Chico's Posts Ragged Results

The clothing retailer reports a 44% profit plunge and says sales weakness continued in November.
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SAN FRANCISCO -- Women's apparel chain Chico's (CHS) - Get Report struggled through yet another quarter, with profit plummeting 44% in the most recent period.

Moreover, the weakness continued after the quarter's end, and Chico's said disappointing November sales may signal only a break-even fourth quarter.

Chico's profit in the quarter ended Nov. 3 dropped to $23.5 million, or 13 cents a share, from $42.1 million, or 24 cents a share, a year ago. The results included a 2-cent gain from the sale of Lucy Activewear to

VF Corp.

(VFC) - Get Report

.

Sales grew to $416 million from $402 million the year before. But same-store sales, or sales at stores open at least a year, fell 9.3%, led by weakness in the company's WH|BM brand.

Analysts had anticipated a profit of 11 cents a share on revenue of $421 million. Those forecasts typically exclude one-time gains.

Chico's also said its same-store sales for November fell 13.7%.

"We are greatly disappointed with our performance to date," said Chico's Chief Executive Scott Edmonds in a statement. "Numerous challenges continue to affect the entire retail sector. It now appears that based on our November sales performance, our fourth quarter earnings could approach the break even level."

Analysts are calling for fourth-quarter earnings of 7 cents a share, according to Thomson Financial.

Chico's has been suffering alongside other women's apparel chains like

Talbots

(TLB)

and

Coldwater Creek

(CWTR)

, each of which have been criticized for losing sight of their customers.

Chico's once enjoyed huge popularity among customers 35 and older, but the company no longer draws the same crowds it used to. Shares have lost 64% of their value since the beginning of the year.

In the third quarter, the company's store operating expenses increased 590 basis points as a percentage of sales, mainly due to higher occupancy and personnel costs, and well as increased investment in payroll to improve service levels.

Edmonds now says Chico's will scale back its growth, reducing its expansion plans for the year to a square-footage growth rate of 10%, compared with its previous plans for a 12% to 15% increase. That should bring its store count down to about 60 to 65 net new stores for the year.

Shares of Chico's were down 52 cents, or 4.5%, to $10.98 in after-hours trading.