Fort Myers, FL—Chico’s FAS said today it plans to shutter 120 stores by 2017, and slow down opening new stores. The women’s specialty retailer reported its fourth quarter loss widened as Sycamore Partners apparently dropped plans to buy the company.
The company said it is cutting capital spending to about $100 million for 2015, a 29% below its three year spending average.
Chico’s plans to close about 35 stores this fiscal year ending Jan. 31, 2016, and open about 40. The company, which operates 1,547 stores in the United States and Canada, opened 109 stores last year.
Meanwhile, The Wall Street Journal reported that Sycamore Partners, the private equity firm, has abandoned its plans to buy Chico’s and take it private. As previously reported, Sycamore reportedly experienced difficulty in getting the financing to buy Chico’s.
For the quarter ended Jan. 31, Chico’s posted a loss of $31.8 million, or 21 cents a share, compared with a loss of $348,000, or 21 cents a share, a year earlier Excluding items, per-share earnings were 5 cents a share.
Holiday Sales Improve
Net sales were up 7.6% to $656.9 million.
Analysts’ average estimate expected 2 cents a share in earnings and $639.93 million in sales.
Comparable store sales increased 4.3% compared to a decline of 3.4% a year ago. At its Chico’s division, sales were up 1.2%. White House|Black Market posted 5.4% sales growth. Soma Intimates reported 13.7% sales growth
“Overall, we are pleased with our fourth quarter performance. The actions we have taken delivered positive comparable sales across all brands, an increase in gross margin dollars and lower inventory levels,” said David Dyer, president/ceo. “ While the overall apparel retail environment remains challenging, we expect the new capital allocation and cost reduction initiatives announced today will further strengthen Chico’s FAS and its brands.”
Gross margin edged down to 50% from 50.7% amid higher promotional activity and West Coast port delays.
Selling, general and administrative expenses amounted to $317.8 million compared to $302.4 million in last year’s fourth quarter. As a percent of net sales, the expenses were 48.4%, a 110 basis point improvement from last year’s fourth quarter, “primarily reflecting sales leverage of store expenses and National Store Support Center costs, partially offset by the impact of investment spending on strategic initiatives.”