EX-99.1 2 g25311exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(Chicoslh)
Chico’s FAS, Inc. • 11215 Metro Parkway • Fort Myers, Florida 33966 • (239) 277-6200
For Immediate Release
Executive Contact:
Robert C. Atkinson
Vice President-Investor Relations
Chico’s FAS, Inc.
(239) 274-4199
Chico’s FAS, Inc. Reports Third Quarter Earnings Per Share of $0.16 vs. $0.13
  •   Net sales increased 8.1% to $483 million with comparable store sales increasing 3.1% and direct-to-consumer sales increasing 41%
     Fort Myers, FL - November 17, 2010 - Chico’s FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2010 third quarter and nine months ended October 30, 2010.
Net Income and Earnings per Share
     The Company reported net income of $28.8 million, or $0.16 per diluted share, for the third quarter compared to net income of $22.7 million, or $0.13 per diluted share, for last year’s third quarter.
     For the nine months ended October 30, 2010, the Company reported net income of $94.7 million, or $0.53 per diluted share, compared to net income of $52.1 million, or $0.29 per diluted share, reported for the same period last year. Excluding impairment charges recorded in both years, the Company’s net income would have been $95.2 million, or $0.53 per diluted share, for the first nine months in 2010 compared to net income of $60.3 million, or $0.34 per diluted share, for the same period last year.
Sales
     Net sales for the current quarter increased 8.1% to $483.0 million from $446.9 million in last year’s third quarter. Consolidated comparable store sales increased 3.1% for the current quarter compared to a 12.8% increase for the same period last year. The Chico’s/Soma Intimates brands’ comparable store sales increased 1.5% compared to a 12.2% increase for the same period last year, and the White House | Black Market (“WH|BM”) brand’s comparable store sales increased 7.1% compared to a 14.4% increase for the same period last year. Direct-to-consumer sales, not included in comparable store sales, increased approximately 41%, to $34.4 million for the 2010 third quarter over last year’s third quarter.
Gross Margin
     Gross margin for the quarter increased $17.8 million, or approximately 7%, over last year’s third quarter. However, expressed as a percentage of net sales, gross margin decreased 60 basis points to 57.0% from 57.6% in last year’s third quarter. The gross

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margin rate decrease was primarily attributable to higher markdowns at Chico’s frontline stores due to softer sales experienced earlier in the quarter. However, the decrease in the gross margin rate was partially offset by improved margins at outlet stores mainly due to increased penetration of made-for-outlet product.
Selling, General and Administrative Expenses
     Selling, general and administrative expenses (“SG&A”) for the third quarter increased $9.9 million, or 4.5%, over last year’s third quarter primarily due to higher store and direct operating costs associated with 64 net new stores opened since the end of last year’s third quarter accompanied by a $7.0 million planned increase in marketing expenses. As a percentage of net sales, however, SG&A for the quarter decreased 170 basis points compared to last year’s third quarter.
     Store and direct operating expenses increased by $4.6 million over last year’s third quarter primarily due to increased occupancy expense and store labor costs associated with 64 net new stores over last year, accompanied by increased in-store promotions and higher credit card fees due to higher sales volume compared to last year. However, expressed as a percentage of net sales, store and direct operating expenses decreased 190 basis points due to the leverage associated with improved comparable store sales.
     Marketing expenses increased $7.0 million over last year’s third quarter primarily due to increased television ads, particularly for the Soma brand, as well as increased online and print media campaigns across all three brands. As a percentage of net sales, marketing expenses increased 100 basis points compared to last year’s third quarter.
     National Store Support Center (“NSSC”) expenses, including corporate and other non-brand specific expenses, decreased by $1.6 million from last year’s third quarter mainly due to lower performance-based compensation accruals and good expense control. As a percentage of net sales, NSSC expenses decreased by 80 basis points assisted by the leverage associated with improved comparable store sales.
Inventories
     End of quarter inventory increased $19.1 million, up 6% per selling square foot, compared to last year’s end of third quarter. Excluding inventory purchased for new stores that will open in the fourth quarter, inventories are up 4.5% per square foot at cost. End of quarter inventory for the WH|BM brand increased approximately 10.5% per selling square foot versus down 21.7% per square foot last year, while Chico’s brand inventory decreased approximately 1.2% quarter over quarter.
Cash Flow
     Net cash provided by operating activities for the first nine months of 2010 decreased by $23.4 million over the same period last year primarily due to the increase in inventory investment accompanied by differences in the timing of accounts payable and accrued liabilities. These uses of cash were partially offset by higher net income. For the first nine months of fiscal 2010, the Company’s capital expenditures totaled $58.5 million compared to $51.0 million for the same period last year.
Share Repurchase Program
     In August 2010, the Board of Directors authorized the repurchase of up to $200 million of the Company’s outstanding common stock, through January 2013. During the third quarter, the Company repurchased 2.1 million shares for $18.7 million. The Company, however, has no obligation to repurchase shares under this authorization, and the timing,

