Fort Myers, FL—Chico’s FAS Inc. reported today a lower second quarter profit due to increased store expenses and costs to support new store growth.
For the quarter ended August 2, Chico’s posted net income of $30.13 million, or 20 cents a share, down from $43.59 million, or 27 cents a share in the prior year. That results missed analysts’ average estimate for 26 cents a share.
Net sales grew 3.3% to $671.13 million from $649.50 million last year, missing analysts’ consensus for revenues of $678.57 million.
The company said its sales growth reflected mainly 98 net new stores for a square footage increase of 6.4% and comparable sales growth of 0.3%. The comparable sales increase was following a 2.6% decrease in last year’s second quarter.
By division, Chico’s/Soma Intimates comps rose 1.4%, with Chico’s comps edging up less than 1% and Soma rising by a mid-single digit. White House Black Market comps fell 1.9%.
Gross margin fell 240 basis points to 52.4%, reflecting increased promotional activity to sell through seasonal merchandise.
Selling, general and administrative expenses were $304.74 million, higher than $286.26 million last year. The increase in expenses was due to sales deleverage of store expenses, costs to support new store growth and impact of about $5 million in incremental investment spending on strategic initiatives, Chico’s stated.
During the quarter, the company repurchased 0.6 million shares for $10 million under its $300 million share repurchase program announced in December 2013.
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