Chico's Coconut Point storefront.

Shares of Chico’s FAS Inc. dropped 11.3 percent Wednesday after the specialty chain missed Wall Street’s first-quarter expectations and provided lackluster guidance for fiscal 2017.

For the quarter ended April 29, Chico’s said net income rose 8.2 percent to $33.6 million, or 26 cents a diluted share, from $31.1 million, or 23 cents, a year ago. Net sales slipped 9.2 percent to $583.7 million from $643 million.

Wall Street was expecting earnings per share of 29 cents on sales of $624.8 million.

By segment, Soma sales inched up 1.2 percent to $80.3 million; White House|Black Market sales fell 10.1 percent to $193.3 million from $215 million, and the core Chico’s brand declined by 11.1 percent to $310.1 million from $348.7 million. The decline in overall sales reflects a comparable sales decrease of 8.7 percent, which the company attributed to a lower average dollar sale and a decline in transaction count. Comps at Chico’s were down 10 percent on top of a 5.4 percent decline a year ago; White House|Black Market comps fell 9.7 percent on top of a 3.8 percent slide last year, while Soma comps inched up 0.2 percent on top of a 0.5 percent gain a year ago.

Shelley Broader, chief executive officer and president, said, “In this challenging retail environment, we remain steadfast in executive against our strategic plan to increase profitable sales and long-term earnings. Our flexible and profitable operating model allowed us to drive improvement in our operating income rate and earnings per share compared to last year even though our comparable sales in the quarter were below our expectations.”

During the conference call to Wall Street analysts, Broader said the decline in sales was also due to product issues at Chico’s and White House|Black Market. She added that following extensive customer analytics, the company has identified the issues and are adjusting assortments to reflect the styles its customers want.

Broader noted that Diane Ellis, the new Chico’s brand president who started in November, began making changes to tops, sweaters, pants and jackets, but retail lead times and completion of the full product cycle mean that the complete benefits from those initiatives won’t be until the fall. The ceo added that the team is near completion of its customer research and psychographic profiling project, which should improve the company’s understanding of its customers’ style preferences.

The problem at White House|Black Market was that the company was focused on tops when it should have focused on the more polished Wear to Work collections and basics. Knits, sweaters and bottoms were challenging categories, while dresses, woven tops and denim were categories that did better.

At Soma, Broader said its updated Vanishing Back Bra — it smooths the back and sides — that became available in March brought momentum to the business. Sleepwear, loungewear and swim were the weaker categories at the intimates concept.

She also said through cost reduction and operating efficiency initiatives outlined last year, the company is on track to fully realize these savings by the first half of 2018.

The company formed a new business development, international and strategy team to focus on expansion of the chain’s global footprint and “identify complementary channels of distribution.” There is a separate team dedicated to run its franchise operations, with Latin America — where it already has franchised stores in Mexico — an initial priority. Broader said there is expectation that the company would enter into an agreement with a partner who can grow the brands in the region.

For fiscal 2017 outlook, the company said it anticipates a “mid-single-digit percentage decline” in comps. Gross margin is forecasted to be flat to up to a 30 basis point increase for the year, with flat SG&A leverage. The company further said it continues to actively manage inventory, and expects on-hand inventory for each quarter to be down compared with year-ago levels.

At the end of the quarter, the company operated 1,492 stores in the U.S., Canada and through franchise locations in Mexico.

Shares of Chico’s closed at $9.84.

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