Investors gave their hardy approval to Chico’s FAS Inc.‘s fourth-quarter results, which easily topped profit expectations.
Shares of the retailer jumped 19.3 percent to $10.34 in midday trading Wednesday.
For the period ended Feb. 3, Chico’s net income more than doubled to $28 million, or 22 cents a diluted share, from $13.5 million, or 10 cents, a year ago. The quarter’s results include the favorable impact of the Tax Cuts and Jobs Act of 2017 of 8 cents a share and a benefit of 3 cents a share driven by an extra week of sales compared with a year earlier. Sales slipped 2.2 percent to $587.8 million from $600.8 million. Comparable sales fell 5.2 percent, mostly due to lower average dollar sale and a flat transaction count.
Sales at its Chico’s brand were essentially flat at $290.7 million. Sales at White House Black Market fell 6.9 percent to $197.9 million, while sales at its intimates brand Soma rose 1.8 percent to $99.2 million.
Wall Street was expecting earnings of just 9 cents on sales of $579.8 million.
Shelley Broader, chief executive officer and president, said, “Our fourth-quarter results exceeded expectations and demonstrate clear progress in the execution of our strategic initiatives to drive improved performance and value creation.”
Broader added that the company in 2017 “strengthened our brands’ positioning, enhanced the customer experience, maintained financial discipline and built a solid foundation for our next stage of profitable growth.”
The company said it was able to raise its gross margin to 37.7 percent of net sales, compared with 35.5 percent in the year-ago quarter, due to lower average unit costs and a reduction in store-occupancy costs.
For fiscal 2018, the company is expecting a low single-digit decline in consolidated comparable sales, with comps performance stronger in the second half of the year. The company also said 2018 capital expenditures would likely be in the range of $70 million to $80 million, driven primarily by store reinvestments and technology enhancements.