Chico's posts 6.3% rise in Fy10 sales

24 Feb '11

5 min read

Chico's FAS, Inc. announced its financial results for the fiscal 2010 fourth quarter and fiscal year ended January 29, 2011.

Net Income and Earnings per Share
The Company reported net income of $20.7 million, or $0.12 per diluted share, for the fourth quarter compared to net income of $17.5 million, or $0.10 per diluted share, for last year's fourth quarter.

For the fiscal year ended January 29, 2011, the Company reported net income of $115.4 million, or $0.64 per diluted share,compared to net income of $69.6 million, or $0.39 per diluted share, reported for the same period last year. Excluding impairment charges recorded in both years, the Company's net income was $116.6 million, or $0.65 per diluted share, for fiscal year 2010 compared to net income of $79.2 million, or $0.44 per diluted share, for the same period last year.

Sales
Net sales for the fourth quarter increased 9.0% to $475.0 million from $435.7 million in last year's fourth quarter. Consolidated comparable store sales for the current quarter increased 1.1%, with the Chico's/Soma Intimates and White House | Black Market ("WH|BM") brands' comparable sales increasing 1.2% and 0.9%, respectively. Including direct-to-consumer ("DTC") sales, consolidated comparable sales increased 4.5% for the fourth quarter.

For fiscal 2010, consolidated comparable store sales increased 6.3%, with the Chico's/Soma and WH|BM brands' comparable sales increasing 5.4% and 8.4%, respectively. Including DTC sales, consolidated comparable sales increased 8.3% for fiscal 2010. Beginning in fiscal 2011, the Company will report comparable sales inclusive of DTC. Since the Company has moved to a pooled inventory effort to support stores and DTC accompanied by cross-channel marketing initiatives, it has become increasingly difficult to discern a portion of our sales that should be credited to the appropriate channel. This further supports the Company's 2010 reporting change to report total sales by brand as opposed to stores volume by brand versus the DTC channel.

Gross Margin
Gross margin for the fourth quarter, expressed as a percentage of net sales, decreased 140 basis points to 53.2% from 54.6% in last year's fourth quarter. The gross margin rate decrease was primarily attributable to higher markdowns at WH|BM frontline stores and additional promotional activity in the DTC channel. However, the decrease in the gross margin rate was partially offset by improved margins at outlet stores mainly due to increased penetration of made-for-outlet product.

Selling, General and Administrative Expenses
Selling, general and administrative expenses for the fourth quarter increased $10.2 million, or 4.8%, over last year's fourth quarter primarily due to higher store and direct operating costs associated with 71 net new stores opened since the end of last year accompanied by a $4.4 million planned increase in marketing expenses. As a percentage of net sales, however, SG&A for the fourth quarter decreased 180 basis points compared to last year's fourth quarter.

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