Chico’s FAS Inc. Earnings Cheat Sheet: Margins Shrink on Rising Costs, Net Income Falls

Chico’s FAS Inc. (NYSE:CHS) reported its results for the third quarter. Chico’s FAS is a national specialty retailer of private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing gift items.

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Chico’s FAS Earnings Cheat Sheet for the Third Quarter

Results: Net income for Chico’s FAS Inc. fell to $26.5 million (16 cents per share) vs. $28.8 million (16 cents per share) a year earlier. This is a decline of 8.1% from the year earlier quarter.

Revenue: Rose 11.5% to $538.5 million from the year earlier quarter.

Actual vs. Wall St. Expectations: CHS reported adjusted net income of 18 cents per share. By that measure, the company fell short of mean estimate of 20 cents per share. Analysts were expecting revenue of $548.9 million.

Key Stats:

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the second quarter, net income rose 42.5% from the year earlier, while the figure increased 29.7% in the first quarter, 18.2% in the fourth quarter of the last fiscal year and 26.8% in the third quarter of the last fiscal year.

Gross margin shrank one percentage point to 56%. The contraction appeared to be driven by increased costs, which rose 14% from the year earlier quarter while revenue rose 11.5%.

Revenue has risen the past four quarters. Revenue increased 18.5% to $551.4 million in the second quarter. The figure rose 11.5% in the first quarter from the year earlier and climbed 9% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the second quarter, it topped the mark by one cent, and in the first quarter, it was ahead by one cent.

Looking Forward: The average estimate for the fourth quarter remains unchanged at 17 cents a share. The average estimate for the fiscal year is now 88 cents per share, down from 90 cents sixty days ago.

Competitors to Watch: Coldwater Creek Inc. (NASDAQ:CWTR), Limited Brands, Inc. (NYSE:LTD), Ann Inc (NYSE:ANN), The Talbots, Inc. (NYSE:TLB), Christopher & Banks Corp. (NYSE:CBK), Ascena Retail Group Inc (NASDAQ:ASNA), Charming Shoppes, Inc. (NASDAQ:CHRS), New York & Company, Inc. (NYSE:NWY), The Cato Corporation (NYSE:CATO), and Body Central Acquisition Corp. (NASDAQ:BODY).

Investing Insights: Here’s Why Chipotle’s Stock Keeps Winning.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

 

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