For the three-month period ending May 2, revenues fell to $280 million, compared with $517 million the same time last year. There was a slight uptick in digital sales during the quarter — with year-over-year, double-digit growth in April — but it wasn’t enough to offset losses. The company recorded a loss of $178 during the quarter, compared with gains of approximately $2 million a year earlier.
“As the impact of COVID-19 on the retail industry became apparent, we took immediate actions to safeguard the health and well-being of our people and communities while simultaneously preserving the financial stability of the company,” Bonnie Brooks, chief executive officer and president of Chico’s FAS, said in a statement.
“During the temporary closure of our 1,341 boutiques across North America and in becoming a digital-only business for most of the quarter, the company drove an even greater level of customer engagement,” Brooks continued. “We entered into Q1 with strong positive comp sales to the end of February that continued the strong momentum built in fall 2019. During the first quarter and now into the second, we have strengthened the company’s liquidity and substantially reduced expenses and cash burn. We are now halfway through the second quarter with an improved financial foundation and focused on accelerating the growth strategies that drove our significant success in the prior two quarters.”
Like most retailers, Chico’s was forced to close stores in March as the coronavirus made its way around the globe. The company began a phased reopening plan the first week of May. As of Wednesday, 63 percent of the store fleet have reopened. The company expects to have 80 percent of stores open by June 12, with options like BOPIS available. Meanwhile, nine stores closed during the quarter. The company is anticipating between 50 and 60 more stores to close later this year.
“In light of the pandemic, we intend to reevaluate each location’s future viability and will modify our closure plans accordingly,” David Oliver, senior vice president of finance and interim chief financial officer, said on the conference call Wednesday morning. “That said, stores are a critical part of our future, but they must be in the right location, be the right size and have the right economics.”
A few bright spots during the quarter included the company’s online businesses — digital sales across all three major brands had double-digit growth — and Soma’s loungewear and sleepwear collections.
“Actually, in many weeks, Soma’s online-only business generated similar sales volumes to its total business in those weeks last year,” Brooks said on the call. “Soma also delivered a new single-day sales record during one of the promotional events, leading the highest single day sales record in the brand’s history.”
The company ended the first quarter with $118 million of cash and cash equivalents. To help mitigate losses, the company started suspending rent payments in April, furloughing associates, suspended quarterly dividends, adjusted merchandise receipts and reduced capital spend. The company is not providing forward-looking guidance.
“As we look to the second quarter and the balance of 2020, we believe we will be competitively stronger because of the measures we’ve taken to liquidate our prior season inventory and remove it from our stores and distribution centers,” said Molly Langenstein, ceo and president elect of Chico’s FAS. “We are encouraged by our strong store reopenings and the accelerated demand in our digital channels, which demonstrate our customers’ loyalty to our brands. As a result of the product changes we made in the second half of 2019, we are well-positioned to capitalize on the growth opportunities ahead.”
Shares of Chico’s FAS, which closed down 27.62 percent to $1.52 a piece Wednesday, have fallen approximately 57 percent in the last year.