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actual number and value of any additional shares to be purchased will depend on the performance of Chico’s stock price, market conditions and other considerations.
Quarterly Dividend
     The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.04 per share on its common stock. The dividend will be payable on December 21, 2010 to Chico’s FAS shareholders of record at the close of business on December 7, 2010. While it is the Company’s intention to continue to pay a quarterly cash dividend in the future, any decision to pay future cash dividends will be made by the Board of Directors and will depend on future earnings, financial condition and other factors.
ABOUT CHICO’S FAS, INC.
The Company is a women’s specialty retailer of private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing gift items. The Company operates 1,153 specialty stores, including stores in 48 states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico.
The Chico’s brand currently operates 598 boutique and 63 outlet stores, publishes a catalog during key shopping periods throughout the year, and conducts e-commerce at www.chicos.com.
White House | Black Market currently operates 344 boutique and 21 outlet stores, publishes a catalog highlighting its latest fashions and conducts e-commerce at www.whbm.com.
Soma Intimates is the Company’s developing concept with 119 boutique stores and 8 outlet stores today. Soma Intimates also publishes a catalog for its customers and conducts e-commerce at www.soma.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)

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Chico’s FAS, Inc.
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share amounts)
                                                                 
    Thirty-Nine Weeks Ended     Thirteen Weeks Ended  
    October 30, 2010     October 31, 2009     October 30, 2010     October 31, 2009  
    Amount     % of Sales     Amount     % of Sales     Amount     % of Sales     Amount     % of Sales  
Net Sales:
                                                                
Chico’s/Soma Intimates
   $ 993,989       69.5     $ 902,050       70.6     $ 337,629       69.9     $ 319,526       71.5  
White House | Black Market
   435,992       30.5       375,370       29.4       145,393       30.1       127,337       28.5  
 
                                                
Net sales
     1,429,981       100.0       1,277,420       100.0       483,022       100.0       446,863       100.0  
 
                                                                
Cost of goods sold
     614,128       42.9       555,713       43.5       207,955       43.0       189,585       42.4  
 
                                                
Gross margin
     815,853       57.1       721,707       56.5       275,067       57.0       257,278       57.6  
 
                                                                
Selling, general and administrative expenses:
                                                                
Store and direct operating expenses
     502,404       35.1       482,481       37.8       169,726       35.1       165,106       37.0  
Marketing
     79,019       5.5       58,976       4.6       31,928       6.6       24,974       5.6  
National Store Support Center
     87,035       6.1       85,123       6.7       29,252       6.1       30,887       6.9  
Impairment charges
     822       0.1       13,026       1.0       —       —       —       —  
 
                                                
Total selling, general and administrative expenses
     669,280       46.8       639,606       50.1       230,906       47.8       220,967       49.5  
 
                                                
Income from operations
     146,573       10.3       82,101       6.4       44,161       9.2       36,311       8.1  
Interest income, net
     1,327       0.0       1,337       0.1        483       0.1        334       0.1  
 
                                                
Income before income taxes
     147,900       10.3       83,438       6.5       44,644       9.3       36,645       8.2  
Income tax provision
     53,200       3.7       31,300       2.4       15,800       3.3       13,900       3.1  
 
