Chico's (NYSE: CHS) will reduce the number of new store openings for 2014 to 107 from the previously announced 120 and 130 stores after a dismal first quarter that missed analysts' estimates on a 22 percent decline in profits.
Chico's made the announcement on a conference call with investors, stating that the additional store openings may still happen at a later time.
"The reduction in new stores planned for this year does not hamper our long-term goal of annual high-single-digit square footage growth, nor does it change our estimate of domestic store potential," said CFO Pamela K. Knous.
At least 35 Soma frontline stores, 15 Boston Proper sites, 15 Chico's store locations and 18 White House|Black Market retail sites will be opened in 2014, the company said. The women's clothing retailer currently operates about 700 stores in the U.S. under Chico's FAS Inc., which owns the signature label as well as White House|Black Market, Soma Intimates and Boston Proper.
While Chico's is reducing the number of new stores in the U.S., the retailer will still forge ahead with its international expansion plans this fall. The retailer has planned three Canadian boutiques in Toronto-area shopping malls, the first of which will open in late August. The stores will open at Square One Shopping Centre in Mississauga, Upper Canada Mall in Newmarket and Mapleview Shopping Centre in Burlington.
For the quarter, Chico's, like many other retailers, was plagued by bad winter weather that led to a drop in foot traffic and a decline in sales. The company also highlighted trouble with inventory levels due to a reduced investment in basics and color at White House|Black Market.
Chico's reported profits of $39.9 million, down from earnings of $51.1 million a year ago. The company earned record sales of $681.6 million for the quarter, up 1.6 percent from $670.7 million a year ago. The increase primarily reflects the addition of nearly 100 new stores over the year.
By segment, sales at Soma Intimates saw the largest gains, rising 3.6 percent to $440.1 million, while sales at the other two nameplates saw declines. White House|Black Market saw a 1.5 percent drop in sales to $217.2 million, while Boston Proper slid 5.3 percent to $24.3 million.
Same-store sales fell 2.6 percent, reflecting less spending on average at checkout, the company said.
-See this Chico's earnings call transcript
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