Chico’s FAS, Inc., along with its subsidiaries, retails clothing, accessories and non-clothing gift items to women aged 25 and older with a moderate to high income level . Chico’s Inc. markets under three separate brands, including its namesake brand, White House Black Market (WH|BM), Soma, and the recently launched Fitigues. Chico’s generates around 95% of its net sales from its retail locations, the remaining 5% being generated by its catalogue and e-commerce enterprise. Chico’s has had stunningly strong sales growth the past five years, and has only recently seen a decline. Going forward, Chico’s is looking to devote more attention to its newer concepts, especially Soma. 
Chico’s distinguishing characteristic has been its focus on its customers. Chico's maintains an extremely sophistocated cutomer tracking database, and its loyalty programs have several million members. Also, an intense focus on customer service as one of its primary standards helps to foster a close relationship with customers.
Recently, the Company has been experimenting with expansion within its concepts. It is looking to increase its offering in non-clothing gift items (leather goods, watches, gifts for children, etc.) within its retail locations. To this end, the Company is involving itself in efforts to expand its retail square footage, relocating and pursuing larger properties for new stores. 
Recently, more in-house design, a higher number of contracts executed directly with manufacturing and the introduction of on-site quality control mean that the brand has been able to improve its merchandise margins while keeping products affordable and stylish. 
Chico’s targets the fashion-conscious woman aged 35 and over. It interprets current fashion trends, offering frequent new designs along with core and seasonal merchandise in easy-handling fabrics. Chico’s brand utilizes a unique sizing system, facilitated by its relaxed styles. The sizing scheme groups traditional women’s sizes (0-16) into four groups. Because the brand does not have to invest in a wide array of sizes within a single style, it is able to offer a wider array of clothing. In February of 2007, there were a total of 541 front-line Chico’s stores, 34 outlet locations, and 13 franchise locations.
Soma shares its target market with Chicos brand. The concept’s merchandise falls into two categories—intimates and apparel (including activewear, sleepwear and loungewear). At the beginning of 2007, the brand operated 52 retail locations, many of them located near or adjacent to Chico’s stores.
Last year, Chico’s and Soma stores accounted for 73.5% of the company’s net sales.
WH|BH (White House| Black Market) has a younger target market – working women 25 and older with active social lives. This concept focuses on delivering a classic and very feminine look, with merchandise in black, white and related shades. In February 2007, the brand operated 254 front-line stores and 16 franchise locations. In 2006, WH|BM stores were responsible for 22.3% of net sales.
In March 2007, the company was operating 34 Chico’s outlet stores and 16 WH|BM outlets. These locations market slower-selling items removed from primary retail locations, pieces that are pushed out by new merchandise, as well as items from the company’s “Additions by Chico’s” label. This label, designed exclusively for Chico’s outlets, seeks to promote the clearance of existing merchandise, and currently accounts for about 25% of sales. The existence of outlet locations helps the company to clear merchandise while allowing its front-line stores to maintain a less generous markdown policy. In fiscal 2006, outlets accounted for 4.6% of the company’s net sales.
In fiscal 2006, catalogue and e-commerce accounted for 3.3% of net sales.
Central to all the brands is the utilization of loyalty programs, designed to encourage repeat sales and inspire higher spending. Chico’s and Soma jointly offer membership in the “Passport Club,” while WH|BM’s has a program of its own. Preliminary membership is free, and permanent membership is attained after a certain dollar value of merchandise has been purchased. Last year, the Passport club had 3.6 million active preliminary and permanent passport members. WH|BH’s club, Black Book, had about 1.8 million. During fiscal 2006, Passport members accounted for 83% of sales, averaging $108 per transaction and shopping 5-6 times a year. Non-members averaged $66 per transaction and shopped 1-2 times per year. Black Book members account for 63% of all sales, and preliminary members account for 31%.
Fiscal 2006 heralded the end of the company's two-digit growth trend, both in new store and comp store sales. This decline was due to a series of factors:
Net Sales and Operating Income in thousands of dollars
|'||Fiscal 2004||%||Fiscal 2005||%||Fiscal 2006||%|
|Catalog and Internet||$26,831||2.5||$36,151||2.6||$53,523||3.3|
|Net Sales||$1,066,882||100||$1,404,575||100||$1,646,482||-||Operating Income||$224,376||$298,313||$251,053|
Percentage Increase in Comp Company Store Net Sales
During fiscal 2006, 51% of Chico’s and Soma merchandise was produced in China and 30% in other foreign countries. For the company’s WH|BM brand, these numbers were at 69% and 6%, respectively. Heavy dependence on foreign manufacture opens the company up to potential glitches in the timeliness of delivery, and generally to the economic and political situations of those countries. More specifically, potential increases in protectionist measures against Chinese textiles, which may be considered a threat to the domestic market, would imply lower margins for Chico’s products. 
The Chico’s brand, making up the bulk of the company’s revenue, sells to women who are fashion-conscious, but not fashion-forward. Therefore, there is a limit to product innovation. The company’s focus on enlivened basics, items inspired more by necessity than fashion, puts a ceiling on what is purchased. With a total addressable market size of about 14.8 million, Chico’s entire Passport membership accounts for over 7 million women in this group, already an extremely high percentage.
Currently, Soma merchandise reads “by Chico’s,” and retail locations from this brand are often located near Chico’s stores. The company has determined that Soma may indeed have a larger market than Chico’s, given that it’s major competitor, Victoria’s Secret, sells to a young, body-conscious customer. Going forward, the company has announced its intent to open Soma stores independent from Chico’s locations, and remove “by Chico’s” from its labels, thereby distinguishing the brand.
Chico’s was formerly one of the only retail chains targeting the baby-boomer market, and its outstanding customer loyalty system and customer service standards may continue to nurture that customer base. However, competition has been a key force in the company recently, with other companies mimicking the Chico’s model and targeting its customers.