Chico's sales up 7 percent for month, 20 percent for year

Warmer weather, a new summer line and a well-performing White House Black Market helped Southwest Florida-based Chico’s post a 20.4 percent gain, with sales for May up to $141.1 million from $117.1 million at the same time last year.

Same-store sales, a key measure in retail, beat analyst expectations to come in at 7.2 percent for the four-week period ending May 27. For the year, the specialty clothing retailer’s sales are up 20 percent to $533 million from $444 million for the same period last year.

The increase, reported Thursday, comes despite an overall drop in consumer confidence and lower expectations after April sales that cost the company on the stock market.

“We are not that affected by consumer confidence. That’s a Wall Street myth,” said Charlie Kleman, executive vice president and chief financial officer. “We are going after the high-income consumer. She is going to look good first. Consumer confidence doesn’t affect apparel shopping for the $100,000-plus income group. Maybe they won’t buy a new car.”

As long as the company offers the right clothes, he said, its customers will buy.

In same stores, the Chico’s core brand was up 4 percent and White House Black Market was up 24 percent. That brand had been a little softer in April, said Michael Smith, vice president of investor and community relations, due to inventory issues that posed a challenge for cold weather stores.

In May, stores on the West Coast as well as in the Northeast saw good sales.

It all bodes well for the company’s ambitious expansion plans for this year and next. Ultimately, Kleman said, the company is focused on building its base.

“That’s what the market doesn’t like. We are using our earnings to build a base. We have years and years of growth not just a short-term pop for the market,” he said. “We are investing in our brands, which is costing some earnings per share.”

Analysts like Ken Perkins of Retail Metrics tend to agree. While the retail industry in general did well in May, Perkins said, Chico’s has historically been one of the “best performing retailers in the universe.”

“Because of their performance, expectations are very high for them always and that’s difficult to do year in and out,” he said. “I would say April was an aberration ...”

He sees a good future for Chico’s expansion plans as well.

“Seems like their core market is underserved and they would well benefit from expanding,” Perkins said. “They seem to have been able to execute very well in the last 9-10 years. I think they will be successful in growing the business further.”