Chico's FAS is Navigating Enclosed Malls: Analyst Outlines Strategy For Leveraging Lifestyle Centers For Growth

Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of Chico's FAS, Inc. CHS, with a price target of $6.
The company is scheduled to report first-quarter earnings results before the market opens on Tuesday, June 6.
The analyst applauds Chico's real estate portfolio, which, per the management, is rightsized and well-positioned to deliver incremental growth and profitability.
Since 2018, the company has closed 230 underperforming store locations, and management shared that it may close up to 20 more doors this fiscal year, the analyst notes.
The analyst also mentions that CHS is moving away from enclosed malls, which account for ~30% of the fleet today (down from 40% a few years ago).
This is helping the company to shift the penetration towards lifestyle centers and open-air malls.
Considering these, the analyst sees EPS of $0.29 vs. $0.28 last year. Total sales growth of 1% Y/Y to $546 million is estimated.
The analyst forecasts 180 bps of gross margin expansion to 41.8% and 60 bps of operating margin expansion Y/Y to 9.0%.
Price Action: CHS shares are trading lower by 14.2% to $4.41 on the last check Wednesday.