Chico's FAS, Inc. Reports Earnings Per Share Increase of 27% in Fourth Quarter and 32% in Fiscal 2012

--$0.20 fourth quarter earnings per share

--16th consecutive quarter of double digit earnings per share growth

--3.7% increase in fourth quarter comparable sales, on top of last year's 8.7%

Feb 28, 2013, 07:15 ET from Chico's FAS, Inc.

FORT MYERS, Fla., Feb. 28, 2013 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2012 fourth quarter and fiscal year ended February 2, 2013. The Company also provided its outlook.

(Logo: http://photos.prnewswire.com/prnh/20110920/FL71045LOGO )

For the fourteen-weeks ended February 2, 2013 (the fourth quarter), when excluding non-recurring acquisition and integration costs related to the Boston Proper acquisition, the Company reported net income of $32.7 million, an increase of 29.8% compared to net income of $25.2 million in last year's thirteen-week fourth quarter, and earnings per diluted share of $0.20, an increase of 33.3% compared to $0.15 per diluted share in last year's fourth quarter. Including non-recurring acquisition and integration costs, the Company reported net income of $31.5 million, an increase of 25.6% compared to net income of $25.1 million in last year's fourth quarter, and earnings per diluted share of $0.19, an increase of 26.7% compared to $0.15 per diluted share in last year's fourth quarter. These results represent the highest fourth quarter earnings per share since 2005.

For the fifty-three weeks ended February 2, 2013 (fiscal 2012), when excluding non-recurring acquisition and integration costs, the Company reported net income of $182.2 million, an increase of 26.1% compared to net income of $144.4 million for the fifty-two week year ended January 28, 2012 (fiscal 2011), and record earnings per diluted share of $1.09, an increase of 29.8% compared to $0.84 per diluted share in fiscal 2011. Including non-recurring acquisition and integration costs, the Company reported net income of $180.2 million, an increase of 27.9% compared to net income of $140.9 million in fiscal 2011, and earnings per diluted share in fiscal 2012 of a record $1.08, an increase of 31.7% compared to $0.82 per diluted share in fiscal 2011.

Net Sales

For the fourth quarter, net sales were $651.9 million, an increase of 14.5% compared to $569.2 million in last year's fourth quarter, primarily reflecting comparable sales growth of 3.7% and 101 net new stores for a square footage increase of 8.1%. The 3.7% increase in comparable sales for the fourth quarter followed an 8.7% increase in last year's fourth quarter, for a two-year stack of 12.4%, and reflected increases in both average dollar sale and transaction count. The comparable sales growth primarily reflected a positive customer response to the fashion assortments and the effectiveness of the Company's innovative marketing plans. The fifty-third week is excluded from comparable sales calculations.

The Chico's/Soma Intimates brands' comparable sales increased 2.3%, which followed a 5.5% increase in last year's fourth quarter for a two-year stack of 7.8%, and the White House | Black Market ("WH|BM") brand's comparable sales increased 6.3%, which followed a 15.4% increase in last year's fourth quarter for a two-year stack of 21.7%.

Gross Margin

For the fourth quarter, gross margin was $346.7 million compared to $297.9 million in last year's fourth quarter.  As a percentage of net sales, gross margin was 53.2%, a 90 basis point improvement from last year's fourth quarter, primarily reflecting a higher level of full-price selling and effective inventory management, partially offset by incentive compensation.

Selling, General and Administrative Expenses   

For the fourth quarter, selling, general and administrative expenses ("SG&A") were $296.1 million compared to $259.1 million in last year's fourth quarter.  As a percentage of net sales, SG&A was 45.4%, a 10 basis point improvement from last year's fourth quarter, primarily reflecting sales leverage on marketing and store expenses, partially offset by incentive compensation.

Inventories

At the end of the fourth quarter, total inventories were $206.8 million compared to $194.5 million at the end of the fourth quarter last year. Inventories increased by $12.4 million, or 6.4%, in line with planned sales growth.    

Share Repurchase Program

During the fourth quarter of fiscal 2012, the Company repurchased 3.9 million shares for $70.1 million under its $200 million share repurchase program announced in November 2011. During fiscal 2012, the Company repurchased a total of 6.3 million shares for $107.5 million.

