Chico’s Q2 earnings drop to 0.17 dollar per share

For the thirteen weeks ended July 29, 2017, Chico’s reported net income of 22.7 million dollars or 0.18 dollar per diluted share, compared to 23 million dollars or 0.17 dollar per diluted share, for the thirteen weeks ended July 30, 2016. For the twenty-six weeks, the company reported net income of 56.3 million dollars or 0.44 dollar per diluted share compared to 54.1 million dollars or 0.41 dollar per diluted share, for the same period, last year.

Commenting on the company’s performance, Shelley Broader, the company’s CEO and President, said in a press release: "Second quarter sales were disappointing, and we are taking decisive actions to adjust our assortments and enhance omni-channel capabilities in bellwether categories such as Jackets at Chico's and Dresses at White House Black Market. While it is early in the third quarter, these key categories are showing encouraging progress."

Net sales decreased 9 percent in Q2

For the second quarter, net sales were 578.6 million dollars compared to 635.7 million dollars in last year's second quarter. This 9 percent decrease, Chico’s said, primarily reflects a comparable sales decline of 8.4 percent, driven by lower average dollar sale and a decline in transaction count.

Gross margin was 209.1 million dollars or 36.1 percent of net sales, compared to 240.8 million dollars or 37.9 percent of net sales, in last year's second quarter. This 180 basis point decrease was sue to sales deleverage of store occupancy expenses and increased promotional activity to reduce inventory levels.

The company also announced that Mary van Praag will be starting as the new Soma President on September 5, 2017. She most recently served as CEO of Perricone MD and prior to that, held senior executive roles at Coty, Inc. and Johnson & Johnson's beauty division.

"We look forward to leveraging Mary's global, multi-channel and brand-building expertise, along with her deep understanding of our target customer, to capitalize on Soma's growth potential," added Broader.

FY17 comparable sales projected to decline high single-digits

For fiscal 2017, the company anticipates comparable sales to be down high single-digits with gross margin rate decreasing by approximately 75 to 100 basis points. Net sales for the 53rd week are expected to approximate 30 million dollars and the company anticipates SG&A expense will be down approximately 50 to 60 million dollars compared to last year.

Picture:Chico's blog