- Fourth quarter 2008 net sales totaled $373.4 million vs. $409.3 million
in 2007
- Fourth quarter 2008 net loss was $40.5 million, or $0.23 per diluted
share, which includes $9.1 million of store impairment and $6.6 million
severance charges after-tax vs. net loss of $20.5 million, or $0.12 per
diluted share in 2007
- Year-end inventories decreased 15% per selling square foot
- Year-end cash and marketable securities were $268.7 million
FORT MYERS, Fla., March 3 /PRNewswire-FirstCall/ -- Chico's FAS, Inc.
(NYSE: CHS) today announced its financial results for the fiscal 2008 fourth
quarter and fiscal year ended January 31, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080211/CHICOSLOGO )
Fourth Quarter and Fiscal Year 2008 Financial Results
For the fourth quarter ended January 31, 2009, the Company had a net loss
of $40.5 million, or $0.23 per diluted share, compared to a net loss of $20.5
million, or $0.12 per diluted share for the fourth quarter ended February 2,
2008.
The fourth quarter 2008 results include two significant after-tax charges
totaling $0.09 per diluted share:
-- Non-cash impairment charges, net of tax benefit, totaling $9.1
million, or $0.05 per share, related to the write-off of fixed assets
at certain underperforming stores; and
-- After-tax severance and workforce reduction costs totaling $6.6
million, or $0.04 per share, related to the previously disclosed cost
reduction initiatives implemented by the Company and obligations under
the former CEO's separation agreement.
Excluding these items, the Company had a fourth quarter net loss of $24.8
million, or $0.14 per diluted share compared to a net loss of $20.5 million,
or $0.12 per diluted share for the like period last year.
For the fiscal year ended January 31, 2009, the Company had a net loss of
$19.1 million, or $0.11 per diluted share compared to net income of $88.9
million, or $0.50 per diluted share for fiscal year 2007. The full fiscal year
2008 results included the aforementioned charges listed above. Excluding
these items, the Company had a net loss for fiscal 2008 of $4.9 million, or
$0.03 per diluted share versus net income of $88.9 million, or $0.50 per
diluted share for fiscal 2007.
Sales
As previously reported, comparable store sales decreased 13.0% for the
thirteen-week period ended January 31, 2009, compared to the comparable
thirteen-week period ended February 2, 2008, with the Chico's brand same store
sales having decreased approximately 17% and the White House | Black Market
(WH|BM) brand same store sales having decreased by approximately 5%.
As previously reported, comparable store sales decreased 15.1% for the
fifty-two week period ended January 31, 2009, compared to the comparable
fifty-two week period ended February 2, 2008, with the Chico's brand same
store sales having decreased approximately 19% and the WH|BM brand same store
sales having decreased by approximately 8%.
Net sales for the direct to consumer channel increased by 8.8% from $20.5
million in last year's fourth quarter to $22.3 million in this year's fourth
quarter. This increase is attributable to higher sales across all three
brands. The Company believes its ability to achieve such an increase in these
challenging economic times is attributable to several factors: the continued
growth in customer acceptance of the offerings at the Soma and WH|BM brands,
increased traffic in all of the direct to consumer channels and the Company's
implementation of planned improvements in its website and call center
infrastructure. The Company intends to continue making improvements to its
direct to consumer infrastructure and merchandising approach in an effort to
increase future sales through this channel.
Gross Margin
Gross margin for the fourth quarter 2008 decreased 14.9% to $166.0 million
from $195.1 million in the prior year's fourth quarter. Gross margin as a
percentage of sales for the fourth quarter decreased 330 basis points to
44.4%, from 47.7% in last year's fourth quarter. WH|BM brand merchandise
margin decreased by approximately 590 basis points due primarily to lower
initial markups as well as higher markdowns. Chico's brand merchandise margin
in the fourth quarter decreased approximately 140 basis points compared to the
prior year's fourth quarter primarily due to lower initial markups offset, in
part, by an improved markdown rate. The gross margin percentage at the
Chico's brand was also negatively impacted by continued investment in that
brand's product development and merchandising functions, coupled with the
deleveraging of these costs associated with the negative same store sales.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") for the fourth
quarter decreased slightly to $228.4 million from $229.3 million in last
year's fourth quarter. As a percentage of sales, SG&A in the fourth quarter
increased by approximately 500 basis points compared to the prior period
primarily due to the recognition of approximately $23.7 million in impairment
and restructuring charges. Excluding the impairment and restructuring
charges, SG&A would have been $204.7 million, which would have represented a
decrease of 10.7% from last year's fourth quarter SG&A and an improvement of
130 basis points over last year's rate as a percentage of sales.
