Chico's FAS on Wednesday announced that Molly Langenstein, president of its two largest brands, Chico's and White House Black Market, on June 24 will replace Bonnie Brooks as the company's president and CEO.
Brooks, who replaced Shelley Broader in those roles last July, will become executive chair of the board "and continue to oversee the Company's strategic direction," according to a company press release. She replaces David Walker, who remains on the board. Board member William Simon, a senior adviser to KKR private equity firm, will become lead independent director.
In an effort to slash costs by about 30%, Chico's also announced "a significant restructure." On Tuesday, the company fired Intimates Group President Mary van Praag and Chief Operations Officer Ann Joyce, and eliminated their positions, effective May 1, according to a filing with the Securities and Exchange Commission.
This is the second shakeup for Chico's in less than a year, with the COVID-19 pandemic interrupting a shaky turnaround.
Langenstein, who before taking over Chico's major apparel group last August had been general business manager of ready-to-wear at Macy's, arrived as part of a leadership shakeup widely seen as a reflection of the company's difficulty in righting itself.
The company says that having her step into the chief role was the plan all along. "These three new simultaneous leadership appointments are the result of a planned succession designed to strengthen and provide ongoing stability and continuity to the business, and to further support the Company's future," Chico's said in its release.
In promoting Langenstein, the company gave her much credit for what it called "one of the fastest turnarounds in fashion retail," citing "three consecutive quarters of unprecedented growth with a 9.4% increase in sales from Q1 to Q4 of fiscal year 2019 prior to the COVID-19 pandemic." Earlier this week, the company was among the first to post plans to reopen, as state and local governments loosen restrictions on nonessential retail. Chico's stores will offer curbside pickup and in-store shopping by appointment, starting May 4.
But that probably belies both the company's ongoing difficulties and the extra pressure brought on by the temporary store closures. "While there had been early signs of stability at both Chico's and [White House Black Market], the reality is that neither were likely profitable," MKM Partners Managing Director Roxanne Meyer said in emailed comments earlier this month. "In the current environment, both concepts might be among the worst positioned from a demand standpoint given a focus on an older consumer (particularly Chico's) and more structured/dressier offerings."
Last year the company announced the closure of 250 stores, and more could end up on that list, Meyer also said. "We expect that Chico's could be forced to close over half its full-price stores, shutter its made-for-outlet business, or wind down/sell the Chico's brand altogether," she said, adding that Chico's is the brand in more dire need because it "has struggled to attract new customers to the brand for years (and it's not getting any easier)."
That could go as far as shuttering Chico's altogether "to focus primarily on Soma," with White House Black Market as a "wildcard," she added.
As of Feb. 1, Chico's operates 1,341 stores in the U.S. and Canada and sells through 70 international franchise locations in Mexico plus two domestic franchise airport locations. On April 2, the company adopted a so-called "poison pill" shareholder rights plan to protect against a hostile takeover, according to an SEC filing.