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Chico's (CHS) to Report Q2 Earnings: What's in the Cards?
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Chico's FAS Inc. is slated to release second-quarter fiscal 2016 results on Aug 31. Last quarter, the company had delivered a negative earnings surprise of 19.4%. In fact, the company has outperformed the Zacks Consensus Estimate in two of the trailing four quarters. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Chico’s mainly concentrates on improving consumer experience, solidifying its brand structure, boosting financials and utilizing retail science. In line with these strategies, the company announced new plans to enhance its supply chain and marketing initiatives, alongside using non-merchandise procurement. These are aimed at curtailing complexities and standardizing business processes, enabling the company to cater to the evolving customer demand.
These undertakings, on a combined basis, are likely to bring in savings of about $65−$85 million annually. Management envisions generating about $15 million of these cost savings in fiscal 2016 itself. Also, these initiatives are likely to take full swing in 2017.
However, Chico’s expects the ongoing trends of weak traffic and soft sales to linger in fiscal 2016. Consequently, the company expects fiscal 2016 to witness a low-single digit decline in comps over the remaining period. Gross margin deleverage is now expected in fiscal 2016, compared with the previous flat guidance. This is because the company now anticipates SG&A deleverage owing to the tough sales environment.
Now, we would wait and see what is in the cards for this specialty apparel retailer in the to-be-reported quarter.
Our proven model does not conclusively show that Chico's is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Chico's is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are at 22 cents.
Zacks Rank: Chico's Zacks Rank #3 (Hold) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Dollar Tree Inc. (DLTR - Free Report) , scheduled to report earnings on Aug 25, has an Earnings ESP of +4.11% and a Zacks Rank #2 (Buy).
Casey's General Stores Inc. (CASY - Free Report) , expected to report earnings on Sep 13, has an Earnings ESP of +0.56% and a Zacks Rank #3.
Fortune Brands Home & Security Inc. , expected to report earnings on Oct 19, has an Earnings ESP of +1.30% and a Zacks Rank #2.
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Chico's (CHS) to Report Q2 Earnings: What's in the Cards?
Chico's FAS Inc. is slated to release second-quarter fiscal 2016 results on Aug 31. Last quarter, the company had delivered a negative earnings surprise of 19.4%. In fact, the company has outperformed the Zacks Consensus Estimate in two of the trailing four quarters. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Chico’s mainly concentrates on improving consumer experience, solidifying its brand structure, boosting financials and utilizing retail science. In line with these strategies, the company announced new plans to enhance its supply chain and marketing initiatives, alongside using non-merchandise procurement. These are aimed at curtailing complexities and standardizing business processes, enabling the company to cater to the evolving customer demand.
These undertakings, on a combined basis, are likely to bring in savings of about $65−$85 million annually. Management envisions generating about $15 million of these cost savings in fiscal 2016 itself. Also, these initiatives are likely to take full swing in 2017.
However, Chico’s expects the ongoing trends of weak traffic and soft sales to linger in fiscal 2016. Consequently, the company expects fiscal 2016 to witness a low-single digit decline in comps over the remaining period. Gross margin deleverage is now expected in fiscal 2016, compared with the previous flat guidance. This is because the company now anticipates SG&A deleverage owing to the tough sales environment.
Now, we would wait and see what is in the cards for this specialty apparel retailer in the to-be-reported quarter.
CHICOS FAS INC Price and EPS Surprise
CHICOS FAS INC Price and EPS Surprise | CHICOS FAS INC Quote
Earnings Whispers
Our proven model does not conclusively show that Chico's is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Chico's is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are at 22 cents.
Zacks Rank: Chico's Zacks Rank #3 (Hold) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Dollar Tree Inc. (DLTR - Free Report) , scheduled to report earnings on Aug 25, has an Earnings ESP of +4.11% and a Zacks Rank #2 (Buy).
Casey's General Stores Inc. (CASY - Free Report) , expected to report earnings on Sep 13, has an Earnings ESP of +0.56% and a Zacks Rank #3.
Fortune Brands Home & Security Inc. , expected to report earnings on Oct 19, has an Earnings ESP of +1.30% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>