Chico's

"We may make mistakes, but we won't repeat any," avers Marvin Gralnick, CEO of Chico's FAS.

Chico's founding force is referring to the women's clothing company's climb out of a steep, mid-1990s descent that followed its initial, phenomenally successful soar up the sales charts in the early 1980s. The lessons learned are being put to good use.

One year after a second aborted attempt to install a CEO to succeed Marvin Gralnick, Chico's is on the path to recovery. Gralnick, who founded the company with his wife, Helene, returned from a second retirement "because we were needed."

And with a newly formulated, high-test management team firing on all engines, sales are breaking all-time highs. Proprietary design, manufacturing and distribution operations are fueling sales in 147 retail stores in 35 states - 29 in Florida and nine in Lee and Collier Counties. Twelve to 15 new stores are set to open in the near future.

Yes, news these days is good. Chico's recently charted its first $10 million month, and first quarter earnings of .28 cents per share are the highest in the company's history. "Yet in our business, we're literally as good as our last sales day," says Marvin. "We can't take our success for granted. We must re-establish that success every day, every week, every month."

"Today is like the first day of Chico's," says Helene Gralnick, senior vice president of concept and design. "Our attitude is 'There's so much more to be done. Let's see what we can do.'"

Today, Chico's versatile private-label clothing collection has achieved its own designer look, fit and feel at a price that's affordable to its accelerating cadre of loyal customers. Moderate to higher income women from 35 to 60 like the primarily natural, flowing fabrics that mix and match through the years. The Chico's shopping experience is guided by saleswomen rewarded for assuring customers are treated to a comfortable, coordinated wardrobe. The result is a continual updating of outfits with fresh pieces and related accessories.

The Projectory Looks Good

Chico's has come a long way, evolving out of its origins as a lone Chico's Folk Art Specialties shop on Sanibel that opened in 1983 (hence, Chico's FAS, Inc.). It has grown from a back-room workshop in a Fort Myers Beach roller rink to a corporation deserving of its world-class campus headquarters on Metro Parkway in Fort Myers.

What can stockholders look forward to? In the coming year, Chico's will:

* Continue to capitalize on the unprecedented strength of a board of directors that includes executives with top-drawer boutique and department store fashion expertise and multi-store retail savvy.

* Launch a company-wide field sales training program to strengthen the customer service hallmark of "personalized product presentation."

* Vitalize Chico's Passport Club frequent buyer program, which caters to actively enrolled customers. Phone calls alert women to new items suited to their preferences and support special discounts, promotions and private sales.

* Reap the benefits of a recently intensified schedule of monthly promotional mailings proven to boost sales and add thousands of prospective frequent shopper names to the data base.

* Benefit from a more disciplined markdown strategy that results in faster turns at full price and higher final margins.

* Introduce slick, clean steel storefronts and retail cases as a practical foil to the lively home ambiance created by store folk art and wood antiques.

* Refine and redefine operating systems and procedures for top-level efficiencies.

As a whole, Chico's is on its way to realizing a maxim instilled in Helene from the time she was a child. "'Always live up to your potential,' my mother told me. Chico's managers and employees understand what that means," she says. "Seeing us all grow and develop, that's the thrill."

It's a philosophy designed to translate into accelerating employee opportunities, a growing customer base and corporate profits. "Success makes people happy," says Marvin. "When people are having fun, they feel energized. One of our main goals is to have kindness as well as success. We want people to look forward to coming to work every day."

Staying Ahead of the Curve

Helene's family consistently exposed her to Miami's art-oriented environment as a child. As an adult, she thrives on designing merchandise, creating marketing programs and shaping the overall image of the company. Growing up, Marvin regularly traveled, met with designers and decorators, and purchased pieces for his family's antiques and accessories wholesale business in St. Louis. He thrives on designing space. They met 27 years ago in Guadalajara, Mexico, where they became friends and then business and life partners.

Echoes of the pair's early career in Mexico resound through Chico's prints, jewelry and decor. But ideas come from anywhere.

"We pay attention to everything," says Helene. "We pick up on what kids are wearing, what walks through airports, what we see on the movie screen. A jacket detail or a dress style or an attitude from 50 years ago in a hit summer movie could be the next demand."

"We sense the feelings engendered. Then we interpret them for our customer," adds Marvin, who has the advantage of having Helene nearby, a perfect example of the Chico's customer. "She buys lots of clothing to keep current. When she tires of pieces, she gives them away. But she may have favorites in her closet for years."

Earlier forays into styles "that looked like everyone else's" or "didn't stay up with what customers wanted" or "were too tight," or "too heavy on prints" taught solid lessons. Today's best-selling products represent a happy balance of 1980s and 1990s Chico's philosophies. Store stock generally comprises 75 percent staple items and 25 percent novelty items. Strategic merchandising places new designs in stores for a limited period to create a sense of shopper urgency. "All our experience has matured us and honed our instincts to the strength of tempered steel," observes Marvin.

"We're not always right, but we've learned to trust ourselves," confirms Helene.

"We've learned to keep Chico's clothes simple and clean," says Marvin. "It takes a woman with a certain amount of sophistication to wear them. They aren't expensive. We don't over-adorn them. Decorative aspects are functional. You'll also see male orientation in many of our clothes, which is attributed to my influence. I believe men's clothing has a lot of integrity."

Keeping Costs on Target

Art forms must function when they operate in the world of commerce. That's where Charlie Kleman, chief financial officer, comes in. Initially hired as a financial consultant for one week, the Gralnicks quickly realized the value of Charlie's down-to-earth perspective.

"When I arrived in 1989, C