Chico’s swings to profit in positive Q1
Strong same-store sales helped Chico’s FAS move from the red into the black in its first quarter of fiscal 2022.
The women’s apparel, accessories and lingerie retailer posted net income of $34.9 million, or $0.28 per diluted share for the first quarter, compared to net loss of $8.9 million, or $0.08 per diluted share. Chico’s said this shift to profitability was partially driven by same-store sales growth of 40.6%, which in turn was produced by an increase in transaction count and higher average dollar sale.
For the first quarter, net sales were $540.9 million, compared to $388 million in the prior year's first quarter. According to Chico’s this 39.4% improvement primarily reflected its same-store sales increase, partially offset by 29 permanent store closures since the previous year's first quarter. Net sales were well ahead of the company’s previous guidance for first-quarter consolidated net sales of $485 million to $500 million, and earnings per share were also better than its previous projections of $0.07 to $0.11 per share.
Chico’s cited apparel as the standout for the first quarter, as evidenced by 65% year-over-year same-store sales growth at White House | Black Market and 52% year-over-year same-sales growth at Chico's. Soma posted its highest first-quarter sales in the brand's history, with a nearly 38% same-store sales increase over the first quarter of 2019, but a 1.4% decline compared to the same quarter in fiscal 2021.
The company also said strategic marketing, with focused resources on digital storytelling and influencers, drove more customers to its brands. Total customer count was up nearly 15% over the prior year's first quarter, and Chico’s said the average age of new customers is continuing to trend younger.
"Fiscal 2022 is off to a great start as reflected by a strong first-quarter sales beat driven by continued digital and store growth, meaningful gross margin rate expansion and substantially better than anticipated operating income,” said Molly Langenstein, Chico's FAS CEO and president. “We continue to leverage our proven business model and execute against our strategic pillars and we are seeing the benefits in our results.
“Our results and continued momentum demonstrate that our strategy is working," concluded Langenstein. "We are a customer-led, product-obsessed, digital-first, operationally-excellent company with three powerful brands and tremendous market share opportunities. After achieving a successful turnaround, our team is now focused on delivering our three-year growth plan, and we are pleased with the great progress underway."
Looking ahead, for the fiscal 2022 second quarter, Chico’s currently expects consolidated net sales of $535 million to $550 million. For the fiscal 2022 full year, the company currently expects consolidated net sales of $2.13 billion to $2.16 billion.
The company also previously released financial targets it expects to reach by fiscal 2024 (fiscal year ending February 1, 2025). These include total revenues in excess of $2.5 billion, and digital revenues in excess of $1.0 billion (included in the $2.5 billion).
[Read more: Chico’s targets total revenue of $2.5 billion-plus by 2025]
As of January 29, 2022, Chico’s operated 1,266 stores under its banners in the U.S. and sold merchandise through 59 international franchise locations in Mexico and two domestic franchise airport locations.