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Chico's FAS posts adjusted net at $35.5mn in Q2FY16
Sep '15
Adjusted net income at omni channel apparel retailer Chico's FAS rose to $35.5 million in the three months to August 1, 2015 compared to net income of $30.1 million for the thirteen weeks ended August 2, 2014.

Consequently, second quarter of fiscal 2016 adjusted earnings per diluted share was $0.25 as against earnings per diluted share of $0.20 in last fiscal's second quarter.

“The second quarter adjusted results exclude net charges of $0.23 per diluted share in 2015 related to the plan to exit Boston Proper and restructuring and strategic charges,” the company said in a press release.

Including the impact of the net charges, the company reported second quarter of fiscal 2016 net income of $2.1 million, or $0.02 per diluted share.

For the reporting quarter, net sales were $680.4 million, up 1.4 per cent from $671.1 million in the prior fiscal's second quarter.

“This primarily reflects 23 net new stores for a square footage increase of 1.3 per cent and a 0.5 per cent hike in comparable sales,” Chico's FAS explained.

The 0.5 per cent rise in comparable sales for the second quarter was on top of a 0.3 per cent growth in the fiscal ago period and reflected an increase in average dollar sale partially offset by a decrease in transaction count.

For the quarter under review, gross profit reached $366.0 million vis-à-vis $351.5 million in the second quarter of fiscal 2015.

Gross margin stood at 53.8 per cent of net sales, a 140 basis point increase from the previous fiscal's second quarter.

“Rise in margin primarily reflects a decline in promotional activity in response to improved inventory management, and benefits from previously announced cost reduction efforts,” it added.

For the second quarter of fiscal 2016, SG&A were $308.4 million compared to $304.7 million, while SG&A was 45.3 per cent of net sales, down 10 basis points from a fiscal ago quarter.

According to Chico's, the reduction primarily benefitted from previously announced cost reduction efforts, partially offset by an increase in accrued incentive compensation and occupancy costs.

For the reporting period, the company recorded pre-tax restructuring and strategic charges of $16.2 million, mainly related to non-cash property and equipment impairment charges for Boston Proper stores.

On an after-tax basis, the second quarter of fiscal 2016 impact of these charges was $10.1 million, or $0.07 per diluted share.

For the second quarter, the retailer determined that certain Boston Proper intangibles were impaired and recorded $66.9 million in pre-tax, non-cash goodwill and trade name impairment charges.

These comprise of $48.9 million related to goodwill and $18.0 million related to the trade name and on an after-tax basis, second quarter impairment charges were $47.1 million, or $0.33 per diluted share.


Fibre2Fashion News Desk – India

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