Chico's FAS, Inc. Reports Third Quarter Earnings Per Share of $0.16 Net of Acquisition Costs of $0.02

-- Net sales increased 11.5% to $538.5 million with comparable sales increasing 3.7%

-- EPS increased 13% over last year's third quarter excluding acquisition costs

-- Completed acquisition of direct-to-consumer retailer Boston Proper, Inc.

22 Nov, 2011, 07:15 ET from Chico's FAS, Inc.

FORT MYERS, Fla., Nov. 22, 2011 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2011 third quarter and nine months ended October 29, 2011, which includes the results of Boston Proper subsequent to the closing of the acquisition on September 19, 2011.    

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

Net Income and Earnings per Share  

The Company reported net income totaling $26.5 million, or $0.16 per diluted share, for the third quarter compared to net income of $28.8 million, or $0.16 per diluted share, for the same period last year.

The third quarter 2011 results include non-recurring acquisition and integration costs related to the Boston Proper acquisition totaling approximately $3.5 million, net of tax, or $0.02 per diluted share.  Excluding these costs, the Company's third quarter net income was $30.0 million, or $0.18 per diluted share, an earnings per share increase of 13%, compared to net income of $28.8 million, or $0.16 per diluted share for the same period last year.

For the nine months ended October 29, 2011, the Company reported net income totaling $115.8 million or $0.66 per diluted share, compared to net income of $94.7 million, or $0.53 per diluted share, reported for the same period last year.  Excluding the non-recurring acquisition and integration costs in the third quarter of fiscal 2011, the Company's net income for the nine months ended October 29, 2011 was $119.3 million, or $0.68 per diluted share, an increase of 28%, compared to net income of $94.7 million, or $0.53 per diluted share, for the same period last year.

Net Sales

Net sales for the quarter increased 11.5% to $538.5 million from $483.0 million in last year's third quarter.  Consolidated comparable sales increased 3.7% for the quarter following a 5.5% increase for the same period last year reflecting increases in average dollar sale and transaction count.  The Chico's/Soma Intimates brands' comparable sales increased 0.6% following a 3.6% increase for the same period last year and the White House | Black Market ("WH|BM") brand's comparable sales increased 11.0% following a 10.2% increase for the same period last year.  Boston Proper's sales are excluded from the comparable sales calculation until twelve full months after the acquisition.

Gross Margin

Gross margin for the third quarter of $301.5 million, or 56.0% of net sales, represents a 100 basis point decrease from last year's third quarter attributable to higher discounting for the Chico's brand as a result of a soft sales environment 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

Selling, general and administrative expenses (SG&A) for the third quarter were $259.5 million, or 48.2% of net sales.  Excluding $5.0 million of non-recurring acquisition and integration costs consisting of professional service fees and employee benefit related costs, SG&A expenses were $254.5 million, or 47.3% of net sales, a 50 basis point improvement from 47.8% of net sales for last year's third quarter primarily attributable to the sales leverage impact on occupancy costs as well as lower performance based compensation, partially offset by increased marketing expenses.

Tax Rate

For the 2011 third quarter, the effective tax rate was 37.8% compared to 35.4% for the same period last year.  Excluding the impact of certain non-deductible Boston Proper acquisition and integration costs, the 2011 third quarter effective tax rate would have been 36.7%.  The effective tax rate was higher in the current quarter compared to last year's third quarter due to a favorable state income tax audit settlement last year.  

Inventories

Total inventories at the end of the third quarter were $247 million compared to $179 million for the same period last year.  Excluding $17 million of inventory related to Boston Proper, inventories increased $51 million or 29%, of which $18 million was for fourth quarter comparable sales, $14 million for year-over-year new stores, $12 million for earlier receipts and $7 million due to higher average unit costs.

Share Repurchase Program

During the third quarter of 2011, the Company repurchased 4.7 million shares for $60.0 million.

