Women's specialty retailer Chico's FAS Inc. (CHS) on Wednesday reported a surge in profit for the third quarter from last year, helped by higher sales and margins. Consolidated comparable store sales for the quarter increased 12.8%. On a per share basis, earnings beat analysts' consensus estimate. Following the announcement of the results, the company's shares are up 10% in the pre-market trading.
Third-Quarter Results
The Fort Myers, Florida-based company's net income for the third quarter rose to $22.75 million or $0.13 per share from $2.00 million or $0.01 per share in the year-ago quarter.On average, nineteen analysts polled by Thomson Reuters expected the company to report earnings of $0.07 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter increased 13.3% to $446.86 million from $394.24 million in the year-ago quarter. Analysts had a consensus revenue estimate of $414.71 million for the quarter. Peer Performance
Among others in the industry, Nordstrom Inc. (JWN) reported a 17% increase in profit for the third quarter from the same period last year on higher sales. The company reported net earnings of $83 million or $0.38 per share for the third quarter, up from $71 million or $0.33 per share in the prior-year quarter. Total revenues for the quarter grew 4% to $1.96 billion from $1.88 billion in the previous-year quarter. Same-store sales for the quarter decreased 1.2% over a year ago.
Other Metrics
Chico's said that net sales by Chico's/Soma stores for the third quarter rose to $300.96 million from $269.08 million in the previous-year quarter. Net sales by White House | Black Market stores advanced to $121.41 million from $106.75 million in the prior-year quarter. Net sales by direct-to-consumer surged 33% to $24.50 million from $18.41 million in the same period last year.
Consolidated comparable store sales increased 12.8% for the thirteen-week period ended October 31, 2009, compared to a 13.4% decrease for the corresponding period in the previous year.
The Chico's/Soma Intimates brands' comparable store sales increased 12.2% during the quarter, compared to a 16.2% decrease for the same period last year. The WH|BM brand's comparable store sales increased 14.4%, compared to a 4.8% decrease for the year-ago period. Direct-to-consumer sales, not included in comparable store sales, surged about 33% over the year-ago period.
The company's gross margin for the quarter, expressed as a percentage of net sales, increased by 400 basis points to 57.6% from 53.6% in the year-ago quarter. In dollar terms, gross margin for the quarter increased to $257.28 million from $211.37 million a year ago.
The increase in gross margin was attributable to significant improvements in the brand merchandise margins at both Chico's and White House | Black Market, or WH|BM. The increased merchandise margins benefited from both lower markdowns and higher initial markups for the Chico's and WH|BM brands. Income from operations for the latest quarter was $36.31 million, compared to loss from operations of $1.70 million in the same period last year. Chico's quarter-ended inventory decreased $27.2 million or approximately 14.5% from the prior year's third quarter. Consolidated inventory at the end of the quarter was $61 per selling square foot, down 15% compared to $72 at the end of the year-ago quarter.
Chico's cash and marketable securities at the end of the latest quarter totaled $423.31 million, up from $256.34 million in at the end of the year-ago period.
Year-To-Date Results
For the first nine months of fiscal year 2009, Chico's reported net income of $52.14 million or $0.29 per share, up from $21.41 million, or $0.12 per share in the same period last year.
Excluding the impairment charges recorded prior to the third quarter of 2009, the company's net income for the period rose to $60.3 million or $0.34 per share from $21.4 million or $0.12 per share in the year-ago period.
Net sales for the nine-month period rose to $1.28 billion from $1.21 billion in the previous-year period.
In mid-October, FBR Capital Markets reiterated an "outperform" rating on Chico's and said it remained confident that Chico's continues to improve conversion and generate sales, as the company's turnaround appears to gain momentum. The brokerage also said it "applauded the management's heroic strides to bring the business back to profitability and sustainable positive comps".
Stock Quotes
CHS closed Tuesday's regular trading session at $13.48. In Wednesday's pre-market trading, the stock is trading at $14.87, up $1.39 or 10.31%. In the past 52 weeks, the stock has been trading in a range of $1.72-$14.14.
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