By  on April 12, 2007

ATLANTA — March comps were up 5.2 percent, and Chico's wants to keep the momentum going by growing direct sales, expanding square footage more than 20 percent and focusing on new, less repetitive product offerings in 2007.

Petites will be in the mix for the first time, starting with a 60-store White House|Black Market rollout in June, and Chico's stores will add petites in 2008. The petite collections will include sized-down versions of regular product along with specifically designed petite offerings in sportswear and dresses.

"The Baby Boomer market is still booming," Charles J. Kleman, executive vice president and chief financial officer of Chico's, told investors and analysts at the annual Institutional Conference at the Ritz-Carlton here. "Our customer is still there."

Kleman said fashion blunders caused Chico's to stumble in 2006, after 113 consecutive months of same-store sales gains. He projected single-digit growth for the rest of 2007, with White House|Black Market performing slightly better than Chico's stores.

Total sales for the five weeks ended April 7 increased 22 percent, to $191.2 million, compared with $156.8 million for the same year ago period.

Kleman outlined plans to boost square footage more than 20 percent with about 130 to 145 new stores, (55 to 60 Chico's; 55 to 65 White House|Black Market and about 20 Soma stores) and select expansions of existing stores. The $1.7 billion chain has 937 stores and the potential to grow to 2,000 units, he said.

"It's not how many stores could we open, but how many should we open," Kleman said, adding that large stores (at least 2,800 square feet) are consistently Chico's strongest performers. "Rather than just more sku's [stockkeeping units], bigger stores can offer customers more individualized, efficient service, with shorter lines at cash registers and fitting rooms."

Direct sales, both online and in catalogue, grew 38 percent in March, to $6.7 million, and will expand with more product and investment. "We've lagged behind some other chains that started out as catalogues, but the opportunity is huge," Kleman said.

To broaden its customer base, the lingerie division, Soma by Chico's, will change its name to Soma Intimates, starting at a few stores this summer and at all units by yearend."We want to encourage the mind-frame of Soma as an intimates store, rather than a Chico's store," Kleman said. "Originally, we wanted to get the six million Chico's customer base, but now we want the woman who doesn't necessarily shop Chico's."

Chico's operates 937 specialty stores, in 47 states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico. The company has 561 Chico's front-line stores, 34 Chico's outlet stores, 264 White House/Black Market front-line stores, 17 White House/Black Market outlets and 53 Soma Intimates stores. Chico's announced the closing of its eight Fitigues stores last month.

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