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Chico's FAS, Inc. is making a steady progress from its turnaround plan. In its latest developments, management outlined strategic initiatives along with certain financial goals, backed by its merchant capabilities, a robust portfolio and a strong platform connecting physical, digital and social commerce.
The company’s key brands, namely Chico's, White House Black Market and Soma are performing outstandingly. These factors coupled with a solid business model, leadership team and a healthy balance sheet are likely to help CHS drive its shareholder value over the long haul.
Let’s Delve Deeper
Chico's FAS is focused on its four strategic growth pillars since its turnaround plan started in 2019. CHS aims at being customer-led, product-obsessed, digital-first and operationally-excellent. Management is on track with developing exceptional experiences, offering best products, enhancing customer lifetime value, reinforcing its core platforms, modernizing store systems and advancing data-driven insights. It is focused on expense-control efforts along with supply-chain and real-estate management.
Now talking about its three-year financial targets, management expects accomplishing the overall revenue target in excess of $2.5 billion and digital revenues of more than $1 billion (included in the $2.5 billion mentioned above) by fiscal 2024 ending Feb 1, 2025. Chico's FAS anticipates delivering a gross margin of 40%, suggesting a 330-basis point (bps) expansion from the fiscal 2021 level and an operating margin of 7.5%, indicating a 380-bps improvement from the fiscal 2021 reading; by fiscal 2024. As a result, CHS envisions witnessing a CAGR of more than 15% for earnings per share from the fiscal 2021 actuals. It predicts generating around $400 million of cumulative cash flow from operations over the next three years.
What’s More?
Chico's FAS also reiterated its guidance for the first quarter and fiscal 2022, issued on Mar 1, 2022. For fiscal 2022, management still projects consolidated net sales of $485-$500 million, a gross margin of 36.9-37.7% and earnings per share of 7-11 cents. CHS continues forecasting SG&A expenses as a rate of net sales of 33.9-34.3% and an effective income tax rate of 20%.
For the full fiscal, consolidated net sales are projected in the range of $2,085-$2,115 million and earnings per share within 40-50 cents. CHS expects a gross margin of 36.7-37.2% and SG&A expenses as a rate of net sales of 32.8-33.2% for the ongoing fiscal year. Fiscal 2022’s effective income tax rate is projected to be 26%. Moreover, capital and cloud-based expenditures are forecast between $65 million and $70 million.
We note that the Zacks Consensus Estimate for sales is currently pegged at $494.2 million for the first quarter and $2.11 billion for fiscal 2022. The consensus mark for earnings stands at 10 cents for the current quarter and 48 cents for the current fiscal year.
Capri Holdings, which offers accessories and footwear, has a Zacks Rank #2 (Buy) at present. CPRI has an expected earnings per share (EPS) growth rate of 53.9% for three-five years. .
The Zacks Consensus Estimate for Capri Holdings’ current financial-year EPS suggests growth of 215.8% from the year-ago reported figure. CPRI has a trailing four-quarter earnings surprise of 1,018.2%, on average.
Boot Barn Holdings, a lifestyle retailer of western and work-related footwear, apparel and accessories, presently has a Zacks Rank of 2. BOOT has an expected EPS growth rate of 20% for three-five years.
The Zacks Consensus Estimate for Boot Barn Holdings’ current financial-year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the year-ago corresponding figures. BOOT has a trailing four-quarter earnings surprise of 47.1%, on average.
Tapestry, a renowned designer of fine accessories, presently carries a Zacks Rank #2. TPR has a trailing four-quarter earnings surprise of 28.2%, on average.
The Zacks Consensus Estimate for Tapestry’s current-year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the corresponding year-ago levels. TPR has an expected EPS growth rate of 12.5% for three-five years.
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Chico's FAS (CHS) Outlines Strategic Plans & Financial Goals
Chico's FAS, Inc. is making a steady progress from its turnaround plan. In its latest developments, management outlined strategic initiatives along with certain financial goals, backed by its merchant capabilities, a robust portfolio and a strong platform connecting physical, digital and social commerce.
