Chico's FAS 1Q Results Miss Expectations, Shares Tank

Chico's FAS, Inc.

announced 4.3 percent fall in net income for the first quarter hurt by 7.9 percent drop in revenue. The results also failed to meet the Street analysts' expectations. As a result, shares plunged more than five percent in the pre-market trading on Thursday. Chico's FAS reported net income of $31.1 million versus $32.5 million while earnings rose 4 percent to $0.23 a share from $0.22 a share in the year-ago quarter. On an adjusted basis, it would have earned $33.4 million or $0.25 a share, down from $44.5 million or $0.30 a share in the same quarter last year. The company's net sales fell 7.9 percent to $643.0 million from $697.8 million in the previous year quarter. The drop in sales included $25.3 million related to Boston Proper. The retailer added that when excluding Boston Proper from fiscal 2015, net sales fell 4.4% reflecting a drop in comparable sales of 4.2% and 15 net store closures. Street analysts estimated the company to report earnings of $0.31 a share and revenue of $667.86 million. Commenting on the results, Chico's FAS CEO and President, Shelley Broader, said, "In the first quarter, our loyal customers continued to be attracted to our brands. Our overall store traffic trended better than our peer index and when she visited our stores she was buying, although weak traffic across the industry impacted our overall sales." He added, "We are executing against the Company's four focus areas announced earlier this year. We are taking action to improve our profitability, assuring our brands' leadership in the future and enhancing value for all of our shareholders. Our cost reduction and operating efficiency initiatives will position us to be more nimble and responsive to our customers' needs. These actions are just the beginning as we execute on our new operating priorities." In the pre-market trading on Thursday, the stock traded 5.53 percent down.