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 604 boutiques and 83 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 25 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 168 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 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)

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

October 29, 2011

October 30, 2010

October 29, 2011

October 30, 2010

Amount

% of Sales

 Amount

% of Sales

Amount

% of Sales

 Amount

% of Sales

Net Sales:

Chico's/Soma Intimates

$  1,106,466

68.0

$   993,989

69.5

357,208

66.3

$337,629

69.9

White House | Black Market

509,677

31.3

435,992

30.5

170,328

31.6

145,393

30.1

Boston Proper

11,010

0.7

11,010

2.1

  Total net sales

1,627,153

100.0

1,429,981

100.0

538,546

100.0

483,022

100.0

Cost of goods sold

698,655

42.9

614,128

42.9

237,038

44.0

207,955

43.0

  Gross margin

928,498

57.1

815,853

57.1

301,508

56.0

275,067

57.0

Selling, general and administrative expenses:

Store and direct operating expenses

549,391

33.8

503,226

35.2

184,414

34.2

169,726

35.1

Marketing

90,979

5.6

79,019

5.5

39,008

7.3

31,928

6.6

National Store Support Center

99,353

6.1

87,035

6.1

31,100

5.8

29,252

6.1

Acquisition and integration costs

4,985

0.3

4,985

0.9

  Total selling, general and        

     administrative expenses  

744,708

45.8

669,280

46.8

259,507

48.2

230,906

47.8

  Income from operations

183,790

11.3

146,573

10.3

42,001

7.8

44,161

9.2

Interest income, net

1,386

0.1

1,327

0.0

566

0.1

483

0.1

  Income before income taxes

185,176

11.4

147,900

10.3

42,567

7.9

44,644

9.3

Income tax provision

69,400

4.3

53,200

3.7

16,100

3.0

15,800

3.3

  Net income

$     115,776

7.1

$     94,700

6.6

$ 26,467

4.9

$ 28,844

6.0

Per share data:

Net income per common share-basic

$          0.67

$         0.53

$     0.16

$     0.16

Net income per common & common equivalent share–diluted

$          0.66

$         0.53

$     0.16

$     0.16

Weighted average common shares outstanding–basic

170,912

177,028

166,519

176,215

Weighted average common & common equivalent shares outstanding–diluted

172,092

178,320

167,575

177,262

Dividends declared per share

$         0.15

$         0.12

Chico's FAS, Inc.

Consolidated Balance Sheets

(in thousands)

October 29,

January 29,

October 30,

2011

2011

2010

(Unaudited)

(Unaudited)

ASSETS

Current Assets:

    Cash and cash equivalents

$           49,485

$           14,695

$           21,930

    Marketable securities, at fair value

190,328

534,019

483,622

    Receivables

5,735

3,845

4,901

    Income tax receivable

6,279

6,565

12,814

    Inventories

247,530

159,814

179,110

   Prepaid expenses

32,472

26,851

23,442

   Deferred taxes

11,738

10,976

14,347

         Total Current Assets

543,567

756,765

740,166

Property and Equipment:

    Land and land improvements

43,631

42,468

42,351

    Building and building improvements

96,712

89,328

87,246

    Equipment, furniture and fixtures

487,975

428,217

420,420

    Leasehold improvements

448,357

426,141

425,237

          Total Property and Equipment

1,076,675

986,154

975,254

    Less accumulated depreciation and amortization

(534,313)

(468,777)

(447,354)

          Property and Equipment, Net

542,362

517,377

527,900

Other Assets:

    Goodwill

238,952

96,774

96,774

    Other intangible assets

133,201

38,930

38,930

    Deferred taxes

964

1,027

    Other assets, net

6,660

5,211

5,112

         Total Other Assets

378,813

141,879

141,843

$  1,464,742

$      1,416,021

$      1,409,909

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

    Accounts payable

$     144,196

$         106,680

$         101,086

    Accrued liabilities

114,232

94,837

107,941

    Current portion of deferred liabilities

21,027

19,760

19,905

         Total Current Liabilities

279,455

221,277

228,932

Noncurrent Liabilities:

    Deferred liabilities

173,097

129,837

132,665

Stockholders' Equity:

    Preferred stock

    Common stock

1,676

1,779

1,776

    Additional paid-in capital

297,480

282,528

279,227

    Retained earnings

712,766

780,212

766,619

    Accumulated other comprehensive income      

268

388

690

       Total Stockholders' Equity

1,012,190

1,064,907

1,048,312

$      1,464,742

$      1,416,021

$      1,409,909

Chico's FAS, Inc.

