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Chico's Stock Is Back in Fashion

On Wednesday, Chico's (NYSE: CHS  ) will release its latest quarterly results. With the stock having hit multiyear highs recently, investors are pleased with its performance, but can the company keep up its success?

Women's retail has been a tough place to make money lately, with several competitors suffering from weak sales and operational business challenges. Chico's, though, has done a better job of navigating the tough environment. Let's take an early look at what's been happening with Chico's over the past quarter and what we're likely to see in its quarterly report.

Stats on Chico's

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$707.75 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can Chico's stay in vogue this quarter?
Analysts have gotten a bit less optimistic about Chico's earnings prospects over the past several months, cutting their estimates for the April quarter by $0.02 per share and their current fiscal-year consensus by twice that amount. The stock, though, has continued rising and is up almost 15% since late February.

Like many retailers in the women's fashion space, Chico's has had to go through some restructuring in recent years in order to try to survive. Many of its competitors have faced similar struggles, with Talbots finally going private last year after largely unsuccessful attempts to turn around its debt-ridden business.

But Chico's has had a lot more success with its restructuring efforts. Not only did the retailer go through the usual exercise of closing stores and managing inventories better, but it also took steps to go beyond its core demographic to broaden its appeal beyond middle-age and older women. The result has been improved same-store sales in recent years, as well as an improving perception in the marketplace.

Still, in the April quarter, the weather may play a negative role in Chico's results. Rival Ann (UNKNOWN: ANN.DL  ) , which runs Ann Taylor, said earlier this month that it had to increase discounts at its Loft stores, as a cold spring made customers less willing to buy warm-weather clothing. Yet Gap (NYSE: GPS  ) managed to overcome the weather to post 7% higher comps in April, continuing the positive momentum that has helped Gap make a solid turnaround over the past several years. With broader appeal, Chico's can hope that it's following in Gap's shoes with its own turnaround.

In Chico's report, be sure to look beyond the numbers to see how company executives plan to move forward with further growth initiatives. Even given huge success, it's important for Chico's to keep up its momentum in order to sustain its rising share price.

The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only the most forward-looking and capable companies will survive, and they'll handsomely reward investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

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