NEW YORK — Women’s specialty retailer Chico’s FAS Inc. delivered another quarter of strong financial results Tuesday, reporting a 43.5 percent increase in profits as sales climbed 33 percent, partly because of higher prices for merchandise.
The company also announced that it would accelerate the store opening schedule of its White House|Black Market concept by an another 20 stores in fiscal 2006.
Chico’s reported third-quarter profits in the three months ended Oct. 29 rose to $53.2 million, or 29 cents a diluted share, ahead of analysts’ estimates of 28 cents. The company earned $37.1 million, or 21 cents, a year ago, adjusted for a 2-for-1 stock split that occurred in February.
Sales in the quarter increased to $358.7 million from $269.8 million last year, and same-store sales in company-owned stores rose 16 percent. By division, third-quarter sales at Chico’s and Soma by Chico’s stores combined were 22.8 percent higher at $277.6 million, sales at White House|Black Market stores doubled to $68.5 million and catalogue and Internet sales gained 36.4 percent to $9.5 million. Sales contributed by franchisees were up 30.5 percent to $3.1 million.
In the nine months, Chico’s earnings grew 38.1 percent to $149.5 million, or 82 cents a diluted share, compared with $108.2 million, or 60 cents, in the year-earlier period. Sales spiked 31.7 percent to $1.03 billion from $781.3 million.
The company said its 22.9 percent operating margin during the quarter was the best since its initial public offering in 1993. “This record-setting operating margin is largely a result of our outstanding merchandise offerings and from our merchants’ commitment to improving average retail price points and initial markups, each of which also contributed to our third-quarter double-digit same-store sales,” Scott Edmonds, president and chief executive officer of Chico’s, said in a statement.
Edmonds said during a conference call with analysts that the retailer’s travelwear and spa apparel at Chico’s stores were strong performers during the quarter. “Reaction to velvet, both basic and novelty, has been outstanding,” he added. “Our customers are very comfortable putting our novelty velvet pieces with their jeans for daytimewear as well as for special occasions. In separates, we thought we had the right mix of basic key items and novelties. For example, our basic turtleneck performed very well in the quarter and continues to perform at regular price into the fourth quarter.”
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Regarding White House|Black Market, which sells mainly white and black casual and dressy apparel, Chico’s said because the partnership between the Chico’s operations teams and the White House|Black Market merchandising teams has “worked better and quicker than expected,” the company will increase the number of planned new White House|Black Market stores next year to 70 from 50. The company will open 150 new stores next year, including 60 new Chico’s stores and 20 new Soma by Chico’s stores.
Chico’s operates 498 front-line Chico’s stores, 29 Chico’s outlets, 196 White House|Black Market locations and 15 Soma by Chico’s stores, its one-year-old lingerie concept.
Separately, Chico’s said same-store sales in November, the first month of its fourth quarter, rose 11.8 percent, while total sales increased 25.6 percent to $111.4 million.
Shares of Chico’s, based in Fort Myers, Fla., closed at $44.88, up 54 cents, in Tuesday trading on the New York Stock Exchange.