Outlook

The Company's goal has been to establish financial targets that are both sustainable and reflect strong growth metrics. The Company believes that by delivering on its long-term objectives to increase sales by a low double-digit percentage and diluted earnings per share by a mid-teen percentage over a meaningful period of time, the Company will provide its shareholders with substantial value. Consistent with these objectives, the Company announced today several strategic investments in 2013 to fuel future growth, including omni-channel capabilities, expansion into Canada, and opening its first Boston Proper stores.

 

A conference call to review the fourth quarter and fiscal year results is scheduled for today at 8:30 a.m. EST.  A live webcast of the call can be accessed at the Events Calendar page of the Chico's FAS, Inc. corporate website at www.chicosfas.com.

ABOUT CHICO'S FAS, INC.

The Company, through its brands – Chico's, White House | Black Market, Soma Intimates, and Boston Proper, is a women's specialty retailer of private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing items.

The Chico's brand offers women a combination of great style, one-of-a-kind details and warm personal service. Chico's currently operates 611 boutiques and 99 outlets throughout the U.S., mails a catalog and offers round-the-clock shopping at www.chicos.com.

White House | Black Market strives to make women feel beautiful with apparel and accessories in the honest simplicity of black and white and the individuality of styles built from it. White House | Black Market currently operates 401 boutiques and 45 outlets, mails a catalog highlighting its latest fashions and connects with customers at www.whbm.com.

Soma Intimates offers beautiful and sensual lingerie, loungewear and beauty. Soma Intimates currently operates 198 boutiques and 16 outlets, mails a catalog coinciding with key shopping periods and sells direct-to-consumer at www.soma.com.  

Boston Proper is a leading direct-to-consumer retailer of women's apparel and accessories. Boston Proper provides unique, distinctive fashion designed for today's independent, confident and active woman. The merchandise focus is about creating a daring, modern style with a sensual feel and is available exclusively through the Boston Proper catalog and website at www.bostonproper.com.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995  Certain statements contained herein, including without limitation, statements addressing the beliefs, plans, objectives, estimates or expectations of the Company or future results or events constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended.  Such forward-looking statements involve known or unknown risks, including, but not limited to, general economic and business conditions, and conditions in the specialty retail industry.  There can be no assurance that the actual future results, performance, or achievements expressed or implied by such forward-looking statements will occur.  Users of forward-looking statements are encouraged to review the Company's latest annual report on Form 10-K, its filings on Form 10-Q, management's discussion and analysis in the Company's latest annual report to stockholders, the Company's filings on Form 8-K, and other federal securities law filings for a description of other important factors that may affect the Company's business, results of operations and financial condition.  The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that projected results expressed or implied in such statements will not be realized.

For more detailed information on Chico's FAS, Inc., please go to our corporate website at www.chicosfas.com.

(Financial Tables Follow)

 

Chico's FAS, Inc.

Condensed Consolidated Statements of Income

 (in thousands, except per share amounts)

Fifty-Three Weeks Ended

Fifty-Two Weeks Ended

Fourteen Weeks Ended

Thirteen Weeks Ended

February 2, 2013

January 28, 2012

February 2, 2013

January 28, 2012

(Unaudited)

(Unaudited)

(Unaudited)

Amount

% of Sales

Amount

% of Sales

Amount

% of Sales

Amount

% of Sales

Net sales:

Chico's/Soma Intimates

$

1,647,476

63.8%

$

1,460,518

66.5%

$

395,844

60.7%

$

354,052

62.2%

White House | Black Market

809,775

31.4%

696,358

31.7%

226,302

34.7%

186,681

32.8%

Boston Proper

123,806

4.8%

39,484

1.8%

29,706

4.6%

28,474

5.0%

Total net sales

2,581,057

100.0%

2,196,360

100.0%

651,852

100.0%

569,207

100.0%

Cost of goods sold

1,129,257

43.8%

969,989

44.2%

305,124

46.8%

271,335

47.7%

Gross margin

1,451,800

56.2%

1,226,371

55.8%

346,728

53.2%

297,872

52.3%

Selling, general and administrative expenses

1,161,105

45.0%

998,861

45.5%

296,118

45.4%

259,138

45.5%

Acquisition and integration costs

3,157

0.1%

5,133

0.2%

1,836

0.3%

148

0.0%

Income from operations

287,538

11.1%

222,377

10.1%

48,774

7.5%

38,586

6.8%

Interest income, net

881

0.0%

1,597

0.1%

248

0.0%

212

0.0%

Income before income taxes

288,419

11.1%

223,974

10.2%

49,022

7.5%

38,798

6.8%

Income tax provision

108,200

4.2%

83,100

3.8%

17,500

2.7%

13,700

2.4%

Net income

$

180,219

6.9%

$

140,874

6.4%

$

31,522

4.8%

$

25,098

4.4%

Per share data:

