Chicos FAS (CHS) Misses Q3 EPS by 3c, Comps Decline 6.8%

Chicos FAS (NYSE: CHS) reported Q3 EPS of $0.05, $0.03 worse than the analyst estimate of $0.08. Revenue for the quarter came in at $499.88 million versus the consensus estimate of $515.63 million.

• comparable sales decline of 6.8%

Fiscal 2018 Fourth Quarter and Full-Year Outlook

The Company expects to see some immediate benefit from its Chico's brand performance improvement actions in the fiscal 2018 fourth quarter. Given the timing of adjustments that are now being made, the Company expects it to be spring of fiscal 2019 before meaningful improvement in the Chico's brand performance is visible in the Company's results.

For the fiscal 2018 fourth quarter, the Company anticipates a mid-teen decline in net sales, which includes the negative impact of the 53rd week of $29 million in fiscal 2017, and a high single-digit decline in consolidated comparable sales.

The Company anticipates gross margin rate as a percent of net sales to decline approximately 400 to 500 basis points in the fiscal 2018 fourth quarter compared to the fiscal 2017 fourth quarter, primarily driven by our omni-channel programs and deleverage of fixed costs from lower sales. The Company also expects SG&A expenses to decrease approximately $10 million to $15 million compared to the prior year period, primarily due to the 53rd week in fiscal 2017.

For full-year fiscal 2018, the Company anticipates a high single-digit decline in net sales and a mid single-digit decline in consolidated comparable sales. The Company expects gross margin rate as a percent of net sales to decline approximately 120 to 140 basis points over fiscal 2017. The Company also expects SG&A expenses to be approximately flat compared to fiscal 2017.

The Company anticipates capital expenditures to be $50 million to $60 million, primarily driven by store reinvestments and technology enhancements. Inventory is expected to increase compared to the prior year period as a result of the timing of the Chinese New Year and stronger penetration in basics and top key items. The Company estimates a fiscal 2018 tax rate in the range of 20% to 25%.

For earnings history and earnings-related data on Chicos FAS (CHS) click here.

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