                                                
Net income
   $ 94,700       6.6     $ 52,138       4.1     $ 28,844       6.0     $ 22,745       5.1  
 
                                                
 
                                                                
Per share data:
                                                                
Net income per common share-basic
   $ 0.53             $ 0.29             $ 0.16             $ 0.13          
 
                                                        
 
                                                                
Net income per common & common equivalent share—diluted
   $ 0.53             $ 0.29             $ 0.16             $ 0.13          
 
                                                        
 
                                                                
Weighted average common shares outstanding—basic
     177,028               177,348               176,215               177,662          
 
                                                        
 
                                                                
Weighted average common & common equivalent shares outstanding—diluted
     178,320               178,516               177,262               179,251          
 
                                                        
 
                                                                
Dividends declared per share
   $ 0.12               —               —               —          
 
                                                        

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Chico’s FAS, Inc.
Consolidated Balance Sheets
(in thousands)
                         
    October 30,     January 30,     October 31,  
    2010     2010     2009  
    (Unaudited)             (Unaudited)  
ASSETS
                        
 
                        
Current Assets:
                        
Cash and cash equivalents
   $ 21,930     $ 37,043     $ 60,985  
Marketable securities, at fair value
     483,622       386,500       362,322  
Receivables
     4,901       3,922       5,845  
Income tax receivable
     12,814        312       728  
Inventories
     179,110       138,516       160,030  
Prepaid expenses
     23,442       24,023       24,152  
Deferred taxes
     14,347       9,664       7,524  
 
                  
Total Current Assets
     740,166       599,980       621,586  
 
                        
Property and Equipment:
                        
Land and land improvements
     42,351       21,978       20,311  
Building and building improvements
     87,246       82,169       84,062  
Equipment, furniture and fixtures
     420,420       388,392       395,225  
Leasehold improvements
     425,237       412,834       416,003  
 
                  
Total Property and Equipment
     975,254       905,373       915,601  
Less accumulated depreciation and amortization
     (447,354 )     (383,844 )     (386,999 )
 
                  
Property and Equipment, Net
     527,900       521,529       528,602  
 
                        
Other Assets:
                        
Goodwill
     96,774       96,774       96,774  
Other intangible assets
     38,930       38,930       38,930  
Deferred taxes
     1,027       36,321       39,398  
Other assets, net
     5,112       25,269       27,323  
 
                  
Total Other Assets
     141,843       197,294       202,425  
 
                  
 
   $ 1,409,909     $ 1,318,803     $ 1,352,613  
 
                  
 
                        
LIABILITIES AND STOCKHOLDERS’ EQUITY
                        
 
                        
Current Liabilities:
                        
Accounts payable
   $ 100,650     $ 79,219     $ 97,238  
Accrued liabilities
     108,377       95,862       123,069  
Current portion of deferred liabilities
     19,905       19,625       19,517  
 
                  
Total Current Liabilities
     228,932       194,706       239,824  
 
                        
Noncurrent Liabilities:
                        
Deferred liabilities
     132,665       142,179       150,538  
 
                        
Stockholders’ Equity:
                        
Common stock
     1,776       1,781       1,779  
Additional paid-in capital
     279,227       268,109       266,112  
Retained earnings
     766,619       711,624       694,116  
Other accumulated comprehensive income
      690        404       244  
 
                  
Total Stockholders’ Equity
     1,048,312       981,918       962,251  
 
                  
 
   $ 1,409,909     $ 1,318,803     $ 1,352,613  
 
                  

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Chico’s FAS, Inc.
Consolidated Cash Flow Statements
(Unaudited)
(in thousands)
                 
    Thirty-Nine Weeks Ended  
    October 30,     October 31,  
    2010     2009  
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net income
   $ 94,700     $ 52,138  
 
            
Adjustments to reconcile net income to net cash provided by operating activities —
                
