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**Table          of          Contents**

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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-Q**

**x      QUARTERLY REPORT      PURSUANT TO SECTION 13 OR 15(d)**

**OF      THE SECURITIES EXCHANGE ACT OF 1934**

**Or**

**o      TRANSITION REPORT      PURSUANT TO SECTION 13 OR 15(d)**

**OF      THE SECURITIES EXCHANGE ACT OF 1934**

**Commission      File No. 000-07258**

| **CHARMING                  SHOPPES, INC.**                                              |
|------------------------------------------------------------------------------------------|
| (Exact                  name of registrant as specified in its                  charter) |

| **PENNSYLVANIA**                                                              |   | **23-1721355**                                      |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) |   | (I.R.S.                Employer Identification No.) |

| **450                WINKS LANE, BENSALEM, PA 19020**              |   | **(215)                245-9100**                                                        |
|--------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------|
| (Address                of principal executive offices) (Zip Code) |   | (Registrant’s                telephone number, including Area                Code) |

| **NOT                  APPLICABLE**                                                                                                    |
|----------------------------------------------------------------------------------------------------------------------------------------|
| (Former                  name, former address, and former fiscal year, if changed since                  last                  report) |

| Large                Accelerated Filer x |   | Accelerated                Filer o |   | Non-accelerated                Filer o |
|-----------------------------------------------|--------|-----------------------------------------|--------|----------------------------------------|

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**Table          of          Contents**

**CHARMING      SHOPPES, INC. AND      SUBSIDIARIES**

**TABLE      OF CONTENTS**

|                        |                                                                                                                          | **Page** |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------|----------|
|                        |                                                                                                                          |     |
| **PART                I.**  | **FINANCIAL                INFORMATION**                                                                                      | 2        |
|                        |                                                                                                                          |     |
| **Item                1.**  | **Financial                Statements                (Unaudited)**                                                            | 2        |
|                        |                                                                                                                          |     |
|                        | Condensed                Consolidated Balance Sheets                                                                          |     |
|                        | November                3, 2007 and February 3, 2007                                                                          | 2        |
|                        |                                                                                                                          |     |
|                        | Condensed                Consolidated Statements of Operations and Comprehensive                Income                        |     |
|                        | Thirteen                weeks ended November 3, 2007 and October                28, 2006                                      | 3        |
|                        | Thirty-nine                weeks ended November 3, 2007 and                October 28, 2006                                   | 4        |
|                        |                                                                                                                          |     |
|                        | Condensed                Consolidated Statements of Cash Flows                                                                |     |
|                        | Thirty-nine                weeks ended November 3, 2007 and October 28,                2006                                   | 5        |
|                        |                                                                                                                          |     |
|                        | Notes                to Condensed Consolidated Financial                Statements                                            | 6        |
|                        |                                                                                                                          |     |
| **Item                2.**  | **Management’s                Discussion and Analysis of Financial Condition                and Results of Operations** | 1        |
|                        |                                                                                                                          |     |
|                        | Forward-looking                Statements                                                                                     | 21       |
|                        |                                                                                                                          |     |
|                        | Critical                Accounting Policies                                                                                   | 23       |
|                        |                                                                                                                          |     |
|                        | Recent                Developments                                                                                            | 24       |
|                        |                                                                                                                          |     |
|                        | Results                of Operations                                                                                          | 25       |
|                        |                                                                                                                          |     |
|                        | Liquidity                and Capital Resources                                                                                | 34       |
|                        |                                                                                                                          |     |
|                        | Financing                                                                                                                     | 38       |
|                        |                                                                                                                          |     |
|                        | Market                Risk                                                                                                    | 39       |
|                        |                                                                                                                          |     |
|                        | Impact                of Recent Accounting                Pronouncements                                                      | 40       |
|                        |                                                                                                                          |     |
| **Item                3.**  | **Quantitative                and Qualitative Disclosures About Market                Risk**                                  | 40       |
|                        |                                                                                                                          |     |
| **Item                4.**  | **Controls                and Procedures**                                                                                    | 40       |
|                        |                                                                                                                          |     |
| **PART                II.** | **OTHER                INFORMATION**                                                                                          | 41       |
|                        |                                                                                                                          |     |
| **Item                1.**  | **Legal                Proceedings**                                                                                          | 41       |
|                        |                                                                                                                          |     |
| **Item                1A.** | **Risk                Factors**                                                                                               | 41       |
|                        |                                                                                                                          |     |
| **Item                2.**  | **Unregistered                Sales of Equity Securities and Use of                Proceeds**                                 | 42       |
|                        |                                                                                                                          |     |
| **Item                6.**  | **Exhibits**                                                                                                                  | 43       |
|                        |                                                                                                                          |     |
|                        | **SIGNATURES**                                                                                                                | 45       |
|                        |                                                                                                                          |     |
|                        | **EXHIBIT                INDEX**                                                                                              | 46       |

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**Table          of          Contents**

**PART      I. FINANCIAL INFORMATION**

**Item      1. Financial Statements**

**CHARMING      SHOPPES, INC. AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

|                                                                                                                         |   | **November                3,** |          |   | **February                3,** |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------------|--------|--------------------------------|--------|
| ***(In                thousands, except share amounts)***                                                                    |   | **2007**                       |          |   | **2007**                       |   |
|                                                                                                                         |   | **(Unaudited)**                |          |   |                           |   |
| **ASSETS**                                                                                                                   |   |                           |          |   |                           |   |
| **Current                assets**                                                                                            |   |                           |          |   |                           |   |
| Cash                and cash equivalents                                                                                     |   | **$**                          | **36,389**    |   |                           | $      | 143,838 |   |
| Available-for-sale                securities                                                                                 |   | ** **                     | **26,919**    |   |                           |   | 1,997 |   |
| Accounts                receivable, net of allowances of $1,440 and $5,083                                                   |   | ** **                     | **3,559**     |   |                           |   | 33,366 |   |
| Investment                in asset-backed securities                                                                         |   | ** **                     | **113,458**   |   |                           |   | 60,643 |   |
| Merchandise                inventories                                                                                       |   | ** **                     | **498,196**   |   |                           |   | 429,433 |   |
| Deferred                advertising                                                                                          |   | ** **                     | **32,130**    |   |                           |   | 21,707 |   |
| Deferred                taxes                                                                                                |   | ** **                     | **5,232**     |   |                           |   | 4,469 |   |
| Prepayments                and other                                                                                         |   | ** **                     | **145,073**   |   |                           |   | 145,385 |   |
| **Total                current assets**                                                                                      |   | ** **                     | **860,956**   |   |                           |   | 840,838 |   |
|                                                                                                                         |   |                           |          |   |                           |   |   |   |
| Property,                equipment, and leasehold improvements – at cost                                               |   | ** **                     | **1,095,772** |   |                           |   | 996,430 |   |
| Less                accumulated depreciation and amortization                                                                |   | ** **                     | **630,414**   |   |                           |   | 573,984 |   |
| **Net                property, equipment, and leasehold improvements**                                                       |   | ** **                     | **465,358**   |   |                           |   | 422,446 |   |
|                                                                                                                         |   |                           |          |   |                           |   |   |   |
| Trademarks                and other intangible assets                                                                        |   | ** **                     | **247,171**   |   |                           |   | 249,490 |   |
| Goodwill                                                                                                                     |   | ** **                     | **152,811**   |   |                           |   | 153,370 |   |
| Other                assets                                                                                                  |   | ** **                     | **68,252**    |   |                           |   | 44,798 |   |
| **Total                assets**                                                                                              |   | **$**                          | **1,794,548** |   |                           | $      | 1,710,942 |   |
|                                                                                                                         |   |                           |          |   |                           |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                                |   |                           |          |   |                           |   |   |   |
| **Current                liabilities**                                                                                       |   |                           |          |   |                           |   |   |   |
| Accounts                payable                                                                                              |   | **$**                          | **194,407**   |   |                           | $      | 178,629 |   |
| Accrued                expenses                                                                                              |   | ** **                     | **192,321**   |   |                           |   | 190,702 |   |
| Current                portion – long-term debt                                                                        |   | ** **                     | **9,239**     |   |                           |   | 10,887 |   |
| **Total                current liabilities**                                                                                 |   | ** **                     | **395,967**   |   |                           |   | 380,218 |   |
|                                                                                                                         |   |                           |          |   |                           |   |   |   |
| Deferred                taxes                                                                                                |   | ** **                     | **66,206**    |   |                           |   | 57,340 |   |
| Other                non-current liabilities                                                                                 |   | ** **                     | **160,666**   |   |                           |   | 144,722 |   |
| Long-term                debt                                                                                                |   | ** **                     | **305,658**   |   |                           |   | 181,124 |   |
|                                                                                                                         |   |                           |          |   |                           |   |   |   |
| **Stockholders’                equity**                                                                                |   |                           |          |   |                           |   |   |   |
| Common                stock $.10 par value:                                                                                  |   |                           |          |   |                           |   |   |   |
| Authorized                – 300,000,000 shares                                                                         |   |                           |          |   |                           |   |   |   |
| Issued                – 151,374,836 shares and 135,762,531 shares                                                      |   | ** **                     | **15,137**    |   |                           |   | 13,576 |   |
| Additional                paid-in capital                                                                                    |   | ** **                     | **406,372**   |   |                           |   | 285,159 |   |
| Treasury                stock at cost – 34,224,114 shares and 12,265,993 shares                                        |   | ** **                     | **(324,425**  | **)**  |                           |   | (84,136 | ) |
| Accumulated                other comprehensive income                                                                        |   | ** **                     | **18**        |   |                           |   | 1 |   |
| Retained                earnings                                                                                             |   | ** **                     | **768,949**   |   |                           |   | 732,938 |   |
| **Total                stockholders’ equity**                                                                          |   | ** **                     | **866,051**   |   |                           |   | 947,538 |   |
| **Total                liabilities and stockholders’ equity**                                                          |   | **$**                          | **1,794,548** |   |                           | $      | 1,710,942 |   |
|                                                                                                                         |   |                           |          |   |                           |   |   |   |
| Certain                prior-year amounts have been reclassified to conform to the current-year                presentation. |   |
|                                                                                                                         |   |
| ***See                Notes to Condensed Consolidated Financial                Statements***                                 |   |

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**Table          of          Contents**

**CHARMING      SHOPPES, INC. AND      SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS**

**AND      COMPREHENSIVE INCOME**

**(Unaudited)**

|                                                                                                                         |   | **Thirteen                Weeks Ended** |        |
|------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|-------------|
|                                                                                                                         |   | **November                3,**          |        |   | **October                28,** |   |
| ***(In                thousands, except per share amounts)***                                                                |   | **2007**                                |        |   | **2006** |   |
|                                                                                                                         |   |                                    |        |   |   |   |
| **Net                sales**                                                                                                 |   | **$**                                   | **669,389** |   |   | $ | 695,278 |   |
|                                                                                                                         |   |                                    |        |   |   |   |   |   |
| Cost                of goods sold, buying, catalog, and occupancy expenses                                                   |   | ** **                              | **486,519** |   |   |   | 480,818 |   |
| Selling,                general, and administrative expenses                                                                 |   | ** **                              | **187,996** |   |   |   | 183,435 |   |
| **Total                operating expenses**                                                                                  |   | ** **                              | **674,515** |   |   |   | 664,253 |   |
|                                                                                                                         |   |                                    |        |   |   |   |   |   |
| **Income/(loss)                from operations**                                                                             |   | ** **                              | **(5,126**  | **)** |   |   | 31,025 |   |
|                                                                                                                         |   |                                    |        |   |   |   |   |   |
| Other                income                                                                                                  |   | ** **                              | **2,686**   |   |   |   | 2,074 |   |
| Interest                expense                                                                                              |   | ** **                              | **(2,206**  | **)** |   |   | (3,540 | ) |
|                                                                                                                         |   |                                    |        |   |   |   |   |   |
| Income/(loss)                before income taxes                                                                             |   | ** **                              | **(4,646**  | **)** |   |   | 29,559 |   |
| Income                tax provision/(benefit)                                                                                |   | ** **                              | **(1,078**  | **)** |   |   | 10,202 |   |
|                                                                                                                         |   |                                    |        |   |   |   |   |   |
| **Net                income/(loss)**                                                                                         |   | ** **                              | **(3,568**  | **)** |   |   | 19,357 |   |
|                                                                                                                         |   |                                    |        |   |   |   |   |   |
| **Other                comprehensive income, net of tax**                                                                    |   |                                    |        |   |   |   |   |   |
| Unrealized                gain on available-for-sale securities,                                                             |   |                                    |        |   |   |   |   |   |
| net                of income tax provision of $8                in 2007                                                      |   | ** **                              | **15**      |   |   |   | 0 |   |
|                                                                                                                         |   |                                    |        |   |   |   |   |   |
| **Comprehensive                income/(loss)**                                                                               |   | **$**                                   | **(3,553**  | **)** |   | $ | 19,357 |   |
|                                                                                                                         |   |                                    |        |   |   |   |   |   |
| **Basic                net income/(loss) per share**                                                                         |   | **$**                                   | **(.03**    | **)** |   | $ | .16 |   |
|                                                                                                                         |   |                                    |        |   |   |   |   |   |
| **Diluted                net income/(loss) per share**                                                                       |   | **$**                                   | **(.03**    | **)** |   | $ | .15 |   |
|                                                                                                                         |   |
| Certain                prior-year amounts have been reclassified to conform to the current-year                presentation. |   |
|                                                                                                                         |   |
| ***See                Notes to Condensed Consolidated Financial                Statements***                                 |   |

