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Chico's FAS, Inc. Announces Third Quarter EPS of $0.13 and Comparable Store Sales Increase of 12.8%

11/18/2009
- Third quarter sales increased 13.4% to $446.9 million- Quarter-end inventories decreased $27.2 million or 15% per selling square foot- Cash and marketable securities were $423.3 million at quarter-end
FORT MYERS, Fla., Nov 18, 2009 /PRNewswire-FirstCall via COMTEX/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2009 third quarter and nine months ended October 31, 2009.

(Logo: http://www.newscom.com/cgi-bin/prnh/20091112/FL09527LOGO )

2009 Third Quarter and Nine Months Financial Results

For the third quarter ended October 31, 2009, the Company had net income of $22.7 million or $0.13 per diluted share, compared to net income of $2.0 million, or $0.01 per diluted share for the third quarter ended November 1, 2008.

For the nine months ended October 31, 2009, the Company had net income of $52.1 million or $0.29 per diluted share, compared to net income of $21.4 million, or $0.12 per diluted share in the first nine months of the prior year. Excluding the impairment charges recorded prior to the fiscal third quarter of 2009, the Company had net income of $60.3 million, or $0.34 per diluted share compared to net income of $21.4 million, or $0.12 per diluted share for the first nine months of 2008.

Sales

Net sales for the thirteen-week period ended October 31, 2009 increased from $394.2 million to $446.9 million. Consolidated comparable store sales increased 12.8% for the thirteen-week period ended October 31, 2009 compared to a 13.4% decrease for the like period last year ended November 1, 2008. The Chico's/Soma Intimates brands' comparable store sales increased 12.2% compared to a 16.2% decrease for the like period last year, and the White House | Black Market (WH|BM) brand's comparable store sales increased 14.4% compared to a 4.8% decrease for the like period last year. Direct-to-consumer sales, not included in comparable store sales, increased approximately 33% over third quarter 2008.

Gross Margin

Gross margin, expressed as a percentage of net sales, increased by 400 basis points to 57.6% from 53.6% in the prior year's third quarter and in dollars from $211.4 million to $257.3 million. The gross margin increase was attributable to significant improvements in the brand merchandise margins at both Chico's and WH|BM. The increased merchandise margins benefited from both lower markdowns and higher initial markups for the Chico's and WH|BM brands. However, the improvements in gross margins were partially offset by the continued investment in merchandise payroll.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") for the third quarter of fiscal 2009 increased from $213.1 million in the prior period to $221.0 million in the current period. However, expressed as a percentage of net sales, SG&A in the current quarter decreased by 450 basis points compared to the prior period primarily from leverage associated with improved comparable store sales as well as effective implementation of on-going cost reduction strategies at the store level.

Store operating expenses for the third quarter of fiscal 2009 increased by $0.6 million, but decreased by 470 basis points, primarily due to leverage resulting from improved comparable store sales.

Marketing expense for the third quarter of fiscal 2009 increased by $2.9 million primarily due to increases in print and broadcast advertisement associated with expanded national marketing campaigns designed to more effectively target purchasing during the fall and holiday shopping seasons.

National Store Support Center costs, including corporate and other non-brand specific expenses, for the third quarter of 2009 increased by $4.4 million dollars due primarily to the increase in performance-based compensation accruals.

Inventories

Quarter-ended inventory decreased $27.2 million or approximately 14.5% from the prior year's third quarter. Consolidated inventory at the end of the third quarter was $61 per selling square foot, reflecting a decrease of approximately 15% compared to $72 at the end of the prior year's third quarter. Quarter-ended inventory for the WH|BM brand decreased approximately 22% per selling square foot over the prior year's third quarter, while Chico's brand inventory decreased approximately 17% quarter over quarter.

Cash and Marketable Securities

Cash and marketable securities at the end of the third quarter totaled $423.3 million, approximately $167 million higher than the prior year's third quarter end. Net cash provided from operating activities for the nine months ended October 31, 2009 increased by $126.1 million compared to the prior year as a result of higher cash flows from operations, an increase in accounts payables and accrued expenses, as well as lower inventory levels. Additionally, the Company invested $51.0 million in capital expenditures for the first nine months in fiscal 2009 versus $92.3 million for the same period last year.

ABOUT CHICO'S FAS, INC.

The Company is a women's specialty retailer of private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing gift items. The Company operates 1,074 specialty stores, including stores in 48 states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico.

The Chico's brand currently operates 608 boutique and 43 outlet stores, publishes a catalog during key shopping periods throughout the year, and conducts e-commerce at www.chicos.com.

White House | Black Market currently operates 331 boutique and 16 outlet stores, publishes a catalog highlighting its latest fashions and conducts e-commerce at www.whitehouseblackmarket.com.

Soma Intimates is the Company's developing concept with 75 boutique stores and 1 outlet store today. Soma Intimates also publishes a catalog for its customers and conducts e-commerce at www.soma.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, www.chicosfas.com.

