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Chico's FAS Slips To Loss In Q1; To Re-evaluate Store Closure Plans - Quick Facts

Chico's Fas Inc. (CHS) on Wednesday reported net loss for the first quarter of $178.29 million or $1.55 per share, compared to net income of $2.03 million or $0.02 per share in the year-ago period.

The latest quarter's results include after-tax charges totaling $134.8 million or $1.17 per share.

Net sales for the quarter fell 45.9 percent to $280.3 million from $517.7 million in the year-ago quarter, primarily as a result of closed stores during the second half of the first quarter, partly offset by stronger digital commerce performance.

On average, analysts polled by Thomson Reuters expected the company to report loss of $0.25 per share for the quarter on revenues of $324.6 million. Analysts' estimates typically exclude special items.

Chico's FAS, which had previously withdrawn its guidance issued on February 27, 2020, said it is not providing updated guidance at this time.

In late April, the retailer announced a phased store reopening plan across North America commencing on May 4, 2020 in accordance with local, state and federal health and safety guidelines and regulations.

Currently, the company has 63 percent of stores open to the public under enhanced safety precautions and reduced hours, and will have 80 percent of its stores open by June 12, 2020.

Chico's FAS said it believes it has appropriately adjusted its floor sets and receipts to align with sales expectations. Accordingly, it does not currently expect significant inventory write-offs over the remaining three quarters of fiscal 2020.

Chico's FAS expects to realize expense savings of approximately $230 million, or 24 percent, before rent expense due to steps it has taken to mitigate the impact of the COVID-19 pandemic.

These steps include temporarily furloughing the majority of employees, temporarily reducing a majority of non-furloughed associates' salary or hours, aligning operating costs with expected sales, and the organizational restructuring.

Chico's FAS reported 9 permanent store closures and no store openings in the first quarter, and expects to close about 50 to 60 stores permanently over the remainder of fiscal 2020.

However, due to the disruption from the pandemic, the company plans to re-evaluate each location's future viability and modify its closure plans accordingly. Additionally, since the end of last year's first quarter, the company has closed 84 stores.

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