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**Table          of          Contents**

**CHARMING      SHOPPES, INC. AND      SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS**

**AND      COMPREHENSIVE INCOME**

**(Unaudited)**

|                                                                                                                         |   | **Thirty-nine                Weeks Ended** |          |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------------|
|                                                                                                                         |   | **November                3,**             |          |   | **October                28,** |   |
| ***(In                thousands, except per share amounts)***                                                                |   | **2007**                                   |          |   | **2006** |   |
|                                                                                                                         |   |                                       |          |   |   |   |
| **Net                sales**                                                                                                 |   | **$**                                      | **2,225,026** |   |   | $ | 2,193,553 |   |
|                                                                                                                         |   |                                       |          |   |   |   |   |   |
| Cost                of goods sold, buying, catalog, and occupancy expenses                                                   |   | ** **                                 | **1,584,048** |   |   |   | 1,516,490 |   |
| Selling,                general, and administrative expenses                                                                 |   | ** **                                 | **574,885**   |   |   |   | 541,468 |   |
| **Total                operating expenses**                                                                                  |   | ** **                                 | **2,158,933** |   |   |   | 2,057,958 |   |
|                                                                                                                         |   |                                       |          |   |   |   |   |   |
| **Income                from operations**                                                                                    |   | ** **                                 | **66,093**    |   |   |   | 135,595 |   |
|                                                                                                                         |   |                                       |          |   |   |   |   |   |
| Other                income                                                                                                  |   | ** **                                 | **7,787**     |   |   |   | 6,488 |   |
| Interest                expense                                                                                              |   | ** **                                 | **(8,287**    | **)** |   |   | (11,475 | ) |
|                                                                                                                         |   |                                       |          |   |   |   |   |   |
| Income                before income taxes                                                                                    |   | ** **                                 | **65,593**    |   |   |   | 130,608 |   |
| Income                tax provision                                                                                          |   | ** **                                 | **24,584**    |   |   |   | 46,627 |   |
|                                                                                                                         |   |                                       |          |   |   |   |   |   |
| **Net                income**                                                                                                |   | ** **                                 | **41,009**    |   |   |   | 83,981 |   |
|                                                                                                                         |   |                                       |          |   |   |   |   |   |
| **Other                comprehensive income, net of tax**                                                                    |   |                                       |          |   |   |   |   |   |
| Unrealized                gain on available-for-sale securities,                                                             |   |                                       |          |   |   |   |   |   |
| net                of income tax provision of                $11 in 2007 and $3 in 2006                                      |   | ** **                                 | **17**        |   |   |   | 4 |   |
|                                                                                                                         |   |                                       |          |   |   |   |   |   |
| **Comprehensive                income**                                                                                      |   | **$**                                      | **41,026**    |   |   | $ | 83,985 |   |
|                                                                                                                         |   |                                       |          |   |   |   |   |   |
| **Basic                net income per share**                                                                                |   | **$**                                      | **.33**       |   |   | $ | .69 |   |
|                                                                                                                         |   |                                       |          |   |   |   |   |   |
| **Diluted                net income per share**                                                                              |   | **$**                                      | **.32**       |   |   | $ | .63 |   |
|                                                                                                                         |   |
| Certain                prior-year amounts have been reclassified to conform to the current-year                presentation. |   |
|                                                                                                                         |   |
| ***See                Notes to Condensed Consolidated Financial                Statements***                                 |   |

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**Table          of          Contents**

**CHARMING      SHOPPES, INC. AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

|                                                                                                                         |   | **Thirty-nine                Weeks Ended** |         |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------------|
|                                                                                                                         |   | **November                3,**             |         |   | **October                28,** |   |
| ***(In                thousands)***                                                                                          |   | **2007**                                   |         |   | **2006** |   |
|                                                                                                                         |   |                                       |         |   |   |   |
| **Operating                activities**                                                                                      |   |                                       |         |   |   |   |
| Net                income                                                                                                    |   | **$**                                      | **41,009**   |   |   | $ | 83,981 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities               |   |                                       |         |   |   |   |   |   |
| Depreciation                and amortization                                                                                 |   | ** **                                 | **69,492**   |   |   |   | 66,431 |   |
| Stock-based                compensation                                                                                      |   | ** **                                 | **8,494**    |   |   |   | 7,603 |   |
| Deferred                income taxes                                                                                         |   | ** **                                 | **8,856**    |   |   |   | (9,713 | ) |
| Excess                tax benefits related to stock-based compensation                                                       |   | ** **                                 | **(847**     | **)** |   |   | (2,635 | ) |
| Net                loss from disposition of capital assets                                                                   |   | ** **                                 | **1,926**    |   |   |   | 849 |   |
| Net                gain from securitization activities                                                                       |   | ** **                                 | **(7,486**   | **)** |   |   | (1,139 | ) |
| Changes                in operating assets and liabilities                                                                   |   |                                       |         |   |   |   |   |   |
| Accounts                receivable, net                                                                                      |   | ** **                                 | **29,807**   |   |   |   | 36,583 |   |
| Merchandise                inventories                                                                                       |   | ** **                                 | **(68,763**  | **)** |   |   | (105,040 | ) |
| Accounts                payable                                                                                              |   | ** **                                 | **15,778**   |   |   |   | 74,330 |   |
| Deferred                advertising                                                                                          |   | ** **                                 | **(10,423**  | **)** |   |   | (5,617 | ) |
| Prepayments                and other                                                                                         |   | ** **                                 | **(591**     | **)** |   |   | (17,932 | ) |
| Income                taxes payable                                                                                          |   | ** **                                 | **0**        |   |   |   | 10,998 |   |
| Accrued                expenses and other                                                                                    |   | ** **                                 | **16,853**   |   |   |   | 2,135 |   |
| Purchase                of Lane Bryant credit card receivables portfolio                                                     |   | ** **                                 | **(230,975** | **)** |   |   | 0 |   |
| Securitization                of Lane Bryant credit card receivables portfolio                                               |   | ** **                                 | **230,975**  |   |   |   | 0 |   |
| **Net                cash provided by operating activities**                                                                 |   | ** **                                 | **104,105**  |   |   |   | 140,834 |   |
|                                                                                                                         |   |                                       |         |   |   |   |   |   |
| **Investing                activities**                                                                                      |   |                                       |         |   |   |   |   |   |
| Investment                in capital assets                                                                                  |   | ** **                                 | **(108,775** | **)** |   |   | (92,524 | ) |
| Gross                purchases of securities                                                                                 |   | ** **                                 | **(73,089**  | **)** |   |   | (33,472 | ) |
| Proceeds                from sales of securities                                                                             |   | ** **                                 | **3,777**    |   |   |   | 52,540 |   |
| Increase                in other assets                                                                                      |   | ** **                                 | **(17,225**  | **)** |   |   | (7,417 | ) |
| **Net                cash used by investing activities**                                                                     |   | ** **                                 | **(195,312** | **)** |   |   | (80,873 | ) |
|                                                                                                                         |   |                                       |         |   |   |   |   |   |
| **Financing                activities**                                                                                      |   |                                       |         |   |   |   |   |   |
| Proceeds                from short-term borrowings                                                                           |   | ** **                                 | **9,527**    |   |   |   | 142,212 |   |
| Repayments                of short-term borrowings                                                                           |   | ** **                                 | **(9,527**   | **)** |   |   | (192,212 | ) |
| Proceeds                from issuance of senior convertible notes                                                            |   | ** **                                 | **275,000**  |   |   |   | 0 |   |
| Proceeds                from long-term borrowings                                                                            |   | ** **                                 | **986**      |   |   |   | 0 |   |
| Repayments                of long-term borrowings                                                                            |   | ** **                                 | **(9,044**   | **)** |   |   | (11,491 | ) |
| Payments                of deferred financing costs                                                                          |   | ** **                                 | **(7,611**   | **)** |   |   | 0 |   |
| Excess                tax benefits related to stock-based compensation                                                       |   | ** **                                 | **847**      |   |   |   | 2,635 |   |
| Purchase                of hedge on senior convertible notes                                                                 |   | ** **                                 | **(90,475**  | **)** |   |   | 0 |   |
| Sale                of common stock warrants                                                                                 |   | ** **                                 | **53,955**   |   |   |   | 0 |   |
| Purchases                of treasury stock                                                                                   |   | ** **                                 | **(240,289** | **)** |   |   | 0 |   |
| Net                proceeds from shares issued under employee stock                plans                                |   | ** **                                 | **389**      |   |   |   | 7,001 |   |
| **Net                cash used by financing activities**                                                                     |   | ** **                                 | **(16,242**  | **)** |   |   | (51,855 | ) |
|                                                                                                                         |   |                                       |         |   |   |   |   |   |
| **Increase/(decrease) in                cash and cash equivalents**                                                     |   | ** **                                 | **(107,449** | **)** |   |   | 8,106 |   |
| Cash                and cash equivalents, beginning of period                                                                |   | ** **                                 | **143,838**  |   |   |   | 130,132 |   |
| **Cash                and cash equivalents, end of period**                                                                  |   | **$**                                      | **36,389**   |   |   | $ | 138,238 |   |
|                                                                                                                         |   |                                       |         |   |   |   |   |   |
| **Non-cash                financing and investing activities**                                                               |   |                                       |         |   |   |   |   |   |
| Common                stock issued on redemption of convertible notes                                                        |   | **$**                                      | **149,564**  |   |   | $ | 0 |   |
| Assets                acquired through capital leases                                                                        |   | **$**                                      | **5,509**    |   |   | $ | 0 |   |
|                                                                                                                         |   |                                       |         |   |   |   |   |   |
| Certain                prior-year amounts have been reclassified to conform to the current-year                presentation. |   |
|                                                                                                                         |   |                                       |         |   |   |   |   |   |
| ***See                Notes to Condensed Consolidated Financial                Statements***                                 |   |

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(Unaudited)**

**Note      1. Condensed Consolidated Financial Statements**

***Segment      Reporting***

**“Note**
**10**
**.**
** Segment      Reporting”**

***Stock-based      Compensation***

**“Item      8.**
** **
** Financial Statements and      Supplementary Data; Note 1**
**1**
**.      Stock**
**-Based Compensation**
** Plans” **

