Chico’s Closing 250 Stores, Focusing More on Digital
The women's apparel retailer revealed plans to close at least 250 stores while investing in new technology.
Shares of Chico’s FAS Inc. rose Friday after the retailer revealed plans to shutter stores and build its digital platforms.
The women’s apparel and accessories retailer said it would close at least 250 stores in the U.S. over the next three years. The store closures will be across all three of Chico’s divisions, including the namesake division, White House/Black Market and intimates brand Soma, and represent about a fifth of the company’s roughly 1,430 brick-and-mortar stores in the U.S. and Canada. The exact time of each store closure is still to be determined, but “weighted to years two and three,” according to a company statement.
“Our focus is on implementing those initiatives that drive the greatest levels of growth and profitability of our business,” said Shelley Broader, Chico’s chief executive officer and president. “This includes continued improvement in each of our differentiated brands, increased flexibility and efficiency across our organization and fully leveraging the capabilities of our robust omnichannel platform.”
The company said it would continue to invest in new technology, giving shoppers options like the ability to buy online and pick-up in store or find products that have sold out. The closures will also let the company take advantage of its lease expiration cadence.
Investors might be sold. Company shares rose 5.4 percent to $6.25 in midday trading Friday. Chico’s also updated its fourth quarter 2018 guidance for the period ending Feb. 2, saying sales were trending better than expected.
Chico’s needed a boost. The stock has fallen about 36 percent over the past year. In an effort to turn things around, Chico’s began pivoting away from its neutral tones with brighter colors. But as the downturn continued, the company decided it needed to focus on what its core shoppers want: classic silhouettes and basics.
Then the company fell short on both top and bottom lines during its most recent earnings. That might help explain why Diane Ellis left her post as Chico’s brand president in November after only two years on the job.
Even so, changing mall patterns and consumer shopping habits have negatively impacted many retailers. In November, Gap Inc. said out of the 775 Gap brand locations globally, it would close “hundreds” of unprofitable stores in the near future to focus on the web site, including its three-level flagship at 680 Fifth Avenue in Manhattan. J. Crew, Abercrombie & Fitch, Macy’s and Ralph Lauren also all closed stores in 2018.