Chico’s FAS Inc. and Coldwater Creek Inc. swung to losses in the fourth quarter, hurt by sluggish sales amid a weakening economy.
This story first appeared in the March 6, 2008 issue of WWD. Subscribe Today.
For the three months ended Feb. 2, Chico’s posted a loss of $20.5 million, or 12 cents a diluted share, which compares with a profit of $18.2 million, or 10 cents, in the year-ago period.
Sales for the quarter shrank 7.9 percent to $409.3 million from $444.6 million. Total same-store sales dropped 15.7 percent. By division, Chico’s brand had a comps decline of 16 percent and White House|Black Market decreased 17 percent.
For the full year, net income plunged 47 percent to $88.9 million, or 50 cents a diluted share, from $166.6 million, or 93 cents, last year as sales grew 4.5 percent to $1.71 billion from $1.64 billion.
“While we attribute much of our underperformance to last year’s merchandising issues, some of the corrective measures we have taken are being masked by the slowdown in retail overall and in the missy sector in particular,” said Scott Edmonds, chairman, president and chief executive officer.
While there have been some improvements at the White House|Black Market division, the Chico’s brand is on a slower path to recovery, he added.
The company anticipates the women’s sector will continue to struggle in the spring and expects negative comps for the first half of 2008 and lower earnings than the first half of 2007. As a result, Chico’s pulled back its inventory commitments for most of the year.
Edmonds predicted comps will become positive in the second half of the year, resulting in overall earnings growth. Shares of the retailers plummeted 13.9 percent to close at $8.50.
For its fourth quarter, Coldwater Creek reported a loss of $17 million, or 19 cents a diluted share, which compares with a profit of $15.9 million, or 17 cents, in the year prior. Sales declined 6 percent to $345.5 million from $366.6 million, while total same-store sales dropped 19.2 percent.
Coldwater Creek said the loss is a result of a decrease in comparable retail traffic and a lower average price per transaction due to aggressive clearance sales.
The company expects a loss of 17 cents to 14 cents a diluted share in first-quarter earnings, and sees a loss of 20 cents to break even for the year.
Shares fell 4.9 percent to end the day at $5.04.