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      1. Condensed Consolidated Financial Statements (Continued)**

| 2004                Stock Award and Incentive Plan           |   |   | 3,915,252 |   |
|--------------------------------------------------------------|--------|--------|-----------|--------|
| 2003                Non-Employee Directors Compensation Plan |   |   | 122,968   |   |
| 1994                Employee Stock Purchase Plan             |   |   | 1,072,687 |   |
| 1988                Key Employee Stock Option Plan           |   |   | 105,055   |   |

|                                                                             |   |       |      |   |        |   |   |                             |   |   | **Aggregate**               |   |
|----------------------------------------------------------------------------------|--------|------------|-----------|--------|-------------|--------|--------|----------------------------------|--------|--------|-----------------------------|--------|
|                                                                             |   |       |      |   | **Average** |   |   |                             |   |   | **Intrinsic**               |   |
|                                                                             |   | **Option** |      |   | **Option**  |   |   | **Option                Prices** |   |   | **Value(1)**                |   |
|                                                                             |   | **Shares** |      |   | **Price**   |   |   | **Per                Share**     |   |   | ** ****(000’s)** |   |
|                                                                             |   |       |      |   |        |   |   |                             |   |   |                        |   |   |   |   |   |   |   |   |
| **Outstanding                at February 3, 2007**                               |   |       | 2,217,790 |   |        | $      | 5.82   |                             |   | $      | 1.00                        |   |   |   | – |   |   | $ | 13.84 |   |   | $ | 16,473 |   |
| Granted                **–**option price less than market price            |   |       | 18,000    |   |        |   | 1.00   |                             |   |   | 1.00                        |   |   |   | – |   |   |   | 1.00 |   |   |   |   |   |
| Canceled/forfeited                                                               |   |       | (7,502    | )      |        |   | 4.08   |                             |   |   | 1.00                        |   |   |   | – |   |   |   | 11.28 |   |   |   |   |   |
| Exercised                                                                        |   |       | (148,181  | )      |        |   | 5.26   |                             |   |   | 1.00                        |   |   |   | – |   |   |   | 8.46 |   |   | ** ** | 884 | (2) |
| **Outstanding                at November 3, 2007**                               |   |       | 2,080,107 |   |        | $      | 5.82   |                             |   | $      | 1.00                        |   |   |   | – |   |   | $ | 13.84 |   |   | $ | 2,092 |   |
| **Exercisable                at November 3, 2007**                               |   |       | 2,015,680 |   |        | $      | 5.98   |                             |   | $      | 1.00                        |   |   |   | – |   |   | $ | 13.84 |   |   | $ | 1,717 |   |
| ____________________                                                             |   |
| *(1)                 Aggregate market value less aggregate exercise price.* |   |
| *(2)                 As of date of exercise.*                               |   |

*“Accounting for Stock-Based Compensation”*
*“Share-Based Payment”*

|                                                  |   | **Thirteen                Weeks Ended** |   |   | **Thirty-nine                Weeks Ended** |   |
|-------------------------------------------------------|--------|-----------------------------------------|--------|--------|--------------------------------------------|--------|
|                                                  |   | **November                3,**          |   |   | **October                28,**             |   |   | **November                3,** |   |   | **October                28,** |   |
| ***(In                thousands)***                   |   | **2007**                                |   |   | **2006**                                   |   |   | **2007** |   |   | **2006** |   |
|                                                  |   |                                    |   |   |                                       |   |   |   |   |   |   |   |
| Total                stock-based compensation expense |   | $                                       | 734    |   |                                       | $      | 2,588 |   |   | $ | 8,494 |   |   | $ | 7,603 |   |

**“Item 8. Financial Statements and Supplementary Data; Note 1. Summary      of      Significant Accounting Policies; **
***Stock-based      Compensation***
**” **

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      1. Condensed Consolidated Financial Statements (Continued)**

***Crosstown      Traders Integration Plan***

**“Item 8. Financial      Statements and Supplementary Data; Note **
**2**
**.**
**Acquisition of Crosstown      Traders, Inc.**
**”**
*“Recognition of      Liabilities in Connection with a Purchase Business      Combination.”*

|                                               |   |                           |   |   | **Thirty-nine                Weeks Ended** |   |   |                          |   |
|----------------------------------------------------|--------|--------------------------------|--------|--------|--------------------------------------------|--------|--------|-------------------------------|--------|
|                                               |   | **Balance                at**  |   |   | **November                3, 2007**        |   |   | **Balance                at** |   |
|                                               |   | **February                3,** |   |   |                                       |   |   | **Payments/**                 |   |   | **November                3,** |   |
| ***(In                thousands)***                |   | **2007**                       |   |   | **Adjustments**                            |   |   | **Settlements**               |   |   | **2007** |   |
|                                               |   |                           |   |   |                                       |   |   |                          |   |   |   |   |
| Lease                termination and related costs |   | $                              | 1,820  |   |                                       | $      | (746   | )                             |   | $ | (1,074 | ) |   | $ | 0 |   |
| Other                costs                         |   |                           | 239    |   |                                       |   | (153   | )                             |   |   | (86 | ) |   |   | 0 |   |
| Total                                              |   | $                              | 2,059  |   |                                       | $      | (899   | )                             |   | $ | (1,160 | ) |   | $ | 0 |   |

**Note      2. Accounts Receivable**

|                                           |   | **November                3,** |   |   | **February                3,** |   |
|------------------------------------------------|--------|--------------------------------|--------|--------|--------------------------------|--------|
| ***(In                thousands)***            |   | **2007**                       |   |   | **2007**                       |   |
|                                           |   |                           |   |   |                           |   |
| Due                from customers              |   | $                              | 4,999  |   |                           | $      | 38,449 |   |
| Allowance                for doubtful accounts |   |                           | (1,440 | )      |                           |   | (5,083 | ) |
| Net                accounts receivable         |   | $                              | 3,559  |   |                           | $      | 33,366 |   |

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      3. Trademarks and Other Intangible Assets**

|                                                                               |   | **November                3,** |    |   | **February                3,** |   |
|------------------------------------------------------------------------------------|--------|--------------------------------|---------|--------|--------------------------------|--------|
| ***(In                thousands)***                                                |   | **2007**                       |    |   | **2007**                       |   |
|                                                                               |   |                           |    |   |                           |   |
| Trademarks,                tradenames, and internet domain names                   |   | $                              | 241,988 |   |                           | $      | 241,850 |   |
| Customer                lists, customer relationships, and covenant not to compete |   |                           | 16,400  |   |                           |   | 16,400 |   |
| Total                at cost                                                       |   |                           | 258,388 |   |                           |   | 258,250 |   |
| Less                accumulated amortization of customer lists, customer           |   |                           |    |   |                           |   |   |   |
| relationships,                and covenant not                to compete           |   |                           | 11,217  |   |                           |   | 8,760 |   |
| Net                trademarks and other intangible assets                          |   | $                              | 247,171 |   |                           | $      | 249,490 |   |

**Note      4. Long-term Debt**

|                                                                                                                                          |   | **November                3,** |    |   | **February                3,** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|--------|--------------------------------|--------|
| ***(In                thousands)***                                                                                                           |   | **2007**                       |    |   | **2007**                       |   |
|                                                                                                                                          |   |                           |    |   |                           |   |
| 1.125%                Senior Convertible Notes, due May 2014                                                                                  |   | $                              | 275,000 |   |                           | $      | 0 |   |
| 4.75%                Senior Convertible Notes, due June 2012(1)                                                                               |   |                           | 0       |   |                           |   | 149,999 |   |
| Capital                lease obligations                                                                                                      |   |                           | 12,876  |   |                           |   | 12,853 |   |
| 6.07%                mortgage note, due October 2014                                                                                          |   |                           | 11,235  |   |                           |   | 11,696 |   |
| 6.53%                mortgage note, due November 2012                                                                                         |   |                           | 7,000   |   |                           |   | 8,050 |   |
| 7.77%                mortgage note, due December 2011                                                                                         |   |                           | 8,051   |   |                           |   | 8,496 |   |
| Other                long-term debt                                                                                                           |   |                           | 735     |   |                           |   | 917 |   |
| Total                long-term debt                                                                                                           |   |                           | 314,897 |   |                           |   | 192,011 |   |
| Less                current portion                                                                                                           |   |                           | 9,239   |   |                           |   | 10,887 |   |
| Long-term                debt                                                                                                                 |   | $                              | 305,658 |   |                           | $      | 181,124 |   |
| ____________________                                                                                                                          |   |
| *(1)                 On April 30, 2007, we called these notes for redemption on June 4,                2007                (see below).* |   |

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      4. Long-term Debt (Continued)**

*“Convertible Bonds with Issuer Option to Settle for      Cash upon Conversion”*
*“Accounting for Derivative      Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own      Stock.”  *

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      4. Long-term Debt (Continued)**

*Accounting for Derivative Instruments and Hedging      Activities,”*

*“Earnings Per Share,”*

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      5. Stockholders’ Equity**

|                                                                                                           |   | **Thirty-nine**                |     |
|----------------------------------------------------------------------------------------------------------------|--------|--------------------------------|----------|
|                                                                                                           |   | **Weeks                Ended** |     |
|                                                                                                           |   | **November                3,** |     |
| ***(Dollars                in thousands)***                                                                    |   | **2007**                       |     |
|                                                                                                           |   |                           |     |
| Total                stockholders’ equity, beginning of period                                           |   | $                              | 947,538  |   |
| Cumulative                effect of adoption of FIN No. 48(1)                                                  |   |                           | (4,998   | ) |
| Net                income                                                                                      |   |                           | 41,009   |   |
| Net                proceeds from shares issued under employee stock plans (466,749                shares) |   |                           | 389      |   |
| Purchase                of treasury shares (21,958,121 shares)                                                 |   |                           | (240,289 | ) |
| Common                stock issued on redemption of convertible notes (15,145,556                shares)       |   |                           | 149,564  |   |
| Sale                of common stock warrants(2)                                                                |   |                           | 53,955   |   |
| Purchase                of common stock call options(2)                                                        |   |                           | (90,475  | ) |
| Stock-based                compensation expense                                                                |   |                           | 8,494    |   |
| Excess                tax benefits related to stock-based compensation                                         |   |                           | 847      |   |
| Unrealized                gain on available-for-sale securities, net of tax                                    |   |                           | 17       |   |
| Total                stockholders’ equity, end of period                                                 |   | $                              | 866,051  |   |
| ____________________                                                                                           |   |
| *(1) **See*** *****“Note                8. Income                Taxes”*** below.        |   |
| *(2) **See*** *****“Note                4. Long-term                Debt”*** above.      |   |

**“Note 4. Long-term Debt”**

**“Note 12. Subsequent      Events”**

**“Note 12. Subsequent Events”**

**Note      6. Customer Loyalty Card Programs**

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      6. Customer Loyalty Card Programs (Continued)**

