Chico's FAS, Inc. Reports Fourth Quarter Earnings Per Share up 25% to $0.15

-- 8.7% comparable sales increase in fourth quarter - 11th consecutive positive quarter

-- 20% quarterly sales increase, including first full quarter of Boston Proper

-- Annual sales over $2 billion for first time, with comparable sales increasing 8.2%

-- Full year EPS up 31%, excluding Boston Proper acquisition costs

22 Feb, 2012, 07:15 ET from Chico's FAS, Inc.

FORT MYERS, Fla., Feb. 22, 2012 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2011 fourth quarter and fiscal year ended January 28, 2012.

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

Net Income and Earnings per Share

For the fourth quarter, net income was $25.1 million, or $0.15 per diluted share, an earnings per share increase of 25% compared to net income of $20.7 million, or $0.12 per diluted share, for last year's fourth quarter.

For the fiscal year ended January 28, 2012, excluding non-recurring acquisition and integration costs, net income was $144.4 million, or $0.84 per diluted share, an earnings per share increase of 31% compared to net income of $115.4 million, or $0.64 per diluted share in fiscal 2010.  For fiscal 2011, net income, including acquisition and integration costs, was $140.9 million, or $0.82 per diluted share.

Net Sales

For the fourth quarter, net sales were $569.2 million, an increase of 19.8% compared to $475.0 million in last year's fourth quarter. The increase reflects a comparable sales increase of 8.7%, an 8.7% increase in square footage and $28.5 million in sales for Boston Proper.  The consolidated comparable sales increase of 8.7% for the fourth quarter was on top of a 4.5% increase for last year's fourth quarter, and reflects increases in both average dollar sale and transaction count.  The Chico's/Soma Intimates brands' comparable sales increased 5.5% on top of a 4.4% increase in last year's fourth quarter and the White House | Black Market ("WH|BM") brand's comparable sales increased 15.4% on top of a 4.7% increase in last year's fourth quarter.  

Gross Margin

For the fourth quarter, gross margin was $297.9 million, an increase of 17.9% compared to $252.7 million in last year's fourth quarter.  As a percentage of net sales, gross margin was 52.3%, which was a 90 basis point decrease from last year's fourth quarter.  This decrease was primarily attributable to planned strategic use of Chico's brand inventory for traffic-driving promotions during the fourth quarter and the inclusion of Boston Proper's results, which were partially offset by higher margins at the WH|BM and Soma Intimates brands due to increased full-price selling and effective promotional activities.

Selling, General and Administrative Expenses

For the fourth quarter, selling, general and administrative expenses (SG&A) were $259.3 million, an increase of 16.7% compared to $222.2 million in last year's fourth quarter.  As a percentage of net sales, SG&A was 45.5%, which was a 130 basis point decrease from last year's fourth quarter.  This decrease was primarily attributable to the sales leverage impact on store expenses and the inclusion of Boston Proper's results, partially offset by incremental marketing expenses.

Tax Rate

For the fourth quarter, the effective tax rate was 35.3% compared to 33.0% in last year's fourth quarter.  The effective tax rate for last year reflected relatively higher levels of favorable state tax settlements.

Inventories

Excluding $15.1 million of inventory related to Boston Proper, inventories increased approximately $19.6 million or 12.3% over last year, of which $11 million was for year-over-year new stores and $3 million was due to higher average unit costs.  At the end of the fourth quarter, total inventories were $194.5 million compared to $159.8 million for the fourth quarter last year.

Cash and Marketable Securities

Cash and marketable securities at the end of the year totaled $247.9 million compared to $548.7 million at the end of last year, reflecting earnings in 2011, partially offset by $213 million for the acquisition of Boston Proper, $132 million in capital expenditures, $183 million of share repurchases, or 14 million shares, and $34 million in dividend payments.  

Share Repurchase Program

During the fourth quarter of 2011, the Company repurchased 2.4 million shares for $25.0 million under its new $200 million share repurchase program announced in November.

