Chico's FAS (NYSE:CHS) reported outstanding earnings (again) after yesterday's market close. For years, I've marveled at this company from the sidelines as it continues to grow a strong business and kicks the market's rear end. (To get the full effect of just how well it's done, check out this chart of its performance over the past five years vs. the S&P 500.)
The company targets a very attractive demographic: women between the ages of 35 and 55. They're not as fickle as teenagers, so Chico's won't typically run into significant fashion mistakes, like a Wet Seal (NASDAQ:WTSLA) or American Eagle Outfitters (NASDAQ:AEOS) might. And Chico's customers have more money than your average teen and want to spend it on comfortable, well-designed clothes.
Chico's delivers consistently to both customers and investors -- as it just did with its second-quarter report. This is one retailer whose business doesn't suffer from seasonality; it does well all year round.
Sales for the quarter ended August 2 shot up 38.7% to $173.4 million. Same-store sales bounced ahead by 14.6%. Net income grew to $24.5 million -- a whopping 49.3% jump. Earnings per share expanded to $0.28 from $0.19.
The company's growth prospects remain Chico's hook with investors. It only has 418 stores today, having added 40 new ones so far this fiscal year. It intends to open at least 30-35 more this year. It also recently made an acquisition (which will close in the third quarter) of The White House, a small, privately held retailer.
Best of all, Chico's is funding this expansion internally, through the cash it generates from operations. (It will use a little stock for its acquisition, but not much compared to the cash it's shelling out.) It has $141 million in cash and marketable securities sitting on its balance sheet, so moolah isn't a concern.
Chico's is a well-run company, with growth aplenty ahead of it. Given that, its valuation of about 34 times trailing earnings is understandable.
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