Chico's Plunges Most Ever on Earnings Miss, Brand Chief Exits

FORT MYERS, United States — Chico's plummeted 38 percent, its biggest decline in 25 years as a public company, after third-quarter results missed analysts' expectations.

Comparable sales fell 6.8 percent compared to the year-ago period, while analysts surveyed by Consensus Metrix had projected only a 2.1 percent decline. At namesake Chico’s stores, the decline was even steeper at 10.2 percent. The retailer also cut its forecast for full-year sales and said the president of the Chico’s brand is departing this week as part of its goal to “reinvigorate broad-based consumer excitement and growth for the brand.”

RBC Capital Markets analyst Brian Tunick said the focus now shifts to whether chief executive Shelley Broader can stabilise the brand, along with ongoing margin pressures from omni-channel efforts.

“While the company is speaking to a 2019 inflection in the Chico’s brand after product and marketing adjustments are made under the eye of [chief executive] Broader, the shares are likely to remain in the penalty box until top line and margin volatility abates,” Tunick wrote in a note to clients on Wednesday. He has an outperform rating on the shares.

Earlier this week, Chico's peer Francesca's Holdings reported preliminary third-quarter results that missed estimates, sending the shares down 14 percent Tuesday. Meanwhile, J. Jill jumped as much as 20 percent Wednesday after its earnings beat the highest estimate.

By Janine Wolf; editors: Courtney Dentch and Catherine Larkin

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