Apparel marketer Chico’s FAS has carried through on its promise to reverse its direct marketing cutbacks, and its direct response sales during its fiscal first-quarter 2010 results reflect this.
During the quarter, sales rose from $410.6 million to $481.6 million. And its net income rose as well, from $14.5 million, or 3.5% of sales, to $35.4 million, or 7.4% of sales.
Direct-to-customer sales rose 31.4%, to $28.9 million, in no small part due to an increase in total marketing. In the first quarter of 2009, Chico’s allotted $17.8 million, or 4.3% of its sales, to marketing (both direct and non). By the end of first-quarter 2010 this had risen to 6%, or $29.1 million.
The turnaround in marketing spending was initially hinted at in August 2009, after Chico’s had released its second-quarter figures. At the time, executive VP and CFO Kent Kleeberger noted “I think that in the first part of spring our circulation was down. We probably cut too deep.”
In its most recent quarterly results, the company attributed the increase to “our continued focus on this previously [the direct to consumer] underinvested channel.” The company did not specify what its current catalog circulation is.
