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Chico's FAS, Inc. Announces Record Fourth Quarter and Year End Earnings

01/28/2006
    * Net sales rose 31.6% to a record $376 million for the fourth quarter
    * Fourth quarter net income up 34.9% to a record $44 million
    * Fiscal year net sales rose 31.7% to a record $1.4 billion
    * Net income climbed 37.4% to a record $194 million for the fiscal year
    * Operating margin of 21.2% is the highest ever
    * Fiscal 2005 net selling square footage increased 22%; added 106 stores,
      net

FORT MYERS, Fla., March 1 /PRNewswire-FirstCall/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fourth quarter and fiscal year ended January 28, 2006.

(Logo: http://www.newscom.com/cgi-bin/prnh/20030428/CHICOLOGO )

For the fiscal year ended January 28, 2006, which included fifty-two weeks, net income rose 37.4% to a record $194 million, or $1.06 per diluted share, compared to net income of $141 million, or $0.78 per diluted share, in the fifty-two week fiscal year ended January 29, 2005. Net sales for the fiscal year increased 31.7% to a record $1.4 billion from $1.1 billion in the prior fiscal year. Comparable store sales for the Company-owned stores increased 14.3% for the fifty-two week fiscal year compared to the same fifty- two week period last year.

For the thirteen-week fourth quarter ended January 28, 2006, net income rose 34.9% to a record $44 million, or $0.24 per diluted share, compared to net income of $33 million, or $0.18 per diluted share, in the thirteen-week fourth quarter ended January 29, 2005. Net sales for the fourth quarter climbed 31.6% to a record $376 million from $286 million in the prior year's comparable period. Comparable store sales for the Company-owned stores increased 14.6% for the thirteen-week period ended January 28, 2006, compared to the same thirteen-week period last year.

Scott A. Edmonds, Chico's President and CEO, commented, "Fiscal 2005 resulted in our highest operating margin ever as we improved from 21.0% last year to 21.2% this year. Both the Chico's and White House | Black Market brands ended fiscal 2005 with over $1,000 per net selling square foot, while the initial 10 Soma stores exceeded $450 per net selling square foot on over $1 million in average sales per store in their first full year of operations. We ended the year with over $400 million in cash and marketable securities, no debt, and an inventory increase that was generally in line with our sales increases."

Mr. Edmonds continued, "Considering the impact of the increase in fourth quarter marketing costs that we planned and implemented, we are pleased with the quarter's consolidated profitability and with the quarter's merchandise margins that improved in each of our brands over the fourth quarter margins last year. During the fourth quarter, Chico's, White House | Black Market, and Soma all achieved their highest fourth quarter front-line merchandise margins ever as Chico's quarter over quarter merchandise margins improved by 50 basis points, White House | Black Market improved by 90 basis points, and Soma improved by 490 basis points. In spite of these brand by brand improvements in merchandise margins, the overall gross margin in the fourth quarter showed a decline from the fourth quarter last year mostly due to a 40 basis point decline in the outlet gross margins, the larger relative growth of the lower margin White House | Black Market and Soma brands, and relatively small increases in other inventory clearance costs and freight costs."

Mr. Edmonds further stated, "The success in our Chico's stores over the years has been phenomenal and we see opportunities for further expansion in the Chico's brand. We are making important investments in our other brands as we transition to a future of multiple platforms for growth. Our recent investment in the Fitigues brand, our accelerated rollout of the Soma brand and the continued emphasis on store growth for our particularly successful White House | Black Market brand, are positioning the Company for what we envision to be sustained long term growth for our shareholders. Earlier this year, we stepped up the rollout plans in fiscal 2006 with the goal of moving more quickly to profitability in the Soma brand and to take advantage of the momentum of the White House | Black Market brand, which has consistently added increasing levels of earnings per share to our overall results. Each of these growth strategies is likely to have some short-term downward impact on both our gross margins and our operating margins. With these continuing long term investments, we expect there will be continued pressure on the overall gross margin for each quarter of fiscal 2006, and we anticipate a decline of between 10 and 50 basis points quarter over quarter, with the first half of the year likely to be less impacted than the second half. Further, these investments, including certain longer term initiatives in the MIS and store payroll areas, can be expected to require a slightly higher level of selling, general and administrative costs as a percentage of sales. We are optimistic that we will be able to manage these costs so as to mitigate the extent of any negative impact on the percentage. Like many other companies, we will be affected by FAS 123R and we anticipate that these new expensing requirements will reduce annual earnings in fiscal 2006 by between eight and nine cents a share. Excluding the impact of the initial adoption of FAS 123R, we anticipate our earnings to grow in the neighborhood of 25% in fiscal 2006."

