Chico’s Q2 tops Street; cuts 200 jobs in corporate streamlining

Chico’s FAS reported better-than-expected second quarter earnings and announced new cost-saving measures. It also said the president of its namesake brand is stepping down.



Chico’s said it has made progress in the cost reduction initiatives it announced back in May. And it announced a new “organizational redesign,” which includes clarified roles, responsibilities and processes across its brands, and shared service center. Chico’s CEO said while the company has created new positions in such key areas as business analytics and digital, it has reduced headcount by nearly 13%, or 200 positions, to “build a “flatter organization that should be more nimble and responsive to customers' evolving needs.”



The retailer expects to save nearly $25 million annually with these changes. In combination with the previously announced initiatives, Chico’s estimates a reduction in future annualized costs between $90 million and $110 million, totaling approximately 4% of 2015 net sales.



“The initiatives we announced last quarter are already driving cost savings and improving our operating efficiency,” said Shelley Broader, CEO, Chico’s FAS. “We expect that the more streamlined organizational structure combined with the other cost reduction and operating efficiency initiatives, will result in a strong, scalable foundation, that is well-positioned for long-term, profitable growth and value creation,”



The retailer also said that Cynthia S. Murray, Chico's brand president, is leaving the company and that a search for her replacement is underway.



For the period ended July 30, Chico’s reported a profit of $23 million, or 17 cents a share, compared with $2.1 million, or 2 cents a share, a year earlier.



Net sales fell 7.3% to $635.7 million from $685.8 million in the year-ago period. The decrease included $26.3 million related to Boston Proper. (Chico’s completed the sale of Boston Proper in January 2016.)



When excluding Boston Proper from fiscal 2015, net sales decreased 3.6%, primarily reflecting a decline in same-store sales of 3.1% and closed stores.