Chico's Pulls Back on Inventory

Fort Myers, Fla. Chico's FAS Inc. on Wednesday said it expects a difficult retail environment to continue through 2008 and will pull back on inventory commitments.

The news came as the company said it swung to a fiscal fourth-quarter loss, hurt by weak sales amid a slumping retail sector.

Net loss for the quarter ended Feb. 2 totaled $20.5 million vs. profit of $18.2 million, or 10 cents per share in the prior-year quarter.

Sales fell 8% to $409.3 million from $444.6 million a year ago. As previously reported, same-store sales, or sales in stores open at least one year, fell 15.7%.

The company said same-store sales at its White House | Black Market brand are improving, while Chico's is on a "slower path to recovery."

"We are actively addressing issues in our accessories division and Travelers collection, and recently added a senior-level merchant to each of these areas," said chief executive Scott A. Edmonds. "We would expect to see improvement in these categories later in the year."

The company expects negative same-store sales, or sales in stores open at least one year, for the first half of 2008 and lower earnings than the first half of 2007.

Chico's forecast positive same-store sales and better earnings growth in the second half of the year.

The chain now plans capital expenditures of $120 million to $125 million compared with $202 million in 2007.

“We have pulled back our real estate growth targets for 2008 and 2009, and we do not intend to increase the number of new stores beyond current commitments until we see improvements in the economy and our own performance," Edmonds said.

For the full fiscal year, Chico’s profit fell 47% to $88.9 million from $166.6 million. Revenue rose nearly 5% to $1.71 billion from $1.64 billion last year.