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Chico’s reports 3.8 percent drop in Q1 net sales

By Prachi Singh

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Report

Chico's FAS, Inc. for the thirteen weeks ended May 5, 2018 reported net income of 29 million dollars or 0.23 dollar per diluted share, compared to 33.6 million dollars or 0.26 dollar per diluted share, for the last year's first quarter. For the first quarter, net sales were 561.8 million dollars compared to 583.7 million dollars in last year's first quarter, a 3.8 percent drop, which the company said, primarily reflects a comparable sales decline of 5.9 percent and the impact of 41 net store closures since last year's first quarter, partially offset by the favourable impact of the calendar shift due to the 53rd week in fiscal 2017.

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"While we are pleased with the launch of our new sales-driving initiatives, first quarter customer traffic was challenging," said Shelley Broader, CEO and President of the company in a media release, adding, "We are seeing initial success with our recently-launched ShopRunner partnership and we look forward to the ramp up of our brand offerings on Amazon.com and QVC."

Chico’s expects mid-to-high single digit decline in Q1 net sales

For the first quarter, gross margin was 226.9 million dollars or 40.4 percent of net sales, compared to 237.4 million dollars or 40.7 oercent of net sales, in last year's first quarter. This 30 basis point decrease, the company added, primarily reflects the initial implementation costs and launch of a new expedited shipping program, partially offset by a 70 basis point improvement in maintained margin.

For second quarter fiscal 2018, the company is anticipating a mid-to-high single digit decline in net sales and a low-to-mid single digit decline in consolidated comparable sales. The company expects gross margin rate as a percentage of net sales to be approximately flat compared to second quarter fiscal 2017.

For fiscal 2018, the company is anticipating a mid-single digit decline in net sales and a low-to-mid single digit decline in consolidated comparable sales and gross margin rate expansion in the range of 50 to 75 basis points over fiscal 2017.

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