At a time when many of its retail counterparts are declaring lackluster sales, Fort Myers, Fla.-based Chico's FAS Inc. is reporting sales of $259 million so far this year — a 67% increase over 2000. The casual-but-stylish apparel and accessories chain is in the midst of a rollout that will increase its number of locations to roughly 300 by year's end. Though most Chico's are company-owned, the retailer is in the process of buying back close to a dozen franchise stores as well.

Chico's attributes its growth not only to new store openings, but also to shoppers' increasing awareness of its exclusively designed, private-label apparel and accessories, geared to affluent 30- to 60-year-old women. “We try very hard to make sure our product assortment meets the needs of our target customer,” says James West, Chico's vice president of real estate. “We're selling to her and she's coming back.” The Chico's approach is working. West says more than 80% of store revenues are generated through the Passport Club, its frequent-buyer program. In fact, same-store sales in 2001 increased 34% over 2000.

Folksy foundation

Founded in 1983 on Sanibel Island, Fla., Chico's Folk Art Specialties originally offered Mexican folk art. But the store's retail focus shifted when founders Marvin and Helene Gralnick bought a truckload of sweaters and sold them within two days. The business was still going strong in 1993 when it went public and Gralnick retired. A series of management changes and radical merchandising shifts, however, resulted in a financial struggle. By 1998, Gralnick was once again at the helm. Under his leadership, sales have increased by at least 50% each of the past few years.

Chico's real estate strategy is based on finding quality sites in a range of settings. “Right now about a third of our stores are located in malls, a third are on [city-center] streets, and a third are in strip or specialty retail centers,” West notes. “We want to maintain that balance.”

And while Chico's prefers higher-income areas (the median household income of a Chico's shopper is $70,000), West stays flexible on specific site characteristics. He regards lifestyle co-tenants such as Pottery Barn, Crate & Barrel and Williams-Sonoma as ideal neighbors.

Flexible store design

The average new Chico's store is 2,000 sq. ft. “But we build each store individually, so there's no prototype design that we're tied to,” explains David Ziel, vice president of construction and services. “We like to maximize the existing architectural features of a site and design our store around it.”

Ziel's group keeps signage packages consistent and often employs stainless steel and black anodized metal for storefronts. Interiors feature branded entryways with cherry flooring. The newest stores include a recessed lighting package and a new beech fixturing system of encased vignette boxes and panels to display apparel. Steel floor fixtures and glass, wood, and metal jewelry and accessory cases round out the kit of parts.

After renovating 60% of its existing stores and opening 23, 42, and 55 new stores during the past three years respectively, Chico's plans to maintain a consistent growth pattern in the next few years, notes West. “We think Chico's can be a 500- to 700-store chain,” he adds. “We'll continue to build stores at our own pace, out of our own profit, not through public stock offerings or by incurring new debt.”

Contact: James West, vice president of real estate, Chico's FAS Inc., 941-274-4140
(F)941-277-0671
or www.chicos.com.

Pat Matson Knapp is a Cincinnati-based writer.