CHICO'S FAS, INC. - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - CHICO'S FAS, INC.	d303251d8k.htm

Exhibit 99.1

LOGO

Chico’s FAS, Inc. • 11215 Metro Parkway • Fort Myers, Florida 33966 • (239) 277-6200

For Immediate Release

Executive Contact:

Todd Vogensen

Vice President-Investor Relations

Chico’s FAS, Inc.

(239) 346-4199

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

•

8.7% comparable sales increase in fourth quarter – 11^th 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

Fort Myers, FL – February 22, 2012 – Chico’s FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2011 fourth quarter and fiscal year ended January 28, 2012.

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.

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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 53^rd week;

•

Gross margin rate down approximately 50 basis points;

•

SG&A expense, as a percentage of net sales, down approximately 50 basis points;

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•

Effective tax rate to be approximately 38%;

•

Inventories to be in-line with sales growth; and

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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)

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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

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Chico’s FAS, Inc.

Consolidated Balance Sheets

(in thousands)


	January 28, 2012		January 29, 2011		January 30, 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

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Chico’s FAS, Inc.

Consolidated Cash Flow Statements

(Unaudited)

(in thousands)


	Fifty-Two Weeks Ended
	January 28, 2012			January 29, 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

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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 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 January 28, 2012
Net income:

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

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Chico’s FAS, Inc.

Boutique Count and Square Footage

As of January 28, 2012


	As of 1/29/2011		New Stores		Closures			As of 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


	As of 1/29/2011		New Stores		Closures			Remodels/ Relos and change in SSF			As of 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

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CHICO'S FAS, INC. - FORM 8-K - EX-99.1 - PRESS RELEASE - February 22, 2012

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CHICO'S FAS, INC. Reports