Shares of Chico’s FAS (NYSE:CHS) tumbled Wednesday after the shrinking retailer, which is closing at least 250 US stores, beat the Street’s fiscal fourth-quarter forecasts but posted a weak outlook.
In the three months until February 2, the Fort Myers, Florida-based company swung to a net loss of $16.6 million, or $0.14 per share, compared with net income of $28 million, or $0.22 per share in the year-ago quarter. Its adjusted loss came to $0.07 per share, beating the consensus, which called for a loss of $0.09.
For the fourth quarter, net sales dropped to $524.7 million from $587.8 million in the year-ago quarter but came in ahead of analysts’ projection of $516.36 million.
Investors remained unimpressed, sending Chico’s shares down 5.2% to $5.72 in morning trade Wednesday.
In the quarter, the company’s gross margin plummeted to 30.2% of net sales compared with 37.7% of net sales, for last year’s fourth quarter, due partly to the clearing of Chico’s seasonable merchandise. Same-store sales also fell 3.8% due to a decrease in transactions and lower average dollar sales.
In other news, Chicos announced that Karen McKibbin has been tapped as its new brand president starting on April 1.
Through its three brands Chico’s, White House Black Market and Soma, the retailer sells casual-to-dressy clothing, intimates and accessories.
The company now expects to close about 100 Chico’s, 90 White House Black Market and 60 Soma stores over the next three years, with about 60 to 80 stores set to close this year.
Looking ahead to the first quarter, Chico’s expects a mid- to high-single-digit decline in net sales and same-store sales compared with the year-ago quarter, reflecting weaker sales throughout February.
For fiscal 2019, the retailer is forecasting a low-single-digit decline in net sales and same-store sales compared with 2018.
Contact Ellen Kelleher at [email protected]