Chico’s Q4 Profit, Sales Beat Estimates

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A "bold in the boardroom" wear to work look from Chico's White House|Black Market stores

Fort Myers, FL—Chico’s FAS reported today that its fourth quarter profit and sales beat forecasts, due primarily to a strong sales at its higher margin Soma and White House|Black Market stores.

For the quarter ended Jan. 28, Chico’s said its net income rose 25% to $25.1 million or 15 cents a share share, from $20.7 million, or 12 a share, a year ago.

Net sales jumped 20% to $569.2 million. Comparable store sales increased 8.7% on top of a 4.5% comp sales increase in the same quarter a year ago. Total sales also included $28.5 million for Boston Proper, which the company purchased last fall.

The results beat analysts’ average estimate expecting 11 cents a share on sales of $547.2 million.

‘Full-Price Selling’ at WH|BM

Chico’s reported that its sales were helped by increases in both the average dollar sale and transaction count. Its Chico’s/Soma Intimates brands’ comparable sales increased 5.5% on top of a 4.4% increase in last year’s fourth quarter. Comparable store sales at White House | Black Market increased 15.4% on top of a 4.7% increase in last year’s fourth quarter

Although gross margins decreased to 52.3% from 53.2%, a year ago, the decrease was less than the company had projected.

“This decrease was primarily attributable to planned strategic use of Chico’s brand inventory for traffic-driving promotions during the fourth quarter and the inclusion of Boston Proper’s results, which were partially offset by higher margins at the WH|BM and Soma Intimates brands due to increased full-price selling and effective promotional activities,” the company said.

For its fiscal 2012, the specialty retailer said it expects net sales to increase by a mid-teens percentage to $2.5 billion. Comparable store sales are expected to grow in a mid-single digit percentage and gross margin is expected to be down to 50 basis points.

Analysts’ average estimate expects annual sales to hit $2.43 billion.

In a conference call with analysts, David Dyer, ceo, said the company plans 135 new stores this year, including 40 as outlet stores.

“The company posted a surprisingly strong fourth quarter given the performance of other women’s retailers like Christopher & Banks Corp and Ann Inc, as well as the performance of the women’s apparel category at the department stores,” Nomura analyst Paul Lejuez told Reuters.