Price cuts made to clear seasonal merchandise were a primary driver of Chico’s lower net income for the second quarter ended Aug. 2.
The company posted net income of $30.1 million for the quarter, a drop of 31% from $43.6 million in the year-ago period. Net sales for the quarter were $671.1 million, an increase of 3.3% from $649.5 million in the previous year, but driven primarily by sales at 98 net new stores. Same-store sales inched up by 0.3%.
The company’s gross margin for the quarter was $351.5 million compared to $356.1 million in last year's second quarter. Gross margin was 52.4% of net sales, a 240 basis point decrease from last year's second quarter, primarily reflecting increased promotional activity in fiscal 2014 to sell through seasonal merchandise.
As of Aug. 2, the company operated 1,525 stores in the US and Canada and sold merchandise through franchise locations in Mexico.