Chico’s FAS (CHS) shares popped more than 15% on Tuesday after the fashion retailer lowered its full-year sales guidance but posted better-than-expected fiscal first-quarter results.
The Fort Myers, Fla.-based company, which also operates the White House Black Market and Soma brands, said it now expects a low to mid-single digit decline in total net sales and comparable sales in the full year, down from its previous views of a low-single digit slip.
For the quarter ended May 4, Chico’s reported adjusted per-share earnings of $0.05, down from $0.23 per diluted share in the prior-year period. Capital IQ expected $0.03. Net sales fell to $517.7 million from $561.8 million the year before, but they were ahead of the Street’s view of $517.6 million.
The company said that the 7.8% decline in net sales reflected a comparable sales decline of 7.0% as well as the impact of 41 net store closures since last year’s first quarter. It said that the comparable sales decline was driven by lower average dollar sale and a decrease in transaction count.
‘In the first quarter, we made significant changes to the company’s leadership and reset priorities for its growth and value creation,” said Bonnie Brooks, Chico’s interim chief executive. Brooks, a former chief executive of Hudson’s Bay Company, was named to the post in April after former chief executive Shelley Broader resigned.
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Chico’s said it’s “making progress” in its search for a permanent chief executive and that the company’s board has met with “exceptionally qualified candidates.”
“Actions are now under way across all brands with a focus on three distinct areas that will positively impact our results,” Brooks said. “These include driving stronger sales through improved product and marketing; optimizing the customer journey by simplifying, digitizing and extending our unique and personalized service; and transforming our sourcing and supply-chain operations to increase product speed to market and improve quality.”
Selling, general and administrative expenses fell to $185.4 million in the first quarter, down from $186.4. The company said it expects SG&A expenses to fall $10 million in its full fiscal year, down from its previous flat expectation.
Chico’s expects a mid-single digit slide in total net sales and comparable sales in its second quarter as it anticipates softer sales at White House Black Market. However, it expects Chico’s and Soma sales will improve in the current period. The Street is expecting a 3% decline in comparable sales.