Chico's shares jump as apparel retailer announces plans to sell on Amazon.com

Chico’s FAS, the parent company of Chico’s, White House Black Market and Soma, announced Monday its plans to soon sell Chico’s merchandise on Amazon.com.

the No. 1 apparel retailer in the U.S. this year. It’s been working with Nike, Calvin Klein and Carter’s, to name a few, to help dismantle a sea of third-party sellers flooding the site with used or marked down inventory.

Still, many brands worry that once they agree to sell on Amazon.com they will be pressured to slash prices, which would hurt profit margins.

According to Jefferies analyst Randal Konik, Chico’s has been cutting back on promotions of late and keeping a tighter control on inventories. “[Merchandise] rebalancing is beginning to yield results at core Chico’s, and we see the other divisions following suit,” he said in a note to clients.

In the fourth quarter of fiscal 2017, same-store sales for Chico’s FAS fell about 5 percent, which was better than what analysts were anticipating. Inventories decreased more than 6 percent during the period, while selling, general and administrative expenses also dropped from a year ago.

Regarding its partnership with Amazon, Chico’s said the deal is “not expected to be material” to 2018 results “given its early nature.”

Chico’s shares are up about 15 percent so far this year.

source : www.cnbc.com