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 1,500 specialty stores nationwide, and in Canada and Mexico (in the latter through a franchise agreement). 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 35 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.
While Chico's rings up almost all of its sales in the US, the fast-growing chain operates several White House/Black stores in Canada (a new market for Chico's). The chain's largest US markets are California, Florida, and Texas, which combined are home to about a quarter of its stores.
Chico's operates 1,518 stores across 48 states, Puerto Rico, the US Virgin Islands and Canada, as well as 37 franchise locations in Mexico.
Sales and Marketing
To drive traffic to its stores and websites Chico's relies on national print and broadcast campaigns, email and direct marketing, social media (
) and other outreach programs. It also utilizes loyalty programs to retain customers. The company spent around $160 million on advertising and promotions in fiscal 2016 (ended January), up from $153 million the prior year.
A trend of fluctuating revenue continued in fiscal 2016, falling 1.5% to $2.64 billion. This reflected a decrease in comparable sales, as well as the absence of sales from sold-off Boston Proper. Store openings counteracted the fall to an extent.
Net income fell by 97% on prior year to $2.0 million, due to an increase in restructuring charges primarily relating to non-cash property and equipment impairment. Employee-related costs such as severance charges and termination benefits also contributed to lower net income.
Cash from operating activities similarly fell 30% to $197.0 million.
Chico's growth strategy is by enhancing customer experience, which has entailed heavy investment in omnichannel capabilities. The company has enhanced its online presence and improved the branding experience, and aims to convey the impression that its three brands' websites are the largest store of each. It is working to remove conceptual barriers between the various sales channels by allowing customers to order online and collect in store.
The company has identified 175 underperforming stores for closure, including all 20 Boston Proper stores held by the sold-off direct-to-consumer business. In fiscal 2015, Chico's closed 69 stores, and plans to close a further 50 in 2016 and the remainder in fiscal 2017.
The Boston Proper business, acquired in 2011, was sold off to better allow Chico's to focus on its strategic goals.
Offsetting the store closures are the opening of four Soma stores in 2016, with a further five planned for the rest of the year.
Chico's was founded in 1983 by ex-chairman Marvin Gralnick and wife Helene.