Research Desk Line-up: Genesco Post Earnings Coverage
LONDON, UK / ACCESSWIRE / June 16, 2017 / Pro-Trader Daily publishes post-earnings coverage on Chico’s FAS, Inc. (NYSE: CHS) following the Company’s announcement of its first quarter fiscal 2017 financial results on May 24, 2017. The clothing chain Company’s revenue and earnings numbers missed market estimates. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:
Get more of our free earnings reports coverage from other constituents of the Apparel Stores industry. Pro-TD has currently selected Genesco Inc. (NYSE: GCO) for due-diligence and potential coverage as the Company reported on May 25, 2017, its earnings results from continuing operations for Q1 FY18 which ended on April 29, 2017. Register for a free membership today, and be among the early birds that get access to our report on Genesco when we publish it.
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For the fiscal 2017 first quarter ended April 29, 2017, Chico’s net sales totaled $583.7 million, down 9% compared to net sales of $643.0 million in Q1 2016. The decline in net sales primarily represents a decline in comparable sales of 8.7%, driven by lower average dollar sale and a decline in transaction count. The Company’s sales numbers fell short of analysts’ estimates of $625.4 million.
For Q1 2017, Chico’s gross margin was $237.4 million, or 40.7% of net sales, compared to $262.3 million, or 40.8% of net sales, in Q1 2016. The decline in gross margin was attributed to sales deleverage of store occupancy expenses, substantially offset by an improvement in merchandise margin. The Company’s selling, general, and administrative expenses (“SG&A”) were $182.5 million, or 31.3% of net sales, in the reported quarter compared to $208.1 million, or 32.4% of net sales, in the prior year’s same quarter, reflecting savings in store related expenses, lower marketing spending, and the benefit of other previously announced cost reduction initiatives.
For the thirteen weeks ended April 29, 2017, Chico’s reported net income of $33.6 million, or $0.26 per diluted share, compared to net income of $31.1 million, or $0.23 per diluted share, for the thirteen weeks ended April 30, 2016. The Company’s earnings numbers came in below Wall Street’s expectations of $0.29 per share.
As of April 29, 2017, Chico’s had cash and cash equivalents worth $119.14 million compared to $56.50 million as on April 30, 2016. At the end of the quarter, the Company had long-term debt of $64.80 million compared to $79.74 million at the end of the year-ago same period.
At the end of Q1 2017, Chico’s inventories totaled $273.9 million versus $268.0 million in the prior year’s comparable quarter. The $5.9 million increase in inventories primarily reflected a $10.5 million increase in in-transit inventories, largely due to a shift in shipping terms with the Company’s major vendor, partially offset by a 2.0% decrease in on-hand inventories compared to the same period last year.
Share Repurchase Program
During Q1 2017, Chico’s repurchased 0.7 million shares for $9.5 million, at a weighted average of $13.65 per share under its $300.0 million share repurchase program announced in November 2015. The Company had 154.1 million remaining for future repurchases under the program.
Chico’s stated that as part of its ongoing strategy to improve the productivity of its fleet, the Company opened 2 new stores and closed 11 during Q1 2017. Chico’s announced that it will be reinvesting in 55 locations through relocations, refreshes, and remodels in FY17.
For fiscal 2017, Chico’s is forecasting a mid-single-digit percentage decline in comparable sales. The Company expects gross margin as a percent of net sales to be flat to up to a 30 basis point increase for the year. Chico’s on-hand inventory in each quarter is expected to be down compared to last year as the Company continues to actively manage inventory. Capital expenditures are expected to be $60 million to $70 million for FY17.
At the close of trading session on Wednesday, June 14, 2017, Chico’s FAS’ stock price declined 2.23% to end the day at $9.22. A total volume of 2.42 million shares were exchanged during the session. The Company’s shares are trading at a PE ratio of 12.77 and have a dividend yield of 3.58%. At Wednesday’s closing price, the stock’s net capitalization stands at $1.21 billion.
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