The company’s key brands, namely Chico's, White House Black Market and Soma are performing outstandingly. These factors coupled with a solid business model, leadership team and a healthy balance sheet are likely to help CHS drive its shareholder value over the long haul.
Let’s Delve Deeper
Chico's FAS is focused on its four strategic growth pillars since its turnaround plan started in 2019. CHS aims at being customer-led, product-obsessed, digital-first and operationally-excellent. Management is on track with developing exceptional experiences, offering best products, enhancing customer lifetime value, reinforcing its core platforms, modernizing store systems and advancing data-driven insights. It is focused on expense-control efforts along with supply-chain and real-estate management.
Now talking about its three-year financial targets, management expects accomplishing the overall revenue target in excess of $2.5 billion and digital revenues of more than $1 billion (included in the $2.5 billion mentioned above) by fiscal 2024 ending Feb 1, 2025. Chico's FAS anticipates delivering a gross margin of 40%, suggesting a 330-basis point (bps) expansion from the fiscal 2021 level and an operating margin of 7.5%, indicating a 380-bps improvement from the fiscal 2021 reading; by fiscal 2024. As a result, CHS envisions witnessing a CAGR of more than 15% for earnings per share from the fiscal 2021 actuals. It predicts generating around $400 million of cumulative cash flow from operations over the next three years.
What’s More?
Chico's FAS also reiterated its guidance for the first quarter and fiscal 2022, issued on Mar 1, 2022. For fiscal 2022, management still projects consolidated net sales of $485-$500 million, a gross margin of 36.9-37.7% and earnings per share of 7-11 cents. CHS continues forecasting SG&A expenses as a rate of net sales of 33.9-34.3% and an effective income tax rate of 20%.
For the full fiscal, consolidated net sales are projected in the range of $2,085-$2,115 million and earnings per share within 40-50 cents. CHS expects a gross margin of 36.7-37.2% and SG&A expenses as a rate of net sales of 32.8-33.2% for the ongoing fiscal year. Fiscal 2022’s effective income tax rate is projected to be 26%. Moreover, capital and cloud-based expenditures are forecast between $65 million and $70 million.
We note that the Zacks Consensus Estimate for sales is currently pegged at $494.2 million for the first quarter and $2.11 billion for fiscal 2022. The consensus mark for earnings stands at 10 cents for the current quarter and 48 cents for the current fiscal year.
This presently Zacks Rank #1 (Strong Buy) stock has rallied 25.8% over the past six months against the industry’s 6.1% dip. You can see the complete list of today’s Zacks #1 Rank stocks here.
More Key Picks in Retail
Some other top-ranked stocks are Capri Holdings (CPRI - Free Report) , Boot Barn Holdings (BOOT - Free Report) and Tapestry (TPR - Free Report) .
Capri Holdings, which offers accessories and footwear, has a Zacks Rank #2 (Buy) at present. CPRI has an expected earnings per share (EPS) growth rate of 53.9% for three-five years. .
The Zacks Consensus Estimate for Capri Holdings’ current financial-year EPS suggests growth of 215.8% from the year-ago reported figure. CPRI has a trailing four-quarter earnings surprise of 1,018.2%, on average.
Boot Barn Holdings, a lifestyle retailer of western and work-related footwear, apparel and accessories, presently has a Zacks Rank of 2. BOOT has an expected EPS growth rate of 20% for three-five years.
The Zacks Consensus Estimate for Boot Barn Holdings’ current financial-year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the year-ago corresponding figures. BOOT has a trailing four-quarter earnings surprise of 47.1%, on average.
Tapestry, a renowned designer of fine accessories, presently carries a Zacks Rank #2. TPR has a trailing four-quarter earnings surprise of 28.2%, on average.
The Zacks Consensus Estimate for Tapestry’s current-year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the corresponding year-ago levels. TPR has an expected EPS growth rate of 12.5% for three-five years.