Chico’s will wave bye to Boston Proper business

Womesnwear group Chico’s FAS will sell its Boston Proper brand and chain as the brand’s soul is under threat of “getting lost” among the group’s other brands and business units.

“I love Boston Proper,” said CEO Dave Dyer in a call with analysts on Wednesday. “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.”

It is worth remembering that it was already Dyer who was at the helm of Chico’s when it bought Boston Proper for 205 million dollars in 2011.

Chico’s fails to turn Boston proper into fully functional omni-channel

As explained by the company, they have spent the last four years trying to turn Boston Proper – formerly a women’s apparel catalogue company - into a fully omni-channel operation by opening digitally integrated stores, but it turns out the business line is getting lost among its other brands.

Chico’s FAS Inc. further developed Boston Proper into a chain of 20 retail stores closely tied to the brand’s website and online inventory. At the time Chico’s bought it, in 2011, Boston Proper generated 111 million dollars in online sales.

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

Sale of Boston Proper, a new attempt to reduce Chico’s costs

This sale would be a new attempt of Chico’s to reduce its costs. The company actually held conversations to be sold entirely to Sycamore Partners earlier this year, although the private equity firm backed out of the deal when it failed to secure financing.

Boston Proper is the smallest brand in the Chico’s portfolio, contributing 3.6 percent, or 24.2 million dollars to the group’s net sales of 680.4 million dollars over the second quarter of fiscal year 2015.

In comparison, Chico’s namesake brand, its biggest, posted a 1.1 percent rise in sales to 353.8 million dollars while revenue in the White House, Black Market segment retreated to 212.4 million dollars. Sales in the Soma Intimates threw some light with a 10 percent increase to 89.9 million dollars.

For the second quarter ended Aug. 1, Chico’s reported net sales of 690.4 million dollars, up 2.9 percent from 671.1 million dollars a year earlier. Net income came in quite behind last year’s, dropping 93 percent to 2.1 million dollars.

Analysts expect a possible update soon on the replacement search for David Dyer, Chico’s outgoing chief executive who announced earlier this year plans to retire, recalls the ‘Wall Street Journal’. Dyer’s potential exit has raised the possibility of a sale of the company, analysts have noted.

Given its first-quarter earnings that came in line with expectations, Chico’s cheered its investors with better-than-expected second-quarter figures, sending the stock over 6 percent up Wednesday.