Chico's Joins Retailers' Bandwagon to Offer Brands on Amazon

Chico's FAS, Inc. CHS becomes the latest retailer to sell its Chico's brand merchandise and accessories on Amazon.com, Inc. AMZN starting mid-May. As a result, customers can avail Chico's brand’s assortments, including Travelers, no-iron shirts, Zenergy athleisure and So Slimming pants along with the brand’s iconic jewelry on Amazon. In fact, the company’s other brands such as White House Black Market and Soma products are also in the queue to be launched on Amazon, depending on customers’ reaction to the rollout of the Chico’s brand.

Notably, Chico's brand select assortments will be available for Prime members, including free shipping and returns with other benefits. However, this partnership will not affect Chico's control on the pricing, marketing and promotional activities for its products on Amazon. Furthermore, the deal will have a minimal impact on the company’s fiscal 2018 financial numbers due to the short period after the launch.

With this, Chico's FAS joins the bandwagon of retailers like NIKE, Inc. NKE, Kohl's Corporation KSS and Sears Holdings Corporation SHLD who are already selling their products on Amazon. This shows e-commerce giant, Amazon, is well on track to become the nation’s largest online apparel retailer.

Shares of this leading retailer of women's clothing and accessories were down 2.4% yesterday after the Chico's FAS-Amazon partnership news. Moreover, this Zacks Rank #4 (Sell) stock has lost 28.6% in a year, wider than its industry’s decline of 1.2%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

This underperformance can be attributed to Chico's FAS dismal surprise history. Apparently, the company has lagged or matched earnings and sales estimates in three of the trailing four quarters. Also, it has been witnessing declining comparable-store sales (comps) across its brands, which in turn, are marring the overall comps and top-line growth. For fiscal 2018, consolidated comps are projected to fall in low single-digits.

Though this partnership between Chico's FAS and Amazon will not have a material impact on the former’s financial performance in the near term, we believe that it will surely aid the company’s top-line growth and generate additional sales, besides boosting profitability.

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