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.	d545425d8k.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 of $0.32

•

Record quarterly net sales of $670.7 million

•

Flat comparable sales, on top of last year’s 9.6% increase

•

Share repurchases of 3.4 million shares for $60 million

•

Opened 46 new stores, including two Boston Proper boutiques

Fort Myers, FL – May 29, 2013 – Chico’s FAS, Inc. (NYSE: CHS) today announced its fiscal 2013 first quarter financial results.

For the first quarter, when excluding non-recurring acquisition and integration costs related to the Boston Proper acquisition, the Company reported net income of $51.7 million, a decrease of 4.2% compared to net income of $54.0 million in last year’s first quarter, and earnings per diluted share of $0.32, flat to a record $0.32 per diluted share in last year’s first quarter. Including non-recurring acquisition and integration costs, the Company reported net income of $51.1 million, a decrease of 4.7% compared to net income of $53.6 million in last year’s first quarter, and earnings per diluted share of $0.31, a decrease of 3.1% compared to $0.32 per diluted share in last year’s first quarter.

Net Sales

For the first quarter, net sales were a record $670.7 million, an increase of 3.1% compared to $650.8 million in last year’s first quarter, primarily reflecting 114 net new stores for a square footage increase of 9.0%. Comparable sales for the first quarter were flat following a 9.6% increase in last year’s first quarter, reflecting higher transaction count offset by a decrease in average dollar sale. The comparable sales results primarily reflect the impact of an unusually cool spring and the cycling of strong comparable sales last year.

The Chico’s/Soma Intimates brands’ comparable sales decreased 2.8% following an 8.8% increase in last year’s first quarter for a two-year stack of 6.0% and the White House | Black Market (“WH|BM”) brand’s comparable sales increased 6.4% following an 11.3% increase in last year’s first quarter for a two-year stack of 17.7%.

Gross Margin

For the first quarter, gross margin was $386.8 million compared to $378.6 million in last year’s first quarter. As a percentage of net sales, gross margin was 57.7%, a 50 basis point decrease from last year’s first quarter, primarily reflecting higher promotion of seasonal merchandise during an unusually cool spring and investment in new distribution automation partially offset by lower incentive compensation.

Page 1 of 8

Selling, General and Administrative Expenses

For the first quarter, selling, general and administrative expenses (“SG&A”) were $304.9 million compared to $291.7 million in last year’s first quarter. As a percentage of net sales, SG&A was 45.5%, a 70 basis point increase from last year’s first quarter, primarily reflecting higher occupancy and marketing expenses as a percent of net sales partially offset by lower incentive compensation.

Inventories

In-store inventory per selling square foot increased approximately 2.3% over the first quarter last year. At the end of the first quarter, total inventories were $243.5 million compared to $213.7 million at the end of the first quarter last year. Inventories increased by $29.8 million, or 13.9%, primarily reflecting inventory to support a square footage increase of 9.0%. Excluding the impact of the calendar shift from last fiscal year’s 53^rd week, inventory increased approximately 9.2% from prior year.

Share Repurchase Program

During the first quarter of fiscal 2013, the Company repurchased 3.4 million shares for $60 million under its $300 million share repurchase program announced in February 2013, with $240 million remaining under the program as of the end of the first quarter.

ABOUT CHICO’S FAS, INC.

The Company, through its brands – Chico’s, White House | Black Market, Soma Intimates, and Boston Proper, is a leading women’s omni-channel specialty retailer of private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing items.

As of May 4, 2013, the Company operated 1,397 stores in the US. The Company’s merchandise is also available at www.chicos.com, www.whbm.com, www.soma.com, and www.bostonproper.com. For more detailed information on Chico’s FAS, Inc., please go to our corporate website at www.chicosfas.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 at www.chicosfas.com.

(Financial Tables Follow)

Page 2 of 8

Chico’s FAS, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)


	Thirteen Weeks Ended
	May 4, 2013					April 28, 2012
	Amount		% of Sales			Amount		% of Sales
Net sales:
Chico’s/Soma Intimates	$	424,661		63.3	%	$	425,342		65.3	%
White House \| Black Market		220,398		32.9	%		191,727		29.5	%
Boston Proper		25,663		3.8	%		33,748		5.2	%

Total net sales		670,722		100.0	%		650,817		100.0	%
Cost of goods sold		283,878		42.3	%		272,221		41.8	%

Gross margin		386,844		57.7	%		378,596		58.2	%
Selling, general and administrative expenses		304,899		45.5	%		291,676		44.8	%
Acquisition and integration costs		914		0.1	%		558		0.1	%

Income from operations		81,031		12.1	%		86,362		13.3	%
Interest income, net		191		0.0	%		183		0.0	%

Income before income taxes		81,222		12.1	%		86,545		13.3	%
Income tax provision		30,100		4.5	%		32,900		5.1	%

Net income	$	51,122		7.6	%	$	53,645		8.2	%


Per share data:
Net income per common share-basic	$	0.31				$	0.32

Net income per common and common equivalent share–diluted	$	0.31				$	0.32

Weighted average common shares outstanding–basic		158,584					163,974

Weighted average common and common equivalent shares outstanding–diluted		159,536					164,876

Dividends declared per share	$	0.110				$	0.105

Page 3 of 8

Chico’s FAS, Inc.

