=Chico's FAS (CHS) reported earnings on Wed 22 Feb 2017 (b/o)

Chico's FAS beats by $0.01, beats on revs; sees low single-digit FY17 comp decline with gross margin leverage :

• Reports Q4 (Jan) earnings of $0.05 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.04; revenues fell 4.9% year/year to $600.8 mln vs the $594.29 mln Capital IQ Consensus, including $16.8 million related to Boston Proper last year. When excluding Boston Proper from fiscal 2015, net sales decreased 2.3%, primarily reflecting a decline in comparable sales of 2.5%, comprised of reduced transaction count and an increase in average dollar sale. Fourth quarter average unit retail increased primarily due to a reduction in promotional activity.
• Gross margin was $213.4 million, or 35.5%, compared to $217.4 million, or 34.4%, in last year's fourth quarter. When excluding Boston Proper from fiscal 2015, gross margin increased 80 basis points in fiscal 2016 compared to gross margin of $213.3 million, or 34.7%, last year. This 80 basis point increase from the 2015 adjusted gross margin rate primarily reflects reduced promotional activity, partially offset by an increase in incentive compensation.
• At the end of the fourth quarter of 2016, inventories totaled $232.4 million compared to $233.8 million last year.
• During the fourth quarter of 2016, the Company repurchased 1.6 million shares for $20.0 million, at an average of $12.81 per share, under its $300.0 million share repurchase program announced in November 2015, with $163.6 million remaining under the program.

2017 Full-Year Outlook

• For fiscal 2017, the Company is anticipating a low single-digit percentage decline in comparable sales as the Company continues to rationalize its promotional activity.
• The Company expects to achieve gross margin leverage for the year, primarily due to reduced promotional activity and savings from the supply chain initiative launched last year. The Company is planning modest SG&A leverage.
• Overall, the Company is anticipating steady improvement in operating margin that will advance its progress toward its target of double digit operating margin in 2019.