Slipping comps and store closures take toll on Chico's FAS
Fort Myers, Florida-based specialty womenswear retailer Chico’s FAS, Inc. saw earnings drop 13.7% in the first quarter of 2018, as net sales fell due to comparable sales declines and store closures.
The company reported on Wednesday that its net income in the first quarter ended May 5, 2018 totaled $29.0 million, compared to the $33.6 million reported in Q1 2017.
This decrease was due in large part to slipping net sales which were down 3.8% to $561.8 million, compared to $583.7 million in the prior year period. A comparable sales decline of 5.9%, due to a lower transaction count, was the main culprit for these falling figures, along with the fact that the company has completed 41 net store closures since the end of Q1 2017.
“While we are pleased with the launch of our new sales-driving initiatives, first quarter customer traffic was challenging," said Chico’s FAS CEO and President Shelley Broader in a statement. "We leveraged strong inventory management and targeted promotions, which resulted in an improvement in trends.”
In the first quarter, the company announced a collaboration with Amazon.com that will see a selection of Chico’s brand products go on offer on the e-commerce platform, and also launched two other major partnerships over the course of the period. The retailer’s intimates brand Soma debuted on QVC on May 5, while all three of its brands (Chico’s, White House Black Market and Soma) have been available on e-commerce network ShopRunner since the end of March.
“Over the long-term, we expect these new channels will drive stronger customer traffic and sales. We remain confident in our future and our ability to deliver sustainable growth and value creation for shareholders,” explained Broader, highlighting the initial success of the ShopRunner partnership.
Looking forward, Chico’s FAS is expecting net sales to fall mid-single digits and comparable sales to decline in the low-to-mid-single digits in both the second quarter and full fiscal year 2018.
The company currently operates 1,451 stores in the US and Canada, and its products are also sold through some 94 franchise locations in Mexico.
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