Outlook

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

  • Net sales increase at a mid teens percentage rate to approximately $2.5 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 to be approximately 38%;
  • Inventories to be in-line with sales growth; and
  • Capital expenditures of approximately $150 million.

A conference call to review the fourth quarter and year results is scheduled for today at 8:30 a.m. EST.  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 gift 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 601 boutiques and 84 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 363 boutiques and 27 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 169 boutiques and 17 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 visit www.chicosfas.com.

(Financial Tables Follow)

Chico's FAS, Inc.

Consolidated Statements of Income

(in thousands, except per share amounts)

Fifty-Two Weeks Ended

Thirteen Weeks Ended

January 28, 2012

January 29, 2011

January 28, 2012

January 29, 2011

(Unaudited)

(Unaudited)

(Unaudited)

Amount

% of Sales

 Amount

% of Sales

Amount

% of Sales

 Amount

% of Sales

Net Sales:

Chico's/Soma Intimates

$  1,460,518

66.5

$1,314,649

69.0

$354,052

62.2

$320,660

67.5

White House | Black Market

696,358

31.7

590,305

31.0

186,681

32.8

154,314

32.5

Boston Proper

39,484

1.8

28,474

5.0

       Total net sales

2,196,360

100.0

1,904,954

100.0

569,207

100.0

474,974

100.0

Cost of goods sold

969,989

44.2

836,379

43.9

271,335

47.7

222,251

46.8

       Gross margin

1,226,371

55.8

1,068,575

56.1

297,872

52.3

252,723

53.2

Selling, general and administrative expenses:

Selling, general and administrative expenses

998,861

45.5

891,493

46.8

259,138

45.5

222,214

46.8

Acquisition and integration costs

5,133

0.2

148

0.0

 Total selling, general and administrative expenses

1,003,994

45.7

891,493

46.8

259,286

45.5

222,214

46.8

       Income from operations

222,377

10.1

177,082

9.3

38,586

6.8

30,509

6.4

Interest income, net

1,597

0.1

1,712

0.1

212

0.0

385

0.1

       Income before income taxes

223,974

10.2

178,794

9.4

38,798

6.8

30,894

6.5

Income tax provision

83,100

3.8

63,400

3.3

13,700

2.4

10,200

2.1

       Net income

$     140,874

6.4

$   115,394

6.1

$ 25,098

4.4

$   20,694

4.4

Per share data:

Net income per common share-basic

$          0.82

$         0.65

$     0.15

$     0.12

Net income per common & common equivalent share–diluted

$          0.82

$         0.64

$     0.15

$     0.12

Weighted average common shares

outstanding–basic

169,153

176,778

163,871

176,029

Weighted average common & common

equivalent shares outstanding–diluted

170,250

178,034

164,801

177,197

Dividends declared per share

$         0.20

$         0.16

$      0.05

$      0.04

Chico's FAS, Inc.

Consolidated Balance Sheets

(in thousands)

January 28,

January 29,

January 30,

2012

2011

2010

(Unaudited)

ASSETS

Current Assets:

    Cash and cash equivalents

$           58,919

$           14,695

$          37,043

    Marketable securities, at fair value

188,934

534,019

386,500

    Inventories

194,469

159,814

138,516

    Prepaid expenses and other current assets

55,104

48,237

37,921

         Total Current Assets

497,426

756,765

599,980

          Property and Equipment, Net

550,230

517,377

521,529

Other Assets:

    Goodwill

238,693

96,774

96,774

    Other intangible assets

132,112

38,930

38,930

    Other assets, net

6,691

6,175

61,590

         Total Other Assets

377,496

141,879

197,294

$     1,425,152

$      1,416,021

$      1,318,803

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

    Accounts payable

$         100,395

$         106,665

$          79,219

    Other current liabilities

137,714

114,612

115,487

         Total Current Liabilities

238,109

221,277

194,706

Noncurrent Liabilities:

    Deferred liabilities

125,690

129,837

142,179

    Deferred taxes

52,125

         Total Deferred Liabilities

177,815

129,837

142,179

Stockholders' Equity:

    Preferred stock

    Common stock

1,657

1,779

1,781

    Additional paid-in capital

302,612

282,528

268,109

    Retained earnings

704,631

780,212

711,624

    Accumulated other comprehensive income      

328

388

404

       Total Stockholders' Equity

1,009,228

1,064,907

981,918

$      1,425,152

$      1,416,021

$       1,318,803

Chico's FAS, Inc.

