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Chico’s says goodbye to Boston Proper

August 27, 2015 02:14 PM
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Chico’s FAS Inc. says it will sell Boston Proper, the women’s apparel catalog company turned e-retailer it acquired in 2011 and developed into a fledgling chain of 20 retail stores closely tied to the brand’s website and online inventory.

Chico’s, No. 88 in the Internet Retailer 2015 Top 500 Guide, made the announcement about Boston Proper in its Q2 earnings release and investor call Wednesday. “I love Boston Proper,” said CEO Dave Dyer. “It’s a great direct business, but in the scope of our megabrands without the stores, we think it would get lost in our company.” Dyer was at the helm of Chico’s when it bought Boston Proper for $205 million four years ago and is scheduled to retire next spring. There is no word of a buyer.

Chico’s has been in cost-cutting mode over the last two quarters. It was in talks to sell the entire company to Sycamore Partners earlier this year, but the private equity firm backed out of the deal when it failed to secure financing.

As recently as November, Chico’s said it planned to add four to six Boston Proper stores in the United States this year, and seven in Canada. It has opened one since January.

Originally a catalog company, Boston Proper grew into an e-commerce powerhouse, peaking on the Internet Retailer Top 500 list at No. 146 in 2011, when it generated $111 million in online sales.

Post-acquisition in 2012, Chicos began planning the first Boston Proper shops. The intent was to be “fully omnichannel,” Robin Kramer, founder of retail design firm Kramer Design Group and lead consultant on the Boston Proper project, told Internet Retailer in 2014.

The first store opened in Estero, Fla., in 2013 measuring less than 2,000 square feet, with approximately 26% of that space dedicated to a designated consultation and fitting room space. In that area consumers and clerks—all of whom carried iPads that can access all of Boston Proper's products—could sit and interact with a large "TechTable,” putting together outfits digitally and saving them to the customer's HerCloset account, her customer record of previous orders and item she's liked.

Stores were light on inventory and acted more as showrooms for the brand. Shoppers, working with a sales associate, selected an item on display, and then the associate could use the iPad to show additional colors or other products it complemented. If the shopper wanted to buy, an order was placed and delivered to the consumer's home as soon as the next day.

Boston Proper is the smallest brand in the Chicos portfolio, contributing 3.6%, or $24.2 million, of the company’s net sales of $680.4 million in the second quarter. In addition to its namesake brand and Boston Proper, Chico’s also operates the White House, Black Market and Soma Intimates stores and e-commerce sites. Executives said the company will put more focus on the Soma brand, which it says is in an earlier stage of growth.

Chico’s does not break out web sales from store sales or provide figures on how e-commerce is performing. In a call with analysts, the retailer pointed to some improvements underway, however. Chicos.com is being redesigned as a fully responsive site. The redesign will launch before the end of the year. Responsive design is a website format that automatically tailors the site to the device the consumer is using. The web design technique uses one code base, saving retailers from having to create separate sites for many screen sizes. Chicos.com also added a blog, dubbed InsideChic, which the brand will use to showcase storytelling content and tie in with marketing campaigns.

For the second quarter ended Aug. 1, Chico’s reported:

  • Net sales of $690.4 million, up 2.9% from $671.1 million a year ealier.
  • Net income of $2.1 million, down 93.0% from $30.1 million a year earlier.

For the 26 weeks ended Aug. 1, the retailer reported:

  • Net sales of $1.37 billion, up 1.5% from $1.35 billion a year earlier.
  • Net income of $34.6 million, down 50.6% from $70.0 million a year earlier. 
 

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