Cheery Chico's

Chico's FAS (NYSE: CHS  ) turned in another exceptional quarter of growth late yesterday. Shares are off about 2% today, though, thanks to an analyst's downgrade related to the company's valuation.

Chico's sales for the quarter ended Nov. 1 jumped 53.4% to $211 million, and net income increased 72.2% to $27 million. The company's recent acquisition, White House/Black Market, was officially a part of Chico's for eight weeks of the quarter.

As usual, Chico's same-store sales growth was astonishing, with comps growing by 20.9% for the quarter. Its strategy for connecting with its core shoppers (women age 35-55) is through its loyalty program, and that keeps the retailer's sales growth in its established locations strong. The importance of that program, called the Passport Club, can't be overstated. Chico's encourages its best customers to return to its stores frequently and shop often. They respond, and Chico's string of remarkable same-store sales results reflects that.

It's not only Chico's comps that demonstrate the company's strength. Check out its cash flow statement, too. (Chico's files its 10-Qs with the SEC on the same day it reports earnings, which makes companies that can't be bothered to produce a cash flow statement with their quarterly results look even worse.) Through the first nine months of the year, it generated $67 million in free cash flow, compared to $30 million in the same time period last year.

There were other positive developments during the quarter as well. Chico's finally released the name of its upcoming intimates line. "Soma by Chico's," from the Greek word for "body," will launch in 10 locations in the fall of 2004. The company also said that the White House/Black Market integration is going better than expected, and that its first catalog produced good results. Chico's is still at work on getting a loyalty program in place for White House that is similar to Passport.

Pulling into its fourth quarter, the year ahead for Chico's looks bright. Continued growth from its namesake stores, added growth from the White House/Black Market brand, and the launch of Soma by Chico's are all exciting events for this growing specialty retailer. Shareholders used to Chico's excelling aren't likely to be disappointed.

Want to chat about Chico's? Log onto the Chico's discussion board.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 500352, ~/Articles/ArticleHandler.aspx, 10/25/2014 11:03:15 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement