Increased promotional activity led to gross margin as a percentage of sales slipping 240 basis points year-on-year at NYSE-listed and omni-channel retailer of women's garments - Chico's FAS, Inc in the second fiscal quarter ended August 2, 2014.
For the second quarter of 2014, gross margin reached 52.4% of net sales, a 240 basis point decline from second fiscal quarter of 2013, which Chico’s said primarily reflects increased promotional activity to sell through seasonal merchandise.Increased promotional activity led to gross margin as a percentage of sales slipping 240 basis points year-on-year at NYSE-listed and omni-channel #
In the quarter under review, gross profit fell $351.5 million compared to $356.1 million in last year's second quarter.
For the thirteen weeks ended August 2, 2014 Chico’s reported net income of $30.1 million compared to net income of $43.6 million for the comparable fiscal quarter of 2013. Correspondingly, second quarter 2014 earnings per diluted share too fell to $0.20 from $0.27.
For the second quarter of 2014, net sales totalled $671.1 million, up 3.3% from $649.5 million from a year ago quarter, the gains primarily coming from, the retailer said, opening of 98 new stores.
Comparable sales grew more slowly by 0.3%, partially offset by a $4.4 million decrease in Boston Proper net sales and following a 2.6% decrease in last year's second quarter because of an increase in transaction count partially offset by a decrease in average dollar sale.
For the second quarter of 2014, Chico'sSoma Intimates brands' comparable sales increased 1.4%, following a 3.1% decrease in last year's second quarter. Chico's brand experienced an increase of slightly less than 1% from a mid-single digit decline in last year's second quarter.
Soma Intimates brand experienced a mid-single digit comparable sales increase in the second quarter of 2014, compared to a high-single digit increase in last year's second quarter, while White House Black Market brand's comparable sales fell 1.9% following a 1.5% decrease.
For the second quarter of 2014, selling, general and administrative expenses (SG&A) rose higher to $304.7 million versus $286.3 million in last year's second quarter and stood at 45.4% of net sales, a 140 basis point increase from last year's second quarter.
Chico’s attributed the rise in SG&A expenses to sales deleverage of store expenses, costs to support new store growth and the impact of approximately $5 million in incremental investment spending on strategic initiatives.
For the second quarter of 2014, effective tax rate was down to 35.5%, compared to an effective tax rate of 37.7% in last year's second quarter, because of favourable state tax settlements.
At the end of the second quarter of 2014, inventories per selling square foot, excluding in-transit inventories went up 2.5%, from a slightly higher average unit cost for inventories on hand and forward fabric commitments.
In-transit inventories at the end of the quarter under preview also increased by $11.2 million, due to an increase in the amount and timing of shipping via ocean, when compared to 2013, Chico’s explained.
Fibre2fashion News Desk - India