Store operating expenses for the fiscal 2008 fourth quarter decreased by
$5.7 million but increased as a percentage of sales by approximately 230 basis
points compared to the prior period primarily due to the deleverage associated
with the Company's negative same store sales and, to a lesser extent, by
increased personnel as a percentage of sales, as selling payroll did not flex
in direct proportion to the decrease in comparable store sales. These
increases were offset, in part, by a decrease in supplies and shipping costs
across all brands.
Marketing costs for the fiscal 2008 fourth quarter decreased by $12.4
million or approximately 260 basis points primarily due to the on-going cost
reduction initiatives and increased efficiencies implemented by the Company.
Shared services expenses (including headquarters and other non-brand
specific expenses) for the fiscal 2008 fourth quarter decreased by $6.5
million or approximately 100 basis points as a percentage of sales mainly as a
result of on-going cost reduction initiatives implemented by the Company.
Inventories
The Company's consolidated inventory per selling square foot at the end of
fiscal 2008 was $51, reflecting a decrease of approximately 15% from $60 at
the end of fiscal 2007 and is the lowest year-end inventory per square foot
total experienced by the Company in the last 10 years. End of-year
inventories for the Chico's brand decreased by 17.0% per square foot from
fiscal 2007 to fiscal 2008 and end-of-year inventories for the WH|BM brand
decreased by 4.4% per square foot from fiscal 2007 to fiscal 2008.
Cash and Marketable Securities
Cash and marketable securities at the end of fiscal 2008 totaled $268.7
million, a slight decrease from the balance at the end of fiscal 2007, but was
approximately 5%, or $12.4 million, higher than the balance at the end of the
third quarter of fiscal 2008.
Stores
During the fiscal 2008 fourth quarter, the Company opened 6 new stores and
closed 13 stores. Also, during this fourth quarter, the Company
expanded/relocated 2 stores. In fiscal 2008, the Company opened 62 new
stores, closed 24 stores and expanded/relocated 32 stores.
The Company is a specialty retailer of private branded, sophisticated,
casual-to-dressy clothing, intimates, complementary accessories, and other
non-clothing gift items. The Company operates 1,074 women's specialty stores,
including stores in 49 states, the District of Columbia, the U.S. Virgin
Islands and Puerto Rico operating under the Chico's, White House | Black
Market, and Soma Intimates names. The Company has 618 Chico's front-line
stores, 41 Chico's outlet stores, 327 White House | Black Market front-line
stores, 17 White House | Black Market outlet stores, 70 Soma Intimates
front-line stores and 1 Soma Intimates outlet store. The company also conducts
e-commerce on its brand websites, www.chicos.com,
www.whitehouseblackmarket.com and www.soma.com.
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)
Chico's FAS, Inc.
