Annual Checkup -- CHS

I was certainly late to the Chico's (CHS -- click to register for free RT streaming quote) party, but sometimes even when you miss the cutting of the cake the party can be great fun. Chico's is one of a number of stocks in my portfolio that I bought with some trepidation because of their elevated PE ratios (see GOOG, ISRG for a few other examples), but I generally accept the fact that you sometimes have to pay handsomely for great management and excellent growth. At some point in the next few years Chico's will have saturated its core market, but their other concepts Soma and White House/Black Market are just getting started ... and I have faith in this management that they'll be able to continue building these brands. With great performance in terms of same store sales growth and industry-leading (industry-crushing, really) margins, I would never bet against Chico's success ... and maybe they'll surprise us by making something big of their investment in Lucy in the next year or two, or buying some other small chain to which they can apply their merchandising and management expertise. Demographics certainly favor them, with the Baby Boomers wanting to look young and be comfortable in the signature Chico's style and the next big generation, the Millennials, coming close to entering their White House/Black Market years. I thought I was paying pretty handsomely for Chico's when I bought it back in August at about $35, but sometimes paying handsomely is worth it for a top notch product.

Keep up with One Guy's Investments, Free Subscription
Enter your email address:

Delivered by FeedBurner