Chico's FAS Q2 Results Top Estimates; Plans To Exit Boston Proper

(RTTNews) - Specialty retailer Chico's FAS, Inc. (CHS) reported Wednesday a profit for the second quarter that plunged from last year, despite sales growth, an income tax benefit and improved gross margins, hurt by significant charges. Both adjusted earnings per share and quarterly net sales topped analysts' expectations.

Following the announcement, the company's shares are trading higher by more than eight percent in pre-market trading.

The company also announced its plan to exit Boston Proper direct-to-consumer (DTC) business and close its existing stores.

The Fort Myers, Florida-based company reported net income available to common shareholders of $2.09 million or $0.02 per share for the second quarter, sharply lower than $29.28 million or $0.20 per share in the prior-year quarter.

Results for the latest quarter include net charges of $0.23 per share related to the plan to exit Boston Proper as well as restructuring and strategic charges.

Excluding items, adjusted net income for the latest quarter was $35.54 million or $0.25 per share. On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $0.22 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 1.4 percent to $680.35 million from $671.13 million in the same quarter last year, and topped twenty Wall Street analysts' consensus estimate of $675.56 million.

The increase in sales reflect the additional contribution from 23 net new stores that saw an 1.3 percent increase in square footage and rise in comparable sales.

Consolidated comparable sales for the quarter edged up 0.5 percent on top of a 0.3 percent rise last year, reflecting an increase in average dollar sale partially offset by a decrease in transaction count.

Net sales from Chico's grew to $354 million from last year's $350 million, while White House/Black Market net sales totaled $212 million, edging down from $214 million in the year-ago quarter.

Net sales from Soma improved to $90 million from last year's $82 million, while Boston Proper net sales edged down to $24.21 million from $25.33 million last year.

Chico's comparable sales increased 0.9 percent, and Soma comparable sales improved 5.1 percent, while White House/Black Market brands' comparable sales declined 1.9 percent.

Gross margin for the quarter improved 140 basis points and selling, general and administrative expenses as a percentage of total sales, declined 10 basis points.

CHS closed Tuesday's regular trading session at $13.83, down $0.27 on a volume of 5.98 million shares.