(Financial Tables Follow)

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

                                             Thirty-Nine Weeks Ended
                                    ---------------------------------------
                                     October 31, 2009     November 1, 2008
                                    ------------------- -------------------
                                      Amount       % of     Amount      % of
                                                  Sales                Sales
                                    --------      -----   --------     -----
    Net sales by Chico's/Soma
     stores                         $853,374      66.8    $832,052      68.8
    Net sales by
     White House | Black Market
     stores                          357,319      28.0     328,696      27.2
    Net sales by
     direct-to-consumer               66,727       5.2      48,278       4.0
                                   ---------     -----   ---------     -----
            Net sales              1,277,420     100.0   1,209,026     100.0

    Cost of goods sold               555,713      43.5     555,490      45.9
                                   ---------     -----   ---------     -----
            Gross margin             721,707      56.5     653,536      54.1

    Selling, general and
     administrative expenses:
    Store operating expenses         482,481      37.8     485,436      40.2
    Marketing                         58,976       4.6      61,673       5.1
    National Store Support Center     85,123       6.7      83,553       6.9
    Impairment charges                13,026       1.0           -         -
                                   ---------     -----   ---------     -----
      Total selling, general, and
       administrative expenses       639,606      50.1     630,662      52.2
                                   ---------     -----   ---------     -----
              Income (loss) from
               operations             82,101       6.4      22,874       1.9

    Interest income, net               1,337       0.1       6,433       0.5
                                   ---------     -----   ---------     -----
             Income before income
              taxes                   83,438       6.5      29,307       2.4

    Income tax provision (benefit)    31,300       2.4       7,900       0.6
                                   ---------     -----   ---------     -----
              Net income             $52,138       4.1     $21,407       1.8
                                   =========     =====   =========     =====

    Per share data:

    Net income per common
     share-basic                       $0.29                 $0.12
                                   =========             =========


    Net income per common & common
     equivalent share-diluted          $0.29                 $0.12
                                   =========             =========

    Weighted average common shares
     outstanding-basic               177,348               176,452
                                   =========             =========

    Weighted average common & common
     equivalent shares
     outstanding-diluted             178,516               176,599
                                   =========             =========



                                              Thirteen Weeks Ended
                                    ---------------------------------------
                                      October 31, 2009     November 1, 2008
                                    ------------------- -------------------
                                      Amount     % of      Amount      % of
                                                 Sales                 Sales
                                    --------     -----    --------     -----
    Net sales by Chico's/Soma
     stores                         $300,957      67.3    $269,079      68.2
    Net sales by
     White House | Black Market
     Stores                          121,408      27.2     106,751      27.1
    Net sales by direct-to-consumer   24,498       5.5      18,413       4.7
                                   ---------     -----   ---------     -----
            Net sales                446,863     100.0     394,243     100.0

    Cost of goods sold               189,585      42.4     182,870      46.4
                                   ---------     -----   ---------     -----
            Gross margin             257,278      57.6     211,373      53.6

    Selling, general and
     administrative expenses:
    Store operating expenses         165,106      37.0     164,494      41.7
    Marketing                         24,974       5.6      22,043       5.6
    National Store Support Center     30,887       6.9      26,535       6.7
    Impairment charges                     -         -           -         -
                                   ---------     -----   ---------     -----
      Total selling, general, and
       administrative expenses       220,967      49.5     213,072      54.0
                                   ---------     -----   ---------     -----
              Income (loss) from
               operations             36,311       8.1      (1,699)     (0.4)

    Interest income, net                 334       0.1       2,394       0.6
                                   ---------     -----   ---------     -----
             Income before income
              taxes                   36,645       8.2         695       0.2

    Income tax provision (benefit)    13,900       3.1      (1,300)     (0.3)
                                   ---------     -----   ---------     -----
              Net income             $22,745       5.1      $1,995       0.5
                                   =========     =====   =========     =====

    Per share data:

    Net income per common
     share-basic                       $0.13                 $0.01
                                   =========             =========

    Net income per common & common
     equivalent share-diluted          $0.13                 $0.01
                                   =========             =========

    Weighted average common shares
     outstanding-basic               177,662               176,517
                                   =========             =========

    Weighted average common & common
     equivalent shares
     outstanding-diluted             179,251               176,604
                                   =========             =========

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

                                         October 31, January 31, November 1,
                                            2009        2009        2008
                                         ----------  ----------  ----------
                                         (Unaudited)            (Unaudited)
                                 ASSETS
     Current Assets:
         Cash and cash equivalents         $60,985     $26,549     $50,233
         Marketable securities, at market  362,322     242,153     206,105
         Receivables                         5,845      33,993      38,287
         Income tax receivable                 728      11,706           -
         Inventories                       160,030     132,413     187,271
         Prepaid expenses                   24,152      21,702      24,063
         Deferred taxes                      7,524      17,859      19,131
                                           -------     -------     -------
              Total Current Assets         621,586     486,375     525,090

