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.
Stein Mart sees some improvement in Q3
Stein Mart is slowly making progress in its turnaround.
The retailer narrowed its operating loss to $13.4 million in the quarter ended Nov.3, from $23.9 million in 2017.
Stein Mart reported a net loss of $16.6 million or $0.36 per share, amid higher interest expenses, compared to a net loss of $14.6 million, or $0.31 per share, in the year-ago period. (The net loss for 2017 includes an income tax benefit of $10.4 million or $0.22 per share, compared to no income tax benefit in 2018.
Net sales were $279.1 million, down from $285.4 million last year. The company said the sales drop reflected the closing of seven underperforming stores this year. Same-store sales rose 1.4%. E-commerce sales were up 76% over last year’s third quarter.
Stein Mart, which has been investing in e-commerce initiatives and working to streamline its inventory and decrease promotions, said that its core apparel businesses all performed very well during the quarter.
“We are pleased with our second consecutive quarter of comparable sales increases and continued gross profit expansion driven by higher regular priced selling,” said Hunt Hawkins, CEO. “While better than last year, our third quarter pre-tax operating results were lower than we expected due to disruption caused by the hurricanes and fees associated with the successful renegotiation of our credit agreements which expanded our credit limit and extended the term.”
Looking ahead, Hawkins said the company expects better comparisons against clearance selling that normalized in the fourth quarter last year.
“This, along with our higher gross profit rate and lower expenses have us well-prepared for a profitable fourth quarter,” he said.
Stein Mart had 288 stores at the end of the quarter compared to 293 at the end of the third quarter last year.
Dick’s Sporting Goods turns in mixed Q3 results as sales fall
Dick’s Sporting Goods beat profit expectations and raised its earnings outlook amid disappointing sales.
The sporting goods retailer reported that its net income rose 2% to $37.8 million, or 39 cents a share, in the quarter ended Nov. 3, from $36.9 million, or 35 cents a share. Analysts had expected 26 cents a share.
Net sales fell 4.5% to $1.86 billion, slightly below estimates of $1.88 billion. Same-store sales, based on an unadjusted calendar, declined 6.1%. (Adjusted for an extra week in 2017, same-store sales fell 3.9%.)
Neil Saunders, managing director of GlobalData Retail, commented that a number of unfavorable dynamics played into Dick’s sales decline, with the foremost being a shift in where people buy sporting goods.
“Here the company is facing a pincer movement,” he said. “At the higher and more professional end of the market, consumers are migrating to dedicated specialists like Lululemon and Nike. These players offer a more streamlined and focused assortment of relevant product in a more compelling setting. The same thing applies to exercise equipment where, despite the ongoing failure of a large player like Sears, Dick’s is not managing to succeed in the same way as more specialist firms like Peloton. Within the everyday sporting segment, non-specialists like Target and Kohl’s are attracting more shoppers as they improve their athletic offerings.” For more analysis, click here.
Dick’s said its online sales, adjusted for the calendar shift, rose 16% in the quarter. E-commerce accounted for 12% of total net sales in the quarter, up from 10% in the year-ago period.
“Our continued improvements in gross margin and disciplined expense management more than offset our strategic investments, and contributed to increased profitability compared to last year,” said chairman and CEO Edward Stack. “Comparable sales were within our range of expectations, including continued headwinds in the hunt and electronics categories.”
Dick’s banned the sales of assault-style weapons from its stores nationwide last February following the shooting rampage at Marjory Stoneman Douglas High School in Parkland, Fla.
The retailer raised its 2018 EPS guidance range to $3.15 to $3.25 from $3.02 to $3.20.
At the end of the quarter, Dick’s operated 732 Dick’s Sporting Goods stores in 47 states, 94 Golf Galaxy stores in 32 states, and 35 Field & Stream stores in 16 states.