Consolidated Balance Sheets
(in thousands)
January 31, February 2,
2009 2008
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $26,549 $13,801
Marketable securities, at market 242,153 260,469
Receivables 33,993 11,924
Income tax receivable 11,706 23,973
Inventories 132,413 144,261
Prepaid expenses 21,702 18,999
Deferred taxes 17,859 13,306
Total Current Assets 486,375 486,733
Property and Equipment:
Land and land improvements 18,627 17,867
Building and building improvements 74,998 62,877
Equipment, furniture and fixtures 376,218 347,937
Leasehold improvements 418,691 396,650
Total Property and Equipment 888,534 825,331
Less accumulated depreciation and
amortization (327,989) (257,378)
Property and Equipment, Net 560,545 567,953
Other Assets:
Goodwill 96,774 96,774
Other intangible assets 38,930 38,930
Deferred taxes 38,458 22,503
Other assets, net 5,101 37,233
Total Other Assets 179,263 195,440
$1,226,183 $1,250,126
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $56,542 $79,030
Accrued liabilities 88,446 100,726
Current portion of deferred liabilities 1,748 1,437
Total Current Liabilities 146,736 181,193
Noncurrent Liabilities:
Deferred liabilities 177,251 156,417
Total Noncurrent Liabilities 177,251 156,417
Stockholders' Equity:
Common stock 1,771 1,762
Additional paid-in capital 258,312 249,639
Retained earnings 641,978 661,115
Other accumulated comprehensive income 135 -
Total Stockholders' Equity 902,196 912,516
$1,226,183 $1,250,126
Chico's FAS, Inc.
Consolidated Statements of Income
(in thousands, except per share amounts)
Fifty-Two Weeks Ended
(unaudited)
January 31, 2009 February 2, 2008
Amount % of Amount % of
Sales Sales
Net sales by
Chico's/Soma
stores $1,074,939 67.9 $1,223,217 71.4
Net sales by White
House | Black
Market stores 436,875 27.6 418,901 24.4
Net sales by direct
to consumer 70,591 4.5 72,093 4.2
Other net sales - - 115 0.0
Net sales 1,582,405 100.0 1,714,326 100.0
Cost of goods sold 762,913 48.2 745,265 43.5
Gross margin 819,492 51.8 969,061 56.5
Selling, general
and administrative
expenses:
Store operating
expenses 645,352 40.8 633,288 36.9
Marketing 80,326 5.1 95,717 5.6
Shared services 109,744 6.9 118,598 6.9
Impairment and
restructuring
charges 23,664 1.5 - -
Total selling,
general, and
administrative
expenses 859,086 54.3 847,603 49.4
Income (loss) from
operations (39,594) (2.5) 121,458 7.1
Gain on sale of
investment - - 6,833 0.4
Interest income,
net 7,757 0.5 10,869 0.6
Income (loss)
before taxes (31,837) (2.0) 139,160 8.1
Income tax
provision
(benefit) (12,700) (0.8) 48,012 2.8
Income (loss) from
continuing
operations (19,137) (1.2) 91,148 5.3
Loss on
discontinued
operations, net of
tax - - 2,273 0.1
Net income (loss) $(19,137) (1.2) $88,875 5.2
Per share data:
Income (loss) from
continuing
operations per
common share-basic $(0.11) $0.52
Loss on
discontinued
operations per
common share-basic $- $( 0.01)
Net income (loss)
per common
share-basic $(0.11) $0.51
Income (loss) from
continuing
operations per
common
share-diluted $(0.11) $0.51
Loss on
discontinued
operations per
common
share-diluted $- $( 0.01)
Net income (loss)
per common &
common equivalent
share-diluted $(0.11) $0.50
Weighted average
common shares
outstanding-basic 175,861 175,574
Weighted average
common & common
equivalent shares
outstanding-diluted 175,861 176,355
Thirteen Weeks Ended
(unaudited) (unaudited)
January 31, 2009 February 2, 2008
Amount % of Amount % of
Sales Sales
Net sales by
Chico's/Soma
stores $242,887 65.0 $280,817 68.6
Net sales by White
House | Black
Market stores 108,179 29.0 107,973 26.4
Net sales by direct
to consumer 22,313 6.0 20,507 5.0
Other net sales - - - -
Net sales 373,379 100.0 409,297 100.0
Cost of goods sold 207,423 55.6 214,193 52.3
Gross margin 165,956 44.4 195,104 47.7
Selling, general
and administrative
expenses:
Store operating
expenses 159,916 42.8 165,628 40.5
Marketing 18,653 5.0 31,069 7.6
Shared services 26,191 7.0 32,649 8.0
Impairment and
restructuring
charges 23,664 6.3 - -
Total selling,
general, and
administrative
expenses 228,424 61.1 229,346 56.1
Income (loss) from
operations (62,468) (16.7) (34,242) (8.4)
Gain on sale of
investment - - - -
Interest income,
net 1,324 0.3 2,692 0.7
Income (loss)
before taxes (61,144) (16.4) (31,550) (7.7)
Income tax
provision
(benefit) (20,600) (5.5) (11,053) (2.7)
Income (loss) from
continuing
operations (40,544) (10.9) (20,497) (5.0)
Loss on
discontinued
operations, net of
tax - - 40 0.0
Net income (loss) $(40,544) (10.9) $(20,537) (5.0)
Per share data:
Income (loss) from
continuing
operations per
common share-basic $(0.23) $(0.12)
Loss on
discontinued
operations per
common share-basic $- $( 0.00)
Net income (loss)
per common
share-basic $( 0.23) $( 0.12)
Income (loss) from
continuing
operations per
common
share-diluted $(0.23) $(0.12)
Loss on
discontinued
operations per
common
share-diluted $- $( 0.00)
Net income (loss)
per common &
common equivalent
share-diluted $( 0.23) $( 0.12)
Weighted average
common shares
outstanding-basic 175,938 175,604
Weighted average
common & common
equivalent shares
outstanding-diluted 175,938 175,604
Chico's FAS, Inc.
