Like many retailers this quarter, Charming Shoppes (NASDAQ:CHRS) reported charmed results as it benefited from an additional week in the fiscal year -- a 14th week for the quarter and a 53rd week for the year.

As a result, Charming Shoppes posted sales that were 9% higher at $874 million with profits that soared 30% to $25 million, or $0.19 per share. That was well ahead of what analysts had forecast on revenues but in line with the prognostications for profit. What the market didn't like, though, was the plus-sized women's retailer saying that the next fiscal quarter would be slimmer than anticipated as it continues to build out its successful Lane Bryant brand.

As popular as the Lane Bryant stores have been, new outlets have led to sales cannibalization at existing stores, and the comps -- sales at stores open for at least a year -- rose up 1% for the year but fell 3% in the latest quarter. Charming Shoppes will be rethinking not only the locations of its outlets in the future, but store size and layout as well.

As important as same-store sales are to retailers, inventory turnover -- how fast product is able to move off the shelves -- is equally important, and as we see below, that slipped last year. Also noteworthy is the amount of time Charming Shoppes is taking to convert its inventory into cash (the cash conversion cycle). On average, it was 6.5 days longer last year as in 2004, which means more cash tied up in working capital.

Year Ending

Days Inventory Outstanding

Days Sales Outstanding

Days Payable Outstanding

Cash Conversion Cycle





















Source: CHRS filings with the SEC and author's calculations

Running into stiffer competition from the likes of Dress Barn (NASDAQ:DBRN) and TJX's (NYSE:TJX) TJ Maxx stores, Charming Shoppes has had to expand its operations in a variety of directions, including a wider online presence. While sales are growing, margins have slipped and the company will need to contain its expenses to improve its bottom line.

The decline in stock price was not unexpected, and gives the retailer an even more attractive position in comparison to the competition. For example, the company's earnings multiple trades at a 25% discount to Maidenform (NYSE:MFB) on a trailing basis. This Fool thinks Charming Shoppes' price is beginning to look very charming at these levels.

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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.