By ICR
Molly Langenstein, CEO, President, and Board Member of Chico’s FAS, got her start in the retail industry at an early age, watching her mother operate a boutique in a small town in Ohio. “That is where I learned the power that product can play in transforming customers and providing them confidence and joy,” she says.
She recalls one customer in particular — Irene — who had a difficult time finding clothes to fit her body type. “My mom was able to find something for her,” she explains, “and when Irene put it on, she cried.” It was in that moment that Langenstein realized the impact that clothing could have on someone’s life.
Inspired to learn from the biggest players in retail, she began her career with Macy’s. But eventually, she was drawn to the fiercely loyal Chico’s customer base and the opportunity to work with three powerful, unique brands — Chico’s, White House Black Market, and Soma — to reimagine their product and marketing strategies and unlock sales and profit growth.
When Langenstein came on board, Chico’s had experienced several years of weak performance, liquidity challenges, and infrastructure issues. To turn the brand around, Langenstein and her team created a three-year transformation plan supported by four pillars: customer-led, product-obsessed, digital-first, and operationally excellent.
To be customer-led, the company focuses on creating exceptional, memorable customer experiences that keep patrons coming back and generates lifetime value. As a product-obsessed company, the brand aims to create best-in-class merchandise. Digital-first refers to the company’s efforts to create digital tools that augment both in-store and online experiences. Finally, the brand prioritizes operational efficiency by closely managing inventory and diversifying their supply chain.
Guided by those pillars, the company is already seeing results. “We’re nine months into our three-year plan, and we are well on our way to achieving our target,” Langenstein says. The brand’s efforts to expand gross margin has created strong cash flow and given the company more flexibility. “We’ve used that flexibility to reduce financial risk by maintaining a balance sheet with higher liquidity and low debt,” Langenstein explains. That provides the ability to support the brand’s three-year plan and fuel long-term growth. “We expect to generate over $400 million in cumulative cash flow through 2024, and more than half of that will be reinvested into the business,” she adds.
As part of its transformation, Chico’s is working diligently to create digital tools to attract and retain multi-channel customers. Customers that engage across multiple channels — e.g., using the brand’s digital tools, My Closet and Style Connect, visiting a physical store location, and shopping online — spend about three times more than a single-channel customer, according to Langenstein. “In the past quarter, we were able to grow multi-channel customers by 17%,” she adds.
To increase digital touch points, the company also makes a point to integrate marketing efforts, holding things like “Sister Sundays” to promote each brand across the others.
Chico’s also wanted to create a way to reward its loyal customer base, so it created a new loyalty program. “It’s a tier model that rewards customers for spending more,” explains Langenstein. And those incentives go beyond discounts. Top customers want exclusivity, she says — like early access to seasonal clothing collections or the ability to influence future designs.
The program has already seen incredible results. “Enrollment is greater than we expected, sentiment is greater than we expected, and redemption rates and really, really strong,” she says. “It is strengthening the great relationship that we have, and we’re really excited to see where this is going to take us.”
After working in retail for more than 30 years, Langenstein says that there’s one thing that hasn’t changed: the customers’ quest for service and connection. “When a customer enters a store, she wants to be acknowledged and greeted,” she explains, “or she will talk with her feet and leave.” This desire may, in fact, be even more important than it was 30 years ago because this kind of interaction is increasingly rare.
By finding new ways to connect with customers through new digital tools, a customized experience, and a robust loyalty program, Chico’s is making big strides toward reimagining its three brands — and it has the balance sheet to prove it.
To learn more about Chico’s strategic growth plans and Molly Langenstein’s role in that initiative, listen to ICR Founder and CEO Tom Ryan’s interview with her on our podcast, Welcome to the Arena.
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