Condensed Consolidated Balance Sheets

(in thousands)


	May 4, 2013		February 2, 2013		April 28, 2012
	(Unaudited)				(Unaudited)
ASSETS

Current Assets:
Cash and cash equivalents	$	85,616	$	56,859	$	147,077
Marketable securities, at fair value		202,769		272,499		193,446
Inventories		243,472		206,849		213,676
Prepaid expenses and other current assets		55,280		61,786		50,973

Total Current Assets		587,137		597,993		605,172

Property and Equipment, net		614,423		608,120		564,904

Other Assets:
Goodwill		238,693		238,693		238,693
Other intangible assets, net		126,665		127,754		131,022
Other assets, net		8,206		8,068		6,821

Total Other Assets		373,564		374,515		376,536

	$	1,575,124	$	1,580,628	$	1,546,612


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	152,123	$	129,387	$	147,925
Other current liabilities		160,004		173,024		164,746

Total Current Liabilities		312,127		302,411		312,671

Noncurrent Liabilities:
Deferred liabilities		137,929		132,374		128,054
Deferred taxes		52,221		52,644		49,528

Total Noncurrent Liabilities		190,150		185,018		177,582

Stockholders’ Equity:

Preferred stock		—		—		—
Common stock		1,621		1,628		1,677
Additional paid-in capital		355,162		348,775		313,756
Retained earnings		715,911		742,580		740,720
Accumulated other comprehensive income		153		216		206

Total Stockholders’ Equity		1,072,847		1,093,199		1,056,359

	$	1,575,124	$	1,580,628	$	1,546,612

Page 4 of 8

Chico’s FAS, Inc.

Condensed Consolidated Cash Flow Statements

(Unaudited)

(in thousands)


	Thirteen Weeks Ended
	May 4, 2013			April 28, 2012
Cash Flows From Operating Activities:
Net income	$	51,122		$	53,645

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		29,124			26,092
Deferred tax (benefit) expense		4,169			(2,014	)
Stock-based compensation expense		7,492			5,318
Excess tax benefit from stock-based compensation		(1,028	)		(3,136	)
Deferred rent and lease credits		(4,263	)		(4,027	)
Loss on disposal and impairment of property and equipment		281			1,285
Changes in assets and liabilities, net of effects of acquisition:
Inventories		(36,623	)		(19,206	)
Prepaid expenses and other assets		1,545			3,284
Accounts payable		13,823			38,726
Accrued and other liabilities		(2,193	)		36,845

Net cash provided by operating activities		63,449			136,812


Cash Flows From Investing Activities:
(Increase) Decrease in marketable securities		69,666			(4,633	)
Purchases of property and equipment, net		(34,599	)		(40,942	)

Net cash (used in) provided by investing activities		35,067			(45,575	)


Cash Flows From Financing Activities:
Proceeds from issuance of common stock		3,067			5,815
Excess tax benefit from stock-based compensation		1,028			3,136
Dividends paid		(8,939	)		(8,753	)
Repurchase of common stock		(64,915	)		(3,277	)

Net cash used in financing activities		(69,759	)		(3,079	)

Net increase in cash and cash equivalents		28,757			88,158
Cash and Cash Equivalents, Beginning of period		56,859			58,919

Cash and Cash Equivalents, End of period	$	85,616		$	147,077

Page 5 of 8

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 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 stockholders 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 (“PSUs”).

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
	May 4, 2013			April 28, 2012
	(dollars in thousands)
Numerator
Net income	$	51,122		$	53,645
Net income and dividends declared allocated to unvested restricted stock		(1,187	)		(933	)

Net income available to common shareholders	$	49,935		$	52,712


Denominator
Weighted average common shares outstanding – basic		158,584,066			163,973,850
Dilutive effect of stock options and PSUs outstanding		951,763			902,397

Weighted average common and common equivalent shares outstanding – diluted		159,535,829			164,876,247


Net income per common share:
Basic	$	0.31		$	0.32

Diluted	$	0.31		$	0.32

Page 6 of 8

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)


	May 4, 2013		April 28, 2012
Net income:
GAAP basis		51,122		53,645

Add: Impact of acquisition and integration costs, net of tax		575		346

Non-GAAP adjusted basis	$	51,697	$	53,991


Net income per diluted share:
GAAP basis	$	0.31	$	0.32

Add: Impact of acquisition and integration costs, net of tax		0.01		0.00

Non-GAAP adjusted basis	$	0.32	$	0.32

Page 7 of 8

Chico’s FAS, Inc.

Store Count and Square Footage

As of May 4, 2013

(Unaudited)


	As of 2/2/2013		New Stores		Closures			As of 5/4/2013
Store count:
Chico’s frontline boutiques		606		8		(3	)		611
Chico’s outlets		99		3		—			102
WH\|BM frontline boutiques		398		13		(2	)		409
WH\|BM outlets		45		3		—			48
Soma frontline boutiques		193		17		(1	)		209
Soma outlets		16		—		—			16
Boston Proper frontline boutiques		—		2		—			2

Total Chico’s FAS, Inc.		1,357		46		(6	)		1,397


	As of 2/2/2013		New Stores		Closures			Other changes in SSF			As of 5/4/2013
Net selling square footage (SSF):
Chico’s frontline boutiques		1,653,252		20,762		(7,777	)		1,519			1,667,756
Chico’s outlets		251,846		6,822		—			(177	)		258,491
WH\|BM frontline boutiques		873,183		32,118		(4,247	)		9,061			910,115
WH\|BM outlets		91,619		5,985		—			—			97,604
Soma frontline boutiques		370,770		33,747		(2,313	)		(3,487	)		398,717
Soma outlets		30,773		—		—			—			30,773
Boston Proper frontline boutiques		—		2,878		—			—			2,878

Total Chico’s FAS, Inc.		3,271,443		102,312		(14,337	)		6,916			3,366,332

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 - PRESS RELEASE - May 29, 2013

Attached files

CHICO'S FAS, INC. Reports