"We have been evaluating the potential number of doorsfor our brands, and we believe the market for Chico'sto be at least 750 doors with the potential for 800,"said Chico's FAS' president and CEO Scott Edmondsduring the call. "For White House|Black Market, we see expanding opportunities for this brand and are confident that the market can support at least 600 stores."
Specifically, 60% of the new stores will be Chico'sstores, with the balance being White House|BlackMarket units. In addition to the new stores, thecompany plans to relocate or expand 30 to 40 locations.Together, the new stores and relocations/expansionswill add 20% of net sf to the company's store base.The company said that new Chico's and WhiteHouse|Black Market units in 2006 will be somewhatlarger than the average existing locations.
Currently, the company owns 477 Chico's stores, 27Chico's outlet stores, 181 White House|Black Marketstores, five White House|Black Market outlet stores and10 Soma by Chico's stores, while franchisees own and operate13 Chico's stores.
The new stores are part of Chico's growth strategy,Edmonds said, adding that they position the companyfor future growth similar to the results generatedduring the most recent quarter.
During the second quarter, the company generated anoperating margin in excess of 22%, a sales increase of35% and a net-income increase of 38%. "Secondquarter gross margins for the core Chico's brand weresomewhat off from last year's gross margins whileWhite House|Black Market's gross margins were up 270basis points on a quarter over quarter basis," Edmondssaid during the earnings call.
Net sales for the second quarter increased 34.6% to arecord $343 million from $255 million for the sameperiod last year. Similarly, net income rose 38.4% to$49 million, or 27 cents a diluted share, compared tonet income of $35 million, or 20 cents a diluted sharefor the same period last year.
The company achieved comp-store sales growth of 15.7%for the second quarter, including high single-digitgrowth for Chico's. The White House|Black Market brandboasted same-store sales in the mid 40% range.
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