(Filed Under wholesale Lingerie News). Soma comparable stores sales rose 6.5% for the 13 weeks ended May 2. In addition, the intimate apparel chain opened a net three new stores during the quarter, raising the total number to 280 (of which 17 are outlet stores).
Meanwhile, at parent company Chico’s FAS, net income was lower at $32.5 million on higher sales of $693.3 million, compared to earnings of $39.9 million on sales of $681.6 million for the same period last year. At its Chico’s shops, comparable store sales fell 2.3% while at White House | Black Market comparable sales rose 1.7%.
In the conference call with analyst to discuss the quarter, Chico’s president and CEO David F. Dyer said the Soma results represented “the 24th consecutive quarter of positive comps,” adding, “The Enhancing Shape bra, supported by a sizable television campaign, has been a very successful new bra launch. Overall, bras, sleepwear and loungewear showed strong sales gains year-over-year.”
While Chico’s executives had indicated as recently as last year that they had plans to eventually operate “600 plus” Soma stores, they have, in different recent announcements, gradually reduced the number that will be opened in 2015. In the December conference call, “19 to 22” were projected, while the number dropped to “12 stores to 14 stores” by the conference call in early March. In the Chico’s annual report which came out in mid-March it stated it planned “7 − 11 net openings of Soma stores.”
Even with the most recent estimate, there could be as many as 288 Soma stores by the end of the year. At the end of the company’s fiscal year 2010 it was operating only 128 Soma locations.
Whatever the pace of openings in 2015, “For Soma, we continue to see opportunity,” declared Chico’s SVP Todd Vogensen in the most recent call. “We’re focusing ever more on opening in centers that we think will be higher volume off the bat to take advantage of improved brand awareness. And we will continue to open stores at least the rate that you are seeing this year, if not a scooch more.”
An interesting consideration for Chico’s as to which stores to open is the slower return on investment with Soma. Explained CEO Dyer, “when we open up a Chico’s or a White House store, we get back cash in 12 months to 18 months. When you open a Soma store, it takes us about three years.” During a conference call in March of 2014, Dyer explained the slower return, noting of the Soma shopper, “it takes a while to change bra loyalty and to get her shopping.” He added, “Our older stores tend to be the most profitable,” and said that that sales at the older stores are still building. “We haven’t found kind of the peak or the plateau of our older stores.”
Though Soma is currently the best performing sector of Chico’s, it represented only 11.6% of overall company sales in fiscal 2014 (up from 9.1% in fiscal 2012).
Important factors in the success of its lingerie stores are, as Chico’s explained in its most recent annual report, Soma “primarily sells exclusively designed, private branded lingerie, sleepwear, loungewear and beauty products focusing on women who are 35 years old and over with a moderate to high income level. Soma offers innovative lingerie, sleepwear, loungewear and beauty, with designer quality at affordable prices. The lingerie category includes bras, panties, shapewear and swimwear while the loungewear category includes tops, bottoms and dresses. Bras range in size from 32A − 44G. The sleepwear and loungewear offerings utilize extra small to extra-extra large sizing.”
A full transcript of Chico’s latest conference call can be found here: http://seekingalpha.com/article/3215236-chicos-fas-chs-david-f-dyer-on-q1-2015-results-earnings-call-transcript?auth_param=n9vbh:1ambsea:d3b19a9035b235fa2d2f735e11e0de0b&uprof=53&dr=1
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