Yahoo Finance Chico’s FAS Loses $360 Million in 2020
Chico’s FAS continues to register losses.
The Fort Myers, Fla.-based retailer — parent company to the Chico’s, White House Black Market, Soma and TellTale brands — revealed quarterly and full-year 2020 earnings results early Tuesday morning, falling short on top and bottom lines and logging a $360 million loss for the year. Shares of Chico’s FAS fell more than 7 percent at the start of the day’s trading session as a result, only to close up 3.92 percent to $2.65 a piece Tuesday.
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“While sales reflect the challenging environment, we took important actions over the past year to strengthen our financial and operating foundation and position our brands for market share gains,” Molly Langenstein, chief executive officer and president of Chico’s FAS, said in a statement. “We enter 2021 as a digital-first, customer-led company with the capabilities to support continued improvement, enhanced value creation and a return to growth in the years ahead.
“We have a solid balance sheet, strong liquidity and the financial stability we need for the foreseeable future,” Langenstein continued. “Cost savings we achieved in 2020 will flow through to future years, demonstrating the discipline that is now core to our organization.”
Total revenues for the three-month period ending Jan. 30 fell 26.7 percent to $386 million, down from $527 million a year earlier. Total company comparable sales fell 24.9 percent, or a 34.4 percent decline at the Chico’s brand and a 36 percent decrease at White House Black Market. Meanwhile, innerwear and loungewear brand Soma’s comparable sales increased 15.2 percent during the quarter.
The company credits the declines to reduced in-store traffic during the quarter. Chico’s bright spots included its e-commerce business and Soma. Digital sales at Soma increased 68.6 percent during the quarter, while total company fourth quarter and year-to-date digital sales each increased nearly 20 percent.
“Soma is delivering consistently increasing comparable sales,” Langenstein said. “Its compelling brand niche, together with this record of results, suggest that Soma is on track to take a sizable share of the $7 billion U.S. intimates apparel and loungewear market, which is forecast to reach over $11 billion by 2025.”
The CEO added on Tuesday’s morning conference call with analysts that the average age range of new customers to the Chico’s and Soma brands fell by 10 years and eight years, respectively, helping attract a younger demographic to the fashion company.
But it wasn’t enough to offset losses. In fact, Chico’s increased its losses to $79 million during the quarter, compared with losses of $4.3 million during the same period a year earlier.
For the full fiscal 2020 year, revenues fell to $1.3 billion, compared with $2 billion a year earlier. The company lost $360 million as a result, compared with losses of $12.7 million in 2019.
Chico’s ended the quarter with $149 million in debt and nearly $91 million in cash and cash equivalents.
The company is not providing forward-looking guidance, but plans on closing between 13 percent and 16 percent of its store fleet over the next three years, starting with 40 to 45 stores in the upcoming fiscal year. The majority of the closures will be in underperforming mall-based Chico’s and White House Black Market stores.
Last July, Chico’s FAS Canada, a subsidiary of Chico’s FAS, filed for bankruptcy with the Ontario, Canada, office of the Superintendent in Bankruptcy, to help reduce expenses.
The move meant all 10 of its stores in Canada — four Chico’s and six White House Black Market locations — would close permanently. The company continues to operate its e-commerce platforms in Canada.
As of Jan. 30, the retailer had 1,302 stores, or 640 Chico’s, 403 White House Black Market and 259 Soma locations. In addition, the firm plans to roll out roughly 50 Soma shops-in-shop in Chico’s stores in 2021.
Shares of Chico’s FAS are down approximately 23.8 percent, year-over-year.
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