Chico's FAS posts 'disappointing' Q2, appoints Mary van Praag as Soma President

By

Obi Anyanwu

Published
Aug 31, 2017

Chico’s FAS on Wednesday reported the second quarter 2017 results that President and CEO Shelley Broader described as “disappointing,” due to decreases in net sales and net income.
 

Sales for the quarter fell 9.0% to $578.6 million from $635.7 million, reflecting an 8.4% decrease in comparable sales. Chico’s comparable sales decreased 9.0% compared to a 5.1% decline in the previous year, White House Black Market comparable sales fell 10.6% versus a 1.3% decline in the prior year, and Soma posted a 1.8% decline compared to a 0.7% increase in the second quarter of fiscal 2016.
 
Comparable sales for the twenty-six weeks ended on July 29, 2017 fell 9.4% for Chico’s, 10.1% for White House Black Market, and 0.8% for Soma.

Gross margin decreased 180 basis points to $209.1 million, or 36.1% of net sales, compared to $240.8 million, or 37.9% of net sales, in the previous year, and SG&A expenses were $173.6 million, or 30.0% of net sales, versus $186.6 million, or 29.4% of net sales, in the prior year.
 
In addition, net income fell slightly to $22.7 million, or $0.18 per diluted share, from $23.0 million, or $0.17 per diluted share, in the prior second quarter.
 
"Second quarter sales were disappointing,” said Broader, “and we are taking decisive actions to adjust our assortments and enhance omni-channel capabilities in bellwether categories such as Jackets at Chico's and Dresses at White House Black Market. While it is early in the third quarter, these key categories are showing encouraging progress."
 
She added that Chico’s FAS’ leadership team is focused on transforming the company into a “more nimble, efficient and innovative retailer.”
 
The company also announced the appointment of Mary van Praag as President of Soma. She previously served as CEO of Perricone MD, and she will assume her new role with Soma on September 5, 2017.
 
"We look forward to leveraging Mary's global, multi-channel and brand-building expertise, along with her deep understanding of our target customer, to capitalize on Soma's growth potential," said Broader.
 
For fiscal 2017, Chico’s FAS expects comparable sales to be down high single-digits, with gross margin decreasing by 75 to 100 basis points.