Soma shines bright amidst losses at Chico’s FAS

By

Robin Driver

Published
Aug 29, 2019

Chico’s FAS’ Soma intimates brand posted a solid double-digit increase in comparable sales in the second quarter ended August 3, 2019, as the Fort Myers, Florida-based apparel retail group reported falling sales and a net loss for the three-month period on Wednesday.

 
The company’s quarterly net sales totaled $508.4 million, down 6.7% from the $544.7 million reported in the prior-year period. This decline reflected the impact of 53 net store closures since the end of Q2 2018, as well as a decrease of 6.1% in comparable sales.
 
While Soma saw a 10.9% increase in comps, news was less positive at the retail group’s flagship Chico’s brand, which accounts for around 53% of the company’s total sales and saw a 5.6% decrease in comparable sales in the second quarter, although this did represent a sequential improvement compared to Q1. The largest dip in comps, however, was seen at White House Black Market, where they fell 16.1%.

Overall, the company reported a net loss of $2.3 million, or $0.02 per diluted share, in the quarter, slipping quite some way from Q2 2018’s net income of $16.8 million, or $0.13 per diluted share.
 
Despite these declines, Chico’s FAS President and CEO Bonnie Brooks was optimistic about the company’s performance.
 
“We are seeing evidence of progress within our business and reported second quarter results in line with our expectations,” she said in a release. “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.”
 
As Chico’s FAS continues with its turnaround efforts, the company announced a series of changes to its senior management team last month, appointing Brooks, who had been serving as interim CEO since April, to her current permanent position, and bringing in Macy’s veteran Molly Langenstein to head up all of the company’s apparel brands in the newly created role of president, apparel group.
 
Taking into account Q1, Chico’s FAS reported net sales of $1.0 billion in the first half of fiscal 2019, down 7.3% from the $1.1 billion reported by the company in the same period in the previous year.
 
Total comps fell 6.6% in the six-month period, reflecting declines of 6.8% and 13.0% at Chico’s and White House Black Market, respectively. Here again though, Soma served as something of a bright spot, posting an increase of 7.4% in comparable sales.
 
The retail group’s net loss for the first half of the year came to $284,000, down from a net income of $45.8 million in the first half of fiscal 2018.
 
Looking forward to the third quarter, Chico’s FAS expects to see a low to mid-single-digit decline in total net sales and consolidated comparable sales.

The company has also updated its outlook for the full fiscal year 2019 and now anticipates a mid-single digit decline in total net sales and consolidated comparable sales, a slight downgrade from its previously reported guidance of a low to mid-single-digit decline.