Chico's store

Shares of Chico’s FAS Inc.  fell 6.5 percent in early morning trading after the company posted second-quarter results that missed Wall Street’s expectations and lowered guidance for the fiscal year.

For the three months ended July 29, the company said net income slipped 1.4 percent to $22.7 million, or 18 cents a diluted share, from $23 million, or 17 cents, a year ago. Total sales fell 9 percent to $578.6 million from $635.7 million. Total company comps were down 8.4 percent on top of the 3.1 percent decline in the year-ago quarter.

Wall Street was expecting EPS of 21 cents on revenues of $579.3 million.

Shares of Chico’s were trading at $7.32 at 9:53 a.m.

Shelley Broader, chief executive officer and president, said, “Second-quarter sales were disappointing, and we are taking decisive actions to adjust our assortments and enhance omnichannel capabilities in bellwether categories such as jackets at Chico’s and dresses at White House Black Market. While it is early in the third quarter, these key categories are showing encouraging progress.”

Separately, the company said that Mary van Praag will start on Sept. 5 as the new president of its Soma brand. She was most recently ceo of Perricone MD. Her experience includes executive roles at Coty Inc. and Johnson & Johnson’s beauty division.

By division, sales at the core Chico’s nameplate fell 9.6 percent to $302,2 million, while comps were decreased 9 percent. At White House Black Market, sales declined 11.4 percent to $184.4 million, and comps dropped 10.6 percent. At the intimates brand Soma, sales slipped 1.7 percent to $92 million, as comps dipped 1.8 percent.

The company also said that gross margin for the quarter slid to 36.1 percent from 37.9 percent a year ago. It said the 180 basis point decrease was due primarily to sales deleveraging of store occupancy expenses and an increase in promotional activity to reduce inventory levels.

For fiscal year 2017, the company expects comps to be down high-single digits, a steeper decline from prior guidance of down midsingle digit to down high-single digit, with the gross margin rate falling by 75 to 100 basis points.

Paul Lejuez at Citi Research said the guidance now implies EPS of between 65 and 75 cents, compared with prior estimates of 80 to 84 cents.