(Filed Under wholesale Lingerie News). Soma comparable sales fell 5.8% in its fiscal first quarter. It was the largest drop in comparable sales in several years for the intimates division of Chico’s FAS, Inc., and came as the company reported the closure of four more Soma boutiques.
Chico’s CEO Shelley Broader blamed the decline, in part, on the fact that the same quarter last year had benefited from the “launch of our updated Vanishing Back bra. As you remember, it was the most successful bra launch in Soma history.” In the conference call with analysts to discuss the quarter, she added, “In addition, while our overall foundation business and Cool Nights sleepwear performed to expectation, our loungewear continues to be difficult.”
Net sales for Soma, as well as Chico’s itself, were also down in the quarter ended May 5, 2018. Soma sales were $78.2 million compared to $80.3 million in the fiscal quarter ended April 29, 2017. For the company as a whole, sales in the three months dropped to $561.8 million compared to $583.7 million in the same period in 2017. Chico’s net income fell to $29.0 million compared to $33.6 million in the first quarter of 2017.
Chico’s FAS has two other brands and store chains besides Soma: Chico’s and White House Black Market.
The lingerie division has now reported negative comps in each of the past four quarters. In a parallel move, Soma has reversed its strategy of expansion, and is closing rather than opening new shops. Between February 3rd and May 5th of this year Soma closed four “frontline boutiques,” reducing the number to 266. During the fiscal year ended January 30, 2017, Soma had opened eight new “frontline boutiques” and closed two, raising the net total then to 275. During the same year, it had also opened one “Soma outlet,” raising the total to 19, where the number remained as of May 5, 2018.
A year ago, in a similar conference call Broader, had bragged that Soma comparable sales rose .2% in the 13 weeks ended April 29, 2017, “which is meaningful since Soma has comped positively for all but one quarter since the second quarter of 2009.”
Said CEO Broader this May of Soma, “We’re on track to deliver a full refresh of our loungewear in the fall and have other exciting initiatives that we believe will drive stronger sales trends for the brand. Specifically in early June, we will launch emBliss, a new and innovative bra that has received excellent customer response throughout the testing phase. emBliss offers structure but is lighter and more comfortable. We will support the launch with a fully integrated, comprehensive marketing campaign.”
“Another exciting initiative for Soma is our new relationship with the multi-platform retailer, QVC. Soma successfully debuted on QVC on May 5th with the Vanishing Back bra and the Vanishing Edge panty, both of which sold out in a matter of minutes.”
“This first event,” she continued, “also drove increased awareness and strong customer traffic into our stores and into our website. We have already planned for additional QVC segments this year, featuring products from our Vanishing, Embraceable, and Cool Nights collection. We believe that Soma’s merchandise is improving; and with our exciting new initiatives, we are on track for stronger top line growth in the back half of the year.” — NM
The complete Chico’s conference call can be found here: https://seekingalpha.com/article/4178239-chicos-fas-inc-chs-ceo-shelley-broader-q1-2018-results-earnings-call-transcript
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