Chico’s to cut more costs after Q1 misses

Feeling the heat from an activist inventory, Chico's FAS Inc. will increase its cost-cutting efforts on the heels of a disappointing first quarter.



The women’s apparel retailer reported a profit of $31.1 million, or 23 cents a share, for the quarter ended April 30, down from $32.5 million, or 22 cents a share, a year earlier. Excluding restructuring-related charges and other items, adjusted per-share earnings fell to 25 cents from 30 cents.



Net sales fell 7.9% to $643 million. Excluding the Boston Proper division, which Chico’s sold in January, sales fell 4.4%. Same-store sales fell 4.2%.



Analysts expected per-share profit of 31 cents and revenue of $668 million.



Chico's cost-savings efforts that include new initiatives to simplify its supply chain enhance its marketing efforts and leverage non-merchandise procurement. The moves are expected to generate additional annual savings of $50 million to $70 million.



The new initiatives are in addition to a previously disclosed realignment of the company's marketing and digital commerce functions.

“Our cost reduction and operating efficiency initiatives will position us to be more nimble and responsive to our customers' needs,” said Shelley Broader, CEO and president. “These actions are just the beginning as we execute on our new operating priorities."



Chico’s reported its results not too long after Barington Capital Group LP, which has a 1.4% stake in the retailer, launched a fight for seats on its board. The activist fund believes that the company's expenses are too high relative to its peers and its centralized structure is inefficient, according to MarketWatch.