Specialty apparel retailer Chico's FAS Inc. (CHS) reported Thursday a double-digit decline in comparable store sales for the month of September, hurt by the weakening economy and financial market instability. The disappointing results, together with uncertainties for future results, have forced the company to withdraw its second-half outlook.
The Fort Myers, Florida-based company's net sales for the month of September decreased 9.3% to $159.5 million from $175.9 million in the year-ago period. For the five-week period ended October 4, 2008, the company's comparable store sales, or sales at stores open for at least one year, declined 15.6% from the five-week period ended October 6, 2007.
Chico's attributed its disappointing September sales results to the deteriorating macro economic environment, as well as the instability in the financial markets. Subsequently, the company said it is withdrawing its second-half earnings outlook that was provided earlier, "as predictability of future results is extremely difficult at this time."
On an outlook for the second-half provided on August 26, the company had stated that it expects consolidated comparable store sales for the fall season to remain negative, anticipates an improvement in trend, and continues to believe that it would be profitable in the second half.
For the thirty-five week period, Chico's registered net sales of $1.091 billion, down 7.9% from $1.184 billion reported for the thirty-five week period last year. Comparable store sales for the year-to-date period decreased 15.9% when compared with the thirty-five week period ended last year.
Scott Edmonds, chairman, president, and chief executive officer, commented, "In order to address this situation, we continue to review every aspect of cost control, including inventory, capital expenditures, headcount, and line-item expense levels, and continue to believe the Company will generate positive free cash flow for the year. Additionally, we maintain a strong balance sheet with approximately $270 million in cash and marketable securities and no debt."
CHS is currently trading on the NYSE at $4.34, up $0.17, or 4.08%, with a volume of 219,938 shares.
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