Last Updated Nov 17, 2010 4:24 PM EST
Amid the flash of tired brands flaunting makeovers (think Talbot's, Lord & Taylor, et. al.) Chico's (CHS) has been undergoing a quieter transformation. The results of which should have its management shouting from the rooftops: a 26.8 percent jump in third-quarter net income, with net sales up 8.1 percent and comps rising 3.1 percent. At a time when many retailers are struggling to find the sweet spot for women over 40, team Chico's has managed to pull off an admirable turnaround that's resonating with customers.
Just three years ago, Chico's, which also operates the White House/Black Market and SOMA Intimates chains, was beginning to pull itself out from under the same criticism that's being leveled at Talbots (TLB): its assortment was even too dowdy for grannies. If 60 has become the new 40 (making 40 the new 20) and skinny silhouettes are the new black, it's no wonder.
Falling profits and stock prices ensued, even before the recession reached the depths. Chico's move to up its fashion quotient along with revamping some management strategies was swift and targeted.
Limiting growth was a tough, but necessary initiative. Back in 2007 when Chico's had hit retail maturity with about 600 stores, it decided to pare down some of its short-term growth in exchange for staying profitable. That allowed the chain to rebuild its foundation based on strong customer service and direct-to-consumer sales.
On the design end, Chico's continued to hone what it does best -- jewelry and accessories -- which are both one-size-fits-all and can command much higher margins. This tactic came at about the same time the frenzy for statement jewelry was in full-swing, and Chico's was right there with loads of sparkly cocktail rings, chunky bracelets, and bib-style necklaces.
The design team also worked to scale down its traditionally generous silhouettes. Contrary to popular belief, even plus-size women look leaner in clothing cut closer to the body. So while Chico's still churns out workhorses such as its shantung shirt/jacket, the slimmer fit makes them instantly more modern (and flattering). Chico's even jumped on the skinny cargo trend (a surprisingly comfy trouser despite its utilitarian chic).
While it implemented these style changes, Chico's didn't leave its customer to parse them on her own. The chain's "style expert" and SVP of stores Sher Canada personally trains sales associates to offer shoppers suggestions on how to wear the trends. She's also a tireless promoter appearing in magazines and on television touting her stylish hints and tips. Canada's got a page on Chico's e-commerce site and appears in the company's videos on Facebook.
But there's something much more subtle underlying the brand's turnaround success -- Chico's really knows its customer. Rather than push hard to grab a younger gal (its typical shopper's average age is 52) and confuse its loyal followers, Chico's is simply shilling more stylish clothing to devotees and letting the market share grow organically. To add visual (and audio) context: it's the reason Chico's leopard jacket may be selling better than the (nearly identical) Talbot's version.
Image via Chico's