     Property and Equipment:
         Land and land improvements         20,311      18,627      18,225
         Building and building improvements 84,062      74,998      74,542
         Equipment, furniture and fixtures 395,225     376,218     381,812
         Leasehold improvements            416,003     418,691     428,755
                                           -------     -------     -------
               Total Property and
                Equipment                  915,601     888,534     903,334
         Less accumulated depreciation
          and amortization                (386,999)   (327,989)   (319,083)
                                           -------     -------     -------
               Property and Equipment,
                Net                        528,602     560,545     584,251

    Other Assets:
         Goodwill                           96,774      96,774      96,774
         Other intangible assets            38,930      38,930      38,930
         Deferred taxes                     39,398      38,458      29,406
         Other assets, net                  27,323       5,101       9,368
                                           -------     -------     -------
              Total Other Assets           202,425     179,263     174,478
                                           -------     -------     -------
                                        $1,352,613  $1,226,183  $1,283,819
                                         =========   =========   =========

                  LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities:
         Accounts payable                  $97,238     $56,542     $81,948
         Accrued liabilities               123,069      88,446      83,883
         Current portion of deferred
          liabilities                        2,236       1,748       1,528
                                           -------     -------     -------
              Total Current Liabilities    222,543     146,736     167,359

    Noncurrent Liabilities:
         Deferred liabilities              167,819     177,251     174,307

    Stockholders' Equity:
         Common stock                        1,779       1,771       1,765
         Additional paid-in capital        266,112     258,312     257,854
         Retained earnings                 694,116     641,978     682,522
         Other accumulated comprehensive
          income                               244        135           12
                                           -------     -------     -------
            Total Stockholders' Equity     962,251     902,196     942,153
                                           -------     -------     -------
                                        $1,352,613  $1,226,183  $1,283,819
                                         =========   =========   =========

                                  Chico's FAS, Inc.
                          Consolidated Cash Flow Statements
                                   (Unaudited)
                                  (in thousands)
                                                     Thirty-Nine Weeks Ended
                                                    ------------------------
                                                    October 31,   November 1,
                                                        2009         2008
                                                    ----------    ----------
    CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                                       $52,138       $21,407
                                                       -------       -------
      Adjustments to reconcile net income to
       net cash provided by operating activities -
         Depreciation and amortization, cost of
          goods sold                                     5,770         7,122
         Depreciation and amortization, other           66,637        68,190
         Deferred tax expense (benefit)                  9,394       (12,728)
         Stock-based compensation expense, cost
          of goods sold                                  1,994         2,612
         Stock-based compensation expense,
          other                                          4,549         6,822
         Excess tax benefit from stock-based
          compensation                                  (1,473)         (100)
         Impairment charges                             13,026             -
         Deferred rent expense, net                      1,963         5,423
         Loss on disposal of property and
          equipment                                      1,361           711
       Decrease (increase) in assets -
         Receivables, net                                2,314          (528)
         Income tax receivable                          10,978        23,973
         Inventories                                   (27,617)      (43,010)
         Prepaid expenses and other                     (2,671)       (3,035)
       Increase (decrease) in liabilities -
         Accounts payable                               40,696        (6,186)
         Accrued and other deferred liabilities         21,200         3,492
                                                       -------       -------
              Total adjustments                        148,121        52,758
                                                       -------       -------
              Net cash provided by operating
               activities                              200,259        74,165
                                                       -------       -------

    CASH FLOWS FROM INVESTING ACTIVITIES:
     (Purchases) sales of marketable
      securities, net                                 (120,061)       54,376
      Purchases of property and equipment              (51,016)      (92,320)
                                                       -------       -------
              Net cash used in investing activities   (171,077)      (37,944)
                                                       -------       -------

    CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from issuance of common stock             3,960           307
      Excess tax benefit from stock-based
       compensation                                      1,473           100
      Repurchase of common stock                          (179)         (196)
                                                       -------       -------
             Net cash provided by financing
              activities                                 5,254           211
                                                       -------       -------

             Net increase in cash and cash
              Equivalents                               34,436        36,432
    CASH AND CASH EQUIVALENTS, Beginning of period      26,549        13,801
                                                       -------       -------
    CASH AND CASH EQUIVALENTS, End of period           $60,985       $50,233
                                                       =======       =======


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 the first nine months of 2009 earnings per diluted share on a GAAP basis to earnings per share on a non-GAAP basis is presented in the table below:

                            Chico's FAS, Inc.
                     Non-GAAP to GAAP Reconciliation
                     Diluted Earnings Per Share (EPS)

                                                    39 weeks ended
                                                   October 31, 2009
                                                   ----------------
       Diluted EPS on a GAAP basis (as reported)          $0.29
       Add: Impact of impairment charges                   0.05
                                                   ----------------
       Non-GAAP Diluted EPS                               $0.34
                                                   ================


Executive Contact:
Robert C. Atkinson
Vice President-Investor Relations
Chico's FAS, Inc.
(239) 274-4199

SOURCE Chico's FAS, Inc.


http://www.chicosfas.com

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