A Fort Myers-based women's retailer hasn't just brightened its clothes, it has brightened its earnings.
Chico's FAS Inc.'s decision to add more color and livelier patterns this year is paying off. The company – with four brands – is seeing record earnings.
"This year, I think she's loving what we got," said David Dyer, the company's president and CEO, in a conference call with analysts Wednesday.
The company reported profits of $53.4 million for the second quarter, up 23 percent from $43.4 million a year ago. Earnings per share rose 28 percent to 32 cents, up from 25 cents in the same quarter last year.
In 2011, the retailer didn't fare as well with more neutral and softer colors, Dyer said. The company responded by returning to its roots, offering more vibrant colors and patterns this year.
"Color for Chico's has always been an important part of our business, whether it's a major trend or not a major trend," Dyer said. "Our customer loves color. She loves pattern."
In the first half of the year, the company saw record profits of $107 million – up 20 percent from $89.3 million in the same months last year. Meanwhile, earnings per share grew 25 percent to 64 cents year-over-year.
In the second quarter, net sales increased 16.4 percent to $641.7 million. Those results reflected a 5.6 percent rise in sales at its same stores, or stores the company has owned at least a year, a 7.4 percent increase in square footage, and $32.6 million in sales for Boston Proper, its newest brand.
Company executives attributed the sales growth at same stores primarily to innovative marketing plans, the positive customer response to merchandise and new product launches.
Customers are buying more merchandise when they shop and they're paying more for it. There are fewer markdowns and promotions and inventories have dropped in the company's stores, reflecting stronger demand.
In the second quarter, the company beat Wall Street's expectations. On average, analysts expected earnings of 30 cents a share on revenues of $641.34 million. Shares spiked on the positive news, hitting a new 52-week high. They closed at $18.21 on Wednesday on the New York Stock Exchange – up $1.13 over the previous close.
Based on the strong performance in the first half of the year, the company updated its outlook for the year. That outlook includes net sales of $2.55 billion to $2.6 billion.
The company expects to make capital expenditures of about $155 million this year, which includes $5 million for Boston Proper.
Chico's FAS acquired Boston Proper, which sells women's high-end apparel and accessories only through its catalog and website, in September. There are plans to open the first stores by early next year.
The local retailer's other three brands are Soma Intimates, White House/Black Market and its namesake Chico's.
Even in a cloudy economic environment, Chico's name remains popular among its customers, said Pamela Knous, the company's chief financial officer, during the conference call.
She said the company is well positioned for growth in 2012 and beyond.
Connect with Laura Layden at www.naplesnews.com/staff/laura_layden