**Note      7. Net Income per Share**

|                                                                                                                                                                                                                |   | **Thirteen                Weeks Ended** |    |   | **Thirty-nine                Weeks Ended** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|--------|--------------------------------------------|--------|
|                                                                                                                                                                                                                |   | **November                3,**          |    |   | **October                28,**             |   |   | **November                3,** |   |   | **October                28,** |   |
| ***(In                thousands, except per share amounts)***                                                                                                                                                       |   | **2007**                                |    |   | **2006**                                   |   |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                |   |                                    |    |   |                                       |   |   |   |   |   |   |   |
| Basic                weighted average common shares outstanding                                                                                                                                                     |   |                                    | 121,196 |   |                                       |   | 122,586 |   |   |   | 122,688 |   |   |   | 122,174 |   |
| Dilutive                effect of assumed conversion of                                                                                                                                                             |   |                                    |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| 4.75%                Senior Convertible                Notes                                                                                                                                                        |   |                                    | 0       | (1)    |                                       |   | 15,182 |   |   |   | 6,674 | (1) |   |   | 15,182 |   |
| Dilutive                effect of stock options and awards                                                                                                                                                          |   |                                    | 0       | (2)    |                                       |   | 2,164 |   |   |   | 1,478 |   |   |   | 2,215 |   |
| Diluted                weighted average common shares                                                                                                                                                               |   |                                    |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| and                equivalents                outstanding                                                                                                                                                           |   |                                    | 121,196 |   |                                       |   | 139,932 |   |   |   | 130,840 |   |   |   | 139,571 |   |
|                                                                                                                                                                                                                |   |                                    |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Net                income/(loss)                                                                                                                                                                                    |   | $                                       | (3,568  | )      |                                       | $      | 19,357 |   |   | $ | 41,009 |   |   | $ | 83,981 |   |
| Decrease                in interest expense from assumed                                                                                                                                                            |   |                                    |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| conversion                of 4.75% Senior                Convertible                                                                                                                                                |   |                                    |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Notes,                net of income                taxes                                                                                                                                                            |   |                                    | 0       | (1)    |                                       |   | 1,128 |   |   |   | 1,476 | (1) |   |   | 3,385 |   |
| Net                income/(loss) used to determine diluted                                                                                                                                                          |   |                                    |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| net                income/(loss) per                share                                                                                                                                                      |   | $                                       | (3,568  | )      |                                       | $      | 20,485 |   |   | $ | 42,485 |   |   | $ | 87,366 |   |
|                                                                                                                                                                                                                |   |                                    |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Options                with weighted average exercise price                                                                                                                                                         |   |                                    |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| greater                than market price, excluded from                                                                                                                                                             |   |                                    |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| computation                of net income/(loss) per share:                                                                                                                                                          |   |                                    |    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Number                of shares                                                                                                                                                                                     |   |                                    | 193     |   |                                       |   | 1 |   |   |   | 77 |   |   |   | 1 |   |
| Weighted                average exercise price per share                                                                                                                                                            |   | $                                       | 7.71    |   |                                       | $      | 13.84 |   |   | $ | 9.30 |   |   | $ | 13.84 |   |
| ____________________                                                                                                                                                                                                |   |
| *(1)                 The notes were converted or redeemed on June 4, 2007 (see **“Note 4.                Long-term Debt”** above).*                                                                |   |
| *(2)                 All stock options and awards are excluded from the computation of                diluted                net loss per share as their effect would have been                anti-dilutive.* |   |

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      7. Net Income per Share (Continued)**

**“Note 4. Long-term Debt”**

**“Note 5. Stockholders’ Equity”**
**“Note 12.      Subsequent Events”**

**Note      8. Income Taxes**

*“Accounting for      Uncertainty in Income Taxes—an interpretation of FASB Statement No.      109.”*

*“Accounting for Income Taxes.”*

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      8. Income Taxes (Continued)**

**Note      9. Asset Securitization**

**“Item 8. Financial Statements and Supplementary Data; Note**
**16**
**. **
**Asset      Securitization**
**” **

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      9. Asset Securitization (Continued)**

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      9. Asset Securitization (Continued)**

**Note      10. Segment Reporting**

**“**
**Note 1. Condensed Consolidated Financial      Statements**
**; **
***Segment      Reporting”***
**“Item 8. Financial      Statements and Supplementary Data; Note 1. Summary of Significant Accounting      Policies” **

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      10. Segment Reporting (Continued)**

|                                                        |   | **Retail** |      |   | **Direct-to-** |   |    | **Corporate**                |   |   |             |   |
|-------------------------------------------------------------|--------|------------|-----------|--------|----------------|--------|---------|------------------------------|--------|--------|------------------|--------|
| ***(In                thousands)***                         |   | **Stores** |      |   | **Consumer**   |   |    | **and                Other** |   |   | **Consolidated** |   |
|                                                        |   |       |      |   |           |   |    |                         |   |   |             |   |
| **Thirteen                weeks ended November 3, 2007**    |   |       |      |   |           |   |    |                         |   |   |             |   |
| Net                sales                                    |   | $          | 588,777   |   |           | $      | 78,979  |                         |   | $      | 1,633            |   |   | $ | 669,389 |   |
| Depreciation                and amortization                |   |       | 15,678    |   |           |   | 401     |                         |   |   | 7,157            |   |   |   | 23,236 |   |
| Loss                before interest and income taxes        |   |       | 32,586    |   |           |   | (4,529  | )                            |   |   | (30,497          | )      |   |   | (2,440 | ) |
| Interest                expense                             |   |       |      |   |           |   |    |                         |   |   | (2,206           | )      |   |   | (2,206 | ) |
| Income                tax benefit                           |   |       |      |   |           |   |    |                         |   |   | 1,078            |   |   |   | 1,078 |   |
| Net                loss                                     |   |       | 32,586    |   |           |   | (4,529  | )                            |   |   | (31,625          | )      |   |   | (3,568 | ) |
| Capital                expenditures                         |   |       | 27,672    |   |           |   | 1,484   |                         |   |   | 5,603            |   |   |   | 34,759 |   |
|                                                        |   |       |      |   |           |   |    |                         |   |   |             |   |   |   |   |   |
| **Thirty-nine                weeks ended November 3, 2007** |   |       |      |   |           |   |    |                         |   |   |             |   |   |   |   |   |
| Net                sales                                    |   | $          | 1,960,754 |   |           | $      | 259,044 |                         |   | $      | 5,228            |   |   | $ | 2,225,026 |   |
| Depreciation                and amortization                |   |       | 42,459    |   |           |   | 1,125   |                         |   |   | 25,908           |   |   |   | 69,492 |   |
| Income                before interest and income taxes      |   |       | 177,430   |   |           |   | (7,440  | )                            |   |   | (96,110          | )      |   |   | 73,880 |   |
| Interest                expense                             |   |       |      |   |           |   |    |                         |   |   | (8,287           | )      |   |   | (8,287 | ) |
| Income                tax provision                         |   |       |      |   |           |   |    |                         |   |   | (24,584          | )      |   |   | (24,584 | ) |
| Net                income                                   |   |       | 177,430   |   |           |   | (7,440  | )                            |   |   | (128,981         | )      |   |   | 41,009 |   |
| Capital                expenditures                         |   |       | 83,264    |   |           |   | 2,294   |                         |   |   | 23,217           |   |   |   | 108,775 |   |

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**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      10. Segment Reporting (Continued)**

|                                                        |   | **Retail** |      |   | **Direct-to-** |   |    | **Corporate**                |   |   |             |   |
|-------------------------------------------------------------|--------|------------|-----------|--------|----------------|--------|---------|------------------------------|--------|--------|------------------|--------|
| ***(In                thousands)***                         |   | **Stores** |      |   | **Consumer**   |   |    | **and                Other** |   |   | **Consolidated** |   |
|                                                        |   |       |      |   |           |   |    |                         |   |   |             |   |
| **Thirteen                weeks ended October 28, 2006**    |   |       |      |   |           |   |    |                         |   |   |             |   |
| Net                sales                                    |   | $          | 615,321   |   |           | $      | 79,826  |                         |   | $      | 131              |   |   | $ | 695,278 |   |
| Depreciation                and amortization                |   |       | 10,216    |   |           |   | 718     |                         |   |   | 10,368           |   |   |   | 21,302 |   |
| Income                before interest and income taxes      |   |       | 58,974    |   |           |   | 346     |                         |   |   | (26,221          | )      |   |   | 33,099 |   |
| Interest                expense                             |   |       |      |   |           |   |    |                         |   |   | (3,540           | )      |   |   | (3,540 | ) |
| Income                tax provision                         |   |       |      |   |           |   |    |                         |   |   | (10,202          | )      |   |   | (10,202 | ) |
| Net                income                                   |   |       | 58,974    |   |           |   | 346     |                         |   |   | (39,963          | )      |   |   | 19,357 |   |
| Capital                expenditures                         |   |       | 25,953    |   |           |   | 2,033   |                         |   |   | 9,567            |   |   |   | 37,553 |   |
|                                                        |   |       |      |   |           |   |    |                         |   |   |             |   |   |   |   |   |
| **Thirty-nine                weeks ended October 28, 2006** |   |       |      |   |           |   |    |                         |   |   |             |   |   |   |   |   |
| Net                sales                                    |   | $          | 1,912,533 |   |           | $      | 279,579 |                         |   | $      | 1,441            |   |   | $ | 2,193,553 |   |
| Depreciation                and amortization                |   |       | 36,693    |   |           |   | 1,285   |                         |   |   | 28,453           |   |   |   | 66,431 |   |
| Income                before interest and income taxes      |   |       | 206,642   |   |           |   | 8,416   |                         |   |   | (72,975          | )      |   |   | 142,083 |   |
| Interest                expense                             |   |       |      |   |           |   |    |                         |   |   | (11,475          | )      |   |   | (11,475 | ) |
| Income                tax provision                         |   |       |      |   |           |   |    |                         |   |   | (46,627          | )      |   |   | (46,627 | ) |
| Net                income                                   |   |       | 206,642   |   |           |   | 8,416   |                         |   |   | (131,077         | )      |   |   | 83,981 |   |
| Capital                expenditures                         |   |       | 64,064    |   |           |   | 3,221   |                         |   |   | 25,239           |   |   |   | 92,524 |   |

**Note      11. Impact of Recent Accounting Pronouncements**

*“Fair Value      Measurements.”*

*“Accounting for Deferred Compensation and Postretirement Benefit Aspects      of      Endorsement Split-Dollar Life Insurance Agreements.”*

----

**Table          of Contents**

**CHARMING            SHOPPES, INC. AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS          (Continued)**

**(Unaudited)**

**Note      11. Impact of Recent Accounting Pronouncements (Continued)**

*“*
*Definition of Settlement in      FASB Interpretation No. 48,”*

**Note      12. Subsequent Events**

**“Note 5.      Stockholders’ Equity”**

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**Table          of Contents**

**Item      2. Management’s Discussion and Analysis of Financial      Condition and Results of Operations**

**FORWARD-LOOKING      STATEMENTS**

| ·   | Our                business is dependent upon our ability to accurately predict rapidly                changing fashion trends, customer preferences, and other fashion-related                factors, which we may not be able to successfully accomplish in the                future. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                business plan is largely dependent upon continued growth in the plus-size                women’s apparel market, which may not                occur. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A                slowdown in the United States economy, an uncertain economic outlook,                and                escalating energy costs could lead to reduced consumer demand for                our                products in the future. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                women’s specialty retail apparel and direct-to-consumer markets are highly                competitive and we may be unable to compete successfully against                existing                or future competitors. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                depend on key personnel, particularly our Chief Executive Officer,                Dorrit                J. Bern, and we may not be able to retain or replace these employees                or                recruit additional qualified                personnel. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Table          of Contents**

| ·   | We                depend on our distribution and fulfillment centers and third-party                freight                consolidators and service providers, and could incur significantly                higher                costs and longer lead times associated with distributing our products                to                our stores and shipping our products to our E-commerce and catalog                customers if operations at any of these locations were to be disrupted                for                any reason. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Natural                disasters, as well as war, acts of terrorism, or other armed conflict,                or                the threat of either may negatively impact availability of merchandise                and                customer traffic to our stores, or otherwise adversely affect our                business. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                manufacturers may be unable to manufacture and deliver merchandise                to us                in a timely manner or to meet our quality                standards. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                rely significantly on foreign sources of production and face a variety                of                risks generally associated with doing business in foreign markets                and                importing merchandise from abroad.  Such risks include (but are not                necessarily limited to) political instability; imposition of, or                changes                in, duties or quotas; trade restrictions; increased security requirements                applicable to imports; delays in shipping; increased costs of                transportation; and issues relating to compliance with domestic or                international labor standards. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                depend on the availability of credit for our working capital needs,                including credit we receive from our suppliers and their agents,                and on                our credit card securitization                facilities. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                may be unable to obtain adequate insurance for our operations at                a                reasonable cost. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                may be unable to protect our trademarks and other intellectual property                rights, which are important to our success and our competitive                position. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Inadequate                systems capacity, a disruption or slowdown in telecommunications                services,                changes in technology, changes in government regulations, systems                issues,                security breaches, a failure to integrate order management systems,                or                customer privacy issues could result in reduced sales or increases                in                operating expenses as a result of our efforts or our inability to                remedy                such issues. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                cannot assure the successful implementation of our business plan                for                increased profitability and growth in our Retail Stores or                Direct-to-Consumer segments. Recent changes in management may fail to                achieve improvement in our operating results.  We cannot assure                the realization of our anticipated annual expense savings from                the  consolidation of operations and new organizational                structure at our CATHERINES brand. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                may be unable to successfully implement our plan to improve merchandise                assortments in our Retail Stores or Direct-to-Consumer                segments. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                Retail Stores and Direct-to-Consumer segments experience seasonal                fluctuations in net sales and operating income.  Any decrease in                sales or margins during our peak sales periods, or in the availability                of                working capital during the months preceding such periods, could have                a                material adverse effect on our business.  In addition, extreme or                unseasonable weather conditions may have a negative impact on our                sales. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                may be unable to hire and retain a sufficient number of suitable                sales                associates at our stores.  In addition, we are subject to the                Fair Labor Standards Act and various state and Federal laws and                regulations governing such matters as minimum wages, exempt status                classification, overtime, and employee benefits.  Changes in                Federal or state laws or regulations regarding minimum wages or other                employee benefits could cause us to incur additional wage and benefit                costs, which could adversely affect our results of                operations. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                Retail Stores segment sales are dependent upon a high volume of traffic                in                the strip centers and malls in which our stores are located, and                our                future retail store growth is dependent upon the availability of                suitable                locations for new stores. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                cannot assure the successful implementation of our business plans                for our                outlet store distribution channel and expansion of our CACIQUE® product                line                through new store formats. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                cannot assure the realization of our anticipated benefits from the                re-launch of our LANE BRYANT credit card                program. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Table          of Contents**

