Chico's And J.Jill Beat Views As Shoppers Return, Pay Full Price

Wednesday, June 9, 2021 | Kate Stalter
Chicos And J.Jill Beat Views As Shoppers Return, Pay Full Price

Women’s clothing retailers Chico’s Fas (NYSE: CHS) and J. Jill (NYSE: JILL) were trading higher Tuesday following some upbeat news in their earnings reports. 

Both companies reported first-quarter results before the bell Tuesday, and both cited consumers’ purchasing at full price, rather than waiting for markdowns. In both cases, consumers were eager to buy, after a year of holding off on new purchases. 

And who can blame the consumers for waiting? For the past year, there’s been no point in dressing up with nowhere to go. 

Chico's beat Wall Street revenue views and issued better-than-expected full-year guidance. Sales came in at $388 million, up 38% from the year-ago quarter. It was the revenue growth in eight quarters. 

The company lost $0.08 per share, an improvement over the same quarter last year, when the loss was $0.38 per share. Even with the loss, Chico’s was still ahead of Wall Street’s views, which called for a loss of $0.13 per share. 

In the press release announcing earnings, CEO Molly Langenstein emphasized the success of revamped marketing efforts.

"The strong first-quarter performance across all three brands was fueled by our significant improvements in product and marketing, which drove full-price selling,” she said.

She noted that the pandemic delayed the results of the new marketing effort, which began in late 2019, adding that those efforts are “now back on track to deliver meaningful growth in the years to come.”

Breaking down the revenue by business unit, Soma sales grew 65% over the first quarter of 2020. According to market research firm NPD, that exceeded growth in the broader apparel market, and was in the top ten brands in its sleepwear and lingerie categories. 

Demand Outpaced Supply

The company also said sales at the flagship Chico’s line, as well as at White House Black Market “are continuing to benefit from improvements in styling and quality. We've embraced the comfort culture and developed innovative fabrics and technology to provide comfort features. The bottoms business in both apparel brands was strong. Inventories are lean and demand outpaced supply. Inventory productivity is high, strategically fueling more full-price sales.”

In other words, shoppers are eager to spruce up their summer wardrobes this year, and weren’t averse to paying full price! 

Shares of Chico’s were trading 4.35% higher mid-session, at $6. Volume was above-average at the time.

Online Sales Up

J.Jill reported earnings per share of $0.20, up from a loss of $3.24 per share a year ago. Revenue was $129.1 million, up 42%. 

That earnings result trounced views; Wall Street expected a loss of $1.35 per share. 

It probably comes as a surprise to no one that online sales were up significantly, growing 32.7% over the year-ago quarter. That represented 57.5% of total net sales, although that number was  61.4% in the first quarter of fiscal 2020. What’s the takeaway? Not only are online sales growing, but it seems customers were also eager to get back into stores.

CEO Claire Spofford addressed post-pandemic trends in the earnings release. 

“Our first-quarter results reflect encouraging progress against initiatives focused on strengthening the operating model and driving healthy margin recovery. Our performance also benefited from the strong rebound in consumer activity this spring particularly as we anniversaried last year’s temporary store closures,” she said.

Here, too, full-price purchases contributed to strong sales and increased margins. 

“[W]e were pleased with the strong customer response to our spring product helping to drive increased full-price selling and strong conversion. These results combined with a continued focus on disciplined inventory management led to significant year over year gross margin expansion and Adjusted EBITDA improvement,” Spofford said. 

She noted particularly strong sales over the Mother’s Day weekend in May. 

Shares of J.Jill rose 4.39% Tuesday, to $18.78.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
J.Jill (JILL)0.7$19.75flatN/A-2.09Hold$3.20
Chico's FAS (CHS)1.3$5.08flatN/A-3.10Hold$5.63
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