Chico's FAS Inc. racked up another loss as sales fell nearly 40% in its second quarter.
The women’s apparel retailer reported a $46.8 million loss, or a $0.40 loss per diluted share, for the three-month quarter ending Aug. 1, compared to a net loss of $2.3 million, or $0.02 loss per diluted share, in the year-ago period. Chico’s second-quarter loss followed a loss of $178 million loss in the prior quarter.
[Further Reading: Chico’s focus on ‘artful style’ in fall campaign]
Net sales fell 39.8% to $306.2 million, reflecting disruptions related to the pandemic, including the continuation of temporary store closures and limited hours, as well as the impact of 74 net permanent store closures since the year-ago quarter, partially offset by double-digit growth in digital performance.
Chico’s noted that second-quarter sales were up 9.2% from the prior quarter amid strong digital sales and store reopenings.
“Store and digital conversion rates improved in the second quarter, providing an indicator that our product changes to comfort, casual and easy care fabrics are resonating with customers, giving us confidence our financial and product initiatives combined with relentless customer focus have positioned us to emerge a stronger company,” said Molly Langenstein, who took the reins as Chico’s CEO and president in April.
Chico’s in June said it expected to close approximately 50 to 60 stores permanently during the remainder of fiscal 2020. (In July, Chico’s FAS Canada filed for bankruptcy with plans to close its 10 stores in Canada.)
In its earnings report, Chico’s said it is performing a strategic real estate review and reevaluating each store's strategic value and profitability. It also is partnering with landlords and achieving rent relief in the form of rent reductions, abatements and other concessions to partially mitigate the impact of COVID-19 on its business.
“The closure of the Canadian boutiques is part of the company’s ongoing cost-savings measures taken to mitigate the impact of the COVID-19 pandemic and address the operational and financial challenges associated with operating in Canada,” Langenstein stated.