Chico’s FAS, Inc. Provides Business Update

Chico’s FAS, Inc. (NYSE: CHS), a leading omnichannel specialty retailer for women that operates Chico’s®, White House Black Market®, Soma® and TellTale™, today provided a business update and boutique reopening plan from the Company’s Chief Executive Officer and President; recent 2020 preliminary sales information; and details on liquidity and cash utilization.

Statement from Bonnie Brooks, Chief Executive Officer and President

The Chico’s FAS Community – our customers, our associates and our shareholders – are at the center of every decision we make as a company, and during this period of temporary closure of our boutiques, that mindset has not wavered. We continue with our commitment to doing the right thing in our business.

As previously announced on April 1, we made the difficult decision to place the majority of our associates on furlough with continued benefits and to temporarily reduce the pay or hours of the majority of our remaining associates, including the entire executive leadership team and Board of Directors by 50%. Our associates in the Distribution Center, which remains fully operational, are receiving full wages to ensure the fulfillment of our healthy digital sales. Across all of our offices and distribution centers, we have implemented enhanced safety protocols that exceed guidelines from public health officials and federal, state and local government.

Strong Digital Sales
Over the past six weeks, we have seen strong customer demand in our digital channels, including increased traffic and sales on our websites and increased engagement on our social media channels.  Chico’s FAS digital sales have experienced double digit growth in the six weeks since the company became a digital-only business on March 18, 2020. The Company operates five unique websites for its’ brands. Driving this sales growth and double-digit traffic growth are categories of intimates, sleep, cozy, active and lounge.

Style Connect and Other Technology Investment
Our digital performance shows that we have been well-served by our investments in technology. In mid-March, we equipped our store management with handheld devices that were installed with Style Connect SM, our proprietary digital styling software that enables us to communicate directly with the majority of our customers to drive the frontline business to digital fulfillment. This action resulted in the above-mentioned double digit increases in online sales since the temporary closure of boutiques. 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.

Stores Reopening Phase to Commence May 4, 2020
Research1, 2, 3 shows our 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. For example, our teams have the ability to manage the number of customers in the stores, provide hand sanitizer and masks to customers, create new flexible distance between clothing racks, and adjust fitting rooms to accommodate social distancing practices.

Starting on May 4, we will roll out three phases of reopening  our boutiques: first, fulfillment of national orders through stores using store inventories; second, buy-online-pick up in store (BOPIS) including contactless curbside pickup; and third, the introduction of a new shop-by-appointment service for all brands – Chico’s, Chico’s Off the Rack, White House Black Market, White House Black Market Outlet, and Soma. Store openings will be consistent with local health and safety guidelines and regulations.

Post COVID-19 Operating Model
As the magnitude of the impact of COVID-19 on the women’s apparel industry became clearer, we immediately pivoted to a new business plan for 2020 and beyond, assessing and overhauling every function of our business, as well as quickly adjusting operations aligned to digital marketing and distribution.  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. 

In the first half of last year, the Company faced a significant downward sales trajectory. In the second quarter, I joined the company, changed the majority of our senior leadership team, and worked to immediately overhaul the business. This new team was able to quickly pivot the business with a 9.4% positive swing in sales from Q1, to the end of Q4, posting the first positive comparable sales quarter for the business since 2014, at fiscal year-end February 1, 2020. 

While todays’ 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.

Popular

spot_img
spot_img
spot_img

Sign up for our newsletter

HOLIDAY SPECIALS

More like this
Related

Black Friday Shopping: Is Your Digital Shelf Ready?

It’s no secret that Black Friday is the biggest...

Diversifying the Holiday Playbook: Retailers, Non-Endemic Brands and the Power of Partnership

As the holiday shopping frenzy approaches, both retailers and...

How to Create Compelling OmniChannel Retail Experiences This Holiday Season

It might not look a lot like Christmas right...