Chico Reports Q4 Loss of $40.5 Million
Fort Myers, Fla. Chico’s FAS Inc. reported on Tuesday a loss of $40.5 million in the fourth quarter, but still managed to beat Wall Street expectations.
Analysts polled by Thomson Reuters expected a loss of $373.1 million for the period ended Jan. 31.
The $40.3 million quarterly loss compares with a loss of $20.5 million a year earlier.
Fourth-quarter total sales dropped 9% to $373.4 million from $409.3 million a year ago.
Fourth-quarter same-store sales fell 13%, with Chico’s brand same-store sales down 17% and White House | Black Market same-store sales down 5%.
Under new management since January — former Tommy Hilfiger and Lands’ End president David Dyer replaced Scott Edmonds as CEO, and Cynthia Murray is now brand president for Chico’s — the company opened six new stores in the fourth quarter and closed 13 locations. The company also expanded/relocated two locations during the quarter.
For fiscal year 2008, Chico’s FAS posted a loss of $19.1 million, compared with a profit of $88.9 million in 2007.
Same-store sales fell 15.1% for the year. Chico’s brand same-store sales dropped approximately 19%, while White House | Black Market same-store sales slid 8%.
Annual revenue declined to $1.58 billion, down 8% from $1.71 billion.
Chico’s opened 62 new stores, closed 24 stores and expanded and/or relocated 32 stores in fiscal 2008.
In January, the company said it would eliminate 180 positions and may close up to 25 stores to cope with the economy’s toll on retailers.
Positive news coming out of the organization included reports that net sales for the direct-to-consumer channel increased by 8.8%, from $20.5 million in last year’s fourth quarter to $22.3 million in this year’s fourth quarter. The company said the increase is due to higher sales across all three brands. The company also attributed increases to continued growth in customer acceptance of the offerings at the Soma and White House | Black Market brands, increased traffic in all of the direct-to-consumer channels and implementation of planned improvements in the Web site and call-center infrastructure.
Lowe’s looking at Sam’s Club sites
The Canadian division of Sam’s Club, the club warehouse stores belonging to Wal-Mart, will close all six of its stores in March so it can focus on opening more Wal-Mart “supercentres” across Canada. The decision, announced on Feb. 26, may provide some new opportunities for Lowe’s, the U.S. home improvement retailer also looking to expand in Canada.
Maureen Rich, a Lowe’s spokeswoman, confirmed that the company is “in talks with Wal-Mart regarding the sites.” The six Sam’s Club stores are all located in Ontario, Pickering, Vaughan, Richmond Hill, London, Etobicoke and Cambridge.
Lowe’s Canada, headquartered in Toronto, Ontario, is currently building three units in the province, all scheduled to open by the end of August. The Mooresville, N.C.-based retailer already operates 11 stores in Canada. Eventually, the company has said, it wants to open 100 stores north of the U.S. border.
Rich told Home Channel News that Lowe’s Canada “continues to evaluate [other] sites” as well as the Sam Club’s locations.
Slower growth means more cash
With fewer new stores opening this year and next, and share repurchase activity on hold, Target stands to more rapidly accumulate a stockpile of cash. The company’s capital budget this year will fall within a range of $2 billion to $2.5 billion, well below last year’s levels, and the suspension of share repurchase activity means, “that we are likely to enjoy one of our strongest years ever in generation of free cash flow,” according to CFO Doug Scovanner. “Specifically, I expect Target to again generate more than $4 billion in cash from operation in 2009.”