Chico’s FAS Inc. posted second-quarter results that beat Wall Street’s adjusted earnings per share estimate by 3 cents, and said an organizational realignment has resulted in 200 jobs being cut.
For the three months ended July 30, the company said net income was $23 million, or 17 cents a diluted share, versus net income of $2.1 million, or 2 cents, a year ago. On an adjusted basis, earnings per diluted share was 25 cents. The company has been executing on some strategic initiatives. Net sales fell 7.3 percent to $635.7 million from $685.8 million, which also included sales from its former Boston Proper business that has since been sold. Comparable store sales fell 3.6 percent in the quarter.
Wall Street was projecting adjusted diluted EPS of 22 cents on revenues of $632.5 million.
Shelley Broader, president and chief executive officer, said, “The initiatives we announced last quarter are already driving cost savings and improving our operating efficiency. In addition, we believe that the organizational redesign announced today will enable us to be more nimble and responsive to our customers’ evolving needs.”
Those cost savings initiatives include supply chain efficiencies and optimization of marketing expenses.
The organizational redesign Broader referred to — expected to result in $25 million in annualized pre-tax savings — results in a flatter organization. While some new positions were created, such as in digital and business analytics, many other jobs at corporate and field leadership were cut. In total about 200 jobs, or 13 percent of the company’s headcount, were cut.
Separately, Chico’s brand president Cynthia S. Murray is leaving the company. Chico’s said a search for her successor is under way.
In total, with the earlier cost-cutting initiatives, the company said it expects a reduction in future annualized costs between $90 million and $110 million.
The company said it expects a low-single-digit comp sales decline for the second half.
Shares of Chico’s closed down 4.5 percent to $11.30 on Tuesday, but rose 2.4 percent to $11.57 in after-market trading. The company reported earnings results and disclosed its organizational realignment after the equity markets closed.