LONDON, UK / ACCESSWIRE / September 21, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Chico's FAS, Inc. (NYSE: CHS), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=CHS, following the Company's announcement of its second quarter fiscal 2017 financial results on August 30, 2017. The clothing chain reported a y-o-y decline in sales and earnings. The Company provided guidance for fiscal 2017. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:

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Earnings Reviewed

For the second quarter ended July 29, 2017, Chico's net sales were $578.6 million compared to $635.7 million in Q2 2016. The decrease of 9.0% in net sales primarily reflected a comparable sales decline of 8.4%, driven by lower average dollar sale and a decline in transaction count. The Company's sales fell short of analysts' estimates of $579.6 million.

For Q2 2017, Chico's gross margin was $209.1 million, or 36.1% of net sales, compared to $240.8 million, or 37.9% of net sales, in Q2 2016. This 180 basis point decrease was attributed to sales deleverage of store occupancy expenses and increased promotional activity to reduce inventory levels.

During Q2 2017, Chico's selling, general, and administrative expenses (SG&A) were $173.6 million, or 30.0% of net sales, compared to $186.6 million, or 29.4% of net sales, for Q2 2016. The decline in SG&A primarily reflected a reduction in store operating expenses to align with sales as well as a decrease in unproductive marketing spend.

Chico's effective tax rate was 35.1% for Q2 2017 compared to 38.0% for Q2 2016, the reduction in effective tax rate of 290 basis points primarily related to favorable federal and state settlements.

For the thirteen weeks ended July 29, 2017, Chico's reported net income of $22.7 million, or $0.18 per diluted share, compared to net income of $23.0 million, or $0.17 per diluted share, for the thirteen weeks ended July 30, 2016. The Company's results included the impact of restructuring and strategic charges of $10.3 million after-tax, or $0.08 per diluted share, for the year-ago corresponding period. Chico's earnings came in below Wall Street's expectations of $0.21 per share.

Cash Matters

Chico's had ended Q2 2017 in a strong cash position with $186 million in cash and short-term investments and $76 million in debt. In the reported quarter, the Company repurchased 1.2 million shares for $11.2 million and delivered $11 million to shareholders in the form of dividends; $143 million remains outstanding under its share repurchase authorization.

Chico's capital expenditures totaled $8.5 million in Q2 2017, mostly comprised of investments in technology projects and existing stores. For FY17, the Company is expecting capital expenditures of $55 million to $60 million.

At the end of Q2 2017, Chico's inventories totaled $235.2 million compared to $235.6 million in Q2 2016. The Company's inventories included a $16.9 million increase for the reported quarter compared to the prior year due to a change in shipping terms with a supplier. Excluding the impact of the change in shipping terms, inventory decreased 7.4%.

Fiscal 2017 Outlook

For fiscal 2017, Chico's is forecasting comparable sales to be down high single-digits with gross margin rate decreasing by approximately 75 to 100 basis points. The Company's net sales for the 53rd week are expected to approximate $30 million. Chico's is anticipating SG&A to be down approximately $50 to $60 million on a y-o-y basis.

Stock Performance

On Wednesday, September 20, 2017, the stock closed the trading session at $8.22, marginally down 0.12% from its previous closing price of $8.23. A total volume of 2.52 million shares have exchanged hands. Chico's FAS' stock price advanced 8.02% in the last one month. The stock is trading at a PE ratio of 11.40 and has a dividend yield of 4.01%. At Wednesday's closing price, the stock's net capitalization stands at $1.04 billion.

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