CHCS, speaking of this one, interesting story today
<<Chico?s expanding on its success
By LAURA RUANE, The News-Press
There?s a lot of rumbling these days at Chico?s FAS.
But the sounds at the Fort Myers-based women?s casual clothing chain aren?t groans over store sales or stock prices.
After a three-year turnaround, Chico?s never has been stronger, officials say. The rumbling comes from a massive roller preparing the ground for a $5 million addition to company headquarters.
That?s just the start of the Chico?s boom: By the end of the year, the company also aims to add 50 new stores in leased quarters nationwide, bringing the total to around 250. Forty-one new stores were added in the last fiscal year. Chico?s also will expand catalog sales and add e-commerce to its Internet site.
These new services are needed because new customers are pouring in from a massive advertising push in high-end women?s magazines.
?We?re really on the cusp of becoming a household name,? said CEO Marvin Gralnick, who founded the company with his wife, Helene. ?We believe that in the next 24 months, every baby boomer will know about Chico?s.?
That?s important because Chico?s boutique-like stores target middle- to high-income women aged 35 to 60. Its centerpiece merchandise consists of comfortable clothes that some wag at Hoovers.com called ?adult Garanimals,? after the line of color-coordinated children?s wear.
Local boomers seem very familiar with Chico?s.
?I love their clothes,? said Rose Anderson, emerging from Chico?s at The Bell Tower Shops last weekend, with a ribbon-bestrewn bag containing capri pants.
?They wear well and wash well. I feel very comfortable in them,? said Anderson, who lives in Cape Coral.
?I love the color combinations, and the girls in the shop ? the way they?ve learned how to coordinate the clothes and welcome the customer ? it?s so impressive,? said Jo Hamilton, a longtime Chico?s shareholder and a seasonal resident of The Landings in south Fort Myers.
?I?m an old store designer and buyer,? said Hamilton, who formerly worked for a department store chain in the Midwest.
Hamilton is so sold on Chico?s she recruited fellow members of the Fort Myers Women?s Republican Club to model Chico?s fashions Wednesday at a club luncheon. ?It?s thrilling,? she said. ?Chico?s is a hometown company that has come up from nothing.?
It?s a story many local folks are fond of retelling. Founded in 1983 as a folk art specialty shop on Sanibel Island, Chico?s saw wild growth during the 1980s and early 1990s.
By 1991, Chico?s had mushroomed into a $25-million-a-year business, with 61 stores in 24 states and more than 400 employees.
The company went public March 24, 1993, closing at $17.50 that day. From there it kept climbing, reaching an all-time high of $37.50 on Nov. 2, 1993.
Hard times hit the company in 1994.
Twice, the founders stepped down from active management, only to return when company fortunes foundered.
Longtime customers grumbled the clothing was getting too tight, too expensive and too similar to other stores? merchandise.
In April 1997, Chico?s stock fell to its all-time low, $2.69. At that point, the Gralnicks already had resumed control.
They added seasoned retailing veterans to their board of directors, and hired Pat Murphy, an industry-respected merchandising manager. Also, clothing designs returned to a more comfortable, casual array.
?The company got in trouble in the past because we lost our focus,? Marvin Gralnick said. ?We could be on a stronger growth tear if we wanted to. But we want to keep it in control.?
Helping the Gralnicks keep in control are a rack of newly hired seasoned managers, such as management information services director Mark Colbert.
?We stole him from Talbot?s,? said CFO Charles Kleman.
Other recent recruits include Jim Frain (Laura Ashley, Gucci) for marketing; Janet Yedavoy (Mast) for quality control and sourcing; and Dave Zeal (Hollywood Video) for store construction.
Big plans ahead
With beefed-up management, Chico?s is moving forward with some big plans.
By mid-May, limited sales may be under way on its Internet site: www.chicos.com. Mail- and phone-order catalog sales should begin in September, and be going full swing for Christmas.
Chico?s Metro Parkway headquarters is being expanded to accommodate the new operations and the new cadre of middle managers.
The catalog call-in center and fulfillment for both Web and catalog sales will be handled there.
?We?ll have our store people train our call center people, so it will feel as if you?re in our store when you?re on the phone,? Helene Gralnick said.
The idea is not to compete with Chico?s stores, but to complement them, particularly in states such as North Dakota and South Dakota, ?where it?s tough to open stores,? Edmonds said.
It?s also for time-starved baby boomers who might even live or work near a Chico?s store, Marvin Gralnick said.
Beginning at Fort Myers? Bell Tower Shops in May, Chico?s stores will get Internet-ready cash registers, allowing salespeople to order items not in stock. Those items will be shipped that day or the next day to the customer, at no charge.
?But the main focus of our company will continue to be our 200-plus stores,? Marvin Gralnick said.
Gralnicks? future uncertain
When the Gralnicks returned a second time to save the company, one question they faced from stock analysts was how long they would stay on.
That question surfaced again last month, when the Gralnicks announced the promotion of Scott Edmonds, senior vice president-operations to the newly created position of chief operating officer. On Feb. 18, the day of the announcement, Chico?s stock closed at $8.81, down 50 cents.
A week after Edmonds? promotion, a company press release announced the Gralnicks had signed a three-year contract to demonstrate their commitment to Chico?s.
?That was done partially to create some comfort in the market,? Marvin Gralnick said.
It seems to have worked: Chico?s stock closed at $11.25, up 69 cents, the day of the contract announcement. It has been rising fairly continually since.
On Friday, the stock closed at $14.25, down 38 cents on volume of 568,500 shares. Its 52-week high was $22.38 and low was $8.81.
The consensus among analysts works out to a ?buy? rating.
Maribeth Holland with Roth Capital Partners in Newport Beach, Calif., isn?t fretting about what will happen after the Gralnicks? contract is up.
?I let the numbers and the merchandise speak for themselves? Holland said. ?With their new management team, the company has a lot of legs to stand on ? a platform to take it to the next level. This is a company that?s here to stay.?
? Laura Ruane can be reached at 335-0392.>>
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