Chico's Scales Back Store-Growth Plans for 2008

NEW YORK CITY-Chico’s FAS is reducing its store-expansion plans to 10% total sf growth this year, down from its normal 12% to 15% annual growth due to a challenging sales environment, management said here at Cowen & Co.’s annual consumer conference. “While business remains challenging, it doesn’t make sense to maintain a high level of store growth,” said Kent Kleeberger, the company’s CFO.

Same-store sales at Chico’s fell 13.7% year over year last month. Executives are also forecasting a loss of 14 cents to 16 cents a share during the fourth quarter, down from a 10-cent gain during the prior year’s fourth quarter.

Besides the macroeconomic problems of the housing slump, the credit crunch and rising energy costs, Chico’s has been marred by “merchandising missteps,” said Scott Edmonds, president and CEO. Additionally, December was an especially “challenging and promotional environment,” he said.

Stores aren’t experiencing sharp declines in traffic, but consumers are a lot more cost conscious than before. “She was in the store, but she would not reach for her wallet,” Edmonds said. The Ft. Myers, FL-based retailer of women’s apparel operates 1,037 across its Chico’s, White House/Black Market and Soma chains.