US women’s wear retailer Chico’s FAS has outlined a reopening plan for North America and cited double-digit digital sales growth in the six weeks since the company became a digital-only business as a result of the Covid-19 pandemic.
The company, which operates the Chico’s, White House Black Market, Soma, and TellTale brands, is taking a three-pronged approach to reopening its boutiques as outlined in a statement by CEO Bonnie Brooks.
Beginning 4 May, Chico’s will roll out three phases of reopening its locations, starting with the fulfillment of national orders through stores using store inventories. The second step will be ‘buy-online-pick up in store’ (BOPIS) and will include contactless curbside pickup, while the third and final phase will see the introduction of a new shop-by-appointment service for all brands. Store openings will be consistent with local health and safety guidelines and regulations.
Brooks said company research shows customers’ main shopping crossover for all of our categories is with department stores.
“We believe we will have some significant advantages in the next several months as the majority of our stores are under 3,500 square feet and are located in easily accessible shopping plazas. Due to the smaller size of our boutiques, Chico’s FAS has the ability to reopen quickly and safely and to follow enhanced safety precautions,” Brooks added.
“For example, our teams have the ability to manage the number of customers in the stores, provide hand sanitiser and masks to customers, create new flexible distance between clothing racks, and adjust fitting rooms to accommodate social distancing practices.”
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Brooks cited “strong” customer demand in the firm’s digital channels over the past six weeks, with digital sales up double digits since the company became a digital-only business on 18 March.
Intimates, sleep, active, and lounge were responsible for driving sales and traffic growth, with Brooks also hailing investments in technology such as Style Connect, Chico’s proprietary digital styling software.
“Style Connect was designed as a competitive advantage that has further opportunities for increasing sales as we move into our new “post-Covid-19 operating model” as it allows for intimate but distanced connection in a meaningful manner that is resonating with our customers.”
Brooks added as the “magnitude of the impact of Covid-19 on the women’s apparel industry became clearer”, Chico’s pivoted to a new business plan for 2020 and beyond.
“During the past few weeks, we have significantly reduced our weekly cash burn. Our actions have been designed to reduce operating expenses by approximately 30% and we are committed to holding this cost structure for the long term. We have deferred the majority of payables, and are renegotiating all contracts, including real estate.”
The company placed the majority of its associates on furlough on 1 April and temporarily reduced the pay or hours of the majority of its remaining employees, including the entire executive leadership team and board of directors by 50%.
In its most recent quarterly results, Chico’s reported its first quarter of positive comparable sales for all three brands since the fourth quarter of 2014. For the three months to 1 February, net sales increased to US$527.1m from $524.7m a year earlier. The 0.4% rise reflected a comparable sales improvement of 2.2%, partially offset by the impact of 77 store closures since last year.
For the four weeks to 29 February, comparable sales were up by 2.7%.
“While today’s challenges are of a greater magnitude, our culture of agility and our ability to grow sales while reducing expenses, which started exactly 12 months ago, has already served us well during this period, and we are confident we have a path forward for the sustainable future of the Company, post-Covid-19,” Brooks said.