Net income per common share-basic

$

1.09

$

0.82

$

0.19

$

0.15

Net income per common and common equivalent share–diluted

$

1.08

$

0.82

$

0.19

$

0.15

Weighted average common shares outstanding–basic

162,989

169,153

161,051

163,871

Weighted average common and common equivalent shares outstanding–diluted

164,119

170,250

162,203

164,801

Dividends declared and paid per share

$

0.21

$

0.20

$

0.0525

$

0.05

 

 

Chico's FAS, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

February 2, 2013

January 28, 2012

(Unaudited)

ASSETS

 Current Assets:

Cash and cash equivalents

$

56,859

$

58,919

Marketable securities, at fair value

272,499

188,934

Inventories

206,849

194,469

Prepaid expenses and other current assets

61,786

55,104

Total Current Assets

597,993

497,426

Property and Equipment, net

608,120

550,230

Other Assets:

Goodwill

238,693

238,693

Other intangible assets, net

127,754

132,112

Other assets, net

8,068

6,691

Total Other Assets

374,515

377,496

$

1,580,628

$

1,425,152

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable

$

129,387

$

100,395

Other current liabilities

173,024

137,714

Total Current Liabilities

302,411

238,109

Noncurrent Liabilities:

Deferred liabilities

132,374

125,690

Deferred taxes

52,644

52,125

Total Noncurrent Liabilities

185,018

177,815

Stockholders' Equity:

Preferred stock

-

-

Common stock

1,628

1,657

Additional paid-in capital

348,775

302,612

Retained earnings

742,580

704,631

Accumulated other comprehensive income     

216

328

Total Stockholders' Equity

1,093,199

1,009,228

$

1,580,628

$

1,425,152

                                                                                                

 

Chico's FAS, Inc.

Condensed Consolidated Cash Flow Statements

 (in thousands)

Fifty-three Weeks Ended

Fifty-two Weeks Ended

February 2, 2013

January 28, 2012

(Unaudited)

Cash Flows From Operating Activities:

Net income

$

180,219

$

140,874

Adjustments to reconcile net income to net cash provided by operating activities —

Depreciation and amortization

108,467

99,430

Deferred tax (benefit) expense

(4,208)

19,489

Stock-based compensation expense

26,453

15,198

Excess tax benefit from stock-based compensation

(7,952)

(2,643)

Deferred rent and lease credits

(16,812)

(19,073)

Loss on disposal and impairment of property and equipment

2,765

2,949

Changes in assets and liabilities, net of effects of acquisition —

Inventories

(12,379)

(20,812)

Prepaid expenses and other assets

(3,956)

(3,491)

Accounts payable

28,992

(14,571)

Accrued and other liabilities

66,683

37,831

Net cash provided by operating activities

368,272

255,181

Cash Flows From Investing Activities:

Purchases of marketable securities

(298,460)

(592,962)

Proceeds from sale of marketable securities

214,783

937,987

Acquisition of Boston Proper, Inc., net of cash acquired

-

(213,561)

Purchases of property and equipment, net

(164,690)

(131,757)

Net cash used in investing activities

(248,367)

(293)

Cash Flows From Financing Activities:

Proceeds from issuance of common stock

16,531

4,549

Excess tax benefit from stock-based compensation

7,953

2,643

Dividends paid 

(34,928)

(34,152)

Repurchase of common stock

(111,521)

(183,290)

Cash paid for deferred financing costs

-

(414)

Net cash used in financing activities

(121,965)

(210,664)

Net (decrease) increase in cash and cash equivalents

(2,060)

44,224

Cash and Cash Equivalents, Beginning of period

58,919

14,695

Cash and Cash Equivalents, End of period

$

56,859

$

58,919

Supplemental Detail on Earnings Per Share Calculation

In accordance with accounting guidance, unvested share-based payment awards that include non-forfeitable rights to dividends, whether paid or unpaid, are considered participating securities.  As a result, such awards are required to be included in the calculation of basic earnings per share pursuant to the "two-class" method.  For the Company, participating securities are comprised of unvested restricted stock awards. 

