Molly Langenstein, Chief Executive Officer and President, Chico’s FAS said, “While sales reflect the challenging environment, we took important actions over the past year to strengthen our financial and operating foundation and position our brands for market share gains. We enter 2021 as a digital-first, customer-led company with the capabilities to support continued improvement, enhanced value creation and a return to growth in the years ahead.
“We have a solid balance sheet, strong liquidity and the financial stability we need for the foreseeable future. Cost savings we achieved in 2020 will flow through to future years, demonstrating the discipline that is now core to our organization.
“Each of our three unique brands has meaningful opportunities. Soma® is delivering consistently increasing comparable sales. Its compelling brand niche, together with this record of results, suggest that Soma is on track to take a sizeable share of the $7 billion U.S. intimate apparel and loungewear market, which is forecasted to reach over $11 billion by 2025.
“At the same time, the disruption in the competitive set has left white space that our apparel brands can easily fill. At Chico’s®, we are reinvigorating growth through new initiatives that emphasize loyalty, community and design. At White House Black Market®, our focus is on fabric, fit and fashion that meets our customer where she is in her lifestyle today.
“I thank our talented and nimble team for their work in helping us become stronger and create new opportunities from the challenges we faced in 2020.”
Fiscal 2020 Business Highlights:
The Company’s fiscal 2020 highlights include:
*Rapid transformation into a digital-first company: Chico’s FAS fast-tracked numerous innovation and digital technology investments. These investments drove higher consumer engagement and a year-over-year digital sales increase of 17.5%, led by Soma’s digital sales increase of 72%.
*Gained sales momentum at Soma: Soma generated comparable sales growth for the last seven months in fiscal 2020, and according to market research firm NPD, Group Inc., for the 12 months ended January 2021, Soma’s growth exceeded that of the U.S. apparel market and the market leader for non-sport bras and panties, and was in the top five brands overall in the sleepwear market. We believe this is compelling evidence Soma is well positioned and on track to accelerate recent market share gains.
*Implementation of enhanced marketing efforts drove traffic as well as new customers: Newly acquired customers were retained at a meaningfully higher rate than in fiscal 2019. The average age of new customers dropped 10 years for Chico’s and eight years for Soma, and the average age of new White House Black Market customers complemented the current target customer, reinforcing the runway for all three brands.
*Improved apparel product and acceptance: The Company relaunched Zenergy in Chico’s with new fabrications, styling and marketing, and also increased its gifting assortment and key item depth which showed positive results. At White House Black Market (“WHBM”), the brand pivoted to casualization and launched luxe weekend alongside new runway leggings and a focus on denim that resonated well with customers.
*Enhanced liquidity and financial flexibility: The Company amended and extended its credit facility to $300 million and ended the year with a solid cash position of $109.4 million of cash and cash equivalents.
*Obtained meaningful rent reductions and strengthened the Company’s real estate position: Chico’s FAS obtained landlord commitments of $65 million in rent abatements and reductions and further rationalized its real estate position by permanently closing an incremental 40 underperforming locations.
*Realized significant cost savings: The Company substantially streamlined the organization and permanently reduced its cost structure to more efficiently support the business, resulting in approximately $235 million of annual savings in fiscal 2020, or 23% greater than its original plan, with the expectation that certain of these cost savings initiatives will benefit future years and reflect a cultural shift in how the business is managed.
Overview of Financial Results
For the fourth quarter, the Company reported a net loss of $79.1 million, or $0.68 loss per diluted share, compared to a net loss of $4.3 million, or $0.04 loss per diluted share, for the thirteen weeks ended February 1, 2020 (“last year’s fourth quarter”). The fourth quarter net loss includes $35.9 million, or $0.32 per share, in significant after-tax non-cash charges, including a deferred tax asset valuation allowance of $32.1 million, or $0.28 per share, within the Company’s income tax provision (benefit). See tabular details in the Summary of Significant Non-Cash Charges table below for further details. Last year’s fourth quarter includes after-tax accelerated depreciation charges of $0.8 million, or $0.01 per share.
For fiscal 2020, the Company reported a net loss of $360.1 million, or $3.11 loss per diluted share, compared to a net loss of $12.8 million, or $0.11 loss per diluted share, for the fifty-two weeks ended February 1, 2020 (“fiscal 2019”). The net loss for fiscal 2020 includes $199.6 million, or $1.73 per share, in significant after-tax non-cash charges. See tabular details in the Summary of Significant Non-Cash Charges table below for further details. The net loss for fiscal 2019 includes after-tax accelerated depreciation charges of $8.1 million, or $0.07 per share, and the after-tax impact of severance and other related net charges of $2.1 million, or $0.02 per share.
For the fourth quarter, net sales were $386.2 million compared to $527.1 million in last year’s fourth quarter. This 26.7% decrease reflects a comparable sales decline of 24.9% as well as the impact of 39 net permanent store closures since last year’s fourth quarter, partially offset by double-digit growth in digital sales. The comparable sales decline was driven by a decrease in transaction count as in-store traffic continued to be significantly impacted by the pandemic and lower average dollar sale. Soma’s comparable sales increased 15.2%, with digital sales increasing 68.6% compared to last year’s fourth quarter.
For fiscal 2020, net sales were $1.3 billion compared to $2.0 billion in fiscal 2019. This 35.0% decrease primarily reflects disruptions related to the pandemic, including temporary store closures or stores operating at reduced hours during fiscal 2020, reduced in-store traffic, changing consumer patterns and the impact of 39 net permanent store closures since fiscal 2019, partially offset by double-digit growth in digital sales.
details at: https://chicosfas.com/investors/press-releases/press-release-details/2021/Chicos-FAS-Inc.-Reports-Fourth-Quarter-and-Fiscal-Year-2020-Results-and-Reviews-Expectations-for-Fiscal-Year-2021/default.aspx