| ·   | We                cannot assure the successful implementation of our business plan                for                Crosstown Traders, including the successful launch of our LANE BRYANT                catalog. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Successful                operation of our E-commerce websites and our catalog business is                dependent                on our ability to maintain efficient and uninterrupted customer service                and fulfillment operations. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                may be unable to manage significant increases in certain costs vital                to                catalog operations, including postage, paper, and acquisition of                prospects, which could adversely affect our results of                operations. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Response                rates to our catalogs and access to new customers could decline,                which                would adversely affect our net sales and results of                operations. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                make certain significant assumptions, estimates, and projections                related                to the useful lives of our property, plant, and equipment and the                valuation of intangible assets related to acquisitions.  The carrying                amount and/or useful life of these assets are subject to periodic                valuation tests for impairment.  Impairment results when the carrying                value of an asset exceeds the undiscounted (or for goodwill and                indefinite-lived intangible assets the discounted) future cash flows                associated with the asset.  If actual experience were to differ                materially from the assumptions, estimates, and projections used                to                determine useful lives or the valuation of property, plant, equipment,                or                intangible assets, a write-down for impairment of the carrying value                of                the assets, or acceleration of depreciation or amortization of the                assets,                could result.  Such a write-down or acceleration of depreciation or                amortization would have an adverse impact on our reported results                of                operations. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Changes                to existing accounting rules or the adoption of new rules could have                an                adverse impact on our reported results of                operations. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Pursuant                to Section 404 of the Sarbanes-Oxley Act of 2002, we are required                to                include our assessment of the effectiveness of our internal control                over                financial reporting in our annual reports.  Our independent                registered public accounting firm is also required to report on                whether or not they believe that we maintained, in all material respects,                effective internal control over financial reporting.  If we are                unable to maintain effective internal control over financial reporting                we                could be subject to regulatory sanctions and a possible loss of public                confidence in the reliability of our financial reporting.  Such a                failure could result in our inability to provide timely and/or reliable                financial information and could adversely affect our                business. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                holders of our 1.125% Senior Convertible Notes due May 1, 2014 (the                “1.125% Notes”) could require us to repurchase the principal amount of the                notes for cash before maturity of the notes under certain circumstances                (see **“Notes to Condensed Consolidated Financial Statements; Note                4. Long-term Debt”**above).  Such a repurchase would                require significant amounts of cash and could adversely affect our                financial condition. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Financial Accounting Standards Board (“FASB”) has issued a proposed Staff                Position (“FSP”) that, if adopted, would apply to any convertible debt                instrument that may be settled in whole or in part with cash upon                conversion, which would include our 1.125% Notes.  We would be                required to adopt the proposal as of February 3, 2008 (the beginning                of                Fiscal 2009), with retrospective application to financial statements                for                periods prior to the date of adoption.  As compared to our                current accounting for the 1.125% Notes, adoption of the proposal                would                reduce long-term debt, increase stockholders’ equity, and reduce net                income and earnings per share.  Adoption of the proposal would                not affect our cash flows. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**CRITICAL      ACCOUNTING POLICIES**

----

**Table          of Contents**

***Senior      Convertible Notes***

**“Notes to      Condensed Consolidated Financial Statements; Note 4. Long-term Debt”**

***Income      Taxes***

*“Accounting      for Uncertainty in Income Taxes—an interpretation of FASB Statement No.      109”*
**“Notes to Condensed      Consolidated Financial Statements; Note**
**8**
**.  Income Taxes”**

**RECENT      DEVELOPMENTS**

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**Table          of Contents**

**“Notes to Condensed Consolidated Financial Statements; Note 5.      Stockholders’ Equity and Note 12. Subsequent Events” **

**RESULTS      OF OPERATIONS**

**Overview**

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**Table          of Contents**

**“LIQUIDITY AND CAPITAL RESOURCES; **
***Off-Balance-Sheet      Financing***
**”**

**“RECENT DEVELOPMENTS”**

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**Table          of Contents**

**Comparative      Operating Data**

|                                                               |   |                                       |   |   |                           |   |   | **Percentage**                                |   |   |                           |   |   |                           |   |   | **Percentage**                |   |
|--------------------------------------------------------------------|--------|--------------------------------------------|--------|--------|--------------------------------|--------|--------|-----------------------------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------|--------|--------|-------------------------------|--------|
|                                                               |   | **Thirteen                Weeks Ended(1)** |   |   | **Change**                     |   |   | **Thirty-nine                Weeks Ended(1)** |   |   | **Change**                     |   |
|                                                               |   | **November                3,**             |   |   | **October                28,** |   |   | **From                Prior**                 |   |   | **November                3,** |   |   | **October                28,** |   |   | **From                Prior** |   |
|                                                               |   | **2007**                                   |   |   | **2006**                       |   |   | **Period**                                    |   |   | **2007**                       |   |   | **2006**                       |   |   | **Period**                    |   |
|                                                               |   |                                       |   |   |                           |   |   |                                          |   |   |                           |   |   |                           |   |   |                          |   |
| Net                sales                                           |   |                                       | 100.0  | %      |                           |   | 100.0  | %                                             |   |   | (3.7                           | )%     |   |                           | 100.0  | %      |                          |   | 100.0 | % |   |   | 1.4 | % |
| Cost                of goods sold, buying,                         |   |                                       |   |   |                           |   |   |                                          |   |   |                           |   |   |                           |   |   |                          |   |   |   |   |   |   |   |
| catalog, and                occupancy                expenses |   |                                       | 72.7   |   |                           |   | 69.2   |                                          |   |   | 1.2                            |   |   |                           | 71.2   |   |                          |   | 69.1 |   |   |   | 4.5 |   |
| Selling,                general, and                               |   |                                       |   |   |                           |   |   |                                          |   |   |                           |   |   |                           |   |   |                          |   |   |   |   |   |   |   |
| administrative                expenses                             |   |                                       | 28.1   |   |                           |   | 26.4   |                                          |   |   | 2.5                            |   |   |                           | 25.8   |   |                          |   | 24.7 |   |   |   | 6.2 |   |
| Income/(loss)                from operations                       |   |                                       | (0.8   | )      |                           |   | 4.5    |                                          |   |   | (116.5                         | )      |   |                           | 3.0    |   |                          |   | 6.2 |   |   |   | (51.3 | ) |
| Other                income                                        |   |                                       | 0.4    |   |                           |   | 0.3    |                                          |   |   | 29.5                           |   |   |                           | 0.3    |   |                          |   | 0.3 |   |   |   | 20.0 |   |
| Interest                expense                                    |   |                                       | 0.3    |   |                           |   | 0.5    |                                          |   |   | (37.7                          | )      |   |                           | 0.4    |   |                          |   | 0.5 |   |   |   | (27.8 | ) |
| Income                tax provision/(benefit)                      |   |                                       | (0.2   | )      |                           |   | 1.5    |                                          |   |   | (110.6                         | )      |   |                           | 1.1    |   |                          |   | 2.1 |   |   |   | (47.3 | ) |
| Net                income/(loss)                                   |   |                                       | (0.5   | )      |                           |   | 2.8    |                                          |   |   | (118.4                         | )      |   |                           | 1.8    |   |                          |   | 3.8 |   |   |   | (51.2 | ) |
| ____________________                                               |   |
| *(1)                 Results may not add due to rounding.*    |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **Thirteen                Weeks Ended** |   |   | **Thirty-nine                Weeks Ended** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|--------|--------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **November                3,**          |   |   | **October                28,**             |   |   | **November                3,** |   |   | **October                28,** |   |
| ***(In                millions)***                                                                                                                                                                                                                                                                                                                                                                                                                              |   | **2007**                                |   |   | **2006**                                   |   |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                    |   |   |                                       |   |   |   |   |   |   |   |
| FASHION                BUG                                                                                                      |   | $                                       | 221.6  |   |                                       | $      | 240.7 |   |   | $ | 761.8 |   |   | $ | 789.2 |   |
| LANE                BRYANT(1)                                                                                                   |   |                                    | 279.7  |   |                                       |   | 287.0 |   |   |   | 907.5 |   |   |   | 845.2 |   |
| CATHERINES                                                                                                                      |   |                                    | 82.2   |   |                                       |   | 85.7 |   |   |   | 276.3 |   |   |   | 276.2 |   |
| Other                retail stores(2)                                                                                           |   |                                    | 5.3    |   |                                       |   | 1.9 |   |   |   | 15.2 |   |   |   | 1.9 |   |
| Total                Retail Stores segment                sales                                                                 |   |                                    | 588.8  |   |                                       |   | 615.3 |   |   |   | 1,960.8 |   |   |   | 1,912.5 |   |
| Total                Direct-to-Consumer segment sales                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                    | 79.0   |   |                                       |   | 79.8 |   |   |   | 259.0 |   |   |   | 279.6 |   |
| Corporate                and other(3)                                                                                           |   |                                    | 1.6    |   |                                       |   | 0.2 |   |   |   | 5.2 |   |   |   | 1.5 |   |
| Total                net                sales                                                                                   |   | $                                       | 669.4  |   |                                       | $      | 695.3 |   |   | $ | 2,225.0 |   |   | $ | 2,193.6 |   |
| ____________________                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |
| *(1)                 Includes LANE BRYANT OUTLET stores, which began operations in July                2006.*                                                                                                                                                                                                                                                                                                                                              |   |
| *(2)                 Includes PETITE SOPHISTICATE stores, which began operations in October                2007, and PETITE SOPHISTICATE OUTLET stores, which began operations                in                September 2006.*                                                                                                                                                                                                                           |   |
| *(3)                 Primarily revenue related to loyalty card fees.*                                                                                                                                                                                                                                                                                                                                                                                      |   |

