Why Chico's FAS, Inc. Stock Dropped 11% in October

What happened

Shares of Chico's FAS, Inc. (NYSE: CHS) were falling again last month as the struggling women's apparel retailer got hit by a pair of analyst downgrades. According to data from S&P Global Market Intelligence, the stock finished October 10.7% lower.

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As the chart below shows, the stock fell sharply on Oct. 11 after a downgrade, though it managed to recover some of those losses toward the end of the month.

CHS data by YCharts

So what 

Chico's shares fell 7.2% on Oct. 11 after Bank of America downgraded the retailer from neutral to underperform with a price target of $7. Analyst Lorraine Hutchinson said she saw no path toward a sales recovery for a company seeing comparable sales fall in the high single digits, and that the stock was fully valued at its current level.

Five days later, the stock declined another 4.3% when Citigroup downgraded it from buy to neutral with a price target of $8. Analyst Tracy Kogan said the anticipated turnaround is not materializing and that she lacks confidence that the company can overcome general retail headwinds.

The stock regained some of those losses in the second half of the month, though there was no real news out on the company.

Now what 

It's been a rough year for Chico's as the stock is down 44% so far. Like plenty of other mall-based retailers, the company is struggling to overcome declining traffic as e-commerce rises and shopping patterns shift. Comparable sales dropped 8.4% in its most recent quarter, so clearly management has some work to do.

The company is set to report third-quarter earnings on Nov. 21. Analysts are expecting earnings per share (EPS) to fall from $0.20 to $0.13, and a revenue decline of 9.8% to $538.2 million. With a low bar like that, the stock could bounce back on a decent quarter.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.