Beginning in mid-May, Chico’s merchandise will be available through Amazon, the companies said on Monday.
For now, the deal makes the brand’s core collections, (including Travelers, Zenergy athleisure, no-iron shirts, So Slimming pants and Chico's jewelry), available through Amazon. Free shipping, free returns and other Prime benefits will apply for members. Chico's FAS maintains control of marketing, pricing and promotions for its products on Amazon, according to a Chico’s press release.
The company’s other brands, including White House Black Market and the Soma lingerie banner, could be added to the deal if sales go well, the company said. As of Feb. 3, the company runs 1,460 stores in the U.S. and Canada and sold merchandise through 94 franchise locations in Mexico and its online banners.
Chico's has been buffeted by slowing traffic to malls and in February reported that fourth quarter net sales fell 2.2% to $587.8 million from $600.8 million in last year's Q4, mostly because of a 5.2% same-store sales decline and the impact of shuttered stores. For the full year, the company's net sales fell 7.8% to $2.3 billion as same-store sales declined 7.7%, for similar reasons and with a similar effect, according to a company press release.
But in recent years, the apparel company 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.
Because of these demographics, Chico's brands don't tend to see much of a bounce from the back-to-school season. The tie-up with Amazon will make "Chico's FAS ... one of the few vertically-integrated specialty retailers with Prime eligibility on Amazon.com, which is a testament to the strength of our iconic brands and their growth potential," Chico's CEO Shelley Broader said in a statement. The new sales channel is not expected to be material to Chico's FAS 2018 financial results, the company said.
But it's not just a potential win for Chico's. The company's core customer base could also be a boon to Amazon, which despite muscling into several segments of retail, including apparel, is less successful among older consumers, according to Matt Sargent, senior vice president of retail at consulting firm Magid. Less than a third (31%) of boomers are Amazon Prime members, compared to 54% of millennials and 41% of Gen Xers, according to Magid's research.
In fact, the cohort of older consumers, who often find processing loads of information more difficult, is growing as Gen Xers age, Sargent said. Many Gen Xers will behave more like Boomers, while others will shop more like millennials, he said. Plus, both cohorts aren't retiring very early, so their earning power will remain robust for longer, he told Retail Dive in an interview last week.