Chico's FAS, Inc. Reports Second Quarter Earnings Per Share of $0.27

FORT MYERS, Fla., Aug. 28, 2013 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2013 second quarter and twenty-six weeks ended August 3, 2013.

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

For the second quarter, the Company reported net income of $43.6 million, a decrease of 18.4% compared to net income of $53.4 million in last year's second quarter, and earnings per diluted share of $0.27, a decrease of 15.6% compared to a record $0.32 per diluted share in last year's second quarter.

For the twenty-six weeks ended August 3, 2013, the Company reported net income of $94.7 million, a decrease of 11.5% compared to net income of $107.0 million in the same period last year, and earnings per diluted share of $0.58, a decrease of 9.4% compared to $0.64 per diluted share in the same period last year.

Net Sales

For the second quarter, net sales were a record $649.5 million, an increase of 1.2% compared to $641.7 million in last year's second quarter, primarily reflecting 112 net new stores for a square footage increase of 8.8%. Comparable sales for the second quarter decreased 2.6% following a 5.6% increase in last year's second quarter, reflecting lower transaction count and average dollar sale primarily as a result of the impact of lower traffic and the cycling of strong comparable sales last year.

The Chico's/Soma Intimates brands' comparable sales decreased 3.1% following a 7.2% increase in last year's second quarter for a two-year stack of up 4.1% and the White House | Black Market brand's comparable sales decreased 1.5% following a 2.3% increase in last year's second quarter for a two-year stack of up 0.8%.

Gross Margin

For the second quarter, gross margin was $356.1 million compared to $362.2 million in last year's second quarter.  Gross margin was 54.8% of net sales, a 160 basis point decrease from last year's second quarter, primarily reflecting increased promotional activity in response to lower traffic and investment in new distribution automation, partially offset by lower incentive compensation as a percent of net sales.

Selling, General and Administrative Expenses

For the second quarter, selling, general and administrative expenses ("SG&A") were $286.3 million compared to $276.1 million in last year's second quarter. SG&A was 44.0% of net sales, a 100 basis point increase from last year's second quarter, primarily reflecting deleverage of occupancy and marketing expenses and the impact of investment spending on strategic initiatives, partially offset by lower incentive compensation as a percent of net sales.  

Inventories

At the end of the second quarter, total inventories were $211.1 million compared to $191.7 million at the end of the second quarter last year. Inventories increased by $19.4 million, or 10.1%, primarily reflecting the impact of new stores and the calendar shift from last fiscal year's 53rd week. Excluding the impact of the calendar shift as it relates to the timing of merchandise receipts, inventories increased approximately 2.1% from prior year, in line with planned sales growth. In-store inventory per selling square foot decreased approximately 1.4% compared to the second quarter of last year.

Share Repurchase Program

During the second quarter of fiscal 2013, the Company repurchased 1.4 million shares for $25 million under its $300 million share repurchase program announced in February 2013. During the twenty-six weeks ended August 3, 2013 and July 28, 2012, the Company repurchased a total of 4.9 million shares for $85.0 million and 1.8 million shares for $25.6 million, respectively, with $215 million remaining under the program as of the end of the second quarter of fiscal 2013.

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 August 3, 2013, the Company operated 1,427 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.

(Financial Tables Follow)

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



Chico's FAS, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)




Twenty-Six Weeks Ended


Thirteen Weeks Ended



August 3, 2013


July 28, 2012


August 3, 2013


July 28, 2012



Amount


% of Sales


Amount


% of Sales


Amount


% of Sales


Amount


% of Sales

Net sales:





















