US womenswear retailer Chico’s FAS has outlined a leadership shakeup that sees Molly Langenstein, president of its two largest brands, promoted to group president and CEO, amid a “significant” restructure of the overall organisation.
A 30-year retail fashion veteran, Langenstein will take up her new role on 24 June. As president of Chico’s and White House Black Market for the past nine months, Langenstein led the apparel group, including its brick-and-mortar boutiques and digital platforms, while increasing sales and product quality.
Langenstein’s promotion will see current CEO and president Bonnie Brooks, who stepped into the role in April 2019 to lead the company’s turnaround, become executive chair of the board of directors and continue to oversee Chico’s strategic direction.
In addition, William Simon, a member of the board and former president and CEO of Walmart US and senior advisor to KKR private equity firm, will assume the role of lead independent director. David Walker, who has served as chair of the board for the past five years, will remain a member of the board, while Langenstein will also become a member.
In a statement on 29 April, Chico’s said the new leadership appointments are the result of a planned succession designed to strengthen and provide ongoing stability and continuity to the business.
“Molly joined the company in August to reposition and rebuild our two significant apparel brands. She has proven to be an exceptional leader who quickly seized the immediate opportunities of improving product assortments, driving sales, and recruiting senior talent, particularly in merchandising, digital and marketing,” Brooks said.
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By GlobalData“Throughout the fall period, the company demonstrated its capacity to dramatically change its performance trajectory, which continued strongly into the pre-Covid-19 spring season. Molly has shown superb leadership during both this high growth phase and particularly in the current environment, as we pivot to a post-Covid-19 operating model. The new culture of agility, and the ability to grow sales while reducing expenses, has already served us well during this period, and I am confident we have a path forward for a sustainable future with Molly at the helm of the company.”
The appointments come amid what Chico’s has called a “significant” restructure of the overall organisation, designed to achieve a leaner, streamlined structure more efficiently aligned to the needs of the business, and to achieve meaningful cost reductions of about 30% across the company.
In a Securities and Exchange Commission (SEC) filing, Chico’s said the move is part of its ongoing strategy to improve its ability to sustain the long-term health of the business and preserve financial flexibility during the Covid-19 crisis.
It includes the elimination of 27% of the company’s officer-level positions and reducing headquarters and field leadership positions by 26%.
“The company expects this initiative to be substantially complete in the second quarter of 2020 and that it will yield annualised operating expense savings of about $30m,” it said.
Chico’s has also terminated the employment of both Intimates Group president Mary van Praag and chief operations officer Ann Joyce, in connection with the company’s planned reorganisation, according to the firm’s SEC filing, in which it said both positions have been eliminated.
In a statement shared with just-style today (5 May), Brooks said: “Last week the company had to make decisions that resulted in people losing their jobs. These decisions were heartbreaking for us and for our teams to make, and under normal circumstances would never have happened. But these are unprecedented circumstances.
“All of our 1,340 stores have been closed for the past seven weeks. Our stores are our main source of revenue. The company has already cut its expenses across all areas, is not paying rent to its landlords, and has stopped or slowed all payments to vendors for all products. All of our Fort Myers headquarters employees without exception, including the board of directors, have taken a 50% cut in pay or are on furlough.
“Under normal circumstances, the company would not be laying off its valued team members without severance, however, the government stimulus package was designed specifically for cases like ours, where companies can simply no longer pay all of their employees, and the stimulus payments are not available while one is receiving a severance. The company is committed to maintaining as many employees as possible in Fort Myers.”
Chico’s is understood to have begun reopening stores across North America yesterday (4 May) for three additional types of revenue generation: the fulfillment of national online orders through store inventories; reintroducing buy-online-pick up in-store (BOPIS) with contactless curbside pickup service; and introducing a new shop-by-appointment service for each of its Chico’s, White House Black Market and Soma brands.
Style Connect, the company’s proprietary digital styling tool, has been a “significant enabler” of the reopening activities and has contributed to what Chico’s called “robust digital sales” during the temporary store closure period.
Langenstein said both the firm’s digital performance and its customer’s comments demonstrate that its investments in innovative technology have benefited the business – a move that will “continue to enhance in our post-Covid-19 operating model.”
In its most recent quarterly results, Chico’s reported its first quarter of positive comparable sales for all three brands since the fourth quarter of 2014. For the three months to 1 February, net sales increased to US$527.1m from $524.7m a year earlier. The 0.4% rise reflected a comparable sales improvement of 2.2%, partially offset by the impact of 77 store closures since last year.
For the four weeks to 29 February, comparable sales were up by 2.7%.