Consolidated Cash Flow Statements

(Unaudited)

(in thousands)

Fifty-Two Weeks Ended

January 28,

January 29,

2012

2011

CASH FLOWS FROM OPERATING ACTIVITIES:

 Net income

$   140,874

$     115,394

 Adjustments to reconcile net income to net cash

    provided by operating activities -

    Depreciation and amortization

99,430

94,113

    Deferred tax expense

19,489

32,501

    Stock-based compensation expense

15,198

10,548

    Excess tax benefit from stock-based compensation

(2,643)

(2,655)

    Deferred rent and lease credits

(19,073)

(16,624)

    Loss on disposal of property and equipment

2,949

3,085

 (Increase) in assets, net of effects of acquisition -

    Inventories

(20,812)

(21,298)

    Prepaid expenses and other current assets

(3,491)

(8,946)

 (Decrease) increase in liabilities, net of effects of acquisition -

    Accounts payable

(14,571)

27,446

    Accrued and other deferred liabilities

37,831

6,062

         Total adjustments

114,307

124,232

         Net cash provided by operating activities

255,181

239,626

CASH FLOWS FROM INVESTING ACTIVITIES:

 Purchases of marketable securities

(592,962)

(579,488)

 Proceeds from sale of marketable securities

937,987

431,953

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

(213,561)

 Purchases of property and equipment, net

(131,757)

(73,045)

         Net cash used in investing activities

(293)

(220,580)

CASH FLOWS FROM FINANCING ACTIVITIES:

 Proceeds from issuance of common stock

4,549

3,648

 Excess tax benefit from stock-based compensation

2,643

2,655

 Dividends paid

(34,152)

(28,489)

 Repurchase of common stock

(183,290)

(19,208)

 Cash paid for deferred financing costs

(414)

        Net cash used in financing activities

(210,664)

(41,394)

        Net increase (decrease) in cash and cash equivalents

44,224

(22,348)

CASH AND CASH EQUIVALENTS, Beginning of period

14,695

37,043

CASH AND CASH EQUIVALENTS, End of period

$58,919

$ 14,695

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-Two Weeks Ended

Net income:

January 28, 2012

GAAP basis

$ 140,874

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

3,574

Non-GAAP adjusted basis

$ 144,448

Net income per diluted share:

GAAP basis

$    0.82

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

0.02

Non-GAAP adjusted basis

$    0.84

Chico's FAS, Inc.

Boutique Count and Square Footage

As of January 28, 2012

As of

New

As of

1/29/2011

Stores

Closures

1/28/2012

Store count:

Chico's frontline boutiques

597

16

(12)

601

Chico's outlets

63

20

83

WH|BM frontline boutiques

342

31

(9)

364

WH|BM outlets

21

6

27

Soma frontline boutiques

120

52

(8)

164

Soma outlets

8

12

(3)

17

Total Chico's FAS, Inc.

1,151

137

(32)

1,256

Remodels/

Relos and

As of

New

change in

As of

1/29/2011

Stores

Closures

SSF

1/28/2012

Net selling square footage (SSF):

Chico's frontline boutiques

1,606,394

42,107

(28,686)

11,859

1,631,674

Chico's outlets

166,123

47,630

(278)

213,475

WH|BM frontline boutiques

710,480

71,132

(19,903)

6,733

768,442

WH|BM outlets

40,421

12,492

350

53,263

Soma frontline boutiques

246,688

104,661

(18,521)

(5,970)

326,858

Soma outlets

14,817

23,969

(6,178)

68

32,676

Total Chico's FAS, Inc.

2,784,923

301,991

(73,288)

12,762

3,026,388

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