Chico's/Soma Intimates


$

839,395


63.6%


$

839,960


65.0%


$

414,734


63.8%


$

414,618


64.6%

White House | Black Market



425,488


32.2%



386,225


29.9%



205,090


31.6%



194,498


30.3%

Boston Proper



55,342


4.2%



66,354


5.1%



29,679


4.6%



32,606


5.1%

   Total net sales



1,320,225


100.0%



1,292,539


100.0%



649,503


100.0%



641,722


100.0%

Cost of goods sold



577,239


43.7%



551,763


42.7%



293,361


45.2%



279,542


43.6%

   Gross margin



742,986


56.3%



740,776


57.3%



356,142


54.8%



362,180


56.4%

Selling, general and administrative expenses



591,161


44.7%



567,797


43.9%



286,262


44.0%



276,121


43.0%

Acquisition and integration costs



914


0.1%



841


0.1%



-


0.0%



283


0.0%

   Income from operations



150,911


11.5%



172,138


13.3%



69,880


10.8%



85,776


13.4%

Interest income, net



299


0.0%



402


0.0%



108


0.0%



219


0.0%

   Income before income taxes



151,210


11.5%



172,540


13.3%



69,988


10.8%



85,995


13.4%

Income tax provision



56,500


4.3%



65,500


5.0%



26,400


4.1%



32,600


5.1%

Net income


$

94,710


7.2%


$

107,040


8.3%


$

43,588


6.7%


$

53,395


8.3%






















Per share data:





















Net income per common share-basic


$

0.58




$

0.64




$

0.27




$

0.32



 

Net income per common and common equivalent share–diluted


$

0.58




$

0.64




$

0.27




$

0.32



 

Weighted average common shares outstanding–basic



157,379





163,898





156,589





163,822



 

Weighted average common and common equivalent shares outstanding–diluted



158,322





164,834





157,573





164,732



 

Dividends declared per share


$

0.165




$

0.1575




$

0.055




$

0.0525




 



Chico's FAS, Inc.

Condensed Consolidated Balance Sheets

(in thousands)




August 3, 2013


February 2, 2013


July 28, 2012



(Unaudited)




(Unaudited)


ASSETS                                  


 Current Assets:










Cash and cash equivalents


$

93,417


$

56,859


$

109,466

Marketable securities, at fair value



208,434



272,499



248,480

Inventories



211,148



206,849



191,694

Prepaid expenses and other current assets



57,492



61,786



52,642

                    Total Current Assets



570,491



597,993



602,282











Property and Equipment, net



622,708



608,120



576,788











Other Assets:










Goodwill



238,693



238,693



238,693

Other intangible assets, net



125,988



127,754



129,933

Other assets, net



8,212



8,068



6,628

                    Total Other Assets



372,893



374,515



375,254



$

1,566,092


$

1,580,628


$

1,554,324












LIABILITIES AND STOCKHOLDERS' EQUITY                           


Current Liabilities:










Accounts payable


$

139,727


$

129,387


$

139,800

Other current liabilities



140,197



173,024



151,936

                    Total Current Liabilities



279,924



302,411



291,736











Noncurrent Liabilities:










Deferred liabilities



141,708



132,374



129,782

Deferred taxes



51,018



52,644



50,840

                    Total Noncurrent Liabilities



192,726



185,018



180,622











Stockholders' Equity:










Preferred stock



-



-



-

Common stock



1,609



1,628



1,660

Additional paid-in capital



366,032



348,775



320,161

Retained earnings



725,736



742,580



759,838

Accumulated other comprehensive income     



65



216



307

                    Total Stockholders' Equity



1,093,442



1,093,199



1,081,966



$

1,566,092


$

1,580,628


$

1,554,324


 



Chico's FAS, Inc.

Condensed Consolidated Cash Flow Statements

(Unaudited)

(in thousands)



Twenty-Six Weeks Ended


August 3, 2013


July 28, 2012

Cash Flows From Operating Activities:






Net income

$

94,710


$

107,040

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






Depreciation and amortization


58,628



52,655

Deferred tax expense (benefit)


3,556



(4,490)

Stock-based compensation expense


14,304



11,005

Excess tax benefit from stock-based compensation


(1,437)



(3,367)

Deferred rent and lease credits


(8,602)



(8,082)

Loss on disposal and impairment of property and equipment


753



1,759

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






                  Inventories


(4,299)



2,775

                  Prepaid expenses and other assets


(2,148)



5,519

                  Accounts payable


1,483



30,689

                  Accrued and other liabilities


(13,491)



30,032

                           Net cash provided by operating activities


143,457



225,535







Cash Flows From Investing Activities:






Decrease (increase) in marketable securities


63,914



(59,568)

Purchases of property and equipment, net


(71,745)



(78,755)

Purchases of intangibles


(420)



-

                           Net cash used in investing activities


(8,251)



(138,323)







Cash Flows From Financing Activities:






Proceeds from issuance of common stock


7,900



6,524

Excess tax benefit from stock-based compensation


1,437



3,367

Dividends paid 


(17,777)



