Chico’s FAS, Inc. Reports Third Quarter Results

Third quarter GAAP loss of $0.07 per diluted share; Adjusted loss of $0.04 per diluted share
• Sequential improvement in comparable sales for all brands
• Executing on strategic priorities, investing in growth areas, maintaining cost discipline
• Updates full-year fiscal 2019 outlook to reflect improvements in the business and tariff impact

Chico’s FAS, Inc. (NYSE: CHS) (the “Company”) today announced its financial results for the fiscal 2019 third quarter ended November 2, 2019.

For the thirteen weeks ended November 2, 2019 (the “third quarter”), the Company reported a net loss of $8.1 million, or $0.07 loss per diluted share, compared to net income of $6.5 million, or $0.05 earnings per diluted share, for the thirteen weeks ended November 3, 2018 (“last year’s third quarter”). The Company reported third quarter adjusted net loss of $4.6 million, or $0.04 loss per diluted share, as presented in the related accompanying GAAP to non-GAAP reconciliation.

For the thirty-nine weeks ended November 2, 2019, the Company reported a net loss of $8.4 million, or $0.07 loss per diluted share, compared to net income of $52.3 million, or $0.41 earnings per diluted share, for the thirty-nine weeks ended November 3, 2018. For the thirty-nine weeks ended November 2, 2019, the Company reported adjusted net income of $0.9 million, or $0.01 earnings per diluted share, as presented in the related accompanying GAAP to non-GAAP reconciliation.

“Our third quarter results demonstrate that we are gaining traction on our strategic priorities. Comparable sales improved sequentially by 10.4 percentage points at White House Black Market and by 2 points at Chico’s, our largest brand. In addition, Soma’s comparable sales increased double-digits for the second consecutive quarter. Each of these achievements indicate that the actions being taken are positively impacting results,” said Bonnie Brooks, CEO and President.

“Our customers are also responding to our brands’ better product, stronger marketing and changes to store presentation. I firmly believe the Company’s turnaround is on the right track, and we have updated our full-year financial outlook to reflect the positive momentum of our business,” continued Ms. Brooks.

The following fiscal 2019 third quarter business highlights reflect the Company’s progress executing on its three strategic priorities: (i) driving stronger sales through improved product and marketing; (ii) optimizing the customer journey by simplifying, digitizing and extending the Company’s unique and personalized service; and (iii) transforming sourcing and supply chain operations to increase product speed to market and improve quality.
•Chico’s® reported sequential improvement in comparable sales, reflecting a focus on key items and a more balanced inventory position between basics and fashion.
•White House Black Market® (“WHBM”) reported sequential improvement in comparable sales enabled by changes made in talent, merchandising and product design.
•Soma® reported double-digit positive comparable sales growth for the second consecutive quarter, driven by product innovation and inventory and marketing investments.
•In the third quarter, the Company strengthened its product teams and made investments in growth areas, such as digital and customer experience. The Company also repositioned some departments, consolidated others, and reduced areas where the Company can operate more efficiently with fewer resources.
•The Company completed the implementation of its Buy On-Line, Pick-up In-Store (BOPIS) capability across all of its brands.
•The Company is actively diversifying its country of origin mix and reducing manufacturing penetration in China, thereby mitigating the majority of tariff increases.

For the third quarter, net sales were $484.7 million compared to $499.9 million in last year’s third quarter. This decrease of 3.0% reflects a comparable sales decline of 2.2% as well as the impact of 58 net store closures since last year’s third quarter. The comparable sales decline was driven by lower average dollar sale, partially offset by an increase in transaction count. In the third quarter, comparable sales at Soma were up positive double-digits for the second consecutive quarter while Chico’s and WHBM posted sequential quarter-over-quarter improvement by adjusting product assortment and

For the third quarter, gross margin was $171.0 million, or 35.3% of net sales, compared to $181.0 million, or 36.2% of net sales, in last year’s third quarter. This 90-basis point decrease primarily reflects accelerated depreciation as a result of our previously announced retail fleet optimization plan and the impact of severance and other related net charges (collectively, “Severance Charges”) in connection with actions taken to reposition our organizational structure.
more detail at: http://chicosfas.com/investors/press-releases/press-release-details/2019/Chicos-FAS-Inc-Reports-Third-Quarter-Results/default.aspx

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