The Company is a specialty retailer of private label, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing gift items. The Company operates 780 women's specialty stores, including stores in 47 states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico operating under the Chico's, White House | Black Market, Soma by Chico's and Fitigues names. The Company owns 501 Chico's front-line stores, 31 Chico's outlet stores, 198 White House | Black Market front-line stores, 8 White House | Black Market outlet stores, 16 Soma by Chico's stores, 11 Fitigues front-line stores and 1 Fitigues outlet store; franchisees own and operate 14 Chico's stores.

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, please call (877) 424-4267 to listen to Chico's
            monthly sales information and investor relations line

A copy of a slide show addressing Chico's recent financial results and current

plans for expansion is available on the Chico's website at

           http://www.chicos.com in the investor relations section

Additional investor information on Chico's FAS, Inc. is available free of

        charge on the Chico's website at http://www.chicos.com in the
                          investor relations section

                          (Financial Tables Follow)



                              Chico's FAS, Inc.
                         Consolidated Balance Sheets
                                (In thousands)

                                                  January 28,      January 29,
                                                     2006             2005
                                                  (Unaudited)
                                    ASSETS
    Current Assets:
         Cash and cash equivalents                   $3,035          $14,426
         Marketable securities, at market           401,445          251,199
         Receivables                                  7,240            5,106
         Income taxes receivable                      5,013               --
         Inventories                                 95,421           73,223
         Prepaid expenses                            13,497            9,429
         Deferred taxes                              12,327           11,184
              Total Current Assets                  537,978          364,567

    Property and Equipment:
         Land and land improvements                  44,893            6,055
         Building and building improvements          35,573           29,286
         Equipment, furniture and fixtures          187,970          140,360
         Leasehold improvements                     209,342          166,096
              Total Property and Equipment          477,778          341,797
         Less accumulated depreciation and
          amortization                             (131,846)         (93,834)
              Property and Equipment, Net           345,932          247,963

    Other Assets:
         Goodwill                                    61,796           61,796
         Other intangible assets                     34,041           34,042
         Other assets, net                           19,666            7,361
              Total Other Assets                    115,503          103,199
                                                   $999,413         $715,729

                     LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities:
         Accounts payable                           $47,434          $36,725
         Accrued liabilities                         74,586           58,258
         Current portion of deferred liabilities        648              332
              Total Current Liabilities             122,668           95,315

    Noncurrent Liabilities:
         Deferred liabilities                        65,189           47,149
         Deferred taxes                               5,129           12,397
              Total Noncurrent Liabilities           70,318           59,546

    Stockholders' Equity:
         Common stock                                 1,817            1,790
         Additional paid-in capital                 202,878          147,652
         Unearned compensation                       (3,710)              --
         Retained earnings                          605,537          411,556
         Accumulated other comprehensive loss           (95)            (130)
              Total Stockholders' Equity            806,427          560,868
                                                   $999,413         $715,729



                              Chico's FAS, Inc.
                      Consolidated Statements of Income
                   (In thousands, except per share amounts)

                                             Fifty-Two Weeks Ended

                                       (Unaudited)
                                    January 28, 2006       January 29, 2005

                                     Amount     % of        Amount     % of
                                                Sales                  Sales

    Net sales by Chico's/Soma
     stores                       $1,095,938     78.0      $889,429     83.4
    Net sales by White House |
     Black Market stores             261,601     18.6       142,092     13.3
    Net sales by catalog & Internet   36,151      2.6        26,831      2.5
    Net sales to franchisees          10,885      0.8         8,530      0.8
            Net sales              1,404,575    100.0     1,066,882    100.0

    Cost of goods sold               547,532     39.0       411,908     38.6
            Gross profit             857,043     61.0       654,974     61.4

    General, administrative and
     store operating expenses        514,529     36.6       398,117     37.3
    Depreciation and amortization     44,201      3.2        32,481      3.1
            Income from operations   298,313     21.2       224,376     21.0

    Interest income, net               8,236      0.6         2,327      0.2
            Income before taxes      306,549     21.8       226,703     21.2

    Income tax provision             112,568      8.0        85,497      8.0
            Net income              $193,981     13.8      $141,206     13.2

            Per share data:
    Net income per common share-
     basic                             $1.07                  $0.79

    Net income per common & common
     equivalent share-diluted          $1.06                  $0.78

    Weighted average common shares
     outstanding-basic               180,465                178,256

    Weighted average common &
     common equivalent shares
     outstanding-diluted             182,408                180,149



                                              Thirteen Weeks Ended

                                       (Unaudited)            (Unaudited)
                                    January 28, 2006       January 29, 2005

