2014

Chico's FAS, Inc. Reports First Quarter Earnings Per Share of $0.32 -- Record quarterly net sales of $670.7 million

-- Flat comparable sales, on top of last year's 9.6% increase

-- Share repurchases of 3.4 million shares for $60 million

-- Opened 46 new stores, including two Boston Proper boutiques

FORT MYERS, Fla., May 29, 2013 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its fiscal 2013 first quarter financial results.

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

For the first quarter, when excluding non-recurring acquisition and integration costs related to the Boston Proper acquisition, the Company reported net income of $51.7 million, a decrease of 4.2% compared to net income of $54.0 million in last year's first quarter, and earnings per diluted share of $0.32, flat to a record $0.32 per diluted share in last year's first quarter. Including non-recurring acquisition and integration costs, the Company reported net income of $51.1 million, a decrease of 4.7% compared to net income of $53.6 million in last year's first quarter, and earnings per diluted share of $0.31, a decrease of 3.1% compared to $0.32 per diluted share in last year's first quarter.

Net Sales

For the first quarter, net sales were a record $670.7 million, an increase of 3.1% compared to $650.8 million in last year's first quarter, primarily reflecting 114 net new stores for a square footage increase of 9.0%. Comparable sales for the first quarter were flat following a 9.6% increase in last year's first quarter, reflecting higher transaction count offset by a decrease in average dollar sale. The comparable sales results primarily reflect the impact of an unusually cool spring and the cycling of strong comparable sales last year.

The Chico's/Soma Intimates brands' comparable sales decreased 2.8% following an 8.8% increase in last year's first quarter for a two-year stack of 6.0% and the White House | Black Market ("WH|BM") brand's comparable sales increased 6.4% following an 11.3% increase in last year's first quarter for a two-year stack of 17.7%.

Gross Margin

For the first quarter, gross margin was $386.8 million compared to $378.6 million in last year's first quarter.  As a percentage of net sales, gross margin was 57.7%, a 50 basis point decrease from last year's first quarter, primarily reflecting higher promotion of seasonal merchandise during an unusually cool spring and investment in new distribution automation partially offset by lower incentive compensation.

Selling, General and Administrative Expenses

For the first quarter, selling, general and administrative expenses ("SG&A") were $304.9 million compared to $291.7 million in last year's first quarter.  As a percentage of net sales, SG&A was 45.5%, a 70 basis point increase from last year's first quarter, primarily reflecting higher occupancy and marketing expenses as a percent of net sales partially offset by lower incentive compensation.  

Inventories

In-store inventory per selling square foot increased approximately 2.3% over the first quarter last year.  At the end of the first quarter, total inventories were $243.5 million compared to $213.7 million at the end of the first quarter last year. Inventories increased by $29.8 million, or 13.9%, primarily reflecting inventory to support a square footage increase of 9.0%. Excluding the impact of the calendar shift from last fiscal year's 53rd week, inventory increased approximately 9.2% from prior year.

Share Repurchase Program

During the first quarter of fiscal 2013, the Company repurchased 3.4 million shares for $60 million under its $300 million share repurchase program announced in February 2013, with $240 million remaining under the program as of the end of the first quarter.

ABOUT CHICO'S FAS, INC.

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

As of May 4, 2013, the Company operated 1,397 stores in the US. The Company's merchandise is also available at www.chicos.com, www.whbm.com, www.soma.com, and www.bostonproper.com. For more detailed information on Chico's FAS, Inc., please go to our corporate website at www.chicosfas.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

(Unaudited)

(in thousands, except per share amounts)




Thirteen Weeks Ended



May 4, 2013


April 28, 2012



Amount


% of

Sales


Amount


% of

Sales

Net sales:











Chico's/Soma Intimates


$

424,661


63.3%


$

425,342


65.3%

White House | Black Market



220,398


32.9%



191,727


29.5%

Boston Proper



25,663


3.8%



33,748


5.2%

Total net sales



670,722


100.0%



650,817


100.0%

Cost of goods sold



283,878


42.3%



272,221


41.8%

Gross margin



386,844


57.7%



378,596


58.2%

Selling, general and administrative expenses



304,899


45.5%



291,676


44.8%

Acquisition and integration costs



914


0.1%



558


0.1%

Income from operations



81,031


12.1%



86,362


13.3%

Interest income, net



191


0.0%



183


0.0%

Income before income taxes



81,222


12.1%



86,545


13.3%

Income tax provision



30,100


4.5%



32,900


5.1%

Net income


$

51,122


7.6%


$

53,645


8.2%












Per share data:











Net income per common share-basic


$

0.31




$

0.32



Net income per common and common equivalent

share–diluted


$

0.31




$

0.32



Weighted average common shares outstanding–

basic



158,584





163,974



Weighted average common and common equivalent

shares outstanding–diluted



159,536





164,876



Dividends declared per share


$

0.110




$

0.105




 



Chico's FAS, Inc.

