Shopping at women's clothing stores is an acquired taste. The way I see it, you either embrace the experience and help your significant other shop till she drops or you mope around like your mommy is dragging you around a department store. One of my wife's favorite stores and catalogs is Chico's (NYSE:CHS), and it is also one of the more interesting retail concepts that I have seen. The store is a manageable size, and the colorful clothing and accessories are easy on the eyes; I also love looking through its sale items to find that one shirt, or scarf, or pair of earrings that my wife will gush over.
I often say that it is easy to spot a well-run retailer; step into Nordstrom (NYSE:JWN) or Target (NYSE:TGT) and see for yourself why these companies are so well run at both the corporate and store level.
Chico's continued its string of eye-popping earnings releases when it released its second-quarter results yesterday. In fact, just about all of its numbers are quite impressive. For a detailed dissertation of the company's healthy cash flow and lack of debt, do yourself a favor and read Seth Jayson's Foolish commentary titled 3 Chic Stocks.
The company logged a 47% gain in net sales and 14% higher same-store sales in the second quarter. A distinctive and effective corporate identity and a strong showing from new acquisition The White House/Black Market were cited as prime movers. The White House/Black Market brand also contributed about $0.02 to $0.025 per share to its earnings of $0.39 a share, which improved mightily from the $0.29 it earned last year. Chico's purchased the unique privately held retailer last year in an attempt to reach a younger demographic, and so far, it looks like the strategy is working.
The months leading up to March 2004 were sort of a torrid romance for Chico's shares. After more than doubling in a year, the stock has leveled off from a high of $47.60 and sits at just more than $42 per share. Trading at 26 times the consensus earnings estimate of $1.63 for 2004, the shares still seem a bit pricey relative to the company's projected 15% growth rate. However, the company's superior cash and debt position, combined with its dynamic merchandising and business plan, make the shares of this women's clothing and accessory category killer quite appealing.
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Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.
