Chico’s Q3 net sale improve but net income and earnings drop

REPORT_ For the thirteen weeks ended November 1, 2014, third quarter, the Chico’s reported net income of 26.5 million dollars compared to adjusted net income of 35.8 million dollars for the thirteen weeks ended November 2, 2013, and third quarter 2014 earnings per diluted share of 0.17 dollars compared to adjusted earnings per diluted share of 0.22 dollars in last year's third quarter.

For the thirty-nine weeks ended November 1, 2014, the Company reported net income of 96.5 million dollars compared to adjusted net income of 131.1 million dollars in the same period last year, and earnings per diluted share of 0.63 dollars compared to adjusted earnings per diluted share of 0.81 dollars in the same period last year. Including the impact of the impairment charges and non-recurring acquisition and integration costs, the Company reported net income of 66.2 million dollars, or 0.41 dollars per diluted share in 2013.

Commenting on the results, Todd E. Vogensen, Senior Vice President and Chief Financial Officer, Chico's, said, “In addition to our brand strategies, fiscal discipline is an important driver of value creation. We remain focused on inventory management and ensuring SG&A and capital investments are aligned with meaningful growth opportunities.”

For the third quarter, net sales were 665.6 million dollars, an increase of 1.5 percent compared to 655.6 million dollars in last year's third quarter, primarily reflecting 87 net new stores, partially offset by a 1.6 percent decrease in comparable sales. The 1.6 percent decrease in comparable sales for the third quarter was following a 1.4 percent decrease in last year's third quarter, and reflected a decrease in average dollar sale partially offset by an increase in transaction count.

For the third quarter, the Chico's/Soma Intimates brands' comparable sales decreased 1.6 percent following a 3.3 percent decrease in last year's third quarter. The Chico's brand experienced a low single digit decrease in comparable sales in the third quarter compared to a mid-single digit decrease in last year's third quarter, and the Soma Intimates brand experienced a mid-single digit comparable sales increase in the third quarter compared to a high-single digit increase in last year's third quarter. The White House, Black Market brand's comparable sales decreased 1.4 percent following a 2.5 percent increase in last year's third quarter.

For the third quarter, gross margin was 363.8 million dollars compared to 364 million dollars in last year's third quarter. Gross margin was 54.7 percent of net sales, an 80 basis point decrease from last year's third quarter, primarily reflecting increased promotional activity to sell through seasonal merchandise.