Driven by robust sales performance and improved margins, U.S.
based specialty retailer,
Chico's FAS Inc
) reported fourth-quarter fiscal 2012 earnings per share of 20
cents per share, up 33.3% from the year-ago quarter's adjusted
earnings of 15 cents and in line with the Zacks Consensus
For fiscal 2012, Chico's reported record earnings of $1.09 per
share, surging 29.8% from 84 cents earned in fiscal 2011, while
meeting the Zacks Consensus Estimate.
Net sales climbed 14.5% year over year to $651.9 million in the
fourth quarter of fiscal 2012 but missed the Zacks Consensus
Estimate of $664.0 million. Top line in the quarter mainly
benefited from a comparable store sales (comps) increase of 3.7%
as well as the opening of 101 new stores that led to square
footage growth of 8.1%.
Comps gains in the quarter resulted from the favorable response
received for the company's fashionable merchandise and its
innovative marketing plans. In the reported quarter, Chico's/Soma
Intimates brands' comparable store sales increased 2.3% and White
House Black Market (WHBM) comparable store sales improved 6.3%.
For fiscal 2012, the company gained 17.5% year over year, with
net sales of $2,581.1 million. However, sales results for the
year fell short of the Zacks Consensus Estimate of $2,592.0
Quarter's Operational Performance
Gross profit for this Zacks Rank #4 company jumped 16.4% to
$346.7 million while gross margin expanded 90 basis points (bps)
from the year-ago quarter to 53.2%, largely due to higher
full-price selling and effectual inventory management, which were
partially offset by increased incentives.
Selling, general and administrative (SG&A) expenses in the
reported quarter were $296.1 million, up 14.3% from the year-ago
level. However, as a percentage of sales, SG&A expenses
contracted 10 bps from the prior-year quarter to 45.4%, primarily
due to sales leverage impact on marketing and store expenses,
partially offset by increased incentive expenses.
Adjusted operating income (excluding acquisition and integration
charges) was $50.6 million compared with $38.7 million recorded
in the fourth quarter of 2011, while operating margin came in at
7.8%, an increase of 100 bps primarily due to increased gross
margin and lower operating expenses.
Cash and marketable securities as of Feb 2, 2013, were $329.4
million, compared with $247.9 million as of Jan 28, 2012. At the
end of fiscal 2012, inventories reflected an improvement of 6.4%
to 206.8 million from $194.5 million as of the end of fiscal
2011, which was in line with the forecasted sales growth.
The company spent $70.1 million during the fourth quarter to buy
back 3.9 million shares under its ongoing $200.0 million share
repurchase program authorized in Nov 2011. This brought the
company's total share repurchases for the year to 6.3 million
shares worth about $107.5 million.
Concurrent to its earnings release, Chico's announced a new $300
million authorization to buy back shares. This new authorization
will be effective from Mar 1, 2013, and will replace the
company's previous $200 million program that was approved in Nov
2011. With the new program in vogue, the company announced that
its Nov 2011 authorization stands cancelled with about $67.7
million remaining under the plan.
Separately, the company announced a cash dividend of 5.5 cents
per share, an increase of 4.8% over the dividend paid in Mar
2012. The dividend will be paid on Apr 1, 2013 to the
shareholders of record as of Mar 18, 2013.
Going forward, Chico's maintains its goal to formulate financial
targets which reflect sustainable and robust growth metrics.
Taking a long-term view, the company expects to provide sustained
value to its shareholders by delivering low double-digit
percentage sales growth and mid-teen percentage earnings per
share growth over a reasonable span of time.
In sync with the above mentioned goals, the company has
highlighted a number of strategic initiatives for 2013 that will
help boost future growth. Some of these initiatives include
omni-channel capabilities, expansion into Canada, and opening its
first Boston Proper stores.
Stocks performing well among the apparel/shoe retailers include
), which has a Zacks Rank #1 (Strong Buy),
Foot Locker Inc.
), both of which have a Zacks Rank #2 (Buy).
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