                                     Amount     % of        Amount     % of
                                                Sales                  Sales

    Net sales by Chico's/Soma
     stores                         $279,266     74.3      $230,958     80.9
    Net sales by White House |
     Black Market stores              82,057     21.8        44,975     15.7
    Net sales by catalog & Internet   11,624      3.1         7,429      2.6
    Net sales to franchisees           2,783      0.8         2,189      0.8
            Net sales                375,730    100.0       285,551    100.0

    Cost of goods sold               152,597     40.6       115,304     40.4
            Gross profit             223,133     59.4       170,247     59.6

    General, administrative and
     store operating expenses        143,488     38.2       107,342     37.5
    Depreciation and amortization     13,009      3.5        11,733      4.1
            Income from operations    66,636     17.7        51,172     18.0

    Interest income, net               2,578      0.7           955      0.3
            Income before taxes       69,214     18.4        52,127     18.3

    Income tax provision              24,754      6.6        19,159      6.7
            Net income               $44,460     11.8       $32,968     11.6

            Per share data:
    Net income per common share-
     basic                             $0.25                  $0.18

    Net income per common & common
     equivalent share-diluted          $0.24                  $0.18

    Weighted average common shares
     outstanding-basic               181,206                178,787

    Weighted average common &
     common equivalent shares
     outstanding-diluted             183,184                180,518



                              Chico's FAS, Inc.
                      Consolidated Cash Flow Statements
                                (In thousands)

                                                   January 28,    January 29,
                                                      2006           2005
    CASH FLOWS FROM OPERATING ACTIVITIES:         (Unaudited)
        Net income                                  $193,981       $141,206
        Adjustments to reconcile net income to
         net cash provided by operating
         activities --
          Depreciation and amortization, cost of
           goods sold                                  4,651          3,605
          Depreciation and amortization, other        44,201         32,481
          Deferred tax benefit                        (8,411)        (2,986)
          Stock-based compensation expense             1,614             --
          Tax benefit of stock options exercised      21,461         27,297
          Deferred rent expense, net                   3,673          6,450
          Loss on impairment and disposal of
           property and equipment                        753            311
        (Increase) decrease in assets --
          Receivables, net                            (7,147)         1,069
          Inventories                                (22,198)       (18,280)
          Prepaid expenses and other                  (5,958)        (2,734)
        Increase in liabilities --
          Accounts payable                            10,709          8,929
          Accrued and other deferred liabilities      31,073         26,272
              Total adjustments                       74,421         82,414
              Net cash provided by operating
               activities                            268,402        223,620

    CASH FLOWS FROM INVESTING ACTIVITIES:
        Purchases of marketable securities          (357,237)      (404,211)
        Proceeds from sale of marketable
         securities                                  207,026        257,299
        Acquisition of equity investment             (10,418)            --
        Acquisition of franchise store                    --         (1,307)
        Purchases of property and equipment         (147,635)       (93,065)
              Net cash used in investing
               activities                           (308,264)      (241,284)

    CASH FLOWS FROM FINANCING ACTIVITIES:
        Proceeds from issuance of common stock        28,471         22,684
        Repurchase of common stock                        --         (4,992)
        Payments on capital leases                        --         (1,278)
                Net cash provided by financing
                 activities                           28,471         16,414

                Net decrease in cash and cash
                 equivalents                         (11,391)        (1,250)
    CASH AND CASH EQUIVALENTS, Beginning of period    14,426         15,676
    CASH AND CASH EQUIVALENTS, End of period          $3,035        $14,426



     Executive Contacts:

     Charles J. Kleman
     Chief Financial Officer
     Chico's FAS, Inc.
     (239) 274-4105

     F. Michael Smith
     Vice President
     Investor and Community Relations
     Chico's FAS, Inc.
     (239) 274-4797
SOURCE  Chico's FAS, Inc.
    -0-                             03/01/2006
    /CONTACT:  Charles J. Kleman, Chief Financial Officer, +1-239-274-4105, or
F. Michael Smith, Vice President, Investor and Community Relations,
+1-239-274-4797, both of Chico's FAS, Inc./
    /Photo:  NewsCom:  http://www.newscom.com/cgi-bin/prnh/20030428/CHICOLOGO
              AP Archive:  http://photoarchive.ap.org
              PRN Photo Desk, photodesk@prnewswire.com /
    /Web site:  http://www.chicos.com /
    (CHS)

CO:  Chico's FAS, Inc.
ST:  Florida
IN:  REA FAS TEX
SU:  ERN ERP

MR-MD
-- FLW024 --
6336 03/01/2006 16:05 EST http://www.prnewswire.com
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