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Chico’s Plots International Growth

A new, more sophisticated store prototype will carry the brand across international borders, the first stop being Canada, launching next fall.

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Chico’s is taking its extroverted style of animal prints, jewel-tone colors and demonstrative jewelry to an international audience while moving into smaller markets in the U.S. and growing its product line.

As it marks its 30th anniversary, the Sanibel Island, Fla.-based retailer is “expanding internationally next year as a corporation and as a brand,” said Cinny Murray, president of Chico’s, referring to Chico’s FAS Inc., which owns the signature label as well as White House|Black Market, Soma and Boston Proper. “We’re working on a more upscale prototype that we’ll take internationally,” said Murray.

The first stop will be Canada, launching next fall. “We have a very strong Canadian base known to us through our Web site and seen in Florida,” Murray said. “We’re going to Toronto. The customer is there.”

Chico’s has 700 boutiques today. About 800 stores is the ceiling. “It’s natural to go international,” Murray said.

The president declined to reveal other foreign locations, but indicated that Europe is in the offing.

The expansion comes against the backdrop of disappointing financial results in the first nine months of this year. For the period ended Nov. 2, Chico’s FAS reported net income of $66.2 million, compared with last year’s $148.7 million, a 55.5 percent drop. Excluding an impairment charge of $64.3 million in the most recent quarter and other charges, net income for the nine months would have been $131.1 million, a 12.3 percent decline from $149.5 million last year.

For Chico’s/Soma Intimates, same-store sales were flat in the first quarter and dropped 3.1 percent in the second quarter and 3.3 percent in the third quarter. During the second-quarter conference call with analysts, Chico’s FAS chief executive officer David F. Dyer said the brand faced a significant challenge up against strong second-quarter comparable sales in 2012.

Chico’s has four million active customers, but still sees some room to grow domestically. “In New York, we’ll add new stores a mile away from existing ones,” Murray said, adding that the company isn’t worried about cannibalization, with Manhattan’s density and foot traffic.

A new, more sophisticated store prototype will carry the brand across international borders. “Several of the international retailers didn’t understand the ‘country’ part of the store decor,” Murray said. The new model, being tested in Boston, has warm tones with subtle animal prints, a woven entry, luggage details on fixtures and artifacts layered in as props.

Chico’s executives walk the walk, talk the talk and wear the brand from head to toe. They discuss clients as if they were friends, referring to the shopper as “she.” They feel it’s more personal than “customer.” They know about shoppers’ personal lives anecdotally from reports from sales associates that find their way to headquarters. Part of the reason is that Chico’s locations in smaller cities and towns allow staff to easily track repeat customers.

“We do well in small markets and destination centers,” Murray said. “She can pull right up in her car. We bring fashion to the markets, and in those markets, we are [all there is]. Manhattan, for example, only has two stores, while there are six or seven in Charlotte and we can still get growth out of that market. Small towns are part of the formula, as is the whole wardrobing experience. We customize and localize the assortments. Turquoise jewelry is big in Texas, but it wouldn’t be the first stone we’d put into a store in Boston.

“Malls are closing and shifting,” Murray added. “Patterns change in a community. Every year I do a complete store review and close stores that are not meeting expectations. As a specialty brand, there is a cap on brick and mortar. What will change is the experience. Her luxury is convenience. She’ll visit all four or five stores in a market, so we change the assortments.”

Chico’s is not for wallflowers. Color is big and bold and patterned in blouses, dresses and sweaters. The brand never met an animal print it didn’t like. Zebra, leopard and ocelot are splayed onto jackets, coats, sweaters, skirts, pants and shoes. Leopard is so ubiquitous throughout the collection, Murray said, “we actually consider it a solid.” A leopard-print duster coat from Chico’s new elevated Black Label collection is shown with a gigantic piece of jewelry on the Web site.

The higher-end Black Label collection is rolling out in 2014 featuring cashmere, leather and velvet. It includes jewelry, scarves and handbags. For the woman who works, there’s the new line, 9 to 5abulous.

“The Chico’s woman wants everything she could possibly need,” Murray said. “Her biggest request over the years has been shoes, which had a soft launch in the fall. The collection will grow in the spring.”

Murray calls shoes “a white-space opportunity in terms of offering both fashion and comfort. Shoes have the Chico’s DNA. We launched with a lot of animal prints, and 40 percent of the assortment is boots. I see it growing into a very large business. We won’t carry shoes in all stores, but we’ll have tablets in stores” with the offering.

Zynergy activewear continues to expand, and there’s a new golf collection. “We’re seriously rolling golf out to 400 stores in the spring,” Murray said. “Also in the spring, we’re working with the Ladies’ Professional Golf Association and partnering with them on the Chico’s Patty Berg Memorial Tournament. Golf is very much a part of [our customer’s] life, especially being a Florida brand. Golfwear didn’t have pizazz and femininity. A whole new world of customers will find us through golf.”

Another new category, swimwear, is launching in Chico’s resort book. It will roll out to stores in 2014.

“Other formats is where we think there’s an opportunity,” Murray said. “We have such a wide range of stores and categories. Those that are scalable will be tested with pop-ups.” Murray said Chico’s is testing “some other sport-related things and other things that are a step before jammies.”

“Wouldn’t home be fun?” she said. “We’ve tested picture frames. We’re constantly in motion and spend so much time trying to learn more about the Chico’s customer.”

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