Chico's Satisfies Despite Earnings Drop

Chico's FAS(CHS Quote) posted a sharp drop in fourth-quarter earnings Tuesday as the women's apparel retailer continued to grapple with fashion missteps at its stores.

Still, Chico's backed Wall Street's estimates for the current year and promised that a turnaround is still in the works. The stock was climbing $1.09, or 5.3%, to $21.51 in after-hours trading.

For the fourth quarter, Chico's earned $18 million, or 10 cents a share, down from $44 million, or 24 cents a share, a year earlier.

The latest quarter's results included a charge of $8.6 million, or 3 cents a share, related to the closure of its Fitigues chain. Analysts polled by Thomson Financial projected earnings of 13 cents a share

Sales increased 19% to $446 million, exceeding Wall Street's forecast of $442.6 million. Same-store sales for the company-owned stores decreased 2%, with the drop consistent across both its core Chico's and WH|BM brands.

"The latter part of fiscal 2006 was certainly difficult at Chico's; with the fourth quarter being the most challenging," Scott Edmonds, president and CEO, said in a statement. "As we indicated on our third quarter conference call, we faced fashion missteps that required much heavier markdowns than originally planned. We committed to clearing our fashion mistakes by year end and I'm pleased to report we were able to do just that."