Chico’s swings to Q2 loss; White House Black Market falls but Soma shines

Chico’s FAS’s continued to struggle in the second quarter amid plunging sales at White House | Black Market and a better-than-expected performance by its lingerie brand, Soma.

The women’s apparel and lingerie company reported a net loss of $2.3 million, or $0.2 cents per share, for the quarter ended, August 3, compared to net income of $16.8 million, or 13 cents per share, in the year-ago period. Adjusted earnings were breakeven ($0.00), in line with analysts’ estimates.

Revenue fell 6.7% to $508.4 million, below the $513.0 million analysts had estimated. The decrease was driven by a total same-store sales decline of 6.1%, more than the Street expected, as well as the impact of 53 net store closures since last year's second quarter, the company said.

By brand, same-store sales fell 16.1% at White House Black Market and 5.6% at Chico’s. Same-store sales rose 10.9% at Soma.

Chico’s is working to turnaround its business, which has been challenged with sliding sales and a decline in mall traffic. The retailer is also in the process of reducing its store portfolio, with plans to shutter at least 250 U.S. locations. In July, Chico’s named Bonnie Brooks as CEO and president of Chico’s FAS. Brooks, former vice chair, president and CEO of Hudson’s Bay Company, has served as interim CEO at Chico’s since the departure of Shelley Broader in April. The company also consolidated responsibility for its apparel brands — Chico’s and White House | Black Market — under Molly Langenstein, who was appointed president, apparel group.

“We are seeing evidence of progress within our business and reported second-quarter results in line with our expectations,” stated Brooks. “We are committed to enhancing value creation at Chico's FAS and are taking the necessary steps to do so. We have made significant leadership changes and are focused on executing on our three operating priorities to deliver sustainable, profitable growth.”

Brooks said that changes made in product, marketing and in-store presentation at White House | Black Market are driving improved sales trends in August compared to its second-quarter results.

“We expect these improvements to continue benefiting the brand throughout the fall and holiday seasons,” she said.

Chico's expects a low-to-mid-single digit decline in both net sales and same-store sales for the third quarter. For the full year, it anticipates a mid-single digit decline in total net sales and consolidated comparable sales, versus its previous guidance of a low to mid-single-digit decline in total net sales and consolidated comparable sales.