Condensed Consolidated Balance Sheets

(in thousands)




May 4,

2013


February 2,

2013


April 28,

2012



(Unaudited)




(Unaudited)

ASSETS

 Current Assets:










Cash and cash equivalents


$

85,616


$

56,859


$

147,077

Marketable securities, at fair value



202,769



272,499



193,446

Inventories



243,472



206,849



213,676

Prepaid expenses and other current assets



55,280



61,786



50,973

               Total Current Assets



587,137



597,993



605,172











Property and Equipment, net



614,423



608,120



564,904











Other Assets:










Goodwill



238,693



238,693



238,693

Other intangible assets, net



126,665



127,754



131,022

Other assets, net



8,206



8,068



6,821

               Total Other Assets



373,564



374,515



376,536



$

1,575,124


$

1,580,628


$

1,546,612











LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:










Accounts payable


$

152,123


$

129,387


$

147,925

Other current liabilities



160,004



173,024



164,746

               Total Current Liabilities



312,127



302,411



312,671











Noncurrent Liabilities:










Deferred liabilities



137,929



132,374



128,054

Deferred taxes



52,221



52,644



49,528

               Total Noncurrent Liabilities



190,150



185,018



177,582











Stockholders' Equity:










Preferred stock



-



-



-

Common stock



1,621



1,628



1,677

Additional paid-in capital



355,162



348,775



313,756

Retained earnings



715,911



742,580



740,720

Accumulated other comprehensive income     



153



216



206

               Total Stockholders' Equity



1,072,847



1,093,199



1,056,359



$

1,575,124


$

1,580,628


$

1,546,612


 



Chico's FAS, Inc.

Condensed Consolidated Cash Flow Statements

(Unaudited)

(in thousands)



Thirteen Weeks Ended


May 4, 2013


April 28, 2012

Cash Flows From Operating Activities:






Net income

$

51,122


$

53,645

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






Depreciation and amortization


29,124



26,092

Deferred tax (benefit) expense


4,169



(2,014)

Stock-based compensation expense


7,492



5,318

Excess tax benefit from stock-based compensation


(1,028)



(3,136)

Deferred rent and lease credits


(4,263)



(4,027)

Loss on disposal and impairment of property and equipment


281



1,285

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






                  Inventories


(36,623)



(19,206)

                  Prepaid expenses and other assets


1,545



3,284

                  Accounts payable


13,823



38,726

                  Accrued and other liabilities


(2,193)



36,845

                           Net cash provided by operating activities


63,449



136,812







Cash Flows From Investing Activities:






(Increase) Decrease in marketable securities


69,666



(4,633)

Purchases of property and equipment, net


(34,599)



(40,942)

                           Net cash (used in) provided by investing activities


35,067



(45,575)







Cash Flows From Financing Activities:






Proceeds from issuance of common stock


3,067



5,815

Excess tax benefit from stock-based compensation


1,028



3,136

Dividends paid 


(8,939)



(8,753)

Repurchase of common stock


(64,915)



(3,277)

                           Net cash used in financing activities


(69,759)



(3,079)

                           Net increase in cash and cash equivalents


28,757



88,158

Cash and Cash Equivalents, Beginning of period


56,859



58,919

Cash and Cash Equivalents, End of period

$

85,616


$

147,077


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 ("PSUs").

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):





Thirteen Weeks Ended



May 4, 2013


April 28, 2012



(dollars in thousands)

Numerator







Net income


$

51,122


$

53,645

Net income and dividends declared allocated to unvested 

               restricted stock



(1,187)



(933)

Net income available to common shareholders


$

49,935


$

52,712








Denominator







Weighted average common shares outstanding – basic



158,584,066



163,973,850

Dilutive effect of stock options and PSUs outstanding



951,763



902,397

Weighted average common and common equivalent

               shares outstanding – diluted



159,535,829



164,876,247








Net income per common share:







                       Basic


$

0.31


$

0.32

                       Diluted


$

0.31


$

0.32









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)



May 4, 2013


April 28, 2012

Net income:




GAAP basis

51,122


53,645

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

575


346

Non-GAAP adjusted basis

$51,697


$53,991





Net income per diluted share:




GAAP basis

$0.31


$0.32

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

0.01


0.00

Non-GAAP adjusted basis

$0.32


$0.32






 



Chico's FAS, Inc.


Store Count and Square Footage


As of May 4, 2013


(Unaudited)













As of
2/2/2013


New
Stores


Closures


As of
5/4/2013



Store count:










Chico's frontline boutiques

606


8


(3)


611



Chico's outlets

99


3


-


102



WH|BM frontline boutiques

398


13


(2)


409



WH|BM outlets

45


3


-


48



Soma frontline boutiques

193


17


(1)


209



Soma outlets

16


-


-


16



Boston Proper frontline boutiques

-


2


-


2



Total Chico's FAS, Inc.

1,357


46


(6)


1,397
























As of
2/2/2013


New
Stores


Closures


Other

changes

in SSF


As of
5/4/2013

Net selling square footage (SSF):     










Chico's frontline boutiques

1,653,252


20,762


(7,777)


1,519


1,667,756

Chico's outlets

251,846


6,822


-


(177)


258,491

WH|BM frontline boutiques

873,183


32,118


(4,247)


9,061


910,115

WH|BM outlets

91,619


5,985


-


-


97,604

Soma frontline boutiques

370,770


33,747


(2,313)


(3,487)


398,717

Soma outlets

30,773


-


-


-


30,773

Boston Proper frontline boutiques

-


2,878


-


-


2,878

Total Chico's FAS, Inc.

3,271,443


102,312


(14,337)


6,916


3,366,332


































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

SOURCE Chico's FAS, Inc.



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