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Chico's FAS, Inc. Announces Record Second Quarter and Six Month Revenues and Earnings

08/25/2006
     * Second quarter net income up 38.4% to a record $49 million

     * Revenues rose 31.0% to a record $670 million for the six months

     * Six months net income climbed 35.3% to a record $96 million

     * August comparable store sales currently in the low double digit range

     * Company announces fiscal 2006 store opening plans

FORT MYERS, Fla., Aug. 25 /PRNewswire-FirstCall/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the second quarter and six months ended July 30, 2005.

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

Net sales for the second quarter ended July 30, 2005, increased 34.6% to a record $343 million from $255 million for the second quarter ended July 31, 2004. Net income rose 38.4% to $49 million, or $0.27 a diluted share, compared to net income of $35 million, or $0.20 a diluted share (as adjusted for the 2 for 1 stock split in February 2005) in the prior year's second quarter. Comparable store sales for the Company-owned stores increased 15.7% for the thirteen-week period ended July 30, 2005 compared to the same thirteen-week period last year.

For the six months ended July 30, 2005, net sales increased 31.0% to a record $670 million from $512 million for the prior year's six months ended July 31, 2004. Net income rose 35.3% to $96 million, or $0.53 a diluted share, compared to net income of $71 million, or $0.40 a diluted share (as adjusted for the 2 for 1 stock split in February 2005) in the prior period. Comparable store sales for the Company-owned stores increased 13.2% for the twenty-six week period compared to the same twenty-six week period last year.

The Company also announced that it is planning to open approximately 20% net new square footage combined for the Chico's and White House | Black Market brands in fiscal 2006, taking into account approximately 105 to 120 net new Company-owned stores and increased square footage from 30-40 relocations and/or expansions. It is currently anticipated that new Chico's and White House | Black Market stores in 2006, for the most part, will be somewhat larger than the average existing store size for the respective brand. Currently, the Company plans that approximately 60% of these new stores will be Chico's stores, with the balance being White House | Black Market stores.

In addition, the Company also announced that it plans to open 20 new Soma by Chico's stores during fiscal 2006 over and above the combined 20% net square footage growth rate outlined above for the Chico's and White House | Black Market brands. The Company anticipates that additional investment will be required to establish the Soma by Chico's brand as an acceptable business meeting the profitability goals of the Company over the longer term. The Company believes the Soma by Chico's brand reduced the Company's operating margin by approximately 60 to 70 basis points for the second quarter of fiscal 2005 and the Company anticipates this will not change significantly in fiscal 2006 even considering the additional new stores planned. The Company further believes that an impact on margin of this order is acceptable when balanced against the possibility of its longer term growth potential.

Scott A. Edmonds, President and CEO, commented, "The second quarter came in with very strong results as we generated an operating margin in excess of 22%, a sales increase of 35%, and a net income increase of over 38%. Second quarter gross margins for the core Chico's brand were somewhat off from last year's gross margins while White House | Black Market's gross margins were up 270 basis points on a quarter over quarter basis. Looking at the potential third quarter results, we are pleased with our same store sales trends thus far in August. Overall, we are experiencing same store sales in the low double digit range, with the Chico's brand in the high single digits range and the White House | Black Market brand again experiencing much stronger same store sales up in the mid 40% range. We are seeing initial strong front-line gross margins from our Fall lines and we anticipate that Chico's front-line stores will generate third quarter gross margins in the range of last year's record setting gross margins and that White House | Black Market's gross margins will continue to make significant improvement. Despite these expectations, we are anticipating an overall gross margin decline in the third quarter similar to that experienced in the second quarter. The lower gross margin is expected to be principally due to lower gross margins in the outlet division as it anniversaries its highest gross margins in history from last year and returns to more normalized outlet gross margins."

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 713 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 and Soma by Chico's names. The Company owns 477 Chico's front-line stores, 27 Chico's outlet stores, 181 White House | Black Market front-line stores, 5 White House | Black Market outlet stores and 10 Soma by Chico's stores; franchisees own and operate 13 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 the

Company's monthly sales information and investor relations line

A copy of a slide show addressing the Company's recent financial results and

current plans for expansion is available on the Company'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 Company's website at http://www.chicos.com in the investor

                              relations section

                          (Financial Tables Follow)


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

                                                   July 30,        January 29,
                                                     2005             2005
                                                  (Unaudited)
                                     ASSETS
    Current Assets:
         Cash and cash equivalents                  $15,741          $14,426
         Marketable securities, at market           334,815          251,199
         Receivables                                  6,744            5,106
         Inventories                                 79,153           73,223
         Prepaid expenses                            14,614            9,429
         Deferred taxes                              13,981           11,184
              Total Current Assets                  465,048          364,567

