For the first quarter, gross margin was $190.8 million, or 36.9 per cent of net sales, compared to $226.9 million, or 40.4 per cent of net sales, in last year's first quarter. This decrease primarily reflects the impact of product liquidations, continued charges related to our omni-channel programmes and accelerated depreciation as a result of retail fleet optimisation plan announced in the fourth quarter of 2018.
"In the first quarter, we made significant changes to the company's leadership and reset priorities for its growth and value creation," commented Bonnie Brooks, interim CEO and president of the company. "Actions are now underway across all brands with a focus on three distinct areas that will positively impact our results. 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. Having led successful turnarounds at other major apparel retailers, I am confident that our action steps on the path forward are the ones needed to deliver our plans."
Soma reported positive 3.4 per cent comparable sales in the first quarter, driven by bras and sleepwear. The company's latest Enbliss collection is performing particularly well and is on track to be the #1 franchise in Soma's portfolio.
White House Black Market reported a greater than expected comparable sales decline, driven by misses in colour and print. Steps to course correct have been implemented, including adjustments for fall and holiday product offerings.
In the reported quarter, the company completed the rollout of StyleConnect, an enhanced platform that provides digitised clienteling tools to all stores and remains on track to launch Buy Online Pick-up in Store (BOPIS) across its fleet this summer.
For the second quarter, the company anticipates a mid-single digit decline in total net sales and consolidated comparable sales, reflecting expected softer sales in its White House Black Market brand, which will continue through the second quarter. However, the company expects that sales at the Chico's and Soma brands will improve in the second quarter compared to the first.
For fiscal 2019, the company anticipates a low-to mid-single digit decline in total net sales and consolidated comparable sales, versus its previous guidance of a low-single digit decline in total net sales and consolidated comparable sales. The company expects stronger sales trends across all brands in the second half of the year, as key initiatives gain traction. (RR)
Fibre2Fashion News Desk – India
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