Women’s specialty retailer Chico’s FAS Inc. hired a new brand president to turn around its namesake division and reported another weak quarterly performance that illustrates just how badly that turnaround is needed.
Nordstrom veteran Karen McKibbin will join the Fort Myers, Fla.-based company as president of the Chico’s brand at the beginning of next month, replacing Diane Ellis, who departed in November after only two years on the job following a leadership shakeup.
McKibbin was most recently president of Nordstrom Rack and before that president of Nordstrom Canada, where she led the company’s expansion into the Canadian market, overseeing buying, logistics, marketing, real estate and online strategies.
While Chico’s is starting to see better results with its brands Soma and White House Black Market, it has been experiencing a number of challenges with its namesake chain as some core customers have changed their spending habits.
The retailer has put an improvement plan in place, which it believes is starting to take hold, and Shelley Broader, chief executive officer and president of Chico’s, told investors that she expects McKibbin’s experience in merchandising, operations and store planning to “significantly contribute to the work underway at Chico’s.”
“I am confident that her leadership and decades of experience will help accelerate the progress we are making to improve performance at the Chico’s brand,” she said.
The new hire announcement came as the the company revealed it had endured a difficult fourth quarter, although the news was not as bad as Wall Street had been expecting.
The company reported a net loss of $16.6 million, or 14 cents per share, compared to net income of $28 million, or 22 cents per share, a year earlier. On an adjusted basis, its net loss was $8.6 million, or 7 cents per share. This, however, was better than analysts’ forecasts for 9 cents per share, according to Factset data.
Net sales, meanwhile, came in at $524.7 million, down from $587.8 million a year earlier, but surpassed Wall Street estimates of $516 million. Comparable sales fell 3.8 percent, with a breakdown showing sales at Chico’s and White House Black Market were down 7.9 percent and 2.9 percent, respectively. Soma comped up 6.2 percent.
“We achieved sequential improvement in comparable sales in all three brands in the fourth quarter, and with work continuing across the company, we believe we are better positioned heading into the new fiscal year,” Broader added.
The situation doesn’t seem likely to improve anytime soon, with the retailer laying the ground for another weak quarter. It has penciled in mid- to high-single-digit declines in both net and comparable sales, blaming a softer February. For the year as a whole, a low-single-digit decline in total net sales is currently in the cards.
The retail chain reiterated plans to shutter at least 250 stores in the U.S. over the next three years as part of its efforts to better capitalize on its omnichannel platform, reduce costs, improve profitability and return on invested capital.
Providing new details of the store shakeup, the firm said it will close approximately 100 Chico’s stores, 90 White House Black Market locations and 60 Soma doors, with the majority of the closings occurring in the second and third years of the program. In 2019, the company will close between 60 to 80 stores. As a result of this timing, it expects minimal impact on sales and earnings this year.
Todd Vogensen, executive vice president and chief financial officer at Chico’s, said: “The store closing impact on sales is something that obviously will be a bigger impact as we get further into the program.”