Chico’s reports sales below expectations in Q3 FY2018
The company registered net income of $52.3 million for the thirty-nine weeks ended November 3, 2018, compared to net income of $73.0 million for the thirty-nine weeks ended October 28, 2017 according to a press release from Chico’s. Results for the thirteen and thirty-nine weeks ended November 3, 2018 include a favourable tax benefit of approximately $4.9 million, or $0.04 per diluted share related to the Tax Cuts and Jobs Act of 2017.
The Soma brand of the parent company Chico’s FAS, has reported positive comparable sales of 2.4 per cent. This better-than-expected performance was primarily driven by the ongoing success of the Enbliss collection and Cool Nights sleepwear. Similarly the White House Black Market brand has continued with its brand repositioning.
The company continued to advance its omni-channel capabilities with the launch of Client Book, an enhanced platform that provides digitised clienteling tools to store associates to personalise the customer experience. Full rollout to all stores is expected in the first quarter of fiscal 2019.
“Brand performance in the third quarter was mixed,” said Shelley Broader, CEO and president of Chico’s. “Soma again performed well and better than expectations, and White House Black Market is continuing its brand repositioning. However, our Chico’s brand did not deliver the sales we anticipated, which led to total company results that were below expectations.”
For the fiscal 2018 fourth quarter, the company anticipates a mid-teen decline in net sales, which includes the negative impact of the 53rd week of $29 million in fiscal 2017, and a high single-digit decline in consolidated comparable sales. In Q4 FY2018, the company anticipates gross margin rate as a percent of net sales to decline approximately 400 to 500 basis points compared to Q4 FY2017.
Following Chico’s brand refresh in February 2018, merchandise and marketing were heavily weighted to boho styles, bold colours and original artisanal prints. This shift was successful in attracting new customers and in reactivating some customers who aspired to the brand’s heritage, as per the company.
The company has implemented certain action plans to improve performance at the Chico’s brand in the coming quarter. It has initiated a leadership transition by trying to identify a new Chico’s brand president. In the interim, the Chico’s brand will be led by Broader. It has adjusted the spring assortments to appropriately balance its merchandise architecture, reducing planned receipts and chasing more classic merchandise that is performing well. It has repositioned marketing touch-points to be more inclusive of all customers by adjusting in-store merchandising and display, print and digital media to feature cleaner, classic silhouettes along with boho artisanal styling. Lastly it has adjusted planning and allocation strategies to improve in-stock and stronger penetration in basics and top key items. (PC)
Fibre2Fashion News Desk – India