Weak Week

Chico’s FAS Inc. (Fort Myers, Fla.) has said that sales during the first 10 days of September, including the Labor Day weekend, were weaker than anticipated, with same-store sales decreasing by 2 percent.

The specialty retailer, which is used to same-store sales increases, attributed this weakness to a number of factors including the continuing impact of Hurricanes Charley and Frances and unusually low coupon redemption rates in certain pockets of the country (most likely related to delays in the delivery of its September catalog).

The company said it sustained limited damage to its stores from the two hurricanes that hit its home state of Florida in the last two weeks. Several stores remain closed and numerous others, particularly those on Sanibel Island, central and northern Florida and the East Coast of Florida, are operating at significantly reduced sales levels as the areas recover from the hurricanes. The Company operates 73 stores in Florida: 54 Chico’s, 18 White House | Black Market and 1 Soma by Chico’s. Approximately 60 of these stores were effectively closed during the peak of Hurricane Frances this past Sunday and Monday; however, any significant physical damage or loss of income related to these hurricanes should be adequately covered by insurance.

“We continue to analyze the reasons behind the weakness in sales during the last week of August and the first 10 days of fiscal September,” said president and ceo Scott Edmonds. “We have no reason to believe that what appears to be a short-term blip represents a fundamental shift in our business or our long-term growth plans and we continue to have confidence in our business and our Fall merchandise offerings. It is not appropriate to extrapolate future results based upon a microscopic view of any given week or month, and since we are still evaluating our current sales trends, we will not provide an estimate of our same-store sales results for fiscal September at this time.”

The company estimates that the direct impact of Charley and Frances is likely to reduce same store-sales for the fiscal month of September by between 1.5 percent and 2.5 percent, taking into account both closed stores and stores operating at significantly reduced sales levels. However, Chico’s believes that the indirect impact on stores in the rest of the country, and specifically the East Coast, is likely to be larger. Hurricane Frances is believed to have affected normal shopping patterns as many consumers closely monitored its progress. To offset the weakness in sales due to these hurricanes, the company is planning to intensify its marketing efforts over the next several weeks, which should generate additional traffic during the balance of fiscal September.