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White House | Black Market brand's same store sales up at Chico's
26
Aug '09
Chico's FAS Inc announced its financial results for the 2009 second quarter ended August 1, 2009. For the second quarter ended August 1, 2009, the Company had net income of $14.9 million or $0.08 per diluted share, compared to net income of $6.7 million, or $0.04 per diluted share for the second quarter ended August 2, 2008.

The second quarter 2009 results include non-cash impairment charges totaling approximately $3.1 million, net of tax, or nearly $0.02 per diluted share. These charges consist of $2.4 million, net of tax, related to the impaired portion of a note receivable and $0.7 million, net of tax, related to underperforming stores. Excluding these charges, the Company's second quarter net income approximated $18.0 million, or $0.10 per diluted share compared to net income of $6.7 million, or $0.04 per diluted share for the like period last year.

For the six months ended August 1, 2009, the Company had net income of $29.4 million or $0.17 per diluted share, compared to net income of $19.4 million, or $0.11 per diluted share in the first six months of the prior year. Excluding all impairment charges recorded in the first half of 2009, the Company had net income of $37.6 million, or $0.21 per diluted share, compared to net income of $19.4 million, or $0.11 per diluted share for the first six months of 2008.

Net sales for the thirteen-week period ended August 1, 2009 increased from $405.2 million to $419.9 million. Consolidated comparable store sales increased 1.3% for the thirteen-week period ended August 1, 2009 compared to the 15.9% decrease for the like period last year ended August 2, 2008. The Chico's/Soma brand's same store sales increased approximately 0.4% and the White House | Black Market (WH|BM) brand's same store sales increased approximately 3.7%. Direct-to-consumer sales, not included in comparable store sales, increased 46% over second quarter 2008.

Gross margin for the second quarter of 2009 increased from $213.4 million to $231.0 million and increased 230 basis points, expressed as a percentage of net sales, to 55.0% from 52.7% in the prior year's second quarter. The increase in gross margin was primarily due to lower markdowns in the Chico's brand and to a lesser extent, higher initial markups for the WH|BM brand. However, the improvements in merchandise margins was partially offset by the continued investment in merchandise payroll including the support for planning and allocation initiatives.

Selling, general and administrative expenses ("SG&A") for the second quarter of 2009 increased from $205.5 million in the prior period to $207.0 million in the current period. However, expressed as a percentage of net sales, SG&A in the current quarter decreased by approximately 140 basis points compared to the prior period primarily as the result of ongoing cost reduction strategies. The dollar savings from these implemented strategies were offset by the recognition of pre-tax impairment charges totaling $5.0 million. Excluding these charges, total SG&A expense would have decreased by $3.4 million, or 260 basis points, compared to the like period last year. The Company's expense reduction strategies were further offset in part by an increase in performance-based compensation accruals resulting from the Company's improved year-to-date results.

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