Chico’s FAS Inc. was upgraded by Citigroup on Monday to “hold” from “sell,” even though the investment bank does not foresee the stock moving in either direction and expectations are already low due to weak fundamentals.
This story first appeared in the June 10, 2008 issue of WWD. Subscribe Today.
“We do not see a near-term catalyst to move the stock in either direction as fundamental concerns over sales and margin declines are likely discounted in Chico’s shares at this price,” said Kimberly Greenberger, retail analyst at Citigroup.
Shares of Chico’s have declined below Citigroup’s target price of $7, down 23 percent for the year-to-date period.
Greenberger noted the retailer’s management has taken the right steps in a renewed focus on protecting its free cash flow and balance sheet by controlling capital expenditures, expenses and inventory management.
Greenberger said these efforts should help minimize margin pressure on comparable-store sales declines and position Chico’s for margin recovery once comps turn positive in the first half of 2009.
Shares of the women’s apparel retailer jumped 2.5 percent to close at $7.08 on Monday.