(Filed Under wholesale Lingerie News). Soma, the intimate apparel chain, reported a 0.7% comparable store sales gain for the 13 weeks ended July 30, 2016.
In the quarter it opened three and closed one store, raising its total sales to $93,534,000, up from $90,831,000 in the three months ended August 1, 2015. Soma also indicated that even more new stores, perhaps as many as seven, are on the way this year. As of July 30, it was operating 274 “frontline boutiques” and 19 “Soma outlets.”
Meanwhile, parent company Chico’s FAS euphemistically announced a company-wide “organizational redesign,” that “reduced total corporate and field leadership headcount by approximately 200, or 13%.”
Combined company sales (which also include the Chico’s and White House Black Market stores) fell to $635.7 million from $685.8 million for the quarter, but net income jumped to $23.0 million from $2.1 million in the same quarter last year.
In the conference call with analysts to discuss the quarter, Chico’s CEO Shelley Broader bragged that at Soma “We have achieved an increase comp sales for the last 28 of the 29 quarters. Soma continues to deliver what customers want while also infusing new products and styles into the brand.”
The executive continued: “Building on Soma’s highest-volume bra launch ever, the Enticing Lift Balconet bra launch this second quarter, with a lower neckline and a strappier look, it successfully expanded the silhouette options for our Enticing Lift bra. Taking advantage of more available whitespace in the market, Soma’s swim collection, which is now in every store, once again, had significantly positive comps. In addition to the swim collection, bras and sleepwear were strong. However, the fashion side of the business has been challenging as Soma continues to refine its brand positioning. To help address these challenges, Soma launched a totally new sports collection at the beginning of the third quarter, which is off to a great start. The brand has another major launch in early September, and shall we say, we expect that to be memorable.”
Explaining how Soma is altering its brand positioning and communicating those changes to its consumers, Broader stated “I would say we’re communicating them quietly to the customer right now. Again, sort of along with the theme that we’ve been talking about today. Soma, that is and remains to be our greatest growth opportunity and growth vehicle. And when we are ready for a more expansive and explosive growth opportunity for Soma, we want to have our product, our pricing, our promotion, our brand just right. And we are continuing to tweak on all of those metrics right now and testing many of them. And then we’ll communicate that out, and we’ll also communicate our growth plans.”
Broader also spoke about the advantages of Chico’s and Soma’s focus on the older consumer. “I think sometimes people forget there’s a 55-year-old born every minute. Everyone thinks that the top of our file is “aging out” or worse. But the fact is, people are coming into that bucket at the same rapid rate. And if you look at the aging population of the U.S. and that aging boomer of market, there is a tremendous amount of people in our core demographic and there continues to be more people added to that core demographic each and every day, and it’s our job to make sure that our brand is current, that it’s modern, that it’s relevant, that it’s speaking to the upper and lower end of what is one of the widest psychographics and demographics in specialty retail, and we’ve got to please both ends of that spectrum. And for the modernization and the newness of that brand and its increasing penetration online, gives me a lot of confidence there.”
Reaffirming store growth plans for Soma in 2016, CFO Todd Vogensen noted in the conference call that Chico’s had “continued plans to open approximately 17 more stores, more than half of which will be Soma stores. In addition, we’ll continue to invest in existing stores and technology to advance our priority to evolve the customer experience.” — NM
The entire Chico’s conference call transcript can be found here: http://seekingalpha.com/article/4003390-chicos-fas-chs-ceo-shelley-broader-q2-2016-results-earnings-call-transcript?page=1
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