• Net income down 8%to $26.5m
  • Sales up 11.5% to $538.5m

US women's wear company Chico's FAS said that third-quarter profits were hit by rising costs, higher discounting levels and costs relating to its acquisition of Boston Proper.

The company, which operates the Chico's, Soma, White House Black Market and Boston Proper brands, announced yesterday that net income for the quarter ended 29 October fell 8% to US$26.5m. Excluding costs relating to the acquisition and integration of Boston Proper, net income would have risen 4.2% to $30m.

Sales increased 11.5% to $538.5m, with comparable sales up 3.7%. It said that the sales rises reflected increases in average dollar sales and transaction count.

Gross margin fell 100 basis points to 56%, which the company attributed to higher discounting in the Chico's brand as a result of a "soft sales environment". This was partially offset by higher margins at White House Black Market and Soma Intimates brands, which recorded increased full-price selling and effective promotional activities.