Despite reporting robust second-quarter earnings on Wednesday, Chico’s FAS Inc. saw shares fall 17 percent in post-market trading after the company cut its sales and earnings guidance.
Separately, Belk Inc. posted robust profits and sales for the quarter, citing strong comps that were bolstered by recent acquisitions.
At Chico’s, for the three months ended July 29, net income increased to $54 million, or 30 cents a diluted share, up from $49 million, or 27 cents, last year. The owner of Chico’s and White House/Black Market reported an 18 percent jump in sales, to $405 million from $343 million in the year prior. Total same-store sales increased 5.3 percent.
For the six-month period, net income rose to $106 million, or 59 cents a diluted share, from $96 million, or 53 cents, in the year-ago period. Sales increased 18.9 percent, to $797 million from $670 million.
By brand, Chico’s comps climbed 3 percent during the quarter while White House/Black Market’s rose 19 percent. At the market close, the Chico’s stock was down 0.3 percent, to $24.08. After market, it plunged 17 percent, to $19.96.
Although comp results were positive for the quarter, the company said August same-store sales were showing a decline in the range of 3 percent, with Chico’s trending down around 6 percent and WH/BM showing a gain of approximately 9 percent.
“We have not realized the level of same-store sales in the Chico’s brand that we originally anticipated, and it appears we are facing our first negative same-store sales results in some time,” Scott A. Edmonds, president and chief executive officer of the company, said in a statement. “We believe this same-store sales decline is due to a combination of factors including the lack of ‘wear-now’ merchandise in our stores, a reduction in overall store traffic and a pre-planned marketing effort that turned out not to inspire our customer to shop.”
The firm said it expects third-quarter earnings to be in the range of 26 cents to 28 cents per diluted share, and $1.10 to $1.14 for the fiscal year. Analysts had the retailer pegged to earn 32 cents in the third quarter. Chico’s said it expects same-store sales to be flat to low-single digits for the next few quarters.
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Chico’s FAS opened 52 stores this year, in line to reach its goal of 145 to 150 new stores by the end of fiscal 2006.
Belk Inc., boosted by strong margins and its year-old Proffitt’s/McRae’s acquisition, reported net income for the second quarter ended July 29 increased 52.9 percent, to $26.3 million from $17.2 million in the year-ago period, on sales that gained 21.5 percent, to $732 million. Belk, based in Charlotte, N.C., said the increase was due primarily to a comparable-store sales increase of 4 percent, new stores and the acquisition.
Top-performing merchandise categories were women’s sportswear, dresses, accessories and cosmetics, including private labels, the company said. “Our management team and associates produced outstanding results in the second quarter,” said Tim Belk, chairman and ceo, in a statement. “We are seeing strong sales and margin gains in the existing Belk stores as well as in the newly acquired Proffitt’s and McRae’s stores.”
Belk recently purchased Parisian, which, along with Proffitt’s and McRae’s, was part of Saks Inc., and Migerobe, a jewelry business that operated jewelry shops in Belk stores.