Chico’s Q2 Earnings Disappoint as American Retail Industry Struggles

Sad entrepreneur worried bad statistics in report
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Chico’s FAS Posts Dismal Second-Quarter Earnings Results

Women’s fashion apparel and accessories retailer Chico’s FAS, Inc. reported its second-quarter results on Wednesday, and the numbers couldn’t get more depressing for its investors. In CEO Shelley Broader’s own words, “Second quarter sales were disappointing.”

The retailer reported an overall 8.4% decline in comparable store sales. All three of its brands—”Chico’s,” “White House Black Market,” and “Soma”—faced slumping sales. Its namesake brand, Chico’s, posted a nine-percent decline in comparable sales, while White House Black Market and Soma witnessed 10.6% and 1.8% revenue declines, respectively.

Meanwhile, the company also saw its profit margins shrinking. Expenses related to operating physical store locations, as well as heavy promotional sales to control inventory levels, jointly contributed to the contracting margins.

Reading through the press release, one sees a striking resemblance to the countless other apparel retailers that have posted weak sales figures this year.

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America’s retail industry is dealing with an apocalyptic situation, in which retailers left, right, and center are going out of business. In fact, this year is being cited as the year of retail bankruptcies. Many famous apparel retailers have already filed for bankruptcy this year, while countless others are closing stores at a record pace.

We’ve seen popular names like BCBG Max Azria Group, LLC, rue21, inc., Ascena Retail Group Inc, bebe stores, inc., The Gymboree Corporation, Payless ShoeSource, Inc., and True Religion Apparel, Inc., all ending up in bankruptcies after struggling with quarter after quarter of declining sales.

The most commonly blamed culprit for the retail industry’s downfall is e-commerce, more specifically, Amazon.com, Inc, which is believed to be changing the old-fashioned ways of conducting retail. A growing number of Americans are no longer walking into physical stores, and are instead looking for digital avenues for making purchases.

Some retail companies have moved swiftly to grab this consumer market. Others have been late to the party.

While Broader says that Chico’s is now striving to improve its omnichannel capabilities—which simply means it’s turning its focus to digital channels now—it wouldn’t be wrong to claim that Chico’s may be too late.

Source

Chico’s FAS, Inc. Reports Second Quarter Results,” Chico’s FAS, Inc., August 30, 2017.

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