CHICO'S FAS, INC. - FORM 8-K - EX-99.1 - May 18, 2011

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8-K - FORM 8-K - CHICO'S FAS, INC.g27293e8vk.htm
Exhibit 99.1
(Chicos LH)
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 a 30% Increase in First Quarter
Earnings Per Diluted Share of $0.26 vs. $0.20
  •   Net sales increased 11.5% to $537.2 million with comparable sales increasing 7.7%
     Fort Myers, FL - May 18, 2011 - Chico’s FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2011 first quarter ended April 30, 2011.
Net Income and Earnings per Share
     The Company reported net income of $45.9 million, or $0.26 per diluted share, for the first quarter of fiscal 2011 compared to net income of $35.4 million, or $0.20 per diluted share, reported for the same period last year.
Net Sales
     Net sales for the first quarter increased 11.5% to $537.2 million from $481.6 million in last year’s first quarter. Consolidated comparable sales, which include direct-to-consumer (DTC) sales, increased 7.7% for the first quarter on top of a 16.0% increase for the same period last year. The Chico’s/Soma Intimates brands’ comparable sales increased 7.8% following a 16.1% increase for the same period last year, and the White House | Black Market (“WH|BM”) brand’s comparable sales increased 7.4% following a 15.7% increase for the same period last year.
Gross Margin
     Gross margin for the first quarter, expressed as a percentage of net sales, increased 60 basis points to 59.1% from 58.5% in last year’s first quarter. The gross margin rate increase was attributable to increased margins at Chico’s and WH|BM frontline stores primarily driven by improved in-season sell-through in the current period versus the same period last year.
Selling, General and Administrative Expenses
     Selling, general and administrative expenses (“SG&A”) for the first quarter, expressed as a percentage of net sales, decreased 150 basis points compared to last year’s first quarter. SG&A dollars, however, increased $18.3 million, or 8.1%, over last year’s first quarter primarily due to higher store and direct operating costs associated with 85 net new stores opened since the end of last year’s first quarter.

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     Store and direct operating expenses increased by $12.3 million over last year’s first quarter primarily due to increased occupancy expense and store labor costs associated with 85 net new stores over last year, accompanied by increased 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 130 basis points due to the leverage associated with the comparable store sales increase.
     Marketing expenses increased $1.8 million over last year’s first quarter primarily due to incremental television advertising for the Soma brand as well as increased e-marketing initiatives for all three brands.
     National Store Support Center (“NSSC”) expenses, including corporate and other non-brand specific expenses, increased by $3.6 million from last year’s first quarter but were flat to last year as a percentage of net sales.
Inventories
     End of quarter inventory increased $38.1 million or approximately 23.7% from last year’s first quarter. Excluding an incremental $9.6 million of in-transit inventories this year over last year, inventory per selling square foot would have been $66 versus $60, an increase of 9.5% compared to last year. The increase in year-over-year comparable sales including DTC, along with the anticipated opening of 21 net, new stores in the May-June 2011 timeframe, contributed to the increased inventory per selling square foot over last year.
Share Repurchase Program
     During the first quarter of 2011, the Company repurchased 2.6 million shares for $36.3 million and has $145.4 million remaining under the original $200 million authorization approved by the Board of Directors in August 2010.
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 1,192 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 593 boutique and 71 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 351 boutique and 24 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 141 boutique stores and 12 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

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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)
                                 
    Thirteen Weeks Ended  
    April 30, 2011     May 1, 2010  
    Amount     % of Sales     Amount     % of Sales  
Net Sales:
                                
Chico’s/Soma Intimates
   $ 374,934       69.8     $ 336,700       69.9  
White House | Black Market
     162,224       30.2       144,888       30.1  
 
                        
Net sales
     537,158       100.0       481,588       100.0  
 
                                
Cost of goods sold
     219,495       40.9       200,008       41.5  
 
                        
Gross margin
     317,663       59.1       281,580       58.5  
 
                                
Selling, general and administrative expenses:
                                
Store and direct operating expenses
     180,114       33.5       167,826       34.8  
Marketing
     30,898       5.7       29,080       6.0  
National Store Support Center
     32,431       6.0       28,800       6.0  
Impairment charges
     1,402       0.3       822       0.2  
 
                        
Total selling, general and administrative expenses
     244,845       45.5       226,528       47.0  
 
                        
 
                                
Income from operations
     72,818       13.6       55,052       11.5  
Interest income, net
     400       0.0       450       0.0  
 
                        
Income before income taxes
     73,218       13.6       55,502       11.5  
Income tax provision
     27,300       5.1       20,100       4.1  
 
                        
Net income
   $ 45,918       8.5     $ 35,402       7.4  
 
                        
 
                                
Per share data:
                                
Net income per common share—basic
   $ 0.26             $ 0.20          
 
                            
 
                                
Net income per common and common equivalent share—diluted
   $ 0.26             $ 0.20          
 
                            
 
                                
Weighted average common shares outstanding—basic
     174,881               177,336          
 
                            
 
                                
Weighted average common and common equivalent shares outstanding—diluted
     176,112               178,833          
 
                            
 
                                
Dividends declared per share
   $ 0.10             $ 0.08          
 
                            

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Chico’s FAS, Inc.
Consolidated Balance Sheets
(in thousands)
                         
    April 30,     January 29,     May 1,  
    2011     2011     2010  
    (Unaudited)             (Unaudited)  
ASSETS
                        
 
                        
Current Assets:
                        
Cash and cash equivalents
   $ 123,409     $ 14,695     $ 32,694  
Marketable securities, at fair value
     442,815       534,019       449,167  
Receivables
     5,590       3,845       3,857  
Income tax receivable  
     713       6,565       631  
Inventories
     198,544       159,814       160,448  
Prepaid expenses
     27,368       26,851       25,546  
Deferred taxes
     11,479       10,976       10,684  
 
