CHS - Chico's stock surges over 20% on earnings beat strong January sales

Chico’s FAS ( NYSE: CHS ) stock ripped over 20% higher on Tuesday after topping Q4 earnings expectations and offering optimistic guidance for the year ahead.

For Q4, GAAP EPS of $0.06 came in above the flat expectation on the Street, while $524.1M in revenue came in $12.1M stronger than consensus estimates. Gross margin was 34.9% of net sales for the quarter, up 40 basis points from the prior year quarter. Comparable sales rose 6.1% in the quarter.

“We delivered strong store and digital sales growth, substantial gross margin expansion and solid expense leverage for the year, which produced outstanding operating income, cash flow and EPS,” CEO Molly Langenstein said. “Apparel led our revenue growth this year, with Chico’s posting a 31% comparable sales increase and White House Black Market generating a 26% comparable sales gain.”

She added that strong sales in January helped the company hurdle its own forecasts for both EPS and revenue in Q4. Additionally, a strong response to the spring collection helped the company move full-price products and portends positively for the fiscal year ahead.

For fiscal year 2023, the company expects net sales of $2.22B to $2.25B, above the $2.25B consensus, and gross margin rate as a percent of net sales between 39.4% to 39.8%. Management expects earnings per diluted share of between $0.79 and $0.91 for the full year, below the $0.95 consensus. For the first quarter, net sales are expected to range from $535M to $550M. The company expects earnings per diluted share of $0.26 to $0.30 against a $0.30 consensus.

Shares of the Florida-based apparel retailer roared 22.22% higher on Tuesday on elevated trading volume. Short interest in Chico’s stands at 8.4%, according to Seeking Alpha data.

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