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

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8-K - FORM 8-K - CHICO'S FAS, INC.	d353694d8k.htm

Exhibit 99.1

LOGO

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

Chico’s FAS, Inc. Reports First Quarter Earnings Per Share Up 23% To A Record $0.32

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13th consecutive quarter of double digit EPS growth

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9.6% comparable sales increase - 12th consecutive positive quarter

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Record net sales of $651 million

Fort Myers, FL – May 16, 2012 – Chico’s FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2012 first quarter ended April 28, 2012.

Net Income and Earnings per Share

For the first quarter, net income was $53.6 million, or $0.32 per diluted share, compared to net income of $45.9 million, or $0.26 per diluted share for last year’s first quarter, reflecting an earnings per share increase of 23%.

Net Sales

For the first quarter, net sales were $650.8 million, an increase of 21.2% compared to $537.2 million in last year’s first quarter. The increase reflects a consolidated comparable sales increase of 9.6%, an 8.0% increase in square footage and $33.7 million in sales for Boston Proper. The consolidated comparable sales increase of 9.6% for the first quarter was on top of a 7.7% increase for last year’s first quarter, and reflects increases in both average dollar sale and transaction count. The Chico’s/Soma Intimates brands’ comparable sales increased 8.8% on top of a 7.8% increase in last year’s first quarter and the White House | Black Market (“WH|BM”) brand’s comparable sales increased 11.3% on top of a 7.4% increase in last year’s first quarter.

Gross Margin

For the first quarter, gross margin was $378.6 million, an increase of 19.2% compared to $317.7 million in last year’s first quarter. As a percentage of net sales, gross margin was 58.2%, a 90 basis point decrease from last year’s first quarter, reflecting the cycling of 2011’s four-year record gross margin rate, a more promotional environment, and the inclusion of Boston Proper’s results.

Selling, General and Administrative Expenses

For the first quarter, selling, general and administrative expenses (“SG&A”) were $291.7 million, an increase of 19.1% compared to $244.8 million in last year’s first quarter. As a percentage of net sales, SG&A was 44.8%, a 70 basis point improvement from last year’s first quarter, reflecting leverage on store expenses from our comparable sales increase and the inclusion of Boston Proper’s results, partially offset by higher marketing expenses and increased performance-based incentive compensation.

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Tax Rate

For the first quarter, the effective tax rate was 38.0% compared to 37.3% in last year’s first quarter. The effective tax rate for last year reflected favorable state tax settlements.

Inventories

At the end of the first quarter, total inventories were $213.7 million compared to $198.5 million for the first quarter last year. Inventories in the current year include $13.6 million of inventory related to Boston Proper.

Outlook

For fiscal 2012, including Boston Proper, the Company’s planning assumptions are as follows:

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Net sales increase at a mid to high teens percentage rate to approximately $2.5 to 2.6 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;

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Gross margin rate down approximately 50 basis points;

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

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Effective tax rate approximately 38%;

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Inventories in-line with sales growth; and

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Capital expenditures approximately $150 million, which include 120 to 130 gross new stores.

A conference call to review the first quarter is scheduled for today at 8:30 a.m. EDT. 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 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 606 boutiques and 86 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 376 boutiques and 31 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 180 boutiques and 15 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.

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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)


	Thirteen Weeks Ended
	April 28, 2012				April 30, 2011
	Amount		% of Sales		Amount		% of Sales
Net Sales:
Chico’s/Soma Intimates	$	425,342		65.3	$	374,934		69.8
White House \| Black Market		191,727		29.5		162,224		30.2
Boston Proper		33,748		5.2		—		—

Net sales		650,817		100.0		537,158		100.0

Cost of goods sold		272,221		41.8		219,495		40.9

Gross margin		378,596		58.2		317,663		59.1

Selling, general and administrative expenses:
Selling, general and administrative expenses		291,676		44.8		244,845		45.5
Acquisition and integration costs		558		0.1		—		—

Total selling, general and administrative expenses		292,234		44.9		244,845		45.5

Income from operations		86,362		13.3		72,818		13.6
Interest income, net		183		0.0		400		0.0

Income before income taxes		86,545		13.3		73,218		13.6
Income tax provision		32,900		5.1		27,300		5.1

Net income	$	53,645		8.2	$	45,918		8.5

Per share data:
Net income per common share–basic	$	0.32			$	0.26

Net income per common and common equivalent share–diluted	$	0.32			$	0.26

Weighted average common shares outstanding–basic		163,974				174,881

Weighted average common and common equivalent shares outstanding–diluted		164,876				176,112

Dividends declared per share	$	0.105			$	0.10

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Chico’s FAS, Inc.

