Chico's FAS wants to color coordinate its customers with its own brands of chic clothes. Once a Mexican folk art shop, Chico's owns and operates more than 1,400 specialty stores in 48 states, the District of Columbia, the US Virgin Islands, and Puerto Rico. Its stores are mostly located in enclosed malls and shopping centers under the banners Chico's, White House/Black Market (WH/BM), and Soma. The boutiques target middle-to-high-income women ages 30 and up with clothes made primarily from natural fabrics (cotton, linen, silk). Its casual wear includes tops, pants, shorts, skirts, and dresses, as well as jewelry and accessories. Chico's FAS was founded in 1983 by ex-chairman Marvin Gralnick and wife Helene.
While Chico's rings up 100% of its sales in the US, the fast-growing chain has plans to enter Canada in fiscal 2014 (ends January).
Chico's portfolio consists of four brands: Chico's (about 700 boutique and outlet stores); White House/Black Market (WH/BM) with some 440 locations; some 210 Soma stores that sell intimate apparel; and its newest online and catalog brand Boston Proper (acquired in fall 2011). Together, Chico's and Soma account for nearly two-thirds of the retailer's total sales.
Sales & Marketing
To drive traffic to its stores and websites Chico's relies on national print and broadcast campaigns, email and direct marketing, social media (Facebook and Twitter) and other outreach programs. It also utilizes loyalty programs to retain customers. The company spent more than $145 million in fiscal 2013 (ended January) on advertising and promotions, up substantially from $110 million in fiscal 2012, and nearly $87 million in 2011.
Chico's sales and profits have risen steeply in recent years. In fiscal 2013 (ended January) sales jumped 18% versus the prior year, while net income rose 28% over the same period. The double-digit increase was driven by additional sales from Boston Proper (acquired in 2011), the addition of some 100 new stores, and strong performance of each of its brands. Indeed, same-store sales (generally considered the best indicator of a retailer's health) have risen, on average, by nearly 8% over the past four years.
In the previous annual comparison sales increased more than 15%, while net income grew 22%. Fiscal 2013 marked the fourth consecutive year of increased sales and profits for the resurgent company, which posted a record $2.6 billion in sales. The company also believes its marketing efforts have helped lure back lapsed customers.
Following a rough patch during the deep recession and steep drop off in women's clothing sales, the retailer has worked hard to revive its Chico's brand stores by improving customer service and merchandise. Judging by the recent run up in sales, CEO David Dyer (who joined the company in 2009) is meeting with considerable success. Indeed, historically fast-growing Chico's is back in growth mode. In fiscal 2013 (ends January) the chain added about 100 new shops and plans to add another 140 locations in fiscal 2014, including three White House/Black Market stores in Canada, its first outside the US. The retail chain is taking a multichannel approach to growth, investing in website functionality to improve the online shopping experience, and aggressively growing its brick-and-mortar store base.
Mergers and Acquisitions
In 2011, Chico's purchased Boston Proper, a privately-held women's retailer for about $205 million to expanded its direct-to-consumer business. The company was enticed by Boston Proper's 2010 net revenue of about $110 million and its multi-catalog circulation of 35 million. Besides boosting its earnings, the move allowed Chico's to integrate marketing, circulation, and sourcing, among other functions. While Boston Proper doesn't operate stores, Chico's plans to test stores for the brand in fiscal 2014. Dyer has credited a renewed focus on the customer and fresh marketing campaigns for Chico's recent success.