Fort Myers, FL—Bolstered by strong sales across all its retail brands, Chico’s FAS reported Thursday that its fourth quarter profit surged 26%, the specialty retailer’s highest fourth quarter results since 2005.
For the quarter ended Feb. 2, the specialty retailer posted net income of $31.5 million, or 19 cents a share, compared to $25.1 million, or 15 cents a share, a year ago. Excluding acquisition and integration costs associated with its newest retail brand, Boston Proper, adjusted earnings were 20 cents a share.
Net sales increased 14.5% to $651.9 million, reflecting a comparable store sales gain of 3.7% and 101 net stores for an 8.1% increase in square footage. The 3.7% comparable store sales increase was on top of an 8.7% increase a year ago.
Analysts’ average estimate for 20 cents was in line with Chico’s net income, but the company just missed their sales estimate for $666 million.
The company credited positive customer response to its fashion assortments, including a new line of slimming fashions, and the effectiveness of the company’s marketing plans.
By division, Chico’s/Soma Intimates posted a comparable store sales increase of 2.3%, which followed a 5.5% increase in last year’s fourth quarter for a two-year stack of 7.8%. At White House|Black Market, comparable store sales increased 6.3%, which followed a 15.4% increase in last year’s fourth quarter for a two-year stack of 21.7%.
For the year, the company reported sales of $2.6 billion and earnings of $1.09 a share, excluding non-recurring costs.
‘We’re Grinning Ear to Ear’
“Comparable sales were up 7.2% one of the best increases in specialty apparel retail,” said David Dyer, president/ceo. “This represents our fourth consecutive year of positive comparable sales with increases of 7% or greater in each of the last 4 years. Our strong comparable sales increases and profitability point to the strength of our business model, our unique leading-edge fashion, our innovative marketing and of course, the caliber of our people.”
In his conference call with analysts, Dyer said “we are grinning ear to ear” over the success of the Chico’s brand of “So Slimming Jean” and pants.
Other success stories were the Workkit line at its White House|Black Market division, and to the Embraceable collection at Soma Intimates, which became profitable for the first time in 2012.
Gross margin increased 90 basis points to 53.2%, primarily reflecting a higher level of full-price selling, effective inventory management, partially offset by incentive compensation.
Chico’s said the company’s long-term objectives included increasing sales by “a low double-digit percentage” and increasing net income by a mid-teen percentage over a meaningful period of time.
To that end, for 2013, the company is making strategic investments in omni-channel capabilities, expansion into Canada and opening its first four Boston Proper stores.
After investing some $80 million in new stores during 2013, the company plan to add another 135 to 145 stores. Last March, Chico’s announced the launch of its international department of one. That department has now grown to five.
Also planed this year are three White House/Black Market stores for Canada and will add Chico’s stores in 2014.