Chico’s Q3 net income falls 14.8 percent

REPORT_ For the third quarter, Chico’s adjusted net

income fell 14.8 percent. Adjusted earnings per diluted share fell 12 percent. For the third quarter, net sales saw an increase of 3 percent compared to last year’s third quarter, primarily reflecting 115 net new stores for a square footage increase of 8.6 percent. Comparable sales for the third quarter decreased 1.4 percent following a 9.9 percent increase in last year’s third quarter, primarily reflecting the cycling of strong comparable sales last year and the impact of lower traffic.

For the third quarter, selling, general and administrative expenses were 47.1 percent of net sales, a 40 basis point increase from last year’s third quarter, primarily reflecting deleverage of occupancy expenses and the impact of investment spending on strategic initiatives, substantially offset by lower incentive compensation as a percent of net sales. For the nine month period adjusted net income decreased 12.3 percent and adjusted earnings per diluted share decreased 9 percent.

Chico’s is a retailer of women’s casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing items. For the third quarter, gross margin was 55.5 percent of net sales, a 170 basis point decrease from last year’s third quarter, primarily reflecting increased promotional activity in response to lower traffic, partially offset by lower incentive compensation as a percent of net sales.