(17,530)

Repurchase of common stock


(90,208)



(29,026)

                           Net cash used in financing activities


(98,648)



(36,665)

                           Net increase in cash and cash equivalents


36,558



50,547

Cash and Cash Equivalents, Beginning of period


56,859



58,919

Cash and Cash Equivalents, End of period

$

93,417


$

109,466


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 condensed consolidated statements of income:





Twenty-Six Weeks Ended


Thirteen Weeks Ended



August 3, 2013


July 28, 2012


August 3, 2013


July 28, 2012






(dollars in thousands)

Numerator













Net income


$

94,710


$

107,040


$

43,588


$

53,395

Net income and dividends declared allocated to unvested restricted stock



(2,612)



(1,941)



(1,284)



(1,006)

Net income available to common shareholders


$

92,098


$

105,099


$

42,304


$

52,389














Denominator













Weighted average common shares outstanding – basic



157,378,652



163,897,542



156,589,110



163,822,041

Dilutive effect of stock options and PSUs outstanding



943,068



935,972



983,505



910,234

Weighted average common and common equivalent shares outstanding – diluted



158,321,720



164,833,514



157,572,615



164,732,275














Net income per common share:













Basic


$

0.58


$

0.64


$

0.27


$

0.32

Diluted


$

0.58


$

0.64


$

0.27


$

0.32


















 


Chico's FAS, Inc.

Store Count and Square Footage

Thirteen Weeks Ended August 3, 2013

(Unaudited)












As of
5/4/2013


New
Stores


Closures


As of
8/3/2013



Store count:










Chico's frontline boutiques

611


5


-


616



Chico's outlets

102


4


-


106



WH|BM frontline boutiques

409


7


-


416



WH|BM outlets

48


4


-


52



Soma frontline boutiques

209


12


(3)


218



Soma outlets

16


1


-


17



Boston Proper frontline boutiques

2


-


-


2



Total Chico's FAS, Inc.

1,397


33


(3)


1,427














As of
5/4/2013


New
Stores


Closures


Other
changes
in SSF


As of
8/3/2013

Net selling square footage (SSF):    










Chico's frontline boutiques

1,667,756


13,193


-


111


1,681,060

Chico's outlets

258,491


9,273


-


(91)


267,673

WH|BM frontline boutiques

910,115


18,318


-


3,623


932,056

WH|BM outlets

97,604


8,636


-


-


106,240

Soma frontline boutiques

398,717


23,951


(5,550)


(3,619)


413,499

Soma outlets

30,773


1,909


-


-


32,682

Boston Proper frontline boutiques

2,878


-


-


-


2,878

Total Chico's FAS, Inc.

3,366,334


75,280


(5,550)


24


3,436,088












 


Chico's FAS, Inc.

Store Count and Square Footage

Twenty-Six Weeks Ended August 3, 2013

(Unaudited)












As of
2/3/2013


New
Stores


Closures


As of
8/3/2013



Store count:










Chico's frontline boutiques

606


13


(3)


616



Chico's outlets

99


7


-


106



WH|BM frontline boutiques

398


20


(2)


416



WH|BM outlets

45


7


-


52



Soma frontline boutiques

193


29


(4)


218



Soma outlets

16


1


-


17



Boston Proper frontline boutiques

-


2


-


2



Total Chico's FAS, Inc.

1,357


79


(9)


1,427














As of
2/3/2013


New
Stores


Closures


Other
changes
in SSF


As of
8/3/2013

Net selling square footage (SSF):    










Chico's frontline boutiques

1,653,252


33,955


(7,777)


1,630


1,681,060

Chico's outlets

251,846


16,095


-


(268)


267,673

WH|BM frontline boutiques

873,183


50,436


(4,247)


12,684


932,056

WH|BM outlets

91,619


14,621


-


-


106,240

Soma frontline boutiques

370,770


57,698


(7,863)


(7,106)


413,499

Soma outlets

30,773


1,909


-


-


32,682

Boston Proper frontline boutiques

-


2,878


-


-


2,878

Total Chico's FAS, Inc.

3,271,443


177,592


(19,887)


6,940


3,436,088












 

SOURCE Chico's FAS, Inc.



RELATED LINKS
http://www.chicos.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.