Chico's FAS, Inc. Reports First Quarter Earnings Per Share Up 23% To A Record $0.32

-- 13th consecutive quarter of double digit EPS growth

-- 9.6% comparable sales increase - 12th consecutive positive quarter

-- Record net sales of $651 million

16 May, 2012, 07:15 ET from Chico's FAS, Inc.

FORT MYERS, Fla., May 16, 2012 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2012 first quarter ended April 28, 2012. 

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

Net Income and Earnings per Share 

For the first quarter, net income was $53.6 million, or $0.32 per diluted share, compared to net income of $45.9 million, or $0.26 per diluted share for last year's first quarter, reflecting an earnings per share increase of 23%.

Net Sales

For the first quarter, net sales were $650.8 million, an increase of 21.2% compared to $537.2 million in last year's first quarter.  The increase reflects a consolidated comparable sales increase of 9.6%, an 8.0% increase in square footage and $33.7 million in sales for Boston Proper.  The consolidated comparable sales increase of 9.6% for the first quarter was on top of a 7.7% increase for last year's first quarter, and reflects increases in both average dollar sale and transaction count. The Chico's/Soma Intimates brands' comparable sales increased 8.8% on top of a 7.8% increase in last year's first quarter and the White House | Black Market ("WH|BM") brand's comparable sales increased 11.3% on top of a 7.4% increase in last year's first quarter.

Gross Margin

For the first quarter, gross margin was $378.6 million, an increase of 19.2% compared to $317.7 million in last year's first quarter.  As a percentage of net sales, gross margin was 58.2%, a 90 basis point decrease from last year's first quarter, reflecting the cycling of 2011's four-year record gross margin rate, a more promotional environment, and the inclusion of Boston Proper's results.

Selling, General and Administrative Expenses

For the first quarter, selling, general and administrative expenses ("SG&A") were $291.7 million, an increase of 19.1% compared to $244.8 million in last year's first quarter.  As a percentage of net sales, SG&A was 44.8%, a 70 basis point improvement from last year's first quarter, reflecting leverage on store expenses from our comparable sales increase and the inclusion of Boston Proper's results, partially offset by higher marketing expenses and increased performance-based incentive compensation. 

Tax Rate

For the first quarter, the effective tax rate was 38.0% compared to 37.3% in last year's first quarter.  The effective tax rate for last year reflected favorable state tax settlements.

Inventories

At the end of the first quarter, total inventories were $213.7 million compared to $198.5 million for the first quarter last year.  Inventories in the current year include $13.6 million of inventory related to Boston Proper.  

Outlook

For fiscal 2012, including Boston Proper, the Company's planning assumptions are as follows:

  • Net sales increase at a mid to high teens percentage rate to approximately $2.5 to 2.6 billion, which includes comparable sales growth at a mid single digit rate, approximately 9% growth in store square footage and approximately $30 million in sales from the 53rd week; 
  • Gross margin rate down approximately 50 basis points;
  • SG&A expense, as a percentage of net sales, down approximately 50 basis points;
  • Effective tax rate approximately 38%;
  • Inventories in-line with sales growth; and
  • Capital expenditures approximately $150 million, which include 120 to 130 gross new stores.

A conference call to review the first quarter is scheduled for today at 8:30 a.m. EDT.  A live webcast of the call will be available at the Events Calendar page of the Chico's FAS, Inc. corporate website, 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 606 boutiques and 86 outlets throughout the U.S., publishes a monthly 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 376 boutiques and 31 outlets, publishes 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 180 boutiques and 15 outlets, publishes 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 high-end 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, 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, www.chicosfas.com.

(Financial Tables Follow)

 

Chico's FAS, Inc.

Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)

Thirteen Weeks Ended

April 28, 2012

April 30, 2011

Amount

% of

Sales

  Amount

% of

Sales

Net Sales:

Chico's/Soma Intimates

$   425,342

65.3

$     374,934

69.8

White House | Black Market

191,727

29.5

162,224

30.2

Boston Proper

33,748

5.2

    Net sales

650,817

100.0

537,158

100.0

Cost of goods sold

272,221

41.8

219,495

40.9

    Gross margin

378,596

58.2

317,663

59.1

Selling, general and administrative expenses:

Selling, general and administrative expenses

291,676

44.8

244,845

45.5

Acquisition and integration costs

558

0.1

    Total selling, general and administrative expenses

292,234

44.9

244,845

45.5

    Income from operations

86,362

13.3

72,818

13.6

Interest income, net

183

0.0

400

0.0

    Income before income taxes

86,545

13.3

73,218

13.6

Income tax provision

32,900

5.1

27,300

5.1

    Net income

$    53,645

8.2

$      45,918

8.5

    Per share data:

Net income per common share–basic

$        0.32

$          0.26

Net income per common and common equivalent share–diluted

$        0.32

$          0.26

Weighted average common shares outstanding–basic

163,974

174,881

Weighted average common and common equivalent shares outstanding–diluted

164,876

176,112

Dividends declared per share

$     0.105

$          0.10

 

Chico's FAS, Inc.

