Chico’s president out as sales plunge

The president of Chico’s is departing after a tough third quarter in which same-store sales fell 10.2%.

Chico’s FAS said Diane Ellis will depart as Chico's brand president, effective November 30, 2018. While the company searches for a replacement, the brand will be led by company CEO Shelley Broader.

In other actions, the retailer said it is adjusting Chico’s spring assortments, “chasing more classic merchandise that is performing well.” It also is adjusting in-store merchandising and display, print and digital media to feature clean, classic silhouettes along with the boho and artisanal styles that dominated the brand’s refresh last February.

“The initial emphasis that we selected for our Chico's brand repositioning has not resonated with our broader target customer base,” said Broader. "So, we are course correcting by implementing a performance improvement plan that includes brand leadership changes and adjustments to our product offering, marketing strategy and assortment architecture to better meet expectations for all customers who shop the Chico's brand."

Chico’s announced the change on the heels of a disappointing quarter in which sales and profit missed expectations. Chico’s net income declined to $6.5 million, or 5 cents a share, in the quarter ended Nov. 3, from $16.7 million, or 13 cents a share, in the year-ago period. Analysts had expected earnings per share of 8 cents.

Net sales fell to $499.9 million from $532.3 million, below estimates of $515.6 million. Sales were impacted by the closing of 43 net stores since last year’s third quarter.

Total same-store sales fell 6.8%, driven by declines in transaction count and average dollar sales. By brand, same-store sales fell 10.2% at Chico’s and 5.1% at White House | Black Market. Same-store sales rose 2.4% at Soma, Chico’s intimate apparel division.

The company lowered its 2018 sales outlook to a "high single-digit" percentage decline from a "mid single-digit" decline and revised its same-store sales outlook to a "mid single-digit" percentage decline from "low-to-mid single-digit" decline.