Chico's Fas sales slip on back of store closures

In the second quarter of fiscal 2018, net sales of Chico's Fas were $544.7 million compared to $578.6 million in last year. This decrease of 5.9 per cent reflects a comparable sales decline of 3.2 per cent, the unfavourable impact of the calendar shift due to the 53rd week in fiscal 2017, as well as the impact of 42 net store closures since last year.

The gross margin was $196.9 million, or 36.1 per cent of net sales, compared to $209.1 million, or 36.1 per cent of net sales, in last year's second quarter. Gross margin rate as a percent of net sales was primarily driven by a 100 basis point improvement in maintained margin, offset by costs related to continued expansion of omni-channel fulfillment programs and deleverage of store occupancy costs.

For full-year fiscal 2018, the company continues to anticipate a mid-single digit decline in net sales and a low-to-mid single digit decline in consolidated comparable sales. The company expects gross margin rate expansion of approximately 50 basis points over fiscal 2017, which is within the company's previously provided range of an expansion of 50 to 70 basis points. The SG&A expenses will be approximately flat compared to fiscal 2017.

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"Second quarter results were in-line with our expectations, reflecting momentum on our top-line initiatives," said Shelley Broader, CEO and president of the company. "New merchandise assortments are resonating with customers, and innovative advancements to our robust omni-channel platform are driving increased customer awareness and reactivation. We remain confident in the opportunities across our brands for profitable growth and value creation."

For the third quarter fiscal 2018, both net sales and comparable sales are expected to decline low-single digits compared to third quarter fiscal 2017. The gross margin rate as a percent of net sales is likely to increase approximately 50 basis points compared to third quarter fiscal 2017. The company also anticipates SG&A expenses to increase in the range of $8 million to $10 million compared to third quarter fiscal 2017 due to continued investment in technology and marketing.