(Filed Under Financial and General Interest News). Sales at Soma intimates rose 2.1% for the fourth quarter ended January 30, 2016 and were up 3.1% for the year prompting plans to expand the chain to about 300 stores by year’s end.
Meanwhile, for the whole of parent company Chico’s FAS, Inc. (which also includes the Chico’s and White House Black Market divisions), things were different: fourth quarter sales dropped 4.5% and for the year sales were down 1.2%.
Soma plans to open “about 15” new stores in 2016 while closing “very few” according to EVP and CFO Todd Vogensen. During the year prior to January 30, 2016 Soma opened 12 and closed six Soma “frontline boutiques” bringing the total to 269; and it opened one Soma outlet store bringing the total to 18. Thus, by the end of this year there will be about 300 Soma stores open.
Soma (which accounts for only about 12.5% of the Chico FAS total) registered $331.7 million in sales for the fiscal year, while Chico’s FAS combined sales were $2.642 billion.
In the conference call to discuss the financial results, Vogensen declared that some of Soma’s success “can be attributed to the launch of our new Balconet Bra this past quarter.” He explained the bra “features a sweetheart neckline that is lower cut than our original version, with more lift and padding. Additionally, our semi-annual sale drove increased traffic and sales. Given our active inventory management, we had fewer items to clear, which allowed the Soma brand to not only grow sales, but also to improve merchandise margins over last year. Looking ahead to next quarter, Soma now has its successful swimwear collection in all of their stores, up from just 100 stores last year. The brand is also looking forward to its next significant bra launch over the coming weeks. We fully expect Soma’s pipeline of new and innovative bra launches to help the brand gain new customers and increase loyalty.”
During the same conference call, Chico’s new president and CEO Shelley Broader spoke admiringly about Soma noting that it is in “an enviable position that caters to a vastly underserved market.” She added, “We have 287 Soma stores today, in what I think is just a tremendously uncrowded space in the market, for a customer who has aged out of some of the traditional retailers and isn’t finding what they want in a department store setting.”
Broader also discussed the relationship between online and brick and mortar sales. “If you just look at the different types of product that are accelerating online, you see across the board where intimates stack up in there. Intimate apparel is heavily penetrated online, and our expectations of Soma that it will be the same. I do, however, believe that a bricks-and-mortar companion to that is incredibly important, and not just for the showrooming aspect of that, but for the tenets of that brand in comfort, in fit, in everyday, everyday sexiness, in things that look great and feel great and are appropriate for somebody living an active lifestyle.” She added that, “in order to continue to grow in market share in intimate apparel, you’ve got to be doing that by driving your online business. And you’re seeing now, and you’ll see it with the launch of our new bra, which I can’t wait for Todd to explain to you next time. You’ll see a much more exciting, a much more sensuous type of marketing and advertising coming from Soma. And I continue to be very bullish on that positioning. I think it’s one of the few spots left in retail where there is real room to grow.”
Broader revealed that Soma’s potential figured in her taking the leadership position at Chico’s. “Part of my own decision-making was the excitement of the growth of that brand.”
A complete transcript of the conference call can be found here: http://seekingalpha.com/article/3930966-chicos-fas-chs-shelley-g-broader-q4-2015-results-earnings-call-transcript?page=1
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