Chicos FAS (CHS) Tops Q3 EPS by 2c, Revenues Beat; Updates FY19 Operational Outlook to 'Reflect Improvements in the Business'

Chicos FAS (NYSE: CHS) reported Q3 EPS of ($0.04), $0.02 better than the analyst estimate of ($0.06). Revenue for the quarter came in at $484.71 million versus the consensus estimate of $473.21 million.

• Third quarter GAAP loss of $0.07 per diluted share; Adjusted loss of $0.04 per diluted share
• Sequential improvement in comparable sales for all brands
• Executing on strategic priorities, investing in growth areas, maintaining cost discipline
• Updates full-year fiscal 2019 outlook to reflect improvements in the business and tariff impact

"Our third quarter results demonstrate that we are gaining traction on our strategic priorities. Comparable sales improved sequentially by 10.4 percentage points at White House Black Market and by 2 points at Chico's, our largest brand. In addition, Soma's comparable sales increased double-digits for the second consecutive quarter. Each of these achievements indicate that the actions being taken are positively impacting results," said Bonnie Brooks, CEO and President.

"Our customers are also responding to our brands' better product, stronger marketing and changes to store presentation. I firmly believe the Company's turnaround is on the right track, and we have updated our full-year financial outlook to reflect the positive momentum of our business," continued Ms. Brooks.

Fiscal 2019 Fourth Quarter and Full-Year Outlook

The Company is initiating outlook for the fourth quarter of fiscal 2019 and is updating its previously provided full-year fiscal 2019 outlook to reflect improvements in the business. The outlook for both the fourth quarter and fiscal year now includes the incremental impact of tariffs, while excluding expected net charges related to the Company's retail fleet optimization plan and Severance Charges.

The Company continues to manage through its turnaround and anticipates continued improvement in net sales and comparable sales trends as progress executing its strategic priorities continues.

For the fiscal 2019 fourth quarter, compared to the fiscal 2018 fourth quarter:

• The Company anticipates a low single-digit decline in total net sales and consolidated comparable sales.
• The Company expects gross margin as a percent of net sales to be down approximately 100 to 150 basis points, due primarily to incremental costs from tariffs.
• SG&A expenses are expected to be down approximately $5 to $7 million, reflecting ongoing cost management.

For full year fiscal 2019, compared to full year fiscal 2018:

• The Company anticipates a mid single-digit decline in total net sales and consolidated comparable sales.
• The Company expects gross margin as a percent of net sales to be down 150 to 200 basis points consistent with previous guidance, which now includes our consideration of incremental costs in the second half of fiscal 2019 associated with tariffs.
• The Company anticipates SG&A expenses to be down approximately $10 million, reflecting ongoing cost management, consistent with previous guidance.
• The Company expects capital expenditures to be approximately $40 million to $45 million, primarily driven by store reinvestments and technology enhancements.
• The Company estimates a full year income tax provision of approximately $2 to $3 million, which excludes accelerated depreciation related to our fleet optimization plan and Severance Charges in connection with our revised organizational structure.

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

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