Chico’s FAS Inc. saw its stock price decline in early trading after the specialty retailer missed analysts’ estimates for earnings.
Net income for the quarter fell slightly to $31.1 million, or 23 cents a diluted share, down from $32.5 million, or 22 cents, a year ago. Adjusted net income was $33.4 million and earnings per share totaled 25 cents and missed the FactSet estimate for 31 cents a share. The stock was falling more than 5 percent to $10.25. The adjustments were related to the restructuring and strategic charges associated with the company’s exit from the Boston Proper chain.
Sales for the first quarter ending April 30 decreased 7.9 percent to $643 million from $697.8 million a year earlier and were much lower than the FactSet estimate for sales of $669 million. Comparable sales fell 4.2 percent. Soma intimate apparel was the only category that saw an increase in sales for the quarter; however, that increase was slower than last year’s growth.
“In the first quarter, our loyal customers continued to be attracted to our brands,” said chief executive officer Shelley Broader. “Our overall store traffic trended better than our peer index and when she visited our stores she was buying, although weak traffic across the industry impacted our overall sales.”
For the first quarter gross margin was $262.3 million, or 40.8 percent, lower than last year’s $295.6 million, or 42.4 percent. The decrease reflected more discounts as a response to lower traffic.
Chico’s unveiled new initiatives to improve the supply chain so that the company can deliver products faster. The new moves are expected to save roughly $50 million to $70 million each year.
The company did not give guidance for the next quarter or year. The FactSet estimate for the second quarter is for earnings per share of 28 cents and sales of $650 million.
On Wednesday, Chico’s appointed Susan Lanigan as its general counsel. The company has also found itself embroiled in a board of directors battle with Barington Capital Group. The activist investor wants its hand-picked nominees to be named to the board, but Chico’s is sticking with its own nominees.