Chico’s Cautious on Growth

While expecting sales improvement in the second half, Chico’s FAS remains cautious about expansion, executives said at the company’s second quarter conference call. The company expects to open between seven and nine net additional stores in the third quarter, but it anticipates no net new store openings (only net closures of approximately seven to nine stores) in the fourth quarter, and to relocate/expand between eight and 10 stores over the balance of the year.

Chico’s will open eight stores, White House/Black Market (WHBM) will open 11 units and Soma will open one store. “I’m not hearing good news from many people, and it makes sense to be cautious,” said Kent Kleeberger, EVP, CFO and treasurer.

Net sales for the quarter decreased 7.1% from the previous year to $405.2 million. Net income was $6.7 million, compared to net income of $38.7 million in the same period last year. Same store sales decreased approximately 19% for the Chico's brand and approximately 12% for WHBM.

However, the company is optimistic, stressing the successful reintroduction of its signature Travelers brand in Chico’s stores, and other “notable improvements” in previously troublesome product areas. “We expect to see an improvement in trends and to be profitable in the second half,” said Scott A. Edmonds, chairman, president, and CEO. Chico’s operates 1,079 stores in 49 states, Washington, DC, the US Virgin Islands and Puerto Rico operating under the Chico's, White House Black Market, and Soma Intimates names.

Source: GlobeSt.com

Chico's FAS outlines strategic plan

Women's apparel retailer Chico's FAS Inc. on Thursday outlined its plan to improve results, including improving its merchandise selection and slowing real estate growth.

Chico's outlined the plan in a statement following its annual shareholder meeting.

The company plans to improve the "fit, fabric and quality" of its clothes.

At the same time, it plans to slow real estate square-footage growth until the weak retail environment improves.

It also plans to tighten control on inventory and cut expenses and capital expenditures.

Also during the meeting, the shareholders re-elected three directors, ratified an amended stock and incentive plan and appointed Ernst & Young LLP as its independent public accountant for the fiscal year ending Jan. 31, 2009.

Chico's FAS Inc. has suffered as consumers cut back spending amid a rising cost of living and declining home values. Women's apparel retailers have been among the hardest hit sectors in the retail industry.

In May, Chico's reported its first-quarter profit dropped 73 percent as sales of its core apparel brand dropped and expenses increased. Revenue fell 10 percent to $409.6 million.

Source: Business Week