Consolidated Cash Flow Statements

(Unaudited)

(in thousands)

Thirty-Nine Weeks Ended

October 29,

2011

October 30,

2010

CASH FLOWS FROM OPERATING ACTIVITIES:

 Net income

$         115,776

$         94,700

 Adjustments to reconcile net income to net cash

    provided by operating activities —

    Depreciation and amortization

72,952

70,218

    Deferred tax expense

11,399

29,828

    Stock-based compensation expense

11,051

8,874

    Excess tax benefit from stock-based compensation

(1,758)

(1,223)

    Deferred rent and lease credits

(14,106)

(12,053)

    Loss on disposal of property and equipment

2,603

1,912

 Decrease (increase) in assets, net of effects of acquisition —

    Receivables, net

(1,723)

(978)

    Income tax receivable

5,086

(12,503)

    Inventories

(73,485)

(40,593)

    Prepaid expenses and other

(4,722)

737

 Increase in liabilities, net of effects of acquisition—

    Accounts payable

29,131

21,850

    Accrued and other deferred liabilities

28,805

16,138

         Total adjustments

65,233

82,207

         Net cash provided by operating activities

181,009

176,907

CASH FLOWS FROM INVESTING ACTIVITIES:

 Decrease (increase) in marketable securities

343,570

(96,836)

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

(212,733)

 Purchases of property and equipment, net

(98,174)

(58,501)

         Net cash provided by (used in) investing activities

32,663

(155,337)

CASH FLOWS FROM FINANCING ACTIVITIES:

 Proceeds from issuance of common stock

3,567

2,137

 Excess tax benefit from stock-based compensation

1,758

1,223

 Dividends paid  

(25,888)

(21,389)

 Repurchase of common stock

(157,905)

(18,654)

 Cash paid for deferred financing costs

(414)

        Net cash used in financing activities

(178,882)

(36,683)

        Net increase (decrease) in cash and cash equivalents

34,790

(15,113)

CASH AND CASH EQUIVALENTS, Beginning of period

14,695

37,043

CASH AND CASH EQUIVALENTS, End of period

$      49,485

$         21,930

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)

Thirty-Nine

Weeks Ended

Thirteen Weeks

Ended

Net income:

October 29, 2011

October 29, 2011

GAAP basis

$ 115,776

$  26,467

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

3,533

3,533

Non-GAAP adjusted basis

$  119,309

$  30,000

Net income per diluted share:

GAAP basis

$    0.66

$    0.16

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

0.02

0.02

Non-GAAP adjusted basis

$    0.68

$    0.18

Chico's FAS, Inc.

Boutique Count and Square Footage

As of October 29, 2011

As of

New

As of

7/30/2011

Stores

Closures

10/29/2011

Store count:

Chico's frontline boutiques

598

5

(4)

599

Chico's outlets

77

5

82

WH|BM frontline boutiques

356

6

(4)

358

WH|BM outlets

25

25

Soma frontline boutiques

148

20

168

Soma outlets

14

3

17

Total Chico's FAS, Inc.

1,218

39

(8)

1,249

Remodels/

Relos and

As of

New

change in

As of

7/30/2011

Stores

Closures

SSF

10/29/2011

Net selling square footage (SSF):

Chico's frontline boutiques

1,619,872

12,968

(10,404)

1,520

1,623,956

Chico's outlets

198,506

12,302

(372)

210,436

WH|BM frontline boutiques

745,774

14,622

(10,401)

2,276

752,271

WH|BM outlets

48,238

48,238

Soma frontline boutiques

302,732

38,203

(260)

340,675

Soma outlets

25,735

6,279

36

32,050

Total Chico's FAS, Inc.

2,940,857

84,374

(20,805)

3,200

3,007,626

Executive Contact: Robert C. Atkinson Vice President-Investor Relations Chico's FAS, Inc. (239) 274-4199

SOURCE Chico's FAS, Inc.



RELATED LINKS

http://www.chicos.com