Chico’s, which in addition to its flagship brand runs lingerie retailer Soma Intimates and White House Black Market, nudged up its first quarter profits from last year but missed expectations. The company's revenue slipped as well, with Q1 net sales falling 9.2% from the year-ago quarter to $583.7 million. Same-store sales declined 8.7%, driven by lower average dollar sale and transaction count, according to a company press release.
Net income in the quarter was $33.6 million, or 26 cents per diluted share, compared to net income of $31.1 million, or 23 cents per diluted share in the year-ago period. The FactSet analyst consensus expectation for earnings was 29 cents per share, according to MarketWatch.
For the full year, the company expects same-store sales to decline in the "mid single-digit" percentage range, in line with the FactSet consensus cited by MarketWatch for a decline of 1.7%.
Like many executives in the dismal apparel sector, Chico’s president and CEO Shelley Broader noted that the company's declines stem in part from a “challenging retail environment.”
“[W]e remain steadfast in executing against our strategic plan to increase profitable sales and long-term earnings,” she said in a statement Wednesday. “Our flexible and profitable operating model allowed us to drive improvement in our operating income rate and earnings per share compared to last year, even though our comparable sales in the quarter were below our expectations."
But while same-store sales suffered during the quarter, margins improved, noted FBR & Co. analysts. "CHS did a good job holding merch margin, and cost saves continue to flow through nicely," FBR analysts said in a note emailed to Retail Dive.
In recent years, the retailer has been distracted not just by tepid sales but also by a failed takeover attempt by private equity firm Sycamore Partners Management. Sycamore couldn’t line up the needed financing to buy the women’s apparel chain and dropped its buyout plans in February 2015.
Since then, there have been layoffs and continued troubles for the brand as it struggles to gain traction among its core customer base of older women, which analysts say is an underserved market. The apparel retail market in general has also seen tepid sales as customer spending habits shift online and mall traffic declines.