Gross profit for the fourth quarter decreased 19.2% to $195.1 million from $241.5 million in the prior year's fourth quarter. Gross profit as a percentage of sales for the current quarter was 47.7%, compared to 54.3% in the prior year's fourth quarter.
Chico's front-line stores' merchandise margins in the fourth quarter decreased by approximately 680 basis points compared to the prior year's fourth quarter primarily due to an aggressive markdown strategy aimed at lowering Fall carryover levels at year end.
Gross profit percentage was also negatively impacted by lower merchandise margins in the direct to consumer and outlet channels primarily due to higher markdown rates as a result of lower than anticipated sales at the front-line stores.
To a lesser extent, the Company's overall gross margin was also impacted by the Company's continued investment in its product development and merchandising functions and by higher cancellation charges attributable to reducing Spring inventory commitments.
Selling, general and administrative expenses (SG&A) for the fourth quarter increased 11.0% to $229.3 million from $206.6 million in the prior year's fourth quarter. As a percentage of sales, SG&A in the fourth quarter increased by approximately 960 basis points compared to the prior period primarily due to increased store operating expenses, increases in marketing spend and from the deleverage associated with the Company's negative same store sales, combined with the reduction in sales associated with the extra week last year.
marketing@alchempro.com
