Chico's FAS Inc. (NYSE:CHS) Q1 2019 Earnings Conference Call Transcript
Jun 11, 2019 • 08:00 am ET
We will now begin the question-and-answer session. (Operator Instructions). The first question today comes from Susan Anderson with B. Riley FBR. Please go ahead.
Hi, good morning. Thanks for taking my question. Nice to see the improvement in the Chico's brand. And, also I think, maybe if you could just talk about inventory levels across the brands, I guess will there be the need for additional clearing in second quarter and then as it relates to gross margin, I may have missed this, but did you guys say what merch margin was in second quarter? And then if you could talk about your expectations for, I mean in first quarter, sorry if merch margin in second quarter and then the back half too, that would be great. Thanks.
Todd E. Vogensen
Absolutely. So inventory levels across brands. For Chico's and White House, we've been managing the inventory really in line with sales and being proactive in how we go about doing that. That did cost us a little bit of merchandise margin as we went through the first quarter nothing terribly significant. We've been managing our inventory pretty tightly and as we go into Q2, I would say much the same.
We've set ourselves up with inventory overall in solid position. Our sales particularly for White House are expected to be lower than we probably would have budgeted. But we've also positioned our inventory fairly well. So no significant impact to maintain margin in the second quarter.
Across inventory levels, what I would tell you is, again for Chico's and White House, we really are managing those inventory levels in line with our overall sales expectations and we'll have some areas where if we see opportunity, we will invest behind those. The bigger opportunity really will be through Soma. And in Soma with the tailwind we have, with the programs we have planned, you will see an increase in Soma inventory particularly as we get into the second half.
Great. That's really helpful. And then just one follow up on the improvement in sales in the back half across the brands. Maybe if you could just kind of talk about the drivers there and I guess for White House specifically, do you feel like you can switch the merchandise up enough to get that inflection in the back half? And I guess for Chico's, I assume it's just kind of a continuation of improved performance there. Thanks.
Bonnie R. Brooks
Good assumptions. Hi, it's Bonnie.
Bonnie R. Brooks
Yeah hi. Thanks for your question. So starting with White House. Yeah, the White House has our significant attention right now. Both my attention, Kim's attention and in fact in looking at products and doing product reviews, we're bringing in all of the senior leaders in the Company to those product reviews for the first time.
So we are actually taking advantage of the merchant expertise we have across all the brands to look at each brand now. And that's a new practice, and has resulted in significant changes, I would