Consolidated Cash Flow Statements
(in thousands)
January 31, February 2,
2009 2008
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(19,137) $88,875
Adjustments to reconcile net (loss)
income to net cash provided by operating
activities -
Depreciation and amortization, cost
of goods sold 8,782 10,386
Depreciation and amortization, other 88,790 81,593
Deferred tax benefit (20,507) (6,635)
Stock-based compensation expense,
cost of goods sold 2,769 4,909
Stock-based compensation expense,
other 9,821 12,171
Excess tax benefit of stock-based
compensation (100) (209)
Deferred rent expense, net 6,060 9,508
Gain on sale of investment - (6,833)
Impairment of long-lived assets 13,691 -
Loss (gain) on disposal of property
and equipment 761 (908)
Decrease (increase) in assets -
Receivables, net 3,766 (18,770)
Income tax receivable 12,267 -
Inventories 11,847 (32,388)
Prepaid expenses and other 4,224 (3,958)
(Decrease) increase in liabilities -
Accounts payable (22,488) 24,119
Accrued and other deferred liabilities (1,100) 46,787
Total adjustments 118,583 119,772
Net cash provided by operating
activities 99,446 208,647
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (569,358) (1,212,894)
Proceeds from sale of marketable
securities 587,809 1,190,761
Purchase of Minnesota franchise rights
and stores - (32,896)
Acquisition of other franchise stores - (6,361)
Proceeds from sale of land - 13,426
Proceeds from sale of investment - 15,090
Purchases of property and equipment (104,615) (202,223)
Net cash used in investing
activities (86,164) (235,097)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 306 3,533
Excess tax benefit of stock-based
compensation 100 209
Cash paid for deferred financing costs (629) -
Repurchase of common stock (311) (694)
Net cash (used in) provided by
financing activities (534) 3,048
Net increase (decrease) in cash and
cash equivalents 12,748 (23,402)
CASH AND CASH EQUIVALENTS, Beginning of
period 13,801 37,203
CASH AND CASH EQUIVALENTS, End of period $26,549 $13,801
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 impairment and certain other
non-recurring charges, 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 fourth quarter and fiscal 2008 year end
earnings per diluted share on a GAAP basis to earnings per share on a non-GAAP
basis are presented in the table below:
Chico's FAS, Inc.
Non-GAAP to GAAP Reconciliation
Diluted Earnings Per Share (EPS)
52 weeks ended 13 weeks ended
January 31, January 31,
2009 2009
Diluted EPS on a GAAP basis (as
reported) $(0.11) $(0.23)
Add: Impact of impairment of
long-lived assets 0.05 0.05
Add: Impact of severance costs 0.03 0.04
Non-GAAP Diluted EPS $(0.03) $(0.14)
Executive Contact:
Robert C. Atkinson
Vice President-Investor Relations
Chico's FAS, Inc.
(239) 274-4199
SOURCE Chico's FAS, Inc.