Chico’s Swings into Q3 Loss on Boston Proper Charges

In Reports, What's New, Industry News by Jeff Prine

A Broadway Holiday theme this year at Chico's

A Broadway Holiday theme this year at Chico’s

Fort Myers, FL—Chico’s FAS said today that it swung into a third quarter loss due to a substantial write-down stemming from sales declines at its Boston Proper stores.

For the quarter ended Nov. 2, the owner of Chico’s, White House|Black Market and Boston Proper stores posted a net loss of $28.5 million, or 18 cents a share, compared with a year-earlier profit of $41.7 million, or 25 cents a share. That included 40 cents a share worth of charges related to impairment charges from the Boston Proper goodwill and trade name.

‘Increased Promotional Activity’ on Lower Traffic

“These impairment charges were the result of recent sales declines in the Boston Proper catalog business due to the increasingly competitive direct-to-consumer environment and the impact of integration efforts and new initiatives,” the company said. Excluding those costs, the company posted a profit of 22 cents.

Net sales rose 3% to $655.6 million while comparable store sales declined 1.4% compared to 9.9% growth a year ago.

Analysts’ average estimate expected adjusted earnings of 24 cents a share on sales of $663 million.

By division, Chico’s/Soma Intimates’ comparable sales decreased 3.3% following an 11.6% increase in last year’s third quarter. Comp store sales at White House|Black Market increased 2.5% on top of a 6.4% increase in last year’s third quarter.

Gross margin was 55.5% of net sales, a 170 basis point decrease from last year’s third quarter, reflecting increased promotional activity in response to lower traffic, partially offset by lower incentive compensation as a percent of net sales.

The company’s selling, general and administrative expenses were $308.5 million, about 47.1% of net sales, a 40 basis point increase from last year, primarily “reflecting deleverage of occupancy expenses and the impact of investment spending on strategic initiatives, substantially offset by lower incentive compensation as a percent of net sales.”


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