Chico's FAS, Inc. (CHS)

consumer discretionary

Women are proving to be the backbone of this recovery.

Upthumb. Good cash flow. 10% sales growth. Lots of cash on-hand. No debt. High margins.

Nice long run up, but the holidays are coming and the market is in a bit of a correction. Profit taking to perserve cash will be the first order of business. The buying power of their customer base may be falling with the increased unemployment. I believe that the upside potential is small and the floor may be less than $5.

Too expensive in this economy.

At the end of June, the average stock in the S&P 500 traded at 1.6 times book value. I'm shorting this greatly overvalued and "frothy" market. I'm especially bearish on restaurants and retailers, because U.S. consumers are tapped out and continue to lack trust in what the "market predictors" are saying.

Shares of Chico's FAS Inc. rose on Monday, after an analyst said the women's apparel retailer's turnaround plan is working and raised estimates on the stock.

Shares rose 60 cents, or 6.6 percent, to $9.70 during midday trading. The stock has traded between $1.72 and $10.71 during the past 52 weeks.

As the recession has eaten into Chico's sales, the Fort Myers, Fla.-based company has implemented a turnaround plan, including cutting expenses, eliminating 180 positions and closing up to 25 stores.

Sterne Agee analyst Margaret Whitfield said management is on the right track with the turnaround.

She said she is confident "not only that the right initiatives to restore the Chico's brand have been identified, but also that management has acted with a sense of urgency and significant progress seems to have been made sooner than planned."

Specifically, the company's system enhancements will help improve inventory levels and productivity levels beginning in the second half of the year, sales in stores open at least one year, or same-store sales, are improving, the company is working to save money on store rent, and merchandise and marketing are improving, she said.

She affirmed her "Buy" rating on the stock, and raised her fourth-quarter earnings estimate to breakeven per share from a loss of 7 cents per share.

Analysts polled by Thomson Reuters, on average, predict a loss of 3 cents per share in the fourth quarter.

good retailer turnaround plan is working its a great retail stock

CHS has risen to far, too fast, and is ready for a tumble, as the reality of the continuing recession overwhelms the over-optimism that bid up the stock's price. The company is losing money and short interest is up this month to 11% of float.... Not good statistics for a retailer.

with good cash, no debt, and new management, chicos should survive the economic crisis and gain market share over rivals that may not survive (ann taylor, talbots). but currently overvalued - just sold my real life holdings in chicos. and TMF suggests you do the same, too. high PE and not making money anytime soon. with lots of insider buys under $6, i may buy back in when chicos gets to those levels again.

Based on the move, I'd say WS is expecting an earnings beat on May 27. That's nice but this stock will be crushed by November.

Overvalued. Even though they have no debt, they are losing value fast. I'm guessing that if you liquidated this business today you'd probably generate about $500M net and they are trading for like 3 times that.

Furthermore, let's just assume that when their business stablizes that they generate about $80M of earnings per year. Your return on your market cap is only like 5.5%. Why not sell your stock and buy a corporate bond instead and get the same kind of yield without all the equity risk?

The only way this valuation makes sense is if they return to rapid growth soon and grow into their valuation. Even if that happens, which I don't believe, the stock still will trail the market until they grow into their current valuation which means years of languishing stock prices.

It's going to be volatile because there are plenty of bulls out there to support this stock since they've been a real Wall Street darling in the past but I think this baby is coming back down earth again soon.

Their earnings announcement on May 27th should continue to disappoint.

Another stock sucked into the sucker's rally.

GOOD WOMAN RETAIL

I forgot to include a pitch when I thumbs downed this stock a while back -- and as of this writing, this is my all-time worst pick in CAPS. Even though this stock had been severely beaten down when I red thumbed it in CAPS, I simply see no compelling signs Chico's is getting its business back on track, and add that in with the terrible consumer spending environment, and I am a bit shocked that it has gone up 100% over the last six months or so.

Fool.com article on it: http://www.fool.com/investing/general/2009/04/20/chicos-look-out-below.aspx

Rising, but low, share price for company that has no debt and a good customer base, particularly when the economy improves.

Pent up high scale consumerism should bring revenues back. Prosperity will soon be in vogue again.

Chicos is making needed changes on upper management and approach to branding. They are cash heavy, and are still producing cash flow in a postive direction. Speciality clothing industry usually begins its comeback before general retailers. FTR - I own this stock.

Don't like it. It's just that simple.

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