Specialty retailer Charming Shoppes (NASDAQ:CHRS) will report first-quarter 2008 financial results (my, where does the time go?) on Thursday, May 24.

What analysts say:

  • Buy, sell, or waffle? Ten analysts cover Charming Shoppes. Six say hold while four think there are some plus-sized profits to be made from the retailer and rate it a buy.
  • Revenues. Revenues are expected to rise more than 6% to $781.9 million for the operator of Lane Bryant, Fashion Bug, and Petite Sophisticate.
  • Earnings. Profits, however, are expected to fall nearly 17% to $0.20 per share.

What management says:
Lane Bryant remains the retailer's premier brand. Management is trying to position the stores between mall locations, outlets, and online, leading to some sales cannibalization at existing locations. Charming Shoppes still plans to expand further, but is going to be adding an intimate apparel store side-by-side to current Lane Bryant stores, where it will go head-to-head against the likes of rival Warnaco (NASDAQ:WRNC). The retailer is also introducing a catalog later this year.

For the year, management is counting on 10% growth in profits if it can generate low single digit same-store sales growth this year, but that might actually be aggressive if comps for this quarter play out the way they did in the fourth. Although comps were up 3% for 2007, they were down 1% in the last quarter. It's been a difficult start of the year for many retailers.

What management does:
The specialty retailer has some tough comparisons to go up against this time around. Last year sales were up nearly 22% in the quarter resulting in a 4% increase in profits per share. In the face of competition from Maidenform (NYSE:MFB), which just had a good quarter and reiterated guidance but faces strong year-over-year comparisons going forward, Charming Shoppes may face similar headwinds that limit what it will show investors. If the company falls in line with other retailers affected by fickle early spring weather patterns, margins could erode in what is generally one of its best quarters.

Margin

01/06

04/06

07/06

10/06

02/07

Gross

30.8%

30.7%

30.2%

30.4%

30.5%

Operating

6.3%

6%

5.4%

5.7%

6.3%

Net

3.6%

3.5%

3.2%

3.4%

3.6%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
As the leading plus-sized woman's retailer with an estimated 40% market share, Charming Shoppes still has a lot to offer consumers. But as it expands its presence into other avenues -- Crosstown Traders is Charming's direct-to-consumer catalog while it also operates a Figi's food and gift catalog -- the retailer may find itself not only stealing customers from its bricks-and-mortar stores but distracted from its core operations.

However, Charming Shoppes is still trading at a pretty big discount to Maidenform, VF, and Hanesbrands (NYSE:HBI), which, if it experiences any sort of P/E expansion to bring it in line with its competition, could result in a better than 25% improvement in its share price. Yet as the company is still working the kinks out of its store expansion plans, I'd wait to see how well Charming Shoppes goes this quarter and look for some attractive entry point afterwards.

Related Foolishness:

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