Shares of niche women's clothing retailer Chico's FAS Inc. (CHS) were rising Friday after the company said it would close 250 stores over the next three years and focus on its digital operations.
The stock was rising 1.85% to $6.04 a share in premarket trading, after declining 7.63% Thursday.
Chico's said in a statement it was revamping its strategy and planned to partner with Amazon.com Inc. (AMZN) , ShopRunner and QVC.
"Chico's announced strategic initiatives to build on the Company's omnichannel platform and ensure that Chico's FAS has the agility, customer service and speed needed for long-term success in a competitive retail environment," the company said.
CEO Shelley Broader said the company was targeting "continued improvement in each of our differentiated brands, increased flexibility and efficiency across our organization, and fully leveraging the capabilities of our robust omnichannel platform to meet the ever-evolving needs of our customers."
Specifically, Chico's will close 250 physical stores in the next three years, and will instead partner with Amazon.com Inc. (AMZN) , ShopRunner and QVC.
For the immediate term, Chico's will see a slight hit to gross margins, as the new initiative require initial promotional and ramp-up costs.
The company also updated its fourth-quarter outlook.
"Based on results to date, total company fourth quarter net sales and comparable sales are trending better than its previous outlook," Chico's said.
Chico sells its own brand, Chico's, but also the White House Black Market and Soma brands. Management said it was the White House Black Market and Soma brands that have seen comparable sales better than initially anticipated.
The company said it now expects a low-single digit percentage decline year-over-year in net sales, against previous expectations of mid-single digits. For consolidated comparable sales, the company expects a mid-single digit decline, better than the previously estimated high-single digit decline.
Shares of Chico's have declined 65% over the past five years. It was trading at more than $45 a share five years ago.