Skip to main content

This Is Why Chico’s Believes Shoppers Will Return to its Stores

Chico’s FAS Inc. has a plan to re-open stores starting Monday.

“Research shows our customers’ main shopping crossover for all of our categories is with department stores. We believe we will have some significant advantages in the next several months as the majority of our stores are under 3,500 square feet and are located in easily accessible shopping plazas,” Bonnie Brooks, CEO and president, said, adding that all store openings will be consistent with local health and safety guidelines and regulations.

State and local governments, including Georgia and Texas, are now dipping their toes in the water to test restarting businesses in the wake of continued social distancing due to the coronavirus, or COVID-19, pandemic amid concerns of a second wave of infections this fall.

The smaller size of Chico’s boutiques allows it to reopen quickly and safely, as well as follow enhanced safety precautions, Brooks said. “For example, our teams have the ability to manage the number of customers in the stores, provide hand sanitizer and masks to customers, create new flexible distance between clothing racks and adjust fitting rooms to accommodate social distancing practices,” she added.

Starting on Monday, the retailer plans to begin a three-phase roll-out.

Phase one will fulfill national orders through store inventories, while phase two calls for “buy online, pickup in store,” including contactless curbside pickup. For phase three, Chico’s is introducing a new shop-by-appointment service for all of its five brands: Chico’s, Chico’s Off the Rack, White House Black Market, White House Black Market Outlet and Soma.

As the magnitude of the store closures and the coronavirus impact on the women’s apparel industry became “clearer,” Chico’s pivoted to a new business plan for 2020 that called for assessment and overhaul of every function of the retailer’s business, as well as adjusting operations for digital marketing and distribution, Brooks said.

Related Stories

“During the past few weeks, we have significantly reduced our weekly cash burn. Our actions have been designed to reduce operating expenses by approximately 30 percent and we are committed to holding this cost structure for the long term,” she added, noting that Chico’s has deferred the majority of its payables, and is renegotiating all contracts, including real estate.

According to Brooks, the past six weeks saw strong customer demand across its online platforms, including online traffic and sales. “Chico’s FAS digital sales have experienced double-digit growth in the six weeks since the company became a digital-only business on March 18, 2020,” she said. Top categories driving sales growth and double-digit traffic growth are intimates, sleep, cozy, active and lounge.

In mid-March, Chico’s deployed handheld devices incorporating the retailer’s proprietary digital styling software called StyleConnect, a move that help support the subsequent strength in e-commerce, Brooks said. The software, she added, enables store associates to communicate directly with customers and drive the front-line business to digital fulfillment.

“Style Connect was designed as a competitive advantage that has further opportunities for increasing sales as we move into our new ‘post-COVID-19 operating model’ as it allows for intimate but distanced connection in in a meaningful manner that is resonating with our customers,” Brooks said.

Chico’s for the last few years and through most of last year suffered through a downward sales trajectory, but has since pivoted to its first positive quarter of comparable sales for Chico’s, White House Black Market and intimates concept Soma–when the retailer posted fourth-quarter results in February. Technological investments have helped to shift its business focus and include extending its personalized services, while sourcing and supply chain transformations have increased speed-to-market and product quality improvements.

In May, private equity firm Sycamore Partners made two attempts to acquire the women’s specialty chain, with the second offer at $3.50 a share, or a deal value of $412.8 million, lower than the initial offer of $3.85 a share, or a deal value of $454.0 million. A third attempt in June valued the retailer at $3.00 a share, or $353.8 million. The company’s board rejected all three overtures by Sycamore. Chico’s at the time was in the process of repositioning operations, including shedding 250 stores through 2021. Brooks was interim CEO following the departure of former CEO and president Shelly Broader in April of last year.