• Earnings drop to US$5.9m
  • Gross margin narrows to 50.7%
  • Sales fall 6.4%

US women's wear retailer Chico's saw its earnings plummet in the fourth quarter hurt by lower traffic and increased promotional activity.

Net income dropped to US$5.9m in the three months ended 2 February. This compared to earnings of $32.7m in the prior year period. Gross margin narrowed to 50.7%, a 250 bsp decrease from last year's fourth quarter.

Net sales amounted to $610.2m, a drop of 6.4% on the prior year, primarily reflecting 115 new store openings, offset by a 3.4% decrease in comparable sales.

FBR Capital Markets analyst Susan Anderson said: "We had noted in our channel checks that Chico's had been significantly more promotional in 4Q13 year-on-year, which likely helped the comp. Chico's was also more promotional year-on-year in 4Q13 at White House Black Market, but the higher price point could have still been prohibitive for consumers given the environment."