Direct Drives Chico’s Results

Fourth-quarter and fiscal-year net sales rose for Chico’s, with the direct-to-consumer segment playing a big role in its success. But the women’s apparel cataloger/retailer says it will no longer break out direct sales as a separate channel for reporting purposes.

Customers of Chico’s, which includes the Chico’s/Soma Intimates and White House | Black Market brands have become “channel-agnostic,” according to president/CEO David F. Dyer. During a Feb. 23 analysts call, Dyer said that the direct and store channels have become intertwined.

“The customer does not differentiate between the two channels, and it’s becoming increasingly difficult to properly attribute sales and marketing expenses to the appropriate channel,” Dyer said. “Our monthly mailing is designed to traffic our stores, but also drives ecommerce. Paid search actually drives more sales to the stores than direct-to-consumer sales, and out Internet marketing drives both stores and ecommerce sales.”

But direct sales made up about 10% of the company’s $475 million in fourth-quarter direct sales, and they increased 47% compared to the same period last year.

Chicos’ total net sales for the fourth quarter were up 9% compared to the period in 2009. Its net sales for fiscal 2010 were up 8.3%.

Dyer said the company hopes to lower its catalog circulation in fiscal year 2011, because segmenting tests proved it could get the same sales dollars out of catalog-driven buyers. Chico’s will instead re-allocate some of the money it had used for circulation to new media and perhaps television advertising, Dyer said.

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