(Recasts lead to work in estimates, share rise)
By Aarthi Sivaraman
NEW YORK May 28 Chico's FAS Inc (CHS.N) posted
better-than-expected quarterly profit on Wednesday and left its
first-half forecast unchanged, reassuring investors who sent
shares of the women's apparel retailer up 11 percent.
The company, which operates the White House/Black Market
and SOMA Intimates stores in addition to its namesake chain,
also said it would stay focused on managing its inventory and
It also pointed to the possibility of better results in the
second half of the year.
"Our current expectations are to gradually improve and
return to positive comparable-store sales increases sometime in
the second half of 2008 if we can expect some level of
improvement in the economic environment resulting in overall
earnings growth during this time frame," Chief Executive Scott
Edmonds said during a conference call.
Net profit was $12.7 million, or 7 cents per share, in the
first quarter ended May 3, compared with $47.2 million, or 27
cents per share, a year earlier.
Analysts, on average, expected earnings of 6 cents a share,
according to Reuters Estimates.
Sales fell 9.6 percent to $409.6 million as same-store
sales -- a key gauge of retail strength that tracks sales at
established stores -- declined 17.5 percent.
The women's apparel sector targeting women over 40 who
choose traditional clothing styles has been struggling for over
a year. Chico's rivals such as Coldwater Creek Inc CWTR.O and
Talbots Inc TLB.N have also posted sliding sales even as the
industry has attempted to update its looks and image.
One analyst warned that Chico's inventory was not
conservative enough for current economic conditions and that
its expectations for the year's second half appeared
"We believe expectations for a back half turn are too
optimistic," Liz Dunn of Thomas Weisel Partners said in a
client note, rating Chico's stock as "underweight."
Chico's has posted a long string of declines in same-store
sales -- down 15.5 percent in April, 20.7 percent in March and
14.9 percent in February.
The company repeated its forecast for lower earnings and
same-store sales for the first half of 2008.
Chico's said it expects to open between 17 and 19 stores in
the second quarter but company executives said during the call
that the company would slow down the pace of store opening
through the rest of the year.
Chico's shares were up 79 cents at $7.96 on the New York
Stock Exchange after rising as high as $8.18 earlier. Its
shares have lost about 71 percent of their value since they
touched a year-high of $27.70 last year.
(Reporting by Aarthi Sivaraman; Editing by Mark Porter and