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**Table          of Contents**

|                                                                                                                                                                                                                                                                                                                               |   | **FASHION** |   |   | **LANE**   |   |   |           |   |   |         |   |   |      |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|--------|--------|------------|--------|--------|----------------|--------|--------|--------------|--------|--------|-----------|--------|
|                                                                                                                                                                                                                                                                                                                               |   | **BUG**     |   |   | **BRYANT** |   |   | **CATHERINES** |   |   | **Other(1)** |   |   | **Total** |   |
|                                                                                                                                                                                                                                                                                                                               |   |        |   |   |       |   |   |           |   |   |         |   |   |      |   |
| **Fiscal                2008 Year-to-Date(2):**                                                                                                                                                                                                                                                                                    |   |        |   |   |       |   |   |           |   |   |         |   |   |      |   |
| Stores                at February 3, 2007                                                                                                                                                                                                                                                                                          |   |        | 1,009  |   |       |   | 859    |           |   |   | 465          |   |   |      | 45     |   |   |   | 2,378 |   |
|                                                                                                                                                                                                                                                                                                                               |   |        |   |   |       |   |   |           |   |   |         |   |   |      |   |   |   |   |   |   |
| Stores                opened                                                                      |   |        | 7      |   |       |   | 73     | (3)            |   |   | 9            |   |   |      | 10     |   |   |   | 99 |   |
| Stores                closed                                                                      |   |        | (12    | )      |       |   | (10    | )              |   |   | (3           | )      |   |      | (0     | ) |   |   | (25 | ) |
| Net                change in                stores                                                |   |        | (5     | )      |       |   | 63     |           |   |   | 6            |   |   |      | 10     |   |   |   | 74 |   |
|                                                                                                                                                                                                                                                                                                                               |   |        |   |   |       |   |   |           |   |   |         |   |   |      |   |   |   |   |   |   |
| Stores                at November 3, 2007                                                                                                                                                                                                                                                                                          |   |        | 1,004  |   |       |   | 922    |           |   |   | 471          |   |   |      | 55     |   |   |   | 2,452 |   |
|                                                                                                                                                                                                                                                                                                                               |   |        |   |   |       |   |   |           |   |   |         |   |   |      |   |   |   |   |   |   |
| Stores                relocated during period                                                                                                                                                                                                                                                                                      |   |        | 15     |   |       |   | 27     |           |   |   | 11           |   |   |      | 0      |   |   |   | 53 |   |
|                                                                                                                                                                                                                                                                                                                               |   |        |   |   |       |   |   |           |   |   |         |   |   |      |   |   |   |   |   |   |
| **Fiscal                2008:**                                                                                                                                                                                                                                                                                                    |   |        |   |   |       |   |   |           |   |   |         |   |   |      |   |   |   |   |   |   |
| Planned                store openings(4)                                                                                                                                                                                                                                                                                           |   |        | 8      |   |       |   | 79     | (5)            |   |   | 9            |   |   |      | 11     | (6) |   |   | 107 |   |
| Planned                store                closings                                              |   |        | 21     |   |       |   | 39     |           |   |   | 6            |   |   |      | 0      |   |   |   | 66 |   |
| Planned                store relocations(4)                                                                                                                                                                                                                                                                                        |   |        | 15     |   |       |   | 45     | (7)            |   |   | 11           |   |   |      | 0      |   |   |   | 71 |   |
| *____________________*                                                                                                                                                                                                                                                                                                             |   |
| *(1)                 Includes PETITE SOPHISTICATE and PETITE SOPHISTICATE OUTLET                stores.*                                                                                                                                                                                                                      |   |
| *(2)                 Excludes 2 Crosstown Traders outlet stores that are included in our                Direct-to-Consumer segment.*                                                                                                                                                                                          |   |
| *(3)                 Includes 18 LANE BRYANT OUTLET stores and 37 LANE BRYANT intimate                apparel                side-by-side stores.*                                                                                                                                                                            |   |
| *(4)                 Reflects reduced capital expenditures forecast (see **“LIQUIDITY AND                CAPITAL RESOURCES; Capital Expenditures”**                below).*                                                                                                                                       |   |
| *(5)                 Includes approximately 19 LANE BRYANT OUTLET stores and 37 LANE BRYANT                intimate apparel side-by-side stores.*                                                                                                                                                                             |   |
| *(6)                 Includes 4 PETITE SOPHISTICATE stores and 7 PETITE SOPHISTICATE OUTLET                stores.*                                                                                                                                                                                                           |   |
| *(7)                 Includes approximately 27 conversions to LANE BRYANT intimate apparel                side-by-side stores.*                                                                                                                                                                                               |   |

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**Table          of Contents**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **Thirteen                Weeks Ended** |   |   | **Thirty-nine                Weeks Ended** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|--------|--------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **November                3,**          |   |   | **October                28,**             |   |   | **November                3,** |   |   | **October                28,** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **2007**                                |   |   | **2006**                                   |   |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                    |   |   |                                       |   |   |   |   |   |   |   |
| **Retail                Stores segment**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                    |   |   |                                       |   |   |   |   |   |   |   |
| Increase                (decrease) in comparable store sales(1)                :                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                    |   |   |                                       |   |   |   |   |   |   |   |
| Consolidated                retail stores                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                    | (8     | )%     |                                       |   | 1 | % |   |   | (4 | )% |   |   | 1 | % |
| FASHION                BUG                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                    | (7     | )      |                                       |   | 0 |   |   |   | (3 | ) |   |   | (1 | ) |
| LANE                BRYANT(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                    | (9     | )      |                                       |   | 0 |   |   |   | (5 | ) |   |   | 2 |   |
| CATHERINES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                    | (6     | )      |                                       |   | 4 |   |   |   | (1 | ) |   |   | 4 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Sales                from new stores as a percentage of total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| consolidated                prior-period                sales(2):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| FASHION                BUG                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                    | 1      |   |                                       |   | 1 |   |   |   | 1 |   |   |   | 1 |   |
| LANE                BRYANT(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                    | 4      |   |                                       |   | 9 |   |   |   | 6 |   |   |   | 5 |   |
| CATHERINES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                    | 0      |   |                                       |   | 1 |   |   |   | 0 |   |   |   | 1 |   |
| Other                retail stores(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                    | 1      |   |                                       |   | 0 |   |   |   | 1 |   |   |   | 0 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Prior-period                sales from closed stores as a percentage                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| of                total consolidated                prior-period sales:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| FASHION                BUG                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                    | (1     | )      |                                       |   | (1 | ) |   |   | (1 | ) |   |   | (1 | ) |
| LANE                BRYANT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                    | (1     | )      |                                       |   | (3 | ) |   |   | (1 | ) |   |   | (2 | ) |
| CATHERINES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                    | (0     | )      |                                       |   | (0 | ) |   |   | (0 | ) |   |   | (1 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Increase/(decrease)                in Retail Stores segment sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                    | (4     | )      |                                       |   | 8 |   |   |   | 3 |   |   |   | 6 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| **Direct-to-Consumer                segment**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Decrease                in Direct-to-Consumer segment sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                    | (1     | )      |                                       |   | (15 | ) |   |   | (7 | ) |   |   | — | (5) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| **Increase/(decrease)                in consolidated total net sales**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                    | (4     | )      |                                       |   | 5 | (6) |   |   | 1 |   |   |   | 12 | (6) |
| *____________________*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
| *(1)                “Comparable store sales” is not a measure that has been defined under                generally accepted accounting principles. The method of calculating                comparable store sales varies across the retail industry and, therefore,                our calculation of comparable store sales is not necessarily comparable                to                similarly-titled measures reported by other companies. We define                comparable store sales as sales from stores operating in both the                current                and prior-year periods. New stores are added to the comparable store                sales base 13 months after their open date. Sales from stores that                are relocated within the same mall or strip-center, remodeled, or                have a                legal square footage change of less than 20% are included in the                calculation of comparable store sales. Sales from stores that are                relocated outside the existing mall or strip-center, or have a legal                square footage change of 20% or more, are excluded from the calculation                of                comparable store sales until 13 months after the relocated store                is                opened. Stores that are temporarily closed for a period of 4 weeks or                more are excluded from the calculation of comparable store sales                for the                applicable periods in the year of closure and the subsequent                year. Non-store sales, such as catalog and internet sales, are                excluded from the calculation of comparable store                sales.* |   |
| *(2)                Includes incremental Retail Stores segment E-commerce                sales.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| *(3)                Includes LANE BRYANT OUTLET stores.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
| *(4)                Includes PETITE SOPHISTICATE and PETITE SOPHISTICATE OUTLET                stores.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
| *(5)                Comparison is not meaningful, as prior-year period includes sales                from                Crosstown Traders, Inc. from the date of acquisition on June 2, 2005                (approximately 21 weeks).*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
| *(6)                The increase in consolidated total net sales includes a decrease                of 2% for                the thirteen weeks ended October 28, 2006 and an increase of 7% for                the                thirty-nine weeks ended October 28, 2006 as a result of the                acquisition of Crosstown Traders, Inc. on June 2,                2005.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |

----

**Table          of Contents**

**Comparison      of Thirteen Weeks Ended November 3, 2007 and October 28,      2006**

***Net      Sales***

***Retail      Stores Segment Net Sales***

**“**
**Notes to Condensed Consolidated Financial Statements;      **
**Note **
**6**
**. Customer Loyalty Card      Programs**
**”**

***Direct-to-Consumer      Segment Net Sales***

***Cost      of Goods Sold, Buying, Catalog, and Occupancy***

----

**Table          of Contents**

***Selling,      General, and Administrative***

**“LIQUIDITY AND CAPITAL RESOURCES: **
***Off-Balance-Sheet      Financing”***
**“Overview”**

***Income      Tax Provision***

**“Comparison of      Thirty-nine Weeks Ended November 3, 2007 and October 28, 2006;**
***Income Tax Provision***
**”**
**“Notes to Condensed Consolidated      Financial Statements; Note **
**8**
**. Income      Taxes”**

----

**Table          of Contents**

**Comparison      of Thirty-nine Weeks Ended November 3, 2007 and October 28,      2006**

***Net      Sales***

***Retail      Stores Segment Net Sales***

***Direct-to-Consumer      Segment Net Sales***

***Cost      of Goods Sold, Buying, Catalog, and Occupancy***

----

**Table          of Contents**

***Selling,      General, and Administrative***

**“LIQUIDITY AND CAPITAL RESOURCES: **
***Off-Balance-Sheet      Financing”***
**“Overview”**

***Income      Tax Provision***

**“Notes to      Condensed Consolidated Financial Statements; Note**
**8**
**. Income Taxes”**

----

**Table          of Contents**

**LIQUIDITY      AND CAPITAL RESOURCES**

**“FINANCING;**
***Long-term Debt”***
**“Notes      to Condensed Consolidated Financial Statements; Note 4. Long-term Debt”**

|                                          |   | **November                3,** |   |   | **February                3,** |   |
|-----------------------------------------------|--------|--------------------------------|--------|--------|--------------------------------|--------|
| ***(Dollars                in millions)***    |   | **2007**                       |   |   | **2007**                       |   |
|                                          |   |                           |   |   |                           |   |
| Cash                and cash equivalents      |   | $                              | 36.4   |   |                           | $      | 143.8 |   |
| Available-for-sale                securities  |   | $                              | 26.9   |   |                           | $      | 2.0 |   |
| Working                capital                |   | $                              | 465.0  |   |                           | $      | 460.6 |   |
| Current                ratio                  |   |                           | 2.2    |   |                           |   | 2.2 |   |
| Long-term                debt to equity ratio |   |                           | 35.3   | %      |                           |   | 19.1 | % |

***Cash      Provided by Operating Activities***

***Capital      Expenditures***

----

**Table          of Contents**

***Debt,      Lease, and Purchase Commitments***

**“**
**PART**
**      II**
**;**
** Item 7. Management’s Discussion and      Analysis of Financial Condition and Results of Operations; FINANCIAL CONDITION;      **
***Debt, Lease, and Purchase      Commitments***
**”**
**“CRITICAL ACCOUNTING POLICIES;**
***Income Taxes***
**”**

***Repurchases      of Common Stock***

**“FINANCING;**
***Long-term Debt***
**”**

**“Notes to Condensed Consolidated Financial Statements; Note 5.      Stockholders’ Equity,”**
**“**
**Notes to Condensed      Consolidated Financial Statements; Note 12 Subsequent Events,”**
**“RECENT DEVELOPMENTS”**
**“PART II. OTHER      INFORMATION; Item 2. Unregistered Sales of Equity Securities and Use of      Proceeds”**

***Dividends***

***Off-Balance-Sheet      Financing***

**“Note 9. Asset Securitization”**
**“**
**PART**
**      II**
**;**
** Item 7. Management’s Discussion and      Analysis of Financial Condition and Results of Operations” **
**“**
**PART**
**      II**
**;**
** Item 8. Financial Statements and      Supplementary Data; Notes to Consolidated Financial Statements; Note      1**
**6**
**. Asset Securitization”**
**“MARKET RISK”**

