Going into this fourth-quarter earnings report, analysts had been expecting to see earnings of $0.13 per share, but the company came up a bit shy at just $0.12.
Its White House/Black Market stores have seen explosive growth over the past decade and seem to have the type of products that would look good in the real White House.
In the immediate aftermath of the credit crisis, shares of CHS collapsed.
We all know the impact that celebrities have on businesses. One of the most obvious instances of this phenomenon comes from the Oprah Winfrey Show. For example, when a title makes it into her book club, millions of loyal followers immediately take action, and sales follow.
These days, Michelle Obama is giving Oprah a run for her money. The First Lady is being closely watched by millions, and she too has a loyal following. She also appears to have a fashion sense that resonates with consumers around the globe. We all saw the number of stories and speculation about her gown during the inauguration.
The operator of 1,074 Chico's, White House/Black Market and Soma Intimates stores said its fourth-quarter loss widened on store impairment charges and severance costs, but absent those charges results exceeded Wall Street's expectations.
The loss for the quarter was $40.5 million, or 23 cents per share including the charges, and 14 cents per share without. Last year's fourth-quarter loss was $20.5 million, or 12 cents per share. Sales fell 9% from a year ago to $373.4 million, while same-store sales were off 13% overall (17% at Chico's and 5% at White House/Black Market).
Results for the tech stocks in last week's preview were a mixed bag, some beats, some misses, some in line. By and large, expectations for tech companies reporting results this week remain high, though. Here's what analysts surveyed by Thomson Financial are anticipating in the way of earnings, as compared to the same period of the previous year.
After hitting a one-year high of $25.10 last July, the stock hit a one-year low of $4.89 on Monday. This morning, CHS opened at $5.32. So far today the stock has hit a low of $5.10 and a high of $5.45. As of 12:05, CHS is trading at $5.28, down $0.04 (-0.8%). The chart for CHS looks bearish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) hold rating.
For a bearish hedged play on this stock, I would consider a September bear-call credit spread above the $50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in four and a half months as long as CHS is below $7.50 at November expiration. CHS would have to rise by more than 40% before we would start to lose money. Learn more about this type of trade here.
- Investors are taking their money out of hedge funds more now that at any time over the past 10 years, according to the Wall Street Journal. Firms are bracing for the end of June when the next big wave will hit.
- First it was a demand for management changes, and now shareholders, including one time director Eli Broad and fund managers Shelby Davis of Davis Selected Advisors and Bill Miller of Legg Mason Inc (NYSE: LM), are again upset with American International Group Inc (NYSE: AIG) and want changes in the boardroom as well, the Wall Street Journal reported.
- The Wall Street Journal reported that Citigroup Incorporated (NYSE: C) will close Old Lane Partners, a hedge fund co-founded by CEO Vikram Pandit.
- Spotlight Capital is increasing pressure on Chico's FAS Inc (NYSE: CHS) and said it has been in touch with 25 major shareholders in order to oust CEO Scott Edmonds and unseat board member John Burden, who are accused of having a conflict of interest, the New York Post reported.
Executives at Limited Brands (NYSE: LTD) and Dillards (NYSE: DDS) have been scooping up their own beaten-down stock. Executives at Foot Locker (NYSE: FL) and Chico's (NYSE: CHS) have also been significant buyers.
Is this a bullish signal? Perhaps. After all, it's been said that while CEOs sell their shares for all kinds of reasons, they only buy stock for one reason: they think it's going up. That's a pretty good maxim, but it can lead you astray in some cases.
- Blue Nile Inc (NASDAQ: NILE) to report Q2 earnings; conference call at 5pm.
- SINA Corporation (NASDAQ: SINA) to report Q2 earnings; conference call at 9pm.
- Tenet Healthcare Corporation (NYSE: THC) to report Q2 earnings; conference call at 11am.
- Cisco Systems Inc (NASDAQ: CSCO) to report Q4 earnings; conference call at 4:30pm.
- Sprint Nextel Corporation (NYSE: S) to report Q2 earnings; conference call at 8am.
- Hot Topic Inc (NASDAQ: HOTT) to report monthly sales at 4pm.
- More monthly sales reports, including: Chicos FAS Inc (NYSE: CHS) at 7:30am; Limited Brands Inc (NYSE: LTD) at 7:30am; Wal-Mart Stores Inc (NYSE: WMT) at 8am; AnnTaylor Stores Corporation (NYSE: ANN) at 8am; and Abercrombie & Fitch Co (NYSE: ANF) at 8:15am.
Last night, Chico's reported same store sales increased 5.2% and total company-wide sales increased 22%. However, one of the flaws of retail monthly sales data is that it does not tell investors what gross margins were. Did management slash prices to get sales growth or did the company successfully change its product mix?
Look for analyst reports today to see if Chico's successfully changed its product mix and did not slash prices to get sales going. If improved product mix was the reason for the sales jump, it may be time to jump back into this stock.
When Chico's has its product mix right, its loyal, high-end customer base will use its deep pockets to buy a lot of stuff, which amounts to huge free cash flow generation for shareholders. With the stock trading for around $25, down from $48 in early 2006, this stock could revisit its former highs if sustainable growth has returned.
- Friedman, Billings, Ramsey upgraded shares of Chico's FAS Inc (NYSE: CHS) to Market Perform from Underperform and raised their target to $25 from $17 on valuation.
- Sanders Morris upgraded Clear Channel Communications (NYSE: CCU) to Hold from Sell, as the firm believes the disapproval by holders to sell the company will result in shares trading in the $34-$37 range.
- Friedman, Billings, Ramsey continued to recommend shares of Urban Outfitters, Inc (NASDAQ: URBN) with an Outperform rating as the firm has seen consistent progress at both the company's divisions throughout March. Friedman added Urban Outfitters to its Top Picks list.
- JP Morgan raised Sonic Corp (NASDAQ: SONC) to an Overweight rating from Neutral, and believes shares have priced in softer Q2 sales that were pre-announced late-February.
- Martha Stewart Living Omnimedia, Inc (NYSE: MSO) was upgraded at Bear Stearns to Peer Perform from Underperform.
- Goldman Sachs upgraded the Mortgage Insurance sector to Neutral from Cautious.
Last night, Chico's reported results and it appears the worst in same store sales (SSS) could be coming to an end. The much watched industry metric could turn positive by the Spring.
SSS for the Chico's stores came in flat, which is a big improvement from 2006 figures. However, management said February SSS were down 3%. Therefore, Chico's is still going through a bumpy period.
With the stock down 60% from its high, it is time to start getting into this stock. Chico's is debt fee, is a cash flow machine and could be a private equity candidate if SSS improves in the Spring and the investment community doesn't drive the stock higher.
Retailer with a loyal clientele come back in droves when the company gets the product mix right.