                  
Total Current Assets
     809,918       756,765       683,027  
 
                        
Property and Equipment:
                        
Land and land improvements
     43,161       42,468       22,043  
Building and building improvements
     90,813       89,328       82,440  
Equipment, furniture and fixtures
     434,330       428,217       398,132  
Leasehold improvements
     429,559       426,141       414,369  
 
                  
Total Property and Equipment
     997,863       986,154       916,984  
Less accumulated depreciation and amortization
     (489,900 )     (468,777 )     (405,140 )
 
                  
Property and Equipment, Net
     507,963       517,377       511,844  
 
                        
Other Assets:
                        
Goodwill
     96,774       96,774       96,774  
Other intangible assets
     38,930       38,930       38,930  
Deferred taxes
     1,791       964       38,755  
Other assets, net
     5,342       5,211       25,119  
 
                  
Total Other Assets
     142,837       141,879       199,578  
 
                  
 
   $ 1,460,718     $ 1,416,021     $ 1,394,449  
 
                  
 
                        
LIABILITIES AND STOCKHOLDERS’ EQUITY
                        
 
                        
Current Liabilities:
                        
Accounts payable
   $ 127,758     $ 106,665     $ 101,570  
Accrued liabilities
     121,974       94,852       126,720  
Current portion of deferred liabilities
     20,854       19,760       19,622  
 
                  
Total Current Liabilities
     270,586       221,277       247,912  
 
                        
Noncurrent Liabilities:
                        
Deferred liabilities
     127,769       129,837       139,600  
 
                        
Stockholders’ Equity:
                        
Preferred stock
     —       —       —  
Common stock
     1,762       1,779       1,787  
Additional paid-in capital
     287,853       282,528       272,153  
Retained earnings
     772,215       780,212       732,741  
Accumulated other comprehensive income
     533       388       256  
 
                  
Total Stockholders’ Equity
     1,062,363       1,064,907       1,006,937  
 
                  
 
   $ 1,460,718     $ 1,416,021     $ 1,394,449  
 
                  

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Chico’s FAS, Inc.
Consolidated Cash Flow Statements
(Unaudited)
(in thousands)
                 
    Thirteen Weeks Ended  
    April 30,     May 1,  
    2011     2010  
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net income
   $ 45,918     $ 35,402  
 
            
Adjustments to reconcile net income to net cash provided by operating activities —
                
Depreciation and amortization
     24,188       23,362  
Deferred tax benefit
     (1,375 )     (3,640 )
Stock-based compensation expense
     3,636       2,831  
Excess tax benefit from stock-based compensation
     (762 )     (707 )
Impairment charges
     1,402       822  
Deferred rent and lease credits
     (4,330 )     (4,140 )
Loss on disposal of property and equipment
     32        766  
(Increase) decrease in assets —
                
Receivables, net
     (1,745 )     65  
Income tax receivable
     5,852       (319 )
Inventories
     (38,730 )     (21,932 )
Prepaid expenses and other
     (648 )     (1,373 )
Increase in liabilities —
                
Accounts payable
     12,283       15,203  
Accrued and other deferred liabilities
     31,240       33,123  
 
            
Total adjustments
     31,043       44,061  
 
            
Net cash provided by operating activities
     76,961       79,463  
 
            
 
                
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Decrease (increase) in marketable securities
     91,349       (62,816 )
Purchases of property and equipment
     (16,208 )     (15,264 )
 
            
Net cash provided by (used in) investing activities
     75,141       (78,080 )
 
            
 
                
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Proceeds from issuance of common stock
     1,373       920  
Excess tax benefit from stock-based compensation
     762       707  
Dividends paid
     (8,835 )     (7,136 )
Repurchase of common stock
     (36,688 )     (223 )
 
            
Net cash used in financing activities
     (43,388 )     (5,732 )
 
            
 
                
Net increase (decrease) in cash and cash equivalents
     108,714       (4,349 )
CASH AND CASH EQUIVALENTS, Beginning of period
     14,695       37,043  
 
            
CASH AND CASH EQUIVALENTS, End of period
   $ 123,409     $ 32,694  
 
            

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Chico’s FAS, Inc.
Boutique Count and Square Footage
As of April 30, 2011
                                 
    As of     New             As of  
    1/29/2011     Stores     Closures     4/30/2011  
Store count:
                                
Chico’s frontline boutiques
     597       2       (4 )     595  
Chico’s outlets
     63       8       —       71  
WH|BM frontline boutiques
     342       9       (1 )     350  
WH|BM outlets
     21       3       —       24  
Soma frontline boutiques
     120       16       (2 )     134  
Soma outlets
     8       4       (2 )     10  
 
                        
Total Chico’s FAS, Inc.
     1,151       42       (9 )     1,184  
 
                        
                                         
                            Remodels/        
                            Relos and        
    As of     New             change in     As of  
    1/29/2011     Stores     Closures     SSF     4/30/2011  
Net selling square footage (SSF):
                                        
Chico’s frontline boutiques
     1,606,394       4,582       (7,102 )     1,877       1,605,751  
Chico’s outlets
     166,123       18,933       —       —       185,056  
WH|BM frontline boutiques
     710,480       20,035       (1,273 )     1,383       730,625  
WH|BM outlets
     40,421       5,925       —       —       46,346  
Soma frontline boutiques
     246,688       32,346       (5,240 )     (446 )     273,348  
Soma outlets
     14,817       8,138       (4,207 )     (594 )     18,154  
 
                              
 
                                        
Total Chico’s FAS, Inc.
     2,784,923       89,959       (17,822 )     2,220       2,859,280  
 
                              

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CHICO'S FAS, INC. Reports