Chico’s Q4 loss widens; to close more stores, reduce headcount

Fort Myers, Fla. -- Chico’s FAS Inc. on Thursday revealed plans to close more stores, cut jobs and decrease its capital spending to $100 million for fiscal 2015, a 29% decrease to its three-year average. As part of its capital allocation, Chico’s will spend $30 million rolling out new POS systems, including mobile technology.



Also on Thursday, the retailer posted a loss of $31.8 million for its fourth quarter, ended Jan. 31, compared with a loss of $348,000 a year earlier. Net sales fared better at $656.9 million, an increase of 7.8% compared to $610.2 million, primarily reflecting 75 net new stores and a 4.3% increase in same-store sales.



Chico’s said it plans to close approximately 120 stores, starting in fiscal 2015 through 2017, for savings of approximately $55.2 million upon completion. In fiscal 2015, the retailer will close 35 stores and open 40 new locations.



As part of an “organizational realignment to” ensure that resources are better aligned with long-term growth initiatives, including omnichannel, Chico’s is eliminating some 240 existing positions, expected to result in approximately $38 million of annualized savings. The corporate realignment resulted in a 12% reduction of the company's headquarters and field management employee base.



Chico’s expects to execute a $250 million accelerated share repurchase agreement in the first quarter of fiscal 2015 to be financed through a combination of cash and debt. At the end of the fourth quarter of fiscal 2014, the company had $290 million remaining under its existing authorization.



In other news, private equity firm Sycamore Partners has abandoned its efforts to buy the women’s apparel retailer, the Wall Street Journal reported. 



“Overall, we are pleased with our fourth quarter performance,” said David Dyer, president and CEO. “The actions we have taken delivered positive same-store sales across all brands, an increase in gross margin dollars and lower inventory levels.”



For the full fiscal year, Chico’s net income slightly declined to $64.6 million from $65.9 million. Net sales were $2.67 billion, an increase of 3% compared to $2.59 billion. Same-store sales were flat.



For the full year of fiscal 2015, the company is anticipating a positive, low- single-digit same-store sales increase.