Event Brief of Q1 2004 Charming Shoppes Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

CORPORATE PARTICIPANTS

. Gayle Coolick, Charming Shoppes Inc., Director of Investor Relations

. Eric Specter, Charming Shoppes Inc., Executive Vice President,

CFO . Dorrit Bern, Charming Shoppes Inc., Chairman, CEO, President

OVERVIEW

CHRS reported 1Q04 net income up 178%, to $26.928m, or $0.22 per diluted share. Net sales were up 5% to $592.7m, with positive 5% comparable store sales for the consolidated corporation, and gross margins were 32.5%, up 250bp. Co. forecast full-year diluted EPS of $0.56-0.58. Q&A focus: guidance, merchandise, margins, and marketing.

FINANCIAL DATA

A. Key Data From Call 1. Net income up 178%, to $26.928m, or $0.22 per diluted share. 2. Net sales up 5% to $592.7m 3. Positive 5% comparable store sales for consolidated corportation. 4. Gross margins 32.5%, up 250bp. 5. Total assets $1.25b. 6. Total inventory $356m. 7. Total debt $220m. 8. Guidance: 2Q04 diluted EPS $0.21-0.23.

9. Guidance: FY04 diluted EPS $0.56-0.58.

PRESENTATION SUMMARY

S1. 1Q04 Results (G.C.) 1. Net income up 178%, to $26.928m, or $0.22 per diluted share, vs. $9.689m or $0.08 per diluted share 1Q03.

1. Included pre-tax expense of $4.431m, or $2.707m after tax, or

$0.02 per diluted share. 2. Driven by better than expected sales and higher gross margins. 2. Effective tax rate of 32.7%. Expect effective tax rate of approx. 36.3% for FY04. 3. Net sales up 5% to $592.7m, vs. $564.3m last year, with positive 5% comparable store sales for the consolidated corporation. 4. Sales By Store:

1. Lane Bryant: 1. Net sales $246.6m. 2. Exceeded sales expectations, with positive 5% comparable store sales. 3. Positive same store sales in all departments. 2. Fashion Bug: 1. Net sales $262.3m. 2. Exceeded sales expectations, with positive 7% comparable store sales. 3. Catherine's: 1. Net sales $83.8m. 2. Negative 3% comparable store sales. Did not meet sales plan for quarter. 5. Margins: 1. Gross margins 32.5%, up 250bp vs. 29.9% last year. 2. Merchandise margins up 100bp vs. last year.

3. Well managed inventories contributed to higher gross margins.

6. Expenses: 1. Buying and occupancy expense decreased by 150bp vs. last year. 2. SG&A expenses down by 60bp vs. last year, 25.1% of sales vs. 25.7% last year. 3. Selling expenses as a percentage of sales down 60bp vs. last year. 4. Administrative expenses down 10bp vs. last year. 5. Interest expense $3.9m, vs. $3.8m a year ago. 6. Income tax rate 32.7%. Effective tax rate of approx. 36.3% for FY04. 7. Store Openings, Closings, and Relocations:

1. Opened 12, closed six, and relocated 13 stores. 2. Co. ended 1Q04 with 2,233 stores, vs. 2,245 a year ago. 3. Total square footage approx. 15.629m square feet at end of period, vs. 15.815m square feet a year ago. 8. Balance Sheet and Cash Flow: 1. Total assets $1.25b at end 1Q04, vs. $1.16b January 31, 2004. 2. Total inventory $356m at end 1Q04, vs. $342m a year ago, up 4%. 3. On comparable store basis, Inventories up 3% at end 1Q04. 4. Total cash, cash equivalents, and long-term available for sale securities approx. $161m, vs. $138m at January 31, 2004. 9. Debt: 1. Total debt end 1Q04 $220m, unchanged from January 31, 2004. 2. Components of debt: 1. $150m 4.75% convertible subordinated notes due 2012.

2. Remaining balances substantially in mortgages and capital

lease obligations. 3. No cash borrowings on line of credit as of May 1, 2004. 10. Other: 1. Shareholders equity approx. $639m at end of period, vs.$605m at January 31, 2004. 2. Capex, including purchase of assets under capital leases, approx. $13.7m for 1Q04. 3. D&A approx. $17m. 4. Free cash flow generated of approx. $22m. GAAP-to-non-GAAP calculations posted on co. website. 11. Guidance: 1. 2Q04: 1. Diluted EPS expected of $0.21-0.23, vs. $0.15 per diluted share for three months ended August 2, 2003. Included pre-tax expense of $6.389m, $3.904m after tax, or $0.03 per diluted share. 2. Diluted EPS projections for 2Q04 includes total sales projections of approx. $630m, and comparable store sales for corp. of low single digits. 3. Comparable store sales plan for May, June, and July each include low single digit increases. 2. FY04: 1. For fiscal year ending January 29, 2005, expect diluted EPS of $0.56-0.58, vs. $0.35 per diluted share for 12 months ending January 31, 2004. Included pre-tax expense of

$11.534m, $7.340m after tax, or $0.06 per diluted share. 2. Diluted EPS projections for FY04 include total sales projections of approx. $2.38b, and comparable store sales for corp. of low single digit increases. 3. Comparable store sales expected to perform at high end of range. 4. Expects expansion and a reported gross margin of approx. 120bp. 5. FY03 reported GM was 28.2%.

6. SG&A as percent of sales expected to show slight improvement; reported SG&A ratio was 24.3% in FY03. 7. Tax rates for full year 2004 expected at 36.3%. 8. D&A expected at $72-74m for the year. 9. Capex expected at $70m.

QUESTION AND ANSWER SUMMARY

Q1. (Tom Filandro, Susquehanna) Question first, Eric, I think on Lane Bryant, can you just tell us in the quarter how the operating margin performance of the business compares to sort of historical levels and then sort of a follow-up to that is, in the new guidance that you've provided, maybe you can put in perspective of where we would be on the curve of where Lane Bryant could be versus historical trends.

A. (Eric Specter) Certainly Lane Bryant had significant improvement YoverY in the first quarter, largely driven by their 5% comparable store sales, and as Gayle mentioned in the opening remarks, those sales were largely driven by the response to the spring offerings …