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%

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.



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