----

**Table          of Contents**

| ***(Dollars                in millions)***                                                                                                                                                                                                                                                                                                                                                                              |   | **Series                1999-2** |   | **Series                2002-1** |   | **Series                2004**   |   | **Series                2004-1** |   | **2005-RPA**(1)                  |   | **Series                2007-1** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|----------------------------------|--------|----------------------------------|--------|----------------------------------|--------|----------------------------------|--------|----------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                             |   |                             |   |                             |   |                             |   |                             |   |                             |
| Date                of facility                                                                                                                                                                                                                                                                                                                                                                                         |   | May                1999          |   | November                2002     |   | January                2004      |   | August                2004       |   | May                2005          |   | October                2007      |
| Type                of facility                                                                                                                                                                                                                                                                                                                                                                                         |   | Conduit                          |   | Term                             |   | Conduit                          |   | Term                             |   | Conduit                          |   | Term                             |
| Maximum                funding                                                                                                                                                                                                                                                                                                                                                                                          |   | $50.0                            |   | $100.0                           |   | $50.0                            |   | $180.0                           |   | $55.0                            |   | $320.0                           |
| Funding                as of                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |   |                        |   |                        |   |                        |   |                        |   |                        |
| November                3, 2007                                                                                                                                                                                                                                                                                                                                                                                         |   | $33.2                            |   | $68.2                            |   | $0.0                             |   | $180.0                           |   | $41.5                            |   | $320.0                           |
| First                scheduled                                                                                                                                                                                                                                                                                                                                                                                          |   |                        |   |                        |   |                        |   |                        |   |                        |   |                        |
| principal                payment                                                                                                                                                                                                                                                                                                                                                                                        |   | Not                applicable    |   | August                2007       |   | Not                applicable    |   | April                2009        |   | Not                applicable    |   | April                2012        |
| Expected                final                                                                                                                                                                                                                                                                                                                                                                                           |   |                        |   |                        |   |                        |   |                        |   |                        |   |                        |
| principal                payment                                                                                                                                                                                                                                                                                                                                                                                        |   | Not                applicable(2) |   | May                2008          |   | Not                applicable(2) |   | March                2010        |   | Not                applicable(2) |   | March                2013        |
| Renewal                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Annual                           |   | Not                applicable    |   | Annual                           |   | Not                applicable    |   | Annual                           |   | Not                applicable    |
| ____________________                                                                                                                                                                                                                                                                                                                                                                                                    |
| *(1)                Receivables Purchase Agreement (for the Crosstown Traders catalog                proprietary credit card receivables program).*                                                                                                                                                                                                                                                                     |
| *(2) Series                1999-2 and Series 2004 have scheduled final payment dates that occur                in                the twelfth month following the month in which the series begins                amortizing. These series and 2005-RPA generally begin amortizing 364                days after start of the purchase commitment by the series purchaser                currently in effect.* |

**“RESULTS OF OPERATIONS; Overview”**

----

**Table          of Contents**

----

**Table          of Contents**

**“Item 8. Financial Statements and      Supplementary Data; Notes to Consolidated Financial Statements; Note      1**
**7**
**. Leases”**

**FINANCING**

***Revolving      Credit Facility***

***Long-term      Debt***

----

**Table          of Contents**

**“Notes to Condensed Consolidated Financial Statements; Note**
**4**
**. **
**Long-term      Debt**
**”**

**“**
**PART**
**      II**
**;**
** Item 7. Management’s Discussion and      Analysis of Financial Condition and Results of Operations”**
**“**
**PART**
**      II**
**;**
** Item 8. Financial Statements and      Supplementary Data; Notes to Consolidated Financial Statements; Note 8.      Short-term Borrowings and Long-term Debt”**

**MARKET      RISK**

----

**Table          of Contents**

**“PART II. OTHER INFORMATION; Item 1A. Risk Factors”**

**IMPACT      OF RECENT ACCOUNTING      PRONOUNCEMENTS**

**“Item 1. Notes to Condensed Consolidated Financial Statements      (Unaudited); Note **
**11.**
** Impact of Recent      Accounting Pronouncements”**

**Item      3. Quantitative and Qualitative Disclosures About Market      Risk**

**“Item 2. Management’s Discussion and Analysis of Financial Condition and      Results of Operations; MARKET RISK,”**

**Item      4. Controls and Procedures**

----

**Table          of Contents**

**PART      II. OTHER INFORMATION**

**Item      1. Legal Proceedings**

**Item      1A. Risk Factors**

**“**
**PART 1.      FINANCIAL INFORMATION**
**; Notes to Condensed Consolidated      Financial Statements; Note 4. Long-term Debt” **

**“**
**PART**
**      I**
**;**
** Item 1A. Risk Factors”**
**“**
**PART I. FINANCIAL      INFORMATION**
**;**
** Item 2. Management’s Discussion      and Analysis of Financial Condition and Results of Operations; FORWARD-LOOKING      STATEMENTS”**

----

**Table          of Contents**

**Item      2. Unregistered Sales of Equity Securities and Use of      Proceeds**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                         |      |   |                          |   |   | **Total**                           |   |   | **Maximum**                    |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-----------|--------|-------------------------------|--------|--------|-------------------------------------|--------|--------|--------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                         |      |   |                          |   |   | **Number**                          |   |   | **Number                of**   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                         |      |   |                          |   |   | **of                Shares**        |   |   | **Shares                that** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                         |      |   |                          |   |   | **Purchased                as**     |   |   | **May                Yet be**  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | **Total**                    |      |   |                          |   |   | **Part                of Publicly** |   |   | **Purchased**                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | **Number**                   |      |   | **Average**                   |   |   | **Announced**                       |   |   | **Under                the**   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | **of                Shares** |      |   | **Price                Paid** |   |   | **Plans                or**         |   |   | **Plans                or**    |   |
| **Period**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **Purchased**                |      |   | **per                Share**  |   |   | **Programs**(4)(5)                  |   |   | **Programs**(4)(6)             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                         |      |   |                          |   |   |                                |   |   |                           |   |
| August                5, 2007 through                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                         |      |   |                          |   |   |                                |   |   |                           |   |
| September                1, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                         | 4,416,392 | (1)    |                          | $      | 9.98   |                                |   |   | 4,415,299                      | (5)    |   |   |   |
| September                2, 2007 through                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                         |      |   |                          |   |   |                                |   |   |                           |   |   |   |   |
| October                6, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                         | 4,262,563 | (2)    |                          |   | 8.69   |                                |   |   | 4,261,243                      | (5)    |   |   |   |
| October                7, 2007 through                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                         |      |   |                          |   |   |                                |   |   |                           |   |   |   |   |
| November                3, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                         | 1,300,200 | (3)    |                          |   | 7.50   |                                |   |   | 1,300,000                      | (4)(5) |   |   |   |
| Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                         | 9,979,155 |   |                          | $      | 9.11   |                                |   |   | 9,976,542                      | (5)    |   |   | 3,752,693 | (4)(6) |
| ____________________                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
| *(1)                Includes 1,093 shares ($8.57 average price paid per share) withheld                for                the payment of payroll taxes on employee stock awards that vested                during                the period and 4,415,299 shares ($9.98 average price paid per share)                purchased in the open market (see Note (5) below).*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *(2)                Includes 1,320 shares ($8.90 average price paid per share) withheld                for                the payment of payroll taxes on employee stock awards that vested                during                the period and 4,261,243 shares ($8.69 average price paid per share)                purchased in the open market (see Note (5) below).*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *(3)                Includes 200 shares ($8.15 average price paid per share) withheld                for the                payment of payroll taxes on employee stock awards that vested during                the                period and 1,300,000 shares ($7.50 average price paid per share)                purchased                in the open market (see Notes (4) and (5) below).*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *(4)* *In                Fiscal 1998, we publicly announced that our Board of Directors granted                authority to repurchase up to 10,000,000 shares of our common                stock. In Fiscal 2000, we publicly announced that our Board of                Directors granted authority to repurchase up to an additional 10,000,000                shares of our common stock. In Fiscal 2003, the Board of Directors                granted an additional authorization to repurchase 6,350,662 shares                of                common stock issued to Limited Brands in connection with our acquisition                of LANE BRYANT. From Fiscal 1998 through Fiscal 2003, pursuant to                these authorizations, we repurchased a total of 21,370,993 shares                of                common stock, which included shares purchased on the open market                as well                as shares repurchased from Limited Brands. During the period from                October 7, 2007 through November 3, 2007, we repurchased a total                of                1,226,976 shares of common stock under these programs. As of November                3, 2007, 3,752,693 shares of our common stock remain available for                repurchase under these programs. Subsequent to the period covered by                this Report, we repurchased a total of 500,000 shares of our common                stock                under these programs. The repurchase programs have no expiration                date.*  |
| *(5)* *In                May 2007, we announced a program to use $80 to $100 million of the                proceeds from our issuance of 1.125% Senior Convertible Notes due                May 1,                2014 to repurchase shares of common stock through the remainder of                our                fiscal year ending February 2, 2008.  During the quarter ended August                4, 2007, we repurchased 1,666,679 shares of common stock in the open                market under this program. During the quarter ended November 3, 2007,                we repurchased 4,790,728 shares of common stock in the open market                and 3,958,838 shares of common stock under an agreement with a                third-party financial institution that provided the third party with                discretionary authority to purchase shares of our common stock on                our                behalf. As of November 3, 2007, we have completed our planned                repurchases of common stock under this program.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| *(6)* *On                November 8, 2007 (subsequent to the period covered by this Report),                we                publicly announced that our Board of Directors granted authority                to                repurchase shares of our common stock up to an aggregate value of                $200                million. Shares may be purchased in the open market or through                privately-negotiated transactions, as market conditions allow. This                repurchase program has no expiration date.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

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**Table          of Contents**

**Item      6. Exhibits**

| 2.1  | Stock                Purchase Agreement dated May 19, 2005 by and among Chestnut Acquisition                Sub, Inc., Crosstown Traders, Inc., the Securityholders of Crosstown                Traders, Inc. whose names are set forth on the signature pages thereto,                and J.P. Morgan Partners (BHCA), L.P., as the Sellers’ Representative,                incorporated by reference to Form 8-K of the Registrant dated June                2,                2005, filed on June 8, 2005 (Exhibit 2.1).  |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1  | Restated                Articles of Incorporation, incorporated by reference to Form 10-K                of the                Registrant for the fiscal year ended January 29, 1994 (File No. 000-07258,                Exhibit 3.1).                                                                                                                                                                                                                                                                                             |
| 3.2  | Amended                Article 5, Subsection (d) to the Articles of Incorporation of Charming                Shoppes, Inc., incorporated by reference to Form 8-K of the Registrant                dated September 25, 2007, filed on September 26, 2007 (Exhibit                3.1).                                                                                                                                                                                                                                             |
| 3.3  | Bylaws,                as Amended and Restated, incorporated by reference to Form 10-Q of                the                Registrant for the quarter ended July 31, 1999 (File No. 000-07258,                Exhibit 3.2).                                                                                                                                                                                                                                                                                                       |
| 4.1  | Indenture                between the Company and Wells Fargo Bank, National Association, dated                as                of April 30, 2007, incorporated by reference to Form 8-K of the Registrant                dated April 30, 2007, filed on May 3, 2007 (Exhibit 4.1).                                                                                                                                                                                                                                                |
| 4.2  | Form                of 1.125% Senior Convertible Note due 2012 (included in Exhibit                4.1).                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.1 | Registration                Rights Agreement among the Company and Banc of America Securities                LLC and                J.P. Morgan Securities Inc., dated as of April 30, 2007, incorporated                by                reference to Form 8-K of the Registrant dated April 30, 2007, filed                on May                3, 2007 (Exhibit 10.1).                                                                                                                                                        |
| 10.2 | Convertible                Bond Hedge Transaction Confirmation entered into by and between the                Company and Bank of America, N.A., dated April 24, 2007, incorporated                by                reference to Form 8-K of the Registrant dated April 25, 2007, filed                on May                1, 2007 (Exhibit 10.1).                                                                                                                                                                              |
| 10.3 | Convertible                Bond Hedge Transaction Confirmation entered into by and between the                Company and JPMorgan Chase Bank, National Association, dated April                24,                2007, incorporated by reference to Form 8-K of the Registrant dated                April                25, 2007, filed on May 1, 2007 (Exhibit 10.2).                                                                                                                                                          |
| 10.4 | Convertible                Bond Hedge Transaction Confirmation entered into by and between the                Company and Wachovia Bank, National Association, dated April 24,                2007,                incorporated by reference to Form 8-K of the Registrant dated April                25,                2007, filed on May 1, 2007 (Exhibit 10.3).                                                                                                                                                                |
| 10.5 | Issuer                Warrant Transaction Confirmation entered into by and between the                Company                and Bank of America, N.A., dated April 24, 2007, incorporated by                reference                to Form 8-K of the Registrant dated April 25, 2007, filed on May                1, 2007                (Exhibit 10.4).                                                                                                                                                                       |
| 10.6 | Issuer                Warrant Transaction Confirmation entered into by and between the                Company                and JPMorgan Chase Bank, National Association, dated April 24, 2007,                incorporated by reference to Form 8-K of the Registrant dated April                25,                2007, filed on May 1, 2007 (Exhibit 10.5).                                                                                                                                                                  |