Property and Equipment:

         Land and land improvements                   6,264            6,055
         Building and building improvements          32,300           29,286
         Equipment, furniture and fixtures          161,275          140,360
         Leasehold improvements                     184,714          166,096
              Total Property and Equipment          384,553          341,797
         Less accumulated depreciation and
          amortization                             (113,667)         (93,834)
              Property and Equipment, Net           270,886          247,963

Other Assets:

         Goodwill                                    61,796           61,796
         Other intangible assets                     34,087           34,042
         Other assets, net                           18,019            7,361
              Total Other Assets                    113,902          103,199
                                                   $849,836         $715,729

                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

         Accounts payable                           $38,230          $36,725
         Accrued liabilities                         69,688           58,258
         Current portion of deferred liabilities        433              332
              Total Current Liabilities             108,351           95,315

Noncurrent Liabilities:

         Deferred liabilities                        52,850           47,149
         Deferred taxes                               6,363           12,397
              Total Noncurrent Liabilities           59,213           59,546

Stockholders' Equity:

         Common stock                                 1,807            1,790
         Additional paid-in capital                 176,882          147,652
         Unearned compensation                       (4,045)          -
         Retained earnings                          507,867          411,556
         Accumulated other comprehensive loss          (239)            (130)
              Total Stockholders' Equity            682,272          560,868
                                                   $849,836         $715,729


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


                   Twenty-Six Weeks Ended           Thirteen Weeks Ended

                July 30, 2005   July 31, 2004   July 30, 2005   July 31, 2004

                 Amount  % of    Amount  % of    Amount  % of    Amount  % of
                         Sales           Sales           Sales           Sales
    Net sales
     by
     Chico's/

Soma

stores $539,071 80.4 $432,341 84.5 $271,466 79.2 $213,852 83.9

    Net sales
     by White
     House |
     Black
     Market

stores 111,095 16.6 62,825 12.3 61,932 18.1 32,827 12.9

Net sales

by catalog

& Internet 14,992 2.2 12,412 2.4 7,035 2.0 6,330 2.5

Net sales to

franchisees 5,022 0.8 3,980 0.8 2,492 0.7 1,758 0.7

Net sales 670,180 100.0 511,558 100.0 342,925 100.0 254,767 100.0

Cost of

goods sold 261,627 39.0 195,037 38.1 136,429 39.8 98,082 38.5

Gross

profit 408,553 61.0 316,521 61.9 206,496 60.2 156,685 61.5

General,

administrative

and store

operating

expenses 239,330 35.7 188,799 36.9 120,056 35.0 92,994 36.5

Depreciation

and

amortization 19,853 3.0 13,701 2.7 10,482 3.0 6,924 2.7

Income

from

operations 149,370 22.3 114,021 22.3 75,958 22.2 56,767 22.3

    Interest
     income,
     net           3,504   0.5       753   0.1     1,994   0.6       484   0.2
      Income
       before
       taxes     152,874  22.8   114,774  22.4    77,952  22.7    57,251  22.5

    Income tax
     provision    56,563   8.4    43,613   8.5    28,841   8.4    21,755   8.6

Net income $96,311 14.4 $71,161 13.9 $49,111 14.3 $35,496 13.9

      Per share data:
    Net income
     per common
     share-
     basic(1)      $0.54           $0.40           $0.27           $0.20

    Net income
     per common
     & common
     equivalent
     share-
     diluted(1)    $0.53           $0.40           $0.27           $0.20

    Weighted
     average
     common
     shares
     outstanding-
     basic(1)    180,007         177,756         180,410         178,572

    Weighted
     average
     common &
     common
     equivalent
     shares
     outstanding-
     diluted(1)  181,867         179,967         182,292         180,379

(1) Prior year amounts restated to give effect to the 2 for 1 stock

split in February 2005

SOURCE  Chico's FAS, Inc.
    -0-                             08/25/2005
    /CONTACT:  Charles J. Kleman, Chief Financial Officer, Chico's FAS, Inc.,
+1-239-274-4105, or F. Michael Smith, Vice President, Investor and Community
Relations, Chico's FAS, Inc., +1-239-274-4797/
    /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
SU:  ERN

KJ
-- NYTH100 --
8649 08/25/2005 16:05 EDT http://www.prnewswire.com
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  • David M. Oliver

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  • cfo@chicos.com