Chico’s FAS (CHS) 2Q16 RESULTS: BETTER THAN EXPECTED, COST CUTS AHEAD

Executive Summary

• Chico’s FAS reported 2Q16 adjusted EPS of $0.25 and beat the consensus estimate of $0.22.
• Revenues decreased 7.3% to $635.7 million from $685.8 million in the second quarter last year, and beat the consensus estimate of $632.4 million. Comparable-store sales decreased by 3.1% versus the consensus of (3.9)%.
• Guidance for the second half was updated to exclude Boston Proper. The company expects a low-single-digit comparable sales decline for the second half of 2016. The decline in sales will result in a decline in gross margin due to deleveraging of store occupancy costs.