Chico's FAS Inc. (CHS) said that it anticipates a low single digit comparable sales decline in the fourth quarter compared to last year. It expects improvement in merchandise margin to be more than offset by occupancy deleverage, resulting in a reduction in gross margin rate. Fourth quarter total inventory is planned to be lower than last year. The fiscal 2016 fourth quarter outlook excludes Boston Proper for comparability purposes.
Shelley Broader, CEO and President, said, "Our third quarter earnings exceeded expectations. As a result of our efforts to transform Chico's FAS for the future, we were able to achieve significant earnings growth and are demonstrating considerable progress toward our goal of double digit operating margin. We are fully engaged in the implementation of our cost reduction and operating efficiency initiatives, and our continued progress reinforces our confidence in the company's strategic plan."
For the thirteen weeks ended October 29, 2016, the Company reported net income of $23.6 million, or $0.18 per share, compared to a net loss of $11.6 million, or $0.09 per diluted share, for the thirteen weeks ended October 31, 2015.
The Company reported third quarter 2016 adjusted net income of $26.4 million, or $0.20 adjusted earnings per diluted share, compared to adjusted net income of $17.7 million, or $0.13 adjusted earnings per diluted share, in last year's third quarter. The adjusted results exclude EPS net charges of $0.02 in 2016 and $0.22 in 2015 related to restructuring and strategic charges and Boston Proper. Analysts polled by Thomson Reuters expected the company to report earnings of $0.13 per share for the third-quarter. Analysts' estimates typically exclude special items.
Quarterly net sales were $596.9 million compared to $645.4 million in last year's third quarter. This decrease of 7.5% included $18.7 million related to Boston Proper. When excluding Boston Proper from fiscal 2015, net sales decreased 4.8%, primarily reflecting a decline in comparable sales of 4.9%, comprised of reduced transaction count and lower average dollar sale. Third quarter average unit retail increased with a decline in promotional activity. Wall Street expected revenues of $610.83 million.
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