Consolidated Balance Sheets

(in thousands)

April 28,

January 28,

April 30,

2012

2012

2011

(Unaudited)

(Unaudited)

ASSETS

 Current Assets:

     Cash and cash equivalents

$         147,077

$           58,919

$         123,409

     Marketable securities, at fair value

193,446

188,934

442,815

     Inventories

213,676

194,469

198,544

     Prepaid expenses and other current assets

50,973

55,104

45,150

          Total Current Assets

605,172

497,426

809,918

           Property and Equipment, Net

564,904

550,230

507,963

Other Assets:

     Goodwill

238,693

238,693

96,774

     Other intangible assets

131,022

132,112

38,930

     Other assets, net

6,821

6,691

7,133

          Total Other Assets

376,536

377,496

142,837

$      1,546,612

$      1,425,152

$      1,460,718

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

     Accounts payable

$         147,925

$         100,395

$         129,894

     Other current liabilities

164,746

137,714

140,692

          Total Current Liabilities

312,671

238,109

270,586

Noncurrent Liabilities:

     Deferred liabilities

128,054

125,690

127,769

     Deferred taxes

49,528

52,125

          Total Noncurrent Liabilities

177,582

177,815

127,769

Stockholders' Equity:

     Preferred stock

     Common stock

1,677

1,657

1,762

     Additional paid-in capital

313,756

302,612

287,853

     Retained earnings

740,720

704,631

772,215

     Accumulated other comprehensive income     

206

328

533

        Total Stockholders' Equity

1,056,359

1,009,228

1,062,363

$      1,546,612

$      1,425,152

$      1,460,718

                                                                                                            

Chico's FAS, Inc.

Consolidated Cash Flow Statements

(Unaudited)

(in thousands)

Thirteen Weeks Ended

April 28,

2012

April 30,

2011

CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income

$        53,645

$         45,918

  Adjustments to reconcile net income to net cash

     provided by operating activities —

     Depreciation and amortization

26,092

24,188

     Deferred tax benefit

(2,014)

(1,375)

     Stock-based compensation expense

5,318

3,636

     Excess tax benefit from stock-based compensation

(3,136)

(762)

     Deferred rent and lease credits

(4,027)

(4,330)

     Loss on disposal and impairment of property and equipment

1,285

1,434

  (Increase) decrease in assets —

     Inventories

(19,206)

(38,730)

     Prepaid expenses and other assets

3,284

3,459

  Increase in liabilities —

     Accounts payable

38,726

14,404

     Accrued and other deferred liabilities

36,845

29,119

          Total adjustments

83,167

31,043

          Net cash provided by operating activities

136,812

76,961

 

CASH FLOWS FROM INVESTING ACTIVITIES:

  (Increase) decrease in marketable securities

(4,633)

91,349

  Purchases of property and equipment

(40,942)

(16,208)

          Net cash (used in) provided by investing activities

(45,575)

75,141

 

CASH FLOWS FROM FINANCING ACTIVITIES:

  Proceeds from issuance of common stock

5,815

1,373

  Excess tax benefit from stock-based compensation

3,136

762

  Dividends paid  

(8,753)

(8,835)

  Repurchase of common stock

(3,277)

(36,688)

         Net cash used in financing activities

(3,079)

(43,388)

    

         Net increase in cash and cash equivalents

88,158

108,714

CASH AND CASH EQUIVALENTS, Beginning of period

58,919

14,695

CASH AND CASH EQUIVALENTS, End of period

$      147,077

$      123,409

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 common 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 shareholders 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):

 

  Thirteen Weeks Ended

 

April 28,

2012

 

April 30,

2011

Net income

$      53,645

$  45,918

Net income and dividends declared allocated to unvested restricted stock 

(933)

(537)

Net income available to common shareholders

$      52,712

$  45,381

 Weighted average common shares outstanding – basic

163,974

174,881

 Weighted average common and common equivalent shares outstanding – diluted

 

164,876

 

176,112

Net income per common share:

     Basic

$         0.32

$         0.26

     Diluted

$         0.32

$         0.26

 

Chico's FAS, Inc.

Boutique Count and Square Footage

As of April 28, 2012

As of

New

As of

1/28/2012

Stores

Closures

4/28/2012

Store count:

Chico's frontline boutiques

601

3

(1)

603

Chico's outlets

83

3

86

WH|BM frontline boutiques

364

9

(1)

372

WH|BM outlets

27

3

30

Soma frontline boutiques

164

15

(2)

177

Soma outlets

17

(2)

15

Total Chico's FAS, Inc.

1,256

33

(6)

1,283

Remodels/

Relos and

As of

New

change in

As of

1/28/2012

Stores

Closures

SSF

4/28/2012

Net selling square footage (SSF):

Chico's frontline boutiques

1,631,674

7,703

(2,725)

887

1,637,539

Chico's outlets

213,475

7,189

220,664

WH|BM frontline boutiques

768,442

23,578

(2,507)

4,150

793,663

WH|BM outlets

53,263

6,512

59,775

Soma frontline boutiques

326,858

28,773

(3,809)

(5,466)

346,356

Soma outlets

32,676

(3,669)

50

29,057

Total Chico's FAS, Inc.

3,026,388

73,755

(12,710)

(379)

3,087,054

 

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