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Business Observer Sunday, Sep. 12, 2021 3 days ago

Retailer posts best earnings quarter since 2013

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Chico’s FAS remains focused on its digital-first future.

FORT MYERS — Women’s retailer Chico’s FAS, while focusing on its future as a digital-first company, turned back the clock a bit in its latest earnings call: it had its best quarter in eight years in the 13-week fiscal period that ended July 31.

Results include:

• A return to profitability, as the company reported $0.21 net income per diluted share for the second quarter, compared to a $0.40 net loss per diluted share for the 13 weeks ended Aug. 1, 2020, which was marred by the pandemic. The results also bested the $0.02 net loss per diluted share for the thirteen weeks ended Aug. 3, 2019, which the Fort Myers-based company, according to an earnings statement, is using “as a pre-pandemic reference.” Overall, total company sales increased 54% year-over-year in the second quarter — the company's best second-quarter performance since 2013, officials added.

• Intimates brand Soma posted a 53% sales increase over last year's second quarter and a 38% comparable sales increase over the second quarter of fiscal 2019. The company's flagship Chico’s brand was up 59% in the quarter over 2020 and White House Black Market increased 48% over the second quarter.

• It ended the second quarter with more than $137 million in cash and marketable securities, the release states, an increase of nearly $35 million over the first quarter of fiscal 2021.

• It’s gross margin rate improved to 38.4% in the second quarter, the best performance in 13 consecutive quarters, the release states, “driven by controlled inventories and lower promotional levels.”

• Selling, general and administrative expenses declined to a 30.9% rate for the second quarter, an improvement over both the second quarter rates of fiscal 2020 and 2019. The drop, the release states, “reflects the impact of cost savings initiatives put in place in prior years, continued cost discipline efforts and sales leverage.”

• In the first half of fiscal 2021, the company obtained approximately $15 million in incremental savings from landlords. That was is in addition to the $65 million of reductions and abatements negotiated during fiscal 2020, for a total savings of $80 million.

“These results show the incredible progress we continue to make in our turnaround strategy, despite pandemic challenges,” Chico’s FAS President and CEO Molly Langenstein says in the statement. “Our return to profitability in the quarter was driven by our strategic actions that grew sales, expanded gross margin and diligently controlled our expenses.”

"Our robust second quarter sales across all three brands were propelled by our meaningful enhancements in product and marketing, which continued to drive full-price selling, reduce markdowns and produce higher gross margin,” Langenstein adds. “Strategically planned inventories, operating discipline and the ongoing benefit of our prior cost reductions further added to our return to profitable growth…We are a digital-first, customer-led company with a strong portfolio of three unique brands. We believe there are ample opportunities to further grow our customer bases, market share and sales in each of these amazing brands. We look forward to reporting our progress in the quarters ahead."

 

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