Chico’s FAS narrowed its loss in a quarter that, for the first time in six years, brought increases across all its three brands.
While all divisions reported comp increases, intimates brand Soma was the start performer across Chico’s brand portfolio, with a 9.4% same-store sales gain. On its earnings call with analysts, Chico’s executives said the company plans to open 10 Soma stores this year. Currently, there are about 300 Soma locations nationwide.
“There is huge runway ahead for growth in Soma, because we are still extremely underpenetrated in footprints across the country, and we also have a lot of other opportunities in front of us for additional distribution,” said Chico’s CEO Bonnie Brooks on the call. “So I would say that we are extremely excited about the Soma potential.”
In January 2019, Chico’s announced plans to shutter 250 stores during the next three years. On its earnings call, the retailer said that that it plans to close 60 to 70 stores this year. But it added that, “due to significant improvement in our sales trends, we are reevaluating every closure decision.”
Chico’s FAS reported a net loss of $4.3 million, or $0.04 loss per share, for the quarter ended Feb. 1, down from $16.6 million or $0.14 loss per share in the year-ago period. The company’s adjusted net loss was $3.5 million, or $0.03 a share.
Net sales inched up 0.4% to $527.1 million. Total company same-store sales rose 2.2%, partially offset by the impact of 77 net store closures since last year’s fourth quarter. The comp improvement was driven by higher average dollar sale and an increase in transaction count.
Chico’s intimates division, Soma, was once again was the store performer across the retailer’s brand portfolio. Same-store sales rose 9.4% at Soma, 0.9% at Chico’s and 0.1% at White House | Black Market.
"We are extremely pleased with the significant sequential turnaround in our business, resulting in our first quarter of positive comparable sales for all three brands since the fourth quarter of 2014,” said Bonnie Brooks, CEO and president, Chico’s FAS. “Our strong performance can be primarily attributed to our disciplined focus on driving sales through improved and elevated product aligned more closely to our customer's expectations.”
For the full fiscal year, sales topped more than $2 billion, down from $2.1 billion the previous year. Chico’s total sales for the year were $1.04 billion, down from $1.09 billion a year earlier. Total same-store stores fell 3.4%, with a 7.9% drop at White House | Black Market and a 4.3% drop at Chico’s. For the year, Soma’s same-store sales increased 8.8%.
On its earning call, Chico’s said it closely monitoring and measuring the coronavirus situation and has three things working in its favor.
“First, fortunately for us, our total penetration of China goods has been reduced from the high 40% last year in this time period, to the low 20% range this year,” said Brooks. “So any slowdown in summer delivery, will impact a much lower percent of our total inventory. Secondly, we have fully accounted for all of our Q1 products and at this time, expect minimal to low impact from the virus on Q1 delivery.”
Third, she added, the company has time to implement mitigation strategies should they be needed going forward to move some production to other countries.
“The movement of goods out of China will also positively offset the impact of the tariffs,” Brooks said.
As of Feb. 1, the company had 1,341 stores, down from 1,373 the previous quarter.