CHICO’S NET GAINS IN QUARTER

Byline: Jennifer Weitzman

NEW YORK — Chico’s FAS remained the little retailer that could Wednesday, as it reported a 13.8 percent quarterly earnings gain and a November same-store sales increase of 18.7 percent.
For the quarter ended Nov. 3, the Fort Myers, Fla.-based chain of women’s casual apparel and accessories reported net income of $8.9 million, or 32 cents a diluted share, compared with $7.8 million, or 28 cents, in the prior-year period. Results matched Wall Street’s consensus estimates. Quarterly sales rang in at $94 million, 36.2 percent higher than the $69 million reached in last year’s quarter. Comps rose 7 percent.
Happy that sales have now returned to pre-Sept. 11 levels, investors sent shares of the company up 13.5 percent, or $4.39, to close at $36.79 on the New York Stock Exchange, as the Dow Jones Industrial Average and Nasdaq indices shot past the 10,000 and 2,000 milestones, respectively. The Dow ended at 10114.29, up 2.2 percent; the Nasdaq closed at 2046.84, up 4.3 percent; and the S&P 500 Index, at 1168.77, up 2.1 percent.
Marvin Gralnick, Chico’s chief executive officer and founder, said on a conference call that the company, now 303 stores, was on track for “another record-breaking year, starting with an 18.7 comps increase for November.” The monthly same-store sales results were 10 percent better than expected, he said. The quarter’s stellar showing was aided by a second November catalog, and television advertising, as well as earlier, deeper markdowns and doubled discounts for its Passport club members.
Charles Kleman, chief financial officer, said he expects comp increases for the rest of the year to exceed retail industry averages. Next year, he foresees comp gains in the mid-single digits and further gross-margin improvements. He noted that there are no plans to scale back real estate growth, as the company still anticipates 60 to 65 new locations.
For the nine months, income rose 42.8 percent, to $32.4 million, or $1.16 a diluted share, compared with $22.7 million, or 84 cents. Sales increased 48.5 percent, to $276.7 million from $186.3 million, and were ahead 16.8 percent on a comp basis.
Catering to an audience of younger females, multichannel retailer Delia’s Corp. reported that it narrowed its third-quarter loss to $3.2 million, or 7 cents a share, compared with a loss of $42.7 million, or $1.71. Excluding a $900,000 extraordinary gain, the loss was $2.3 million, or 5 cents. However, sales for the quarter decreased 37.9 percent, to $32.5 million from $52.3 million, due to divestitures.
“As we move through the holiday season, the macroenvironment remains challenging, and we believe it is prudent to adopt a conservative outlook,” Andrea Weiss, president of the New York-based firm, said in a statement. “Accordingly, we now expect to record slightly positive to slightly negative net income for the fourth quarter.”
For the nine months, Delia’s reported a loss of $22.4 million, or 57 cents a diluted share, compared with a loss of $61.9 million, or $2.49. The loss before the gain was $21.6 million. Sales fell 31.7 percent, to $94.7 million from $138.7 million.

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