Earnings per share is determined using the two-class method, as it is more dilutive than the treasury stock method.  Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period.  Diluted earnings per share reflects the dilutive effect of potential common shares from securities such as stock options and performance-based restricted stock units.

The following table sets forth the computation of basic and diluted earnings per share shown on the face of the accompanying consolidated statements of income (in thousands, except per share amounts):

 

 

Fifty-three Weeks Ended

Fifty-two Weeks Ended

Fourteen Weeks Ended

Thirteen Weeks Ended

February 2, 2013

January 28, 2012

February 2, 2013

January 28, 2012

Numerator

 

Net income

$

180,219

$

140,874

$

31,522

$

25,098

 

Net income and dividends declared allocated to unvested restricted stock

(3,309)

(1,834)

(580)

(355)

 

Net income available to common stockholders

$

176,910

$

139,040

$

30,942

$

24,743

Denominator

 

Weighted average common shares outstanding – basic

162,988,767

169,152,870

161,051,252

163,871,369

 

Dilutive effect of outstanding awards

 

1,130,313

 

1,097,574

 

1,151,804

 

929,542

 

Weighted average common and common equivalent shares outstanding – diluted

 

164,119,080

 

170,250,444

 

162,203,056

 

164,800,911

 

Net income per common share

Basic

$

1.09

$

0.82

$

0.19

$

0.15

Diluted

$

1.08

$

0.82

$

0.19

$

0.15

 

 

SEC Regulation G - The Company reports its consolidated financial results in accordance with generally accepted accounting principles (GAAP).  However, to supplement these consolidated financial results, management believes that certain non-GAAP operating results, which exclude certain non-recurring charges including acquisition and integration costs, may provide a more meaningful measure on which to compare the Company's results of operations between periods.  The Company believes these non-GAAP results provide useful information to both management and investors by excluding certain expenses that impact the comparability of the results.  A reconciliation of net income and earnings per diluted share on a GAAP basis to net income and earnings per diluted share on a non-GAAP basis is presented in the table below:

 

Chico's FAS, Inc.

Non-GAAP to GAAP Reconciliation of Net Income and Diluted EPS

(in thousands, except per share amounts)

Fifty-three Weeks Ended

Fifty-two Weeks Ended

Fourteen Weeks Ended

Thirteen Weeks Ended

Net income:

February 2, 2013

January 28, 2012

February 2, 2013

January 28, 2012

GAAP basis

180,219

140,874

31,522

25,098

Add: Impact of acquisition and integration costs, net of tax

1,973

3,574

1,181

96

Non-GAAP adjusted basis

$182,192

$144,448

$32,703

$25,194

Net income per diluted share:

GAAP basis

1.08

0.82

0.19

$0.15

Add: Impact of acquisition and integration costs, net of tax 

0.01

0.02

0.01

0.00

Non-GAAP adjusted basis

$1.09

$0.84

$0.20

$0.15

 

 

Store Count and Square Footage

As of February 2, 2013

(Unaudited)

As of 1/28/2012

New Stores

Closures

As of 2/2/2013

Store count:

Chico's frontline boutiques

601

14

(9)

606

Chico's outlets

83

16

-

99

WH|BM frontline boutiques

364

40

(6)

398

WH|BM outlets

27

18

-

45

Soma frontline boutiques

164

36

(7)

193

Soma outlets

17

1

(2)

16

Total Chico's FAS, Inc.

1,256

125

(24)

1,357

As of 1/28/2012

New Stores

Closures

Other changes in SSF

As of 2/2/2013

Net selling square footage (SSF):

Chico's frontline boutiques

1,631,674

37,474

(21,583)

5,687

1,653,252

Chico's outlets

213,475

38,371

-

-

251,846

WH|BM frontline boutiques

768,442

102,689

(10,859)

12,911

873,183

WH|BM outlets

53,263

38,356

-

-

91,619

Soma frontline boutiques

326,858

70,446

(12,112)

(14,422)

370,770

Soma outlets

32,676

1,716

(3,669)

50

30,773

Total Chico's FAS, Inc.

3,026,388

289,052

(48,223)

4,226

3,271,443

 

Executive Contact:                                                                                Todd Vogensen   Vice President-Investor Relations                                                          Chico's FAS, Inc.   (239) 346-4199  

SOURCE Chico's FAS, Inc.



RELATED LINKS

http://www.chicos.com