Consolidated Balance Sheets

(in thousands)


	April 28, 2012		January 28, 2012		April 30, 2011
	(Unaudited)				(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	147,077	$	58,919	$	123,409
Marketable securities, at fair value		193,446		188,934		442,815
Inventories		213,676		194,469		198,544
Prepaid expenses and other current assets		50,973		55,104		45,150

Total Current Assets		605,172		497,426		809,918

Property and Equipment, Net		564,904		550,230		507,963

Other Assets:
Goodwill		238,693		238,693		96,774
Other intangible assets		131,022		132,112		38,930
Other assets, net		6,821		6,691		7,133

Total Other Assets		376,536		377,496		142,837

	$	1,546,612	$	1,425,152	$	1,460,718


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	147,925	$	100,395	$	129,894
Other current liabilities		164,746		137,714		140,692

Total Current Liabilities		312,671		238,109		270,586

Noncurrent Liabilities:
Deferred liabilities		128,054		125,690		127,769
Deferred taxes		49,528		52,125		—

Total Noncurrent Liabilities		177,582		177,815		127,769

Stockholders’ Equity:
Preferred stock		—		—		—
Common stock		1,677		1,657		1,762
Additional paid-in capital		313,756		302,612		287,853
Retained earnings		740,720		704,631		772,215
Accumulated other comprehensive income		206		328		533

Total Stockholders’ Equity		1,056,359		1,009,228		1,062,363

	$	1,546,612	$	1,425,152	$	1,460,718

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Chico’s FAS, Inc.

Consolidated Cash Flow Statements

(Unaudited)

(in thousands)


	Thirteen Weeks Ended
	April 28, 2012			April 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	53,645		$	45,918

Adjustments to reconcile net income to net cash provided by operating activities —
Depreciation and amortization		26,092			24,188
Deferred tax benefit		(2,014	)		(1,375	)
Stock-based compensation expense		5,318			3,636
Excess tax benefit from stock-based compensation		(3,136	)		(762	)
Deferred rent and lease credits		(4,027	)		(4,330	)
Loss on disposal and impairment of property and equipment		1,285			1,434
(Increase) decrease in assets —
Inventories		(19,206	)		(38,730	)
Prepaid expenses and other assets		3,284			3,459
Increase in liabilities —
Accounts payable		38,726			14,404
Accrued and other deferred liabilities		36,845			29,119

Total adjustments		83,167			31,043

Net cash provided by operating activities		136,812			76,961

CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in marketable securities		(4,633	)		91,349
Purchases of property and equipment		(40,942	)		(16,208	)

Net cash (used in) provided by investing activities		(45,575	)		75,141

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		5,815			1,373
Excess tax benefit from stock-based compensation		3,136			762
Dividends paid		(8,753	)		(8,835	)
Repurchase of common stock		(3,277	)		(36,688	)

Net cash used in financing activities		(3,079	)		(43,388	)

Net increase in cash and cash equivalents		88,158			108,714
CASH AND CASH EQUIVALENTS, Beginning of period		58,919			14,695

CASH AND CASH EQUIVALENTS, End of period	$	147,077		$	123,409

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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 common 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 shareholders 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.

The following table sets forth the computation of basic and diluted earnings per share shown on the face of the accompanying consolidated statements of income (in thousands, except per share amounts):


	Thirteen Weeks Ended
	April 28, 2012			April 30, 2011
Net income	$	53,645		$	45,918
Net income and dividends declared allocated to unvested restricted stock		(933	)		(537	)

Net income available to common shareholders	$	52,712		$	45,381

Weighted average common shares outstanding – basic		163,974			174,881
Weighted average common and common equivalent shares outstanding – diluted		164,876			176,112
Net income per common share:
Basic	$	0.32		$	0.26

Diluted	$	0.32		$	0.26

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Chico’s FAS, Inc.

Boutique Count and Square Footage

As of April 28, 2012


	As of 1/28/2012		New Stores		Closures			As of 4/28/2012
Store count:

Chico’s frontline boutiques		601		3		(1	)		603
Chico’s outlets		83		3		—			86
WH\|BM frontline boutiques		364		9		(1	)		372
WH\|BM outlets		27		3		—			30
Soma frontline boutiques		164		15		(2	)		177
Soma outlets		17		—		(2	)		15

Total Chico’s FAS, Inc.		1,256		33		(6	)		1,283


	As of 1/28/2012		New Stores		Closures			Remodels/ Relos and change in SSF			As of 4/28/2012
Net selling square footage (SSF):

Chico’s frontline boutiques		1,631,674		7,703		(2,725	)		887			1,637,539
Chico’s outlets		213,475		7,189		—			—			220,664
WH\|BM frontline boutiques		768,442		23,578		(2,507	)		4,150			793,663
WH\|BM outlets		53,263		6,512		—			—			59,775
Soma frontline boutiques		326,858		28,773		(3,809	)		(5,466	)		346,356
Soma outlets		32,676		—		(3,669	)		50			29,057

Total Chico’s FAS, Inc.		3,026,388		73,755		(12,710	)		(379	)		3,087,054

Executive Contact:

Todd Vogensen

Vice President-Investor Relations

Chico’s FAS, Inc.

(239) 346-4199

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CHICO'S FAS, INC. - FORM 8-K - EX-99.1 - May 16, 2012

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CHICO'S FAS, INC. Reports