Chico's FAS Inc. (NYSE:CHS) Q2 2020 Earnings Conference Call - Final Transcript
Aug 26, 2020 • 08:30 am ET
Good morning and welcome to Chico's FAS Second Quarter 2020 Conference Call and Webcast. [Operator Instructions]
I would now like to turn the conference over to David Oliver, Interim Chief Financial Officer and Senior Vice President - Controller. Mr Oliver. Please go ahead.
David M. Oliver
Good morning and welcome to the Chico's FAS second quarter 2020 conference call and webcast. Molly Langenstein, our CEO and President also joins me today. Our second quarter release can be found on our website at www.chicosfas.com. under Press Releases on the Investor Relations page.
Today's comments will include forward-looking statements regarding our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry, which speaks only as of today's date. You should not unduly rely on forward-looking statements.
Important factors that could cause actual results or events to differ materially from those projected or implied by our forward-looking statements are included in our earnings release issued this morning and our SEC filings and in the comments that are made on this call. We disclaim any obligations to update or revise any information discussed on this call except as may be otherwise required by law.
And with that, I'll turn the call over to Molly.
Thank you, David and good morning, everyone. We have had a tough quarter as stores were effectively closed, the same amount of time in Q2 as Q1. However, our results for Q2 are much stronger because of our ability to stay focused on our turnaround plan started in fiscal 2019. We are very optimistic about our future and are energized for growth despite the current headwinds.
In the fourth quarter of last year we proved that we could drive our best sales performance in six years, an outstanding 9.2% comparable sales improvement from what we posted in Q1 of fiscal 2019. Based on customer acceptance of our new product, we have confidence in our strategy to return to the trajectory started in the first quarter. We are taking advantage of this unprecedented period to be flexible and to stay laser focused. We have streamlined the organization, reduced expenses, reengineered our supply chain and accelerated technology initiatives. We are fortunate to have three distinctive brands with loyal customers and unique growth opportunities, a very robust digital business, a strong store portfolio, a solid financial position and a nimble talented organization.
Our business plan is based on delivering improved quarter-over-quarter performance. In the second quarter, we substantially enhanced our financial performance from the first quarter. Digital and store sales combined improved by 9.2% in Q2 over Q1, despite stores effectively being closed the same number of weeks in second quarter as in the first.
Our gross margin rate rose more than 1,800 basis points. SG&A expenses decreased by $22.9 million or 18%. Our cash and cash equivalents increased by $7 million and our inventory levels were reduced by nearly 14%. We are taking actions to continue to capture market share and emerge an even stronger company.
We are applying the same disciplines