US: Adverse weather hits Chico's Q1 profit
- Q1 profit falls 21.9% to $39.9m
- Sales climb 1.6% to $681.6m
- Gross margin down 150 basis points
Chico's was forced to be more promotional in the quarter due to unfavourable weather
Chico's has reported a double-digit decline in first-quarter profit, after adverse weather forced the women's wear retailer to be more promotional to move product.
Net income amounted to US$39.9m during the 13 weeks to 3 May, compared to $51.1m in the same period of last year.
Sales climbed 1.6% to a record $681.6m from $670.7m a year ago, while comparable store sales fell 2.6%. Gross margin declined 150 basis points to56.2%, reflecting increased promotional activity in response to lower traffic.
FBR Research analyst Susan Anderson viewed the results as a "positive" given the retail environment.
"While adverse weather was likely a headwind in February and March, Chico's [segment] sales picked up significantly when the weather improved in April, posting a +high single digit comp in April (slightly less than -1% for 1Q).
Although trends likely decelerated in May, Anderson added, Chico's assortment looks "attractive" - particularly elevated knit assortment and golf wear, and she expects trends to pick up as the quarter progresses.
Chico's, meanwhile, said second-quarter to date sales and comparable store sales increased 5% and 1% respectively year-on-year.
"We believe that the environment will continue to be promotional, particularly given aggressive stances by the department stores," Anderson noted. "However, given improvements in industry-wide inventories and a pick-up in demand, the promotional level could be sequentially improved."
Help test our new apparel sourcing tool.
- China leads US apparel sources with falling prices
- Hard hit Turkish industry is not knocked out
- "Power of the many" drives change at Otto Group
- Vietnam grows share of US apparel imports in 2016
- US apparel sector braces for potential cost hikes
- US Q4 in brief – Foot Locker, Nordstrom, Carter's
- Bangladesh crackdown has cost garment sector $100m
- Adidas and Burberry recognised for sustainability
- Inditex and H&M boycott Dhaka Apparel Summit
- Macy's will "do the right thing", says Lundgren
- When Things Go Wrong - A Practical Guide to Managing Common Problems in Apparel Sourcing
- Outdoor performance apparel 2016: A broader perspective
- Technical textile markets: product developments and innovations, December 2016
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Global market review of lingerie – forecasts to 2022