Chico’s FAS (CHS) is a leading retailer of women’s apparel. The stock trades at a big discount to the market, and the company could benefit from improvement in demand but also from several internal initiatives and opportunities, including the conversion of catalog-company Boston Proper, which it acquired last year, to stores. The balance sheet is very strong, the valuation low, and the chart showing strong support just below the current price. After a weak earnings report, my target has been reduced from 25 to 23.5, but this still suggests the potential for significant gains over the next year.
CHS was a high-flying retailer that lost its way that I enjoyed watching on the way up as we owned it at my former employer and exited as the fundamentals changed. I became interested in it again after its CEO, Dave Dyer, joined to turn it around in 2009. His background and capabilities are a great fit, as he fixed up Lands End before Sears acquired it as well as Tommy Hilfiger before it was acquired by private equity. It was the Lands End experience that really attracted my attention, as that was a catalog business that evolved to internet and even stores, similar to the CHS evolution.
Today, CHS operates four different concepts, including