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.
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