Chico's Tops Forecasts; Company Will Sell Boston Proper Business
August 26 2015 - 9:40AM
Dow Jones News
Chico's FAS Inc., in the midst of cost-cutting plans, reported
better-than-expected revenue and adjusted earnings for its latest
quarter Wednesday, though bottom-line profit took a sharp fall.
The women's retailer also said it would sell its Boston Proper
direct-to-consumer business and close its existing 20 stores.
Earlier this year, Chico's said it was shoring up its finances
by lowering capital spending, accelerating store closings and
cutting jobs. The move was made after private-equity firm Sycamore
Partners dropped its bid to buy Chico's because it couldn't line up
financing.
For the period ended Aug. 1, Chico's reported a profit of $2.1
million, or 2 cents a share, down from year-earlier earnings of
$30.1 million, or 20 cents a share.
Excluding charges related to the company's plan to exit its
Boston Proper business and restructuring and strategic items,
adjusted earnings rose to 25 cents a share from 20 cents a share a
year ago.
Revenue edged 1.4% higher to $680.4 million, helped by the
opening of a net 23 new stores. Analysts surveyed by Thomson
Reuters expected 22 cents a share on revenue of $676 million.
Sales at stores excluding locations that have been recently
opened or closed inched up 0.5%.
In the latest quarter, lean inventory levels helped drive margin
expansion. Inventories per selling square foot decreased 5.7%, when
excluding in-transit inventories. Gross margin expanded to 53.8%
from 52.4%.
Chico's namesake brand, its biggest, posted a 1.1% rise in sales
to $353.8 million while revenue in the White House, Black Market
segment edged down to $212.4 million. Sales in the Soma Intimates
brand jumped 10% to $89.9 million.
Analysts expect a possible update soon on the replacement search
for David Dyer, Chico's outgoing chief executive who announced
earlier this year plans to retire. Mr. Dyer's possible exit has
raised the possibility of a sale of the company, analysts have
said.
Mr. Dyer, who took the helm of the retailer in 2009, has said he
would retire next spring.
In February, the Florida-based company said it planned to close
120 stores through 2017. The company said it expected to cut its
capital budget to $100 million for the year, a 29% decrease to its
three-year average.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 26, 2015 09:25 ET (13:25 GMT)
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