Chico's FAS Inc. (NYSE:CHS) Q3 2017 Earnings Conference Call Transcript
Nov 21, 2017 • 08:30 am ET
Good morning, and welcome to the Chico's Third Quarter 2017 Earnings Conference Call. (Operator Instructions). Please also note today's event is being recorded.
I would now like to turn the conference over to Julie Lorigan, VP of IR, Public Relations and Corporate Communication. Please go ahead.
Thank you, Rocco, and good morning, everyone. Welcome to Chico's FAS Third Quarter Earnings Conference Call and Webcast. Joining me today at our National Store Support Center in Fort Myers are Shelley Broader, our CEO; and Todd Vogensen, our CFO.
(Forward-Looking Cautionary Statements). And with that, I'll turn it over to Shelley.
Thank you, Julie, and good morning, everyone. Despite the significant disruption of our business due to the three hurricanes, our overall third quarter performance met our expectations. Our performance reflects the substantial progress we are making in executing our strategic initiatives and building a stronger, more profitable company for the long term.
As I approach my two-year anniversary at Chico's FAS, I'd like to recap where we are in executing our turnaround plan. Specifically, we analyzed and diagnosed the problems across the company. We developed a corrective action plan around organizational structure, operating efficiencies and product life cycle. And we are close to completing the implementation of that plan. And now we have identified opportunities for top line growth. In this last phase of our plan, we are focused on building a sustainable revenue stream as we go after those opportunities that are most impactful to the business.
A quick word on our team's response to those hurricanes before I get to the business results. In Texas, Florida and the Southeast, we were able to take steps ahead of the storms to protect our stores, and as a result, were able to get them reopened quickly. In anticipation of Irma, we watched as it tracked towards our headquarters in Fort Myers. We were able to maintain flow of product, customer support and critical business processes by moving a team of resources to our distribution center in Winder, Georgia. I am proud of our team's response to the storms and so thankful that those impacted remain safe.
Now turning to our third quarter results. We are continuing to see the benefit of our margin and cost initiatives, which contributed to a solid bottom line performance. As you saw, we reported earnings of $0.13 per share for the quarter, which included $0.04 per share of cost related to the above-mentioned storms. We are making important improvements across our brands, proactively addressing our customers' needs, and we believe that our actions will deliver stronger top line performance as well.
Comparable sales for the third quarter were down 8.2%, adjusted for an approximate $9 million sales impact due to severe weather. Comparable sales declined 7.6%, which was in line with our expectations and a slight sequential improvement from the first half. We implemented some controlled promotions to right-size inventory following the hurricanes, and we still ended the quarter with an improvement in merchandise margin and with gross