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FORT MYERS — Women's retailer Chico's FAS reported a net loss of $31.8 million in the fourth quarter and announced plans to close 120 stores and lay off 12% of its headquarters staff.
“The actions we have taken delivered positive comparable sales across all brands, an increase in gross margin dollars and lower inventory levels,” says David Dyer, president and CEO of Chico's, in a statement. “While the overall apparel retail environment remains challenging, we expect the new capital allocation and cost reduction initiatives announced today will further strengthen Chico's FAS and its brands.”
Chico's operates 1,547 stores in the U.S. and Canada under the brands Chico's, White House | Black Market, Soma Intimates and Boston Proper. A deal by private equity firm Sycamore Partners to acquire Chico's collapsed due to lack of financing, the Wall Street Journal reported Wednesday.
Although fourth-quarter sales rose 7.6% to $657 million compared with the same quarter one year ago, Chico's posted a net loss of $31.8 million because of a $30.1 million impairment charge related to its acquisition of Boston Proper in 2011. “These impairment charges were the result of sales and margin declines in the Boston Proper brand due to issues with its merchandising and marketing effectiveness,” the company says in a statement.
In addition, the company says it took a $16.7 million charge relating to store closures and employee severance. The company plans to close 120 stores through 2017. Chico's also announced layoffs of 240 employees, including 12% of the corporate headquarters staff in Fort Myers. The staff cuts will result in $38 million of annualized savings, the company says.
Chico's says it will accelerate a plan to repurchase $250 million worth of shares in 2015 by using cash and debt. “The changes to the company's capital allocation and cost reductions announced today were carefully considered to ensure that we continue to operate from a position of strength and drive profitable growth and value creation,” says Todd Vogensen, executive vice president and chief financial officer of Chico's, in a statement.