Chico’s FAS is on a roll.
The Fort Myers, Fla.-based retailer — parent company to the Chico’s, White House Black Market, Soma and TellTale brands — revealed quarterly earnings Tuesday morning, improving on top and bottom lines thanks to strength both in stores and online across the portfolio. The company raised its full-year guidance as a result, causing company shares to shoot up more than 7 percent at the start of Tuesday’s trading session.
“Fiscal 2022 is off to a great start as reflected by a strong first-quarter sales beat driven by continued digital and store growth, meaningful gross margin rate expansion and substantially better-than-anticipated operating income,” Molly Langenstein, chief executive officer and president of Chico’s FAS, said in a statement. “We continue to leverage our proven business model and execute against our strategic pillars and we are seeing the benefits in our results.
“Our results and continued momentum demonstrate that our strategy is working,” Langenstein continued. “We are a customer-led, product-obsessed, digital-first, operationally excellent company with three powerful brands and tremendous market share opportunities. After achieving a successful turnaround, our team is now focused on delivering our three-year growth plan, and we are pleased with the great progress underway.”
Total revenues for the three-month period ending April 30 were nearly $541 million, up from approximately $388 million during 2021’s first quarter. Sales increased in the retailer’s three major brands as well. Revenues grew 48.9 percent at the nameplate brand to $264 million, up from approximately $177 million a year ago. White House Black Market sales increased 31.2 percent to roughly $169 million, up from $104 last year, while sales at innerwear brand Soma were up nearly 20 percent during the quarter to $107 million, compared with $106 million a year ago.
Comparable sales for the entire company increased 41 percent during the quarter, year-over-year, helping the firm surpass 2019 levels by 11 percent, thanks to increased transaction counts and higher average dollar sales.
At the Chico’s brand, comparable sales grew 52 percent during the quarter, year-over-year, while comparable sales at White House Black Market surged 65 percent during the same time frame. Comparable sales grew 38 percent at Soma, compared with 2019’s first quarter.
The company called out strength in categories such as denim, travel, dresses and versatile wear as tailwinds during the quarter, while sales in sleepwear grew soft.
“Apparel was the standout for the first quarter,” Langenstein said. “Customers continued to respond enthusiastically to product innovation and our myriad product solutions. Across all three brands, we achieved higher average unit retail, better productivity and more full-priced sales than last year’s first quarter.”
The company logged nearly $35 million in profits as a result, compared with losses of $8.9 million a year ago.
For the current quarter, Chico’s FAS now expects consolidated net sales to be in the range of $535 million to $550 million, with earnings per diluted share between $0.21 to $0.26 each.
Chico’s also raised its full-year outlook. The company is now anticipating consolidated net sales between $2.13 billion and $2.16 billion, with earnings per share in the range of $0.64 to $0.74.
The retailer ended the quarter with 1,264 stores across the portfolio, with plans to open roughly 30 more Soma locations by the end of the year. Executives on Tuesday morning’s conference call with analysts said the firm closed 29 stores since last year’s first quarter and plans to close roughly 40 more mall-based stores, a combination of Chico’s and White House Black Market locations, in 2022.
Additional headwinds included increased SG&A expenses (more than $171 million, compared with $134 million last year) and higher inventory for the quarter. The retailer’s inventory totaled more than $325 million for the quarter, compared with roughly $210 million a year ago, as a result of increased consumer demand and delays caused by extended in-transit times.
“The supply chain challenges that we’ve experienced all the way through 2021 have obviously continued through 2022 and we have been nimble in responding to these challenges by taking positions in basics and shifting the calendar to mitigate the extended in-transit times,” Langenstein said on the call. “We will continue to respond to these new challenges they arise and we’ll keep actively managing our production calendar to avoid the costly airfreight until we see the situation changing.”
“Supply chain disruptions and inflation are expected to remain a challenge that we are working to navigate as we successfully did in 2021,” she continued. “We remain highly disciplined on expense control and have a lean cost structure. Although we are seeing labor inflation in our stores and distribution centers, we view both of these costs as investments that are closely linked to top-line growth.”
The company ended the quarter with roughly $104 million in cash and cash equivalents and $99 million in long-term debt.
Shares of Chico’s FAS, which closed up 0.62 percent Monday to $4.86 apiece, are down 10.9 percent, year-over-year.
FOR MORE ON CHICO’S FROM WWD.COM, SEE:
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