Chico’s is first national apparel retailer to set reopening date

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Chico’s is first national apparel retailer to set reopening date

By Marianne Wilson - 04/28/2020
chicos

Chico’s FAS will begin a three-part store reopening plan on May 4. But it won’t be business as usual.

The women's apparel and accessories retailer, whose banners include Chico’s, White House | Black Market and Soma, said that, starting May 4, it will roll out three phases of reopening stores, beginning with the fulfillment of national orders through physical locations using store inventories. 

The second phase will feature buy-online pick-up-in-store, including contactless curbside pickup. The third phase will see the introduction of a new shop-by-appointment service for all banners. (Store openings will be consistent with local health and safety guidelines and regulations.)

According to Chico’s research, its customers' main shopping crossover for all of its categories is with department stores. To date, no department stores have announced reopening plans.

"We believe we will have some significant advantages in the next several months as the majority of our stores are under 3,500 sq. ft. and are located in easily accessible shopping plazas," stated CEO Bonnie Brooks. "Due to the smaller size of our boutiques, Chico's FAS has the ability to reopen quickly and safely and to follow enhanced safety precautions."

For example, Brooks explained, Chico’s teams have the ability to manage the number of customers in the stores, provide hand sanitizer and masks to customers, create new flexible distance between clothing racks, and adjust fitting rooms to accommodate social distancing practices.

Chico's said it has experienced double-digit growth in the six weeks since it became a digital-only business, with the increase driven by select categories including active, lounge and sleep. The growth was also driven by a new tech enhancement: In mid-March, store management was given handheld devices containing proprietary styling software, Style Connect, that “enables us to communicate directly with the majority of our customers to drive the frontline business to digital fulfillment,” Brooks explained. 

“Style Connect was designed as a competitive advantage that has further opportunities for increasing sales as we move into our new ‘post-COVID-19 operating model’ as it allows for intimate but distanced connection in a meaningful manner that is resonating with our customers,” she added. 

Assessing the COVID-19 impact on the apparel industry, Chico’s immediately pivoted to a new business plan for 2020 and beyond, Brooks said, assessing and overhauling every function of its business and quickly adjusting operations aligned to digital marketing and distribution. During the past few weeks, the company has significantly reduced our weekly cash burn. 

“Our actions have been designed to reduce operating expenses by approximately 30% and we are committed to holding this cost structure for the long term,” Brooks said. “We have deferred the majority of payables, and are renegotiating all contracts, including real estate.”

For the 13 weeks ending Feb. 1, Chico’s same-store sales rose 2.2%, after three consecutive quarters of negative same-store sales. For the four weeks ending Feb. 29, same-store sales were up 2.7%. 

As of April 27, Chico's had about $103 million in cash and equivalents on hand. Borrowings on an asset-based credit facility and by leveraging its own real estate could yield an additional $100 million in liquidity. The retailer also has a one-time liquidity benefit of $95 million under the CARES Act. 

“While todays' challenges are of a greater magnitude, our culture of agility and our ability to grow sales while reducing expenses, which started exactly 12 months ago, has already served us well during this period, and we are confident we have a path forward for the sustainable future of the company, post-COVID-19,” Brooks said.