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Published
Nov 29, 2018
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Chico’s FAS announces leadership switch-up at namesake brand as sales continue to disappoint

Published
Nov 29, 2018

Fort Myers, Florida-based apparel retail group Chico’s FAS, Inc. announced plans to overhaul its namesake Chico’s brand on Wednesday, as the company’s third-quarter sales and earnings once again failed to show signs of improvement.


The boho reboot implemented by Chico's earlier this year has failed to resonate with the brand's customer base - Instagram: @lovechicos

 
The company’s net income for the third quarter ended November 3, 2018, totaled $6.5 million, a significant decline from the $16.7 million reported in Q3 2017.
 
While this disappointing performance was negatively impacted to the tune of $5.0 million by disruption linked to hurricanes Harvey, Irma and Maria, it was largely driven by revenue declines across Chico’s FAS’ business.

The company’s net sales for the quarter totaled $499.9 million, down 6.1% compared to $532.3 million in the prior-year period. The decline reflected a comparable sales decrease of 6.8%, but also the impact of 43 net store closures since Q3 2017.
 
Among the falling figures, the retail group’s lingerie and intimates brand Soma was a faintly glimmering bright spot, posting a better-than-expected comps increase of 2.4%, driven by strong sales of its Enbliss collection and its Cool Nights sleepwear range.
 
In contrast, White House Black Market, which is currently in the process of a brand repositioning, saw comps drop 5.1%, while the Chico’s brand suffered the biggest decline in comparable sales of the quarter, at 10.2%.
 
Due to its continued poor performance, Chico’s FAS announced that it will be implementing a comprehensive improvement plan at its namesake brand over the next few months.
 
The first step in the strategy involves the departure of Diane Ellis as the brand’s president, effective November 30, 2018. Ellis, who stepped into her role in October 2016, will be replaced by Chico’s FAS president and CEO Shelley Broader, who will serve as the brand’s interim president while the company searches for a permanent successor.
 
The improvement plan also aims to alter the brand’s positioning, both in terms of product assortment and marketing.
 
The brand’s Spring assortment, for example, will be refocused on classic merchandise, while in-store marketing, along with display, print and digital media, will be adjusted “to feature more clean, classic silhouettes along with boho artisanal styling.”
 
Chico’s FAS acknowledged that the boho-inspired reboot rolled out by the brand in February of this year had succeeded in attracting new customers but struck a bum note with consumers seeking a more traditional or polished look.
 
“The initial emphasis that we selected for our Chico's brand repositioning has not resonated with our broader target customer base,” explained Broader in a release. “So, we are course correcting by implementing a performance improvement plan that includes brand leadership changes and adjustments to our product offering, marketing strategy and assortment architecture to better meet expectations for all customers who shop the Chico's brand.”
 
Year to date, the company reported net income of $52.3 million down from $73.0 million, with net sales of $1.6 billion, compared to $1.7billion in the prior-year period.
 
Chico’s FAS expects net sales to see a decline in the mid-teens in the fourth quarter of 2018, while consolidated comparable sales are predicted to suffer a high single-digit decrease.
 
And the company’s current full-year 2018 outlook isn’t much sunnier, with a high single-digit decline expected in net sales and a mid-single-digit decrease forecast in consolidated comparable sales.

Chico's FAS currently operates 1,431 stores in the US and Canada, as well as four brand-specific e-commerce websites. The company's merchandise is also sold through 83 franchise locations in Mexico.

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