-size women's apparel business, the availability of suitable store locations on appropriate terms, changes in or miscalculation of fashion trends, extreme or unseasonable weather conditions, economic downturns, a weakness in overall consumer demand, the ability to hire and train associates, trade restrictions and political or financial instability in countries where goods are manufactured, the interruption of merchandise flow to the Company's retail stores from its centralized distribution facilities, competitive pressures, and the adverse effects of acts or threats of war, terrorism, or other armed conflict on the United States and international economies. These, and other risks and uncertainties, are detailed in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended February 2, 2002. Charming Shoppes assumes no duty to update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

                            CHARMING SHOPPES, INC.

                                     2nd Quarter          2nd Quarter
                                        Ended                Ended
    (in thousands except     Percent   August 3, Percent    August 4, Percent
     per share amounts)       Change    2002(a)  of Sales    2001(b)  of Sales

    Net sales                  58.5 %  $638,307   100.0 %   $402,700  100.0 %

    Cost of goods sold,
     buying, and occupancy     51.2     441,246    69.1      291,881   72.5
    Selling, general, and
     administrative            79.6     151,391    23.7       84,308   20.9
    Amortization
     of goodwill             (100.0)          0     0.0        1,221    0.3
    Total operating expenses   57.0     592,637    92.8      377,410   93.7

    Income from operations     80.6      45,670     7.2       25,290    6.3

    Other income, principally
     interest                 (47.8)        719     0.1        1,377    0.3
    Interest expense          138.0      (5,678)   (0.9)      (2,386)  (0.6)

    Income before
     income taxes              67.7      40,711     6.3       24,281    6.0
    Income tax provision       65.1      15,552     2.4        9,421    2.3
    Income before minority
     interest                  69.3      25,159     3.9       14,860    3.7

    Minority interest in net
     loss of consolidated
     subsidiary                  NA         390     0.1            0    0.0
    Net income                 71.9 %   $25,549     3.9 %    $14,860    3.7 %

    Basic net income per share            $0.22                $0.15
    Weighted average shares
     outstanding                        115,621              101,377

    Net income per share,
     assuming dilution                    $0.20                $0.14
    Weighted average shares
     and equivalents
     outstanding                        137,210              115,225

    (a)  The results of operations for the quarter ended August 3, 2002
          include the results of operations of Lane Bryant, Inc., acquired on
          August 16, 2001.

    (b) Certain prior-year amounts have been reclassified to conform to the
         current presentation.

                                      Six Months           Six Months
                                       Ended                 Ended
    (in thousands except   Percent    August 3,  Percent    August 4, Percent
     per share amounts)     Change     2002(a)   of Sales    2001(b)  of Sales

    Net sales                59.1 %  $1,268,923   100.0 %   $797,461  100.0 %

    Cost of goods sold,
     buying, and occupancy   52.4       880,054    69.4      577,457   72.4
    Selling, general, and
     administrative          74.2       310,547    24.5      178,241   22.4
    Amortization
     of goodwill           (100.0)            0     0.0        2,443    0.3
    Total operating
     expenses                57.0     1,190,601    93.8      758,141   95.1

    Income from operations   99.2        78,322     6.2       39,320    4.9

    Other income,
     principally interest   (65.8)        1,163     0.1        3,405    0.4
    Interest expense        161.6       (12,480)   (1.0)      (4,771)  (0.6)

    Income before income
     taxes and cumulative
     effect of
    accounting change        76.5        67,005     5.3       37,954    4.8
    Income tax provision     73.8        25,596     2.0       14,726    1.9
    Income before minority
     interest and cumulative
     effect
    of accounting change     78.3        41,409     3.3       23,228    2.9

    Minority interest in net
     loss of consolidated
     subsidiary                NA           451     0.0            0    0.0
    Income before cumulative
     effect of accounting
     change                  80.2        41,860     3.3       23,228    2.9
    Cumulative effect of
     accounting change(c)      NA       (43,975)   (3.4)           0    0.0

    Net income (loss)      (109.1)%     $(2,115)   (0.2)%    $23,228    2.9 %

    Basic net income (loss)
     per share:
    Income before cumulative
     effect of accounting
     change                               $0.37                $0.23
    Cumulative effect of
     accounting change(c)                 (0.39)                0.00
    Net income (loss)                    $(0.02)               $0.23
    Weighted average shares
     outstanding                        113,681              101,311

    Net income (loss) per
     share, assuming
     dilution:
    Income before cumulative
     effect of accounting
     change                               $0.33                $0.22
    Cumulative effect of
     accounting change(c)                 (0.33)                0.00
    Net income (loss)                       $--                $0.22
    Weighted average shares
     and equivalents
     outstanding                        132,107              115,187


    (a)  The results of operations for the six months ended August 3, 2002
          include the results of operations of Lane Bryant, Inc., acquired on
          August 16, 2001.

    (b)  Certain prior-year amounts have been reclassified to conform to the
          current presentation.

    (c)  Write-down of non-deductible goodwill in connection with adoption of
          FASB Statement No. 142, "Goodwill and Other Intangible Assets."


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SOURCE Charming Shoppes, Inc.
Web site: http: //www.charmingshoppes.com
CONTACT: Gayle M. Coolick, Director of Investor Relations, +1-215-638-6955