Last fall, a hurricane came along, investors got spooked, Chico's FAS (NYSE:CHS) got spanked, and we all got an amazing buying opportunity. Since then, the stock has doubled.
This year, not even two of the most powerful hurricanes in our nation's history seem to be able to stop this . women's clothier? How's that for a juggernaut? Yes, Virginia, skirts and blouses can trounce microchips, VoIP, sharks with laser beams on their heads, and all of that other "next big thing" stuff.
Today, the firm released a revenue update for September, predicting comparable store sales up in the mid double digits for the month. Management also said it sees gross margins coming in stronger than expected.
That's pretty good news, given that Chico's gross margins, at 61%, are already about 25 percentage points ahead of the industry average. I've also noted in the past that Chico's net margins, more than 13%, are much better than the operating margins at many competitors. (Contrast this with the so-called margin disappointment Chico's experienced recently, and you'll find yet more reason to love this company.)
No one else is operating this efficiently while still putting up such amazing sales growth, not Gap (NYSE:GPS), not Ann Taylor (NYSE:ANN), not Talbots (NYSE:TLB), not Motley Fool Hidden Gems pick New York & Co. (NYSE:NWY).
Chico's is in a class of its own. Should you pay twice what competing retailers cost -- from, say an oversimplified, P/E perspective? If you're getting twice the growth, twice the margins, it's hard to resist. After having chastised myself again and again, I'm having a hard time coming up with excuses to sit on the sidelines.
Related Foolish commentary:
- At Chico's, it's all in the margins.
- For a more complete look at the numbers, see why Chico's is a stock I'd love to own again.
- Wallow in regret with a foolish Fool.
At the time of publication, Seth Jayson owned shares of New York & Co., but had no position in any other firm mentioned here. View his stock holdings and Fool profile here . Gap is a Motley Fool Stock Advisor pick. Fool rules are here.