Depreciation and amortization
     70,218       72,407  
Deferred tax expense
     29,828       9,394  
Stock-based compensation expense
     8,874       6,543  
Excess tax benefit from stock-based compensation
     (1,223 )     (1,473 )
Impairment charges
     822       13,026  
Deferred rent expense, net
     (6,245 )     (7,721 )
Loss on disposal of property and equipment
     1,090       1,361  
(Increase) decrease in assets —
                
Receivables, net
     (978 )     2,314  
Income tax receivable
     (12,503 )     10,978  
Inventories
     (40,593 )     (27,617 )
Prepaid expenses and other
     737       (2,671 )
Increase in liabilities —
                
Accounts payable
     21,431       40,696  
Accrued and other deferred liabilities
     10,749       30,884  
 
            
Total adjustments
     82,207       148,121  
 
            
Net cash provided by operating activities
     176,907       200,259  
 
            
 
                
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Purchases of marketable securities
     (96,836 )     (120,061 )
Purchases of property and equipment
     (58,501 )     (51,016 )
 
            
Net cash used in investing activities
     (155,337 )     (171,077 )
 
            
 
                
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Proceeds from issuance of common stock
     2,137       3,960  
Excess tax benefit from stock-based compensation
     1,223       1,473  
Dividends paid
     (21,389 )     —  
Repurchase of common stock
     (18,654 )     (179 )
 
            
Net cash (used in) provided by financing activities
     (36,683 )     5,254  
 
            
 
                
Net (decrease) increase in cash and cash equivalents
     (15,113 )     34,436  
CASH AND CASH EQUIVALENTS, Beginning of period
     37,043       26,549  
 
            
CASH AND CASH EQUIVALENTS, End of period
   $ 21,930     $ 60,985  
 
            

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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 impairment and certain other non-recurring charges, 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  
    October 30, 2010     October 31, 2009     October 30, 2010     October 31, 2009  
Net income:
                                
 
                                
GAAP basis
   $ 94,700     $ 52,138     $ 28,844     $ 22,745  
Add: Impact of impairment charges
      822       13,026       —       —  
Less: Tax effect on impairment charges
     (296 )     (4,886 )     —       —  
 
                        
Non-GAAP adjusted basis
   $ 95,226     $ 60,278     $ 28,844     $ 22,745  
 
                        
 
                                
Net income per diluted share:
                                
 
                                
GAAP basis
   $ 0.53     $ 0.29     $ 0.16     $ 0.13  
Add: Impact of impairment charges, net of tax
     0.00       0.05       —       —  
 
                        
Non-GAAP adjusted basis
   $ 0.53     $ 0.34     $ 0.16     $ 0.13  
 
                        

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Chico’s FAS, Inc.
Boutique Count and Square Footage
As of October 30, 2010
                                         
    As of     New             As of          
    7/31/2010     Stores     Closures     10/30/2010          
Store count:
                                        
 
                                        
Chico’s frontline boutiques
     598       —       —       598          
Chico’s outlets
     53       7       —       60          
WH|BM frontline boutiques
     337       7       —       344          
WH|BM outlets
     18       2       —       20          
Soma frontline boutiques
     105       9       —       114          
Soma outlets
     7       1       —       8          
 
                                
Total Chico’s FAS, Inc.
     1,118       26       —       1,144          
 
                                
                                         
                            Remodels/        
                            Relos and        
    As of     New             change in     As of  
    7/31/2010     Stores     Closures     SSF     10/30/2010  
Net selling square footage (SSF):
                                        
 
                                        
Chico’s frontline boutiques
     1,606,698       —       —       2,209       1,608,907  
Chico’s outlets
     142,375       16,229       —       —       158,604  
WH|BM frontline boutiques
     696,018       16,524       —       (461 )     712,081  
WH|BM outlets
     34,691       3,763       —       —       38,454  
Soma frontline boutiques
     204,747       28,223       —       (130 )     232,840  
Soma outlets
     12,846       1,971       —       —       14,817  
 
                              
 
                                        
Total Chico’s FAS, Inc.
     2,697,375       66,710       —       1,618       2,765,703  
 
                              

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