David F. Dyer, the new chief executive officer of Chico’s FAS Inc., sees “unique opportunities” for growth and believes the business is well positioned to weather the poor retail climate.
This story first appeared in the January 9, 2009 issue of WWD. Subscribe Today.
“We can face anything. We have no liquidity problems whatsoever,” a confident Dyer told WWD on Thursday, when he was named ceo, succeeding Scott A. Edmonds, who told the board in January that he would retire.
While there has been mounting shareholder pressure to improve performance and several executive changes over the past year, Edmonds is credited with orchestrating the national growth of the specialty retailer, from a single concept chain operating 250 Chico’s stores to a 1,080-unit retailer with three brands including White House|Black Market, acquired in 2003, and Soma, which was launched in 2004.
“We are really dealing with the economic environment from strength, rather than defensively,” Dyer said. “That doesn’t mean we won’t watch expenses and inventories, and will slow growth. But because of our balance sheet, we have the ability to be aggressive while being conservative.”
Chico’s, a high flying specialty chain in the Nineties with a long string of double-digit sales gains that outshined the industry, started dragging before the economy collapsed. Chico’s targets the misses market, a sector that has been slumping more than most and for a longer period. Such competitors as Talbots, Ann Taylor and Liz Claiborne have also been struggling in their efforts to cater to the same market.
“There’s been a lot of overcapacity, and a lot of people tried to entice customers through price,” Dyer said. “You have to do it through assortments that generate excitement.”
Asked if his appointment signals a strategic shift for Chico’s, the 59-year-old Dyer replied: “We are in some pretty tough times economically. We will be conducting a top to bottom review of the company and certainly making decisions regarding the current environment. But we have some very unique opportunities. We have three great brands that have a lot of growth in them.”
Dyer also said the balance sheet is in good shape, with over $250 million in cash, and that the White House|Black Market division is “very well positioned” adding, “the merchandise is strong.”
“There are great opportunities for us to increase market share because of the economy,” such as working on a store model requiring less investment on openings and seizing real estate opportunities created by retail vacancies, said Dyer. He also said the company hasn’t scratched the surface in direct marketing. Online, the three brands do a combined $100 million in volume. “We should be two or three or four times as large,” Dyer said, adding that what’s required is an appropriate infrastructure and more aggressive marketing. “There is an opportunity to buy other infrastructure at a reasonable price.”
Dyer’s extensive background in direct marketing factored heavily into his appointment. He was president and ceo of Lands’ End from November 1998 until its June 2002 sale to Sears, Roebuck and Co. Following that, he joined Sears as executive vice president and a member of its executive committee, while retaining his responsibilities at Lands’ End. Dyer once served as acting president of J. Crew, and president and chief operating officer of Home Shopping Network. More recently, he was president and ceo of Tommy Hilfiger Inc. from August 2003 until its sale in May 2006. Since May 2006, Dyer has served on the Chico’s board and has done some consulting.
He sees restoring the company’s “entrepreneurial spirit” as critical. He also sees an opportunity to maximize some key items, including wrinkle-free blouses at Chico’s, and activewear, including yoga products.
“This isn’t even a car with a flat tire,” said Ross E. Roeder, who is currently the company’s lead director and was named non-executive chairman of the board. “It might have some tires that are soft, that we need to fill up. But this is a well-run vehicle.”
The company operates 623 Chico’s stores; 41 Chico’s outlet stores; 330 White House|Black Market stores; 19 White House|Black Market outlets; 72 Soma Intimates units, and one Soma outlet. Chico’s founders, Marvin and Helene Gralnick, retired from the board in December 2006.