Spring sprang for Chico's FAS Inc.
A well-received spring collection helped drive revenue and profit growth for the Fort Myers-based women's retailer in its fiscal first quarter, ending April 28.
The clothing store operator reported record earnings and sales in the quarter — beating Wall Street's expectations.
The chain — with four brands — earned $53.6 million, or 32 cents a share. That was up 17 percent from $45.9 million, or 26 cents a share, in the first quarter a year ago.
"I love spring," said Dave Dyer, the company's CEO, in a conference call Wednesday. "Spring has always been our time."
The warmer weather up north this year was helpful too in driving more sales in its spring line, he said. Net sales in the first quarter rose to $650.8 million, up more than 21 percent from $537.2 million a year ago.
Wall Street predicted revenues of about $628.1 million and earnings of 30 cents a share. Analysts on the conference call congratulated the company for its better-than-expected performance.
Shares rose on the good news. On Wednesday, they closed up 55 cents at $15.21 on the New York Stock Exchange.
The company saw a 9.6 percent increase in same-store sales — or sales made at stores open at least a year — in the quarter, an increase Dyer described as "industry leading." The retailer also benefited from new stores in the past year and $33.7 million in sales from Boston Proper, its newest brand.
Chico's FAS acquired Boston Proper, which sells women's high-end apparel and accessories only through its catalog and website, in September.
On average, Chico's FAS saw its customers spending more money and the numbers of transactions rose in the quarter. Successful television advertising and other new and innovative marketing has helped to draw past customers back and to attract new customers to the company's stores, Dyer said.
The retailer's other three brands are Soma Intimates, White House/Black Market and its namesake Chico's.
Same-store sales increased 8.8 percent for the Chico's and Soma Intimates brands in the first quarter. They rose 11.3 percent for White House/Black Market.
New stores are performing better than expected. They're smaller, with a more intimate, boutique feel that fits well with its brands and its customers, Dyer said.
With such strong sales so far this year and new stores performing better than expected, the company raised its revenue forecast for the year.
The company expects to make $150 million in capital expenditures this year, including the addition of at least 120 stores for all of its brands. It's opening smaller stores in smaller markets, said Pamela Knous, the company's chief financial officer, during the conference call.
Chico's FAS is well positioned for growth, with four strong brands in different stages of development, she said. She gave kudos to the brand teams for delivering such results in the first quarter. The company is transitioning to its summer collection and expects to have a more successful third quarter this year.
The third quarter has not been as strong for sales, with its fall offerings not as well received, but design teams have been working hard to change that, Dyer said.
"I think we have turned the corner," he said. "But I guess time will tell."
Under the Chico's brand, the retail chain operates 606 boutiques and 86 outlets throughout the U.S. There are 376 White House/Black Market stores, along with 31 outlets. Soma Intimates operates 180 boutiques and 15 outlets.
At the end of the first quarter, the inventory of merchandise for all of the stores was valued at $213.7 million, up from $198.5 million a year ago. That included $13.6 million of inventory for Boston Proper and the inventory at new stores.
On the conference call, an analyst asked if tighter inventories at some stores might have "left any sales on the table" because of fewer choices for shoppers. Dyer said he didn't look at it that way.
"Inventory is like produce, it does not get better with age," he said, adding that it's like a tomato sitting on a shelf and "you want to sell it."
Asked about his company's plans to go international, Dyer said it will likely be a few years before that happens.
"I do believe in 2013 that we'll probably stick our toe in the water somewhere," he said. "But we still have a lot of work to do, and it will not be any meaningful part of our business certainly in the near-term."
Connect with Laura Layden at www.naplesnews.com/staff/laura_layden