Chico's, HSN 2010 profits rise

Chico's FAS Inc.
NAPLES —Annual profits at Chico's FAS Inc. (symbol: CHS) grew 66% over the year in 2010, with $115.4 million in net income earned on $1.9 billion in net sales. In the last three months of the year, the Naples-based clothier made $20.7 million in profits on $475 million in net sales.

Quarterly profits grew 18% despite a decrease in the company's gross margin (net sales minus the cost of goods sold), which fell from 54.6% of sales to 53.2%. Chico's said the decrease was largely the result of high markdowns on its clothing sales.

Although the company's expenses were down relative to revenues, the real key to Chico's increased profits was a 9% increase in net sales over the year (up from $435.7 million in 2009).

Chico's profitable year helped the firm expand its liquidity. The company ended 2010 with $549 million in cash and marketable securities, up 30% from the end of 2009.

And the only plan Chico's has announced for using those liquid resources is an increased dividend, which will go up from $0.04 a share to $0.05 a share at next payment.

Investors responded positively to Chico's latest results, including its increased dividend. Shares of its stock were up roughly 8% in early trading this morning.

A day before releasing its earnings results, Chico's announced that Kent Kleeberger would join the firm as chief operating officer.

HSN Inc.

ST. PETERSBURG — HSN Inc. earned $98.5 million in net income on $3.0 billion in net sales in 2010, up 36% and 9% over the year. In particular, its Cornerstone unit — one of two main business segments — enjoyed a dramatic turnaround in profitability.

HSN Inc. operates two business arms: HSN, which earns revenues by providing diverse sales channels to smaller-scale retailers; and Cornerstone, which uses mail-order catalogs to sell products from its own brand lines.

While HSN saw a 5% increase in annual net sales, Cornerstone's gain was much larger on a percentage basis, at 19%. Each arm's operating incomes were even more divergent: while HSN operating income grew by $11.4 million (7%), Cornerstone turned a $1.6 million operating loss from 2009 into a $27.4 million gain in 2010.

In a release, HSN Inc. explained that an investment in increased catalog circulation for Cornerstone brands drove the most recent quarterly increase in business for that segment. In the last three months of 2010, Cornerstone net sales increased to $278.4 million, up 23% over the year.

The St. Petersburg-based retailer ended 2010 with $354.3 million in cash and cash equivalents on its balance sheet, up 31% over the year.