US retailer Chico's FAS reports 14.3% leap in net income in Q1 FY23

This financial performance in Q1 FY23 was primarily driven by a gross margin expansion of 210 basis points. Additionally, the firm posted robust operating income growth, with income from operations standing at $53.3 million, or 10 per cent of net sales, compared to $45.4 million, or 8.4 per cent of net sales, in the first quarter of last year.

However, the company experienced a slight dip in net sales in Q1 FY23, posting $534.7 million compared to $540.9 million in Q1 FY22. Total comparable sales for the period decreased by 0.6 per cent versus last year's first quarter, but saw a significant increase on a two-year stacked basis, surging by 40 per cent, the company said in a media release.

Chico's brand saw a comparable sales growth of 4.9 per cent in Q1 FY23, while Soma's comparable sales improved 250 basis points sequentially, though they were down 2.5 per cent compared to the first quarter of last year. However, White House Black Market saw comparable sales decrease 8 per cent versus a strong increase of 64.8 per cent in the previous year's first quarter.

Gross profit for the first quarter stood at $225 million, or 42.1 per cent of net sales, showing an improvement from $216.6 million, or 40 per cent of net sales, in the first quarter of the previous year.

The company's selling, general, and administrative expenses were reported at $171.7 million, or 32.1 per cent of net sales, slightly higher than $171.2 million, or 31.6 per cent of net sales, in last year's first quarter. This increase was largely due to enhanced marketing and store operating expenses to support long-term growth strategies.

Chico's FAS reported a decrease in inventories, totalling $293.8 million at the end of the first quarter, compared to $325.6 million in the same period of the previous year.

Molly Langenstein, chief executive officer and president, said: “We delivered another quarter of outstanding operating income and EPS performance, underscoring our commitment to our four strategic pillars of customer led, product obsessed, digital first, and operationally excellent.

"Total year-over-year sales were in line with our outlook, down 1.1 per cent, on top of 39.4 per cent growth in the first quarter last year. For the company as a whole, full-priced sales remained healthy, spend per customer and average unit retail increased year-over-year; and we gained market share across all brands."

Fibre2Fashion News Desk (DP)