Double-digit slides in same-store sales, coupled with special charges, drove two misses’ retailers, Chico’s FAS Inc. and Caché Inc., to fourth-quarter losses.
This story first appeared in the March 4, 2009 issue of WWD. Subscribe Today.
The misses retail market has been hurt not only by the recession but also by a lack of clear fashion direction and confusion about the demographics of the increasingly mercurial Baby Boomer customer.
Chico’s fourth-quarter loss nearly doubled on impairment and severance costs and particular softness at its namesake stores.
For the three months ended Jan. 31, the Ft. Myers, Fla.-based Chico’s registered a net loss of $40.5 million, or 23 cents a diluted share, from a deficit of $20.5 million, or 12 cents, in the year-ago quarter. Excluding store impairment and severance charges, the loss was $24.8 million, or 14 cents a share, 3 cents less than expected by analysts polled by Yahoo Finance. Chico’s, which had originally anticipated a goodwill charge, said that, upon review, one was not required.
Quarterly revenue declined 8.8 percent to $373.4 million, from $409.3 million, as comparable-store sales fell 13 percent. Gross margin dipped 330 basis points to 44.4 percent of sales.
At its Chico’s nameplate stores, sales dropped 13.5 percent to $242.9 million from $280.8 million, while comps declined 17 percent. The White House|Black Market chain saw sales inch up 0.2 percent to $108.2 million from $108 million as comps fell 5 percent.
Chico’s said a lack of unique merchandise might have attributed to the lagging sales at its nameplate.
At the direct-to-consumer channel, which accounts for about 4 percent of the business, sales grew 8.8 percent to $22.3 million from $20.5 million across all three brands — Chico’s, White House|Black Market and Soma Intimates. Chico’s said it hopes to grow its direct business to 10 percent in the near term.
Chief financial officer Kent Kleeberger reported recent improvement in Chico’s comp trends, a 15 percent reduction in inventory on a per square foot basis from a year ago and a 5 percent increase in its cash and marketable securities balance since the third quarter to nearly $269 million.
In January, Chico’s named David Dyer to succeed Scott Edmonds as chief executive officer.
For the year, Chico’s recorded a net loss of $19.1 million, or 11 cents a share, versus a profit of $88.9 million, or 50 cents a share, in 2007. Excluding items, it lost 3 cents a share. Net sales decreased 7.7 percent to $1.58 billion from $1.71 billion, a year earlier. Comps slid 15.1 percent — 19 percent at Chico’s and 8 percent at White House|Black Market.
For the quarter ended Dec. 27, Caché, based in New York, posted a net loss of $5.5 million, or 42 cents a diluted share, compared with a profit of $4.9 million, or 32 cents a share, for the year-ago period. Excluding impairment charges, the loss was $4.2 million, or 32 cents, 6 cents worse than the analyst consensus estimate from Yahoo Finance.
Sales dropped 16 percent to $65.9 million from $78.5 million, in 2007. Same-store sales fell 17 percent and gross margin slid to 32.6 percent of sales from 46.4 percent a year earlier on higher markdowns.
Thomas Reinckens, chairman and ceo, said on the company earnings call that Caché will “increase financial flexibility” into 2009 and will try to attract new customers with a new merchandise line that focuses more on casualwear.
For the year, the firm posted a net loss of $7.1 million, or 53 cents a share, compared with a profit of $6.5 million, or 40 cents a share, in 2007. Stripping out charges, the net loss was $3.7 million, or 28 cents a share. Net sales for 2008 contracted 3.2 percent to $265.7 million from $274.5 million in 2007, as comps slid 4 percent.
For the first quarter, the missy retailer said that, excluding charges of 11 cents a share, it expects to lose between 12 cents and 16 cents a share. Revenue is predicted to be in the range of $53 million and $55 million.
Also on Tuesday, Bebe Stores Inc. said Erin Stern, president of Bebe Sport, had left the company. Gregory Scott resigned as ceo in January and his expansion of the Bebe Sport division had been widely criticized by analysts.