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Chico’s President Steps Down As Brand Sales Drop 10.2% In Q3

Chico’s President Steps Down As Brand Sales Drop 10.2% In Q3

Diane Ellis, President of the Chico's brand, will step down from the position, effective Nov. 30, 2018. Parent company Chico’s FAS has initiated a search to identify a new Chico's brand President. In the interim, the Chico's brand will be led by Shelley Broader, CEO and President of Chico’s FAS.

Ellis had been in the role for two years after joining the company from The Limited. The executive change comes as Chico’s tries to reposition its three retail properties: Chico’s, White House Black Market and Soma. But the repositioning effort has continued to be a tough one, especially at its namesake brand. In Q3, across all three brands:

  • Net sales dipped 6.1% from $532.3 million to $499.9 million (when including the impact of hurricanes Harvey, Irma and Maria in 2017, the number drops further to 7.7%);
  • Comparable sales dropped 6.8%, driven by a decrease in transaction count and lower average dollar sale; and
  • Chico’s closed a net total of 43 stores.

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Individually, Chico’s performed the worst of the three brands, with same-store sales dipping 10.2% compared to a 5.1% decline for White House Black Market. Soma was the lone bright spot for Chico’s FAS, increasing comparable sales 2.4%,with the retailerachieving positive numbers for five straight months.

While White House Black Market will continue with its original brand repositioning, the company revealed that Chico’s will be the focus of a new “brand performance improvement plan.” This new plan comes after a failed brand refresh earlier this year, in which “merchandise and marketing were heavily weighted to boho styles, bold colors and original artisanal prints.”

While the shift was successful in attracting new customers and reactivating some customers who aspired to the brand's heritage, the new styles apparently turned off many existing traditional customers. Chico’s has since adjusted spring assortments to balance its merchandise architecture, reducing planned receipts and opting for more classic merchandise that is performing well. Additionally, the company repositioned marketing touch points to be more inclusive of all customers.

"The initial emphasis that we selected for our Chico's brand repositioning has not resonated with our broader target customer base,” said Broader in a statement. “So, we are course correcting by implementing a performance improvement plan that includes brand leadership changes and adjustments to our product offering, marketing strategy and assortment architecture to better meet expectations for all customers who shop the Chico's brand. Our attention is keenly focused on establishing a record of consistent top line growth across all three of our brands."

Chico’s efforts underscore the challenges apparel retailers face in a highly competitive environment. In May, Chico’s made a controversial decision to sell its flagship brand on Amazon. While this move gives Chico’s another sales channel, it also arguably helps Amazon strengthen its own apparel ambitions and potentially cannibalize sales in Chico’s stores.

In the earnings release, the company revealed that it has connected its endless aisle shared inventory system across all stores, enabling customers to purchase online and ship-from-store.

To personalize the in-store experience, Chico’s launched Client Book, an enhanced platform designed to provide digitized clienteling tools to store associates. With Client Book, store associates would offer customers personalized online storefronts of curated product based on their attributes and prior purchase behavior, as well as the opportunity to work online with a personal stylist. Full rollout to all stores is expected in Q1 2019.

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