Fort Myers, FL—Chico’s FAS, Inc. today reported its first quarter profit fell 4.7% as comp store sales were flat and gross margin decreased.
For the quarter ended May 4, the women’s specialty retailer posted a profit of $51.1 million, or 31 cents a share, compared to $53.6 million, or 32 cents a share, in first quarter last year. Removing one-time charges, such as integration costs related to Boston Proper, per share earnings were 32 cents. That was below the 36 cents a share that analysts’ average estimate expected.
Total revenue rose 3.1% to $670.72 million, but still came in below analysts’ estimate for $707.75 million. Comparable store sales were flat on top of a 9.6% increase last year and reflect “an unusually cool spring” and strong comparables last year.
The company attributed overall sales growth mainly to the addition of 114 net new stores for a square footage increase of 9%.
‘Should Have Hired a Weather Man?’
By division, the Chico’s/Soma Intimates stores’ comparable sales decreased 2.8% following an 8.8% increase first quarter last year. At White House|Black Market, comp sales increased 6.4% on top of an 11.3% increase in first quarter last year.
Addressing the impact of cold weather, particularly in the company’s Midwest and Northeast regions, David Dyer, chief executive, told analysts on a conference call that
“I was told by a boss early in my career that, if he wanted a weather report, he would have hired a weather man, so I have always been reluctant to talk about the effects of weather on business,” Dyer said. “However, this past quarter, I should have hired a weather man.”
The effect was to keep lightweight spring merchandise sitting in stores, he noted.
Gross margin narrowed to 57.7% from 58.2% last year, mainly reflecting higher promotion of seasonal merchandise during an unusually cool spring and investment in new distribution automation, partially offset by lower incentive compensation.
During the quarter, the company repurchased 3.4 million shares for $60 million under its $300 million share repurchase program.