• Q4 earnings reach US$7.5m
  • Sales grow 7.6%
  • Comparable sales up 4.3%

US women's wear retailer Chico's has booked an increase in fourth-quarter earnings but outlined plans for a series of cost reduction initiatives that will result in 120 store closures and 250 job cuts.

In the three months ended 1 February, adjusted net income amounted to US$7.5m compared to $5.9m a year earlier. This excluded EPS charges of $0.26 in 2014 and $0.04 in 2013, primarily related to Boston Proper non-cash goodwill and trade name impairment, as well as cost reduction and restructuring initiatives.

Fourth-quarter sales, however, grew 7.6% to $656.9m, primarily reflecting 75 net new stores for a square footage increase of 4.5% and a 4.3% increase in comparable sales.

The company said it has determined to increase the rate of domestic store closures to improve the overall productivity of its store fleet. As a result, around 120 stores will close starting in fiscal 2015 through 2017. The move is expected to result in expense savings of around $55.2m upon completion.

An additional organisational realignment “to ensure that resources are better aligned with long-term growth initiatives”, including omni-channel, will see the elimination of around 240 existing positions, resulting in savings of $38m annually.

CEO David Dyer, said: "Overall, we are pleased with our fourth-quarter performance. The actions we have taken delivered positive comparable sales across all brands, an increase in gross margin dollars and lower inventory levels. While the overall apparel retail environment remains challenging, we expect the new capital allocation and cost reduction initiatives announced today will further strengthen Chico's FAS and its brands."

For fiscal 2015, the company is anticipating a positive, low-single digit comparable sales increase, and an improvement its gross margin rate on last year.