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**Table          of Contents**

| 10.7  | Issuer                Warrant Transaction Confirmation entered into by and between the                Company                and Wachovia Bank, National Association, dated April 24, 2007,                incorporated by reference to Form 8-K of the Registrant dated April                25,                2007, filed on May 1, 2007 (Exhibit 10.6).                                                                                                                                                                                                                                                       |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.8  | Charming                Shoppes, Inc. 2003 Non-Employee Directors Compensation Plan, amended                and                restated effective June 21, 2007, incorporated by reference to Form                10-Q                of the Registrant for the quarter ended August 4, 2007 (File No.                000-07258, Exhibit 10.8).                                                                                                                                                                                                                                                                   |
| 10.9  | Amendment                dated as of October 17, 2007 to Second Amended and Restated Pooling                and                Servicing Agreement dated as of November 25, 1997 and heretofore                amended                among Charming Shoppes Receivables Corp. (“CSRC”), Spirit of America, Inc.                (“SOAI”), and U.S. Bank National Association, as Trustee (“Trustee”),                incorporated by reference to Form 8-K of the Registrant dated October                17,                2007, filed on October 22, 2007 (Exhibit 10.1).  |
| 10.10 | Series                2007-1 Supplement dated as of October 17, 2007 to the Second Amended                and                Restated Pooling and Servicing Agreement dated as of November 25,                1997 and                heretofore amended among CSRC, SOAI and Trustee, incorporated by                reference                to Form 8-K of the Registrant dated October 17, 2007, filed on October 22,                2007 (Exhibit 10.2).                                                                                                                                                     |
| 10.11 | Class                A, Class M, and Class B Certificate Purchase Agreement dated as of                October                10, 2007 among CSRC, SOAI, Barclays Capital, Inc. and Fashion Service                Corp, incorporated by reference to Form 8-K of the Registrant dated                October 17, 2007, filed on October 22, 2007 (Exhibit 10.3).                                                                                                                                                                                                                                                 |
| 10.12 | Class                C Purchase Agreement dated as of October 17, 2007 among CSRC, SOAI,                Trustee, Galleon Capital, LLC, and Clipper Receivables Company, LLC,                incorporated by reference to Form 8-K of the Registrant dated October                17,                2007, filed on October 22, 2007 (Exhibit 10.4).                                                                                                                                                                                                                                                               |
| 10.13 | Purchase                Agreement dated as of October 31, 2007 between World Financial Network                National Bank, Spirit of America National Bank, Lane Bryant, Inc.,                Sierra                Nevada Factoring, Inc., and Charming Shoppes Outlet Stores, LLC,                incorporated by reference to Form 8-K of the Registrant dated October                31,                2007, filed on November 5, 2007 (Exhibit 99.1).                                                                                                                                                     |
| 31.1  | Certification                by Principal Executive Officer                Pursuant to Section 302 of the Sarbanes-Oxley Act of                2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 31.2  | Certification                by Principal Financial Officer                Pursuant to Section 302 of the Sarbanes-Oxley Act of                2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 32    | Certification                Pursuant to 18 U.S.C. Section                1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act                of                2002.                                                                                                                                                                                                                                                                                                                                                                                                                                    |

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**Table          of Contents**

**SIGNATURES**

|                                  | **CHARMING                SHOPPES, INC.**            |
|---------------------------------------|------------------------------------------------------|
|                                  | (Registrant)                                         |
|                                  |                                                 |
|                                  |                                                 |
|                                  |                                                 |
| Date:                December 7, 2007 | **/S/                DORRIT J. BERN**                |
|                                  | Dorrit                J. Bern                        |
|                                  | Chairman                of the Board                 |
|                                  | President                and Chief Executive Officer |
|                                  |                                                 |
|                                  |                                                 |
|                                  |                                                 |
| Date:                December 7, 2007 | **/S/                ERIC M. SPECTER**               |
|                                  | Eric                M. Specter                       |
|                                  | Executive                Vice President              |
|                                  | Chief                Financial Officer               |

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**Table          of Contents**

**EXHIBIT      INDEX**

| **Exhibit                No.** | **Item**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 2.1                            | Stock                Purchase Agreement dated May 19, 2005 by and among Chestnut Acquisition                Sub, Inc., Crosstown Traders, Inc., the Securityholders of Crosstown                Traders, Inc. whose names are set forth on the signature pages thereto,                and J.P. Morgan Partners (BHCA), L.P., as the Sellers’ Representative,                incorporated by reference to Form 8-K of the Registrant dated June                2,                2005, filed on June 8, 2005. (Exhibit 2.1).  |
| 3.1                            | Restated                Articles of Incorporation, incorporated by reference to Form 10-K                of the                Registrant for the fiscal year ended January 29, 1994 (File No. 000-07258,                Exhibit 3.1).                                                                                                                                                                                                                                                                                              |
| 3.2                            | Amended                Article 5, Subsection (d) to the Articles of Incorporation of Charming                Shoppes, Inc., incorporated by reference to Form 8-K of the Registrant                dated September 25, 2007, filed on September 26, 2007 (Exhibit                3.1).                                                                                                                                                                                                                                              |
| 3.3                            | Bylaws,                as Amended and Restated, incorporated by reference to Form 10-Q of                the                Registrant for the quarter ended July 31, 1999 (File No. 000-07258,                Exhibit 3.2).                                                                                                                                                                                                                                                                                                        |
| 4.1                            | Indenture                between the Company and Wells Fargo Bank, National Association, dated                as                of April 30, 2007, incorporated by reference to Form 8-K of the Registrant                dated April 30, 2007, filed on May 3, 2007.  (Exhibit                4.1).                                                                                                                                                                                                                      |
| 4.2                            | Form                of 1.125% Senior Convertible Note due 2012 (included in Exhibit                4.1).                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.1                           | Registration                Rights Agreement among the Company and Banc of America Securities                LLC and                J.P. Morgan Securities Inc., dated as of April 30, 2007, incorporated                by                reference to Form 8-K of the Registrant dated April 30, 2007, filed                on May                3, 2007.  (Exhibit 10.1).                                                                                                                                             |
| 10.2                           | Convertible                Bond Hedge Transaction Confirmation entered into by and between the                Company and Bank of America, N.A., dated April 24, 2007, incorporated                by                reference to Form 8-K of the Registrant dated April 25, 2007, filed                on May                1, 2007.  (Exhibit 10.1).                                                                                                                                                                   |
| 10.3                           | Convertible                Bond Hedge Transaction Confirmation entered into by and between the                Company and JPMorgan Chase Bank, National Association, dated April                24,                2007, incorporated by reference to Form 8-K of the Registrant dated                April                25, 2007, filed on May 1, 2007.  (Exhibit 10.2).                                                                                                                                               |
| 10.4                           | Convertible                Bond Hedge Transaction Confirmation entered into by and between the                Company and Wachovia Bank, National Association, dated April 24,                2007,                incorporated by reference to Form 8-K of the Registrant dated April                25,                2007, filed on May 1, 2007.  (Exhibit 10.3).                                                                                                                                                     |
| 10.5                           | Issuer                Warrant Transaction Confirmation entered into by and between the                Company                and Bank of America, N.A., dated April 24, 2007, incorporated by                reference                to Form 8-K of the Registrant dated April 25, 2007, filed on May                1,                2007.  (Exhibit 10.4).                                                                                                                                                            |
| 10.6                           | Issuer                Warrant Transaction Confirmation entered into by and between the                Company                and JPMorgan Chase Bank, National Association, dated April 24, 2007,                incorporated by reference to Form 8-K of the Registrant dated April                25,                2007, filed on May 1, 2007.  (Exhibit 10.5).                                                                                                                                                       |

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**Table          of Contents**

| **Exhibit                No.** | **Item**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.7                           | Issuer                Warrant Transaction Confirmation entered into by and between the                Company                and Wachovia Bank, National Association, dated April 24, 2007,                incorporated by reference to Form 8-K of the Registrant dated April                25,                2007, filed on May 1, 2007.  (Exhibit 10.6).                                                                                                                                                                                                                                           |
| 10.8                           | Charming                Shoppes, Inc. 2003 Non-Employee Directors Compensation Plan, amended                and                restated effective June 21, 2007, incorporated by reference to Form                10-Q                of the Registrant for the quarter ended August 4, 2007 (File No.                000-07258, Exhibit 10.8).                                                                                                                                                                                                                                                                   |
| 10.9                           | Amendment                dated as of October 17, 2007 to Second Amended and Restated Pooling                and                Servicing Agreement dated as of November 25, 1997 and heretofore                amended                among Charming Shoppes Receivables Corp. (“CSRC”), Spirit of America, Inc.                (“SOAI”), and U.S. Bank National Association, as Trustee (“Trustee”),                incorporated by reference to Form 8-K of the Registrant dated October                17,                2007, filed on October 22, 2007 (Exhibit 10.1).  |
| 10.10                          | Series                2007-1 Supplement dated as of October 17, 2007 to the Second Amended                and                Restated Pooling and Servicing Agreement dated as of November 25,                1997 and                heretofore amended among CSRC, SOAI and Trustee, incorporated by                reference                to Form 8-K of the Registrant dated October 17, 2007, filed on October                22,                2007 (Exhibit 10.2).                                                                                                                                      |
| 10.11                          | Class                A, Class M, and Class B Certificate Purchase Agreement dated as of                October                10, 2007 among CSRC, SOAI, Barclays Capital, Inc. and Fashion Service                Corp, incorporated by reference to Form 8-K of the Registrant dated                October 17, 2007, filed on October 22, 2007 (Exhibit 10.3).                                                                                                                                                                                                                                                 |
| 10.12                          | Class                C Purchase Agreement dated as of October 17, 2007 among CSRC, SOAI,                Trustee, Galleon Capital, LLC, and Clipper Receivables Company, LLC,                incorporated by reference to Form 8-K of the Registrant dated October                17,                2007, filed on October 22, 2007 (Exhibit 10.4).                                                                                                                                                                                                                                                               |
| 10.13                          | Purchase                Agreement dated as of October 31, 2007 between World Financial Network                National Bank, Spirit of America National Bank, Lane Bryant, Inc.,                Sierra                Nevada Factoring, Inc., and Charming Shoppes Outlet Stores, LLC,                incorporated by reference to Form 8-K of the Registrant dated October                31,                2007, filed on November 5, 2007 (Exhibit 99.1).                                                                                                                                                     |
| 31.1                           | Certification                by Principal Executive Officer                Pursuant to Section 302 of the Sarbanes-Oxley Act of                2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 31.2                           | Certification                by Principal Financial Officer                Pursuant to Section 302 of the Sarbanes-Oxley Act of                2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 32                             | Certification                Pursuant to 18 U.S.C. Section                1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act                of                2002.                                                                                                                                                                                                                                                                                                                                                                                                                                    |

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**Table          of          Contents**