Chico's FAS Turns To Profit In Q3, Meets View; But Revenues Miss

(RTTNews) - Specialty apparel retailer Chico's FAS Inc. (CHS) on Tuesday reported a turnaround to profit in the third quarter, while the year-ago quarter's results were impacted by one-time charges. Earnings per share for the latest quarter matched analysts expectations, while revenues missed their estimates.

The Fort Myers, Florida-based retailer's net income for the third quarter was $26.46 million or $0.17 per share, compared to net loss of $28.48 million or $0.18 per share in the same period last year.

Excluding charges of $64.27 million or $0.40 per share related to Boston Proper non-cash goodwill and trade name impairment, adjusted net income for the year-ago quarter was $35.79 million or $0.22 per share.

On average, twenty three analysts polled by Thomson Reuters expected the company to report earnings of $0.17 per share for the latest quarter. Analysts' estimates typically exclude special items.

Chico's, the owner of White House | Black Market, Soma Intimates, and Boston Proper brands, said net sales for quarter rose 2 percent to $665.57 million from $655.58 million in the year-ago period. Analysts had a consensus revenue estimate of $673.41 million for the quarter.

The increase in revenues primarily reflects 87 net new stores for a square footage increase of 5.4 percent, offset by a decrease in comparable sales.

Comparable sales, or sales from stores open for at least a year, decreased 1.6 percent in the quarter and follows a 1.4 percent decrease in the year-ago quarter. The decline in comparable sales reflected a decrease in average dollar sale partially offset by an increase in transaction count.

Gross margin for the quarter declined 80 basis points from last year to 54.7 percent, primarily reflecting increased promotional activity to sell through seasonal merchandise.

Selling, general, and administrative costs increased 120 basis points to 48.3 percent of net sales, reflecting sales deleverage of store expenses, and the impact of about $5 million in investment spending on strategic initiatives and cycling the reversal of incentive compensation in fiscal 2013.

In a separate statement, Chico's said that its board of directors declared a quarterly cash dividend of $0.075 per share of its common stock. The dividend is payable on December 22, 2014 to the company's shareholders of record at the close of business on December 8, 2014.

CHS closed Tuesday's trading at $15.83, up $0.19 or 1.21 percent on a volume of 2.35 million shares.