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Chico's FAS, Inc. Announces Fourth Quarter Comparable Store Sales Increase of 14.6% and Diluted EPS of $0.10

02/24/2010
FORT MYERS, Fla., Feb 24, 2010 /PRNewswire via COMTEX/ -- Sales increased 16.7% to $435.7 million with direct-to-consumer sales increasing 42%Fourth quarter gross margin expansion of over 1000 basis pointsCash and marketable securities were $423.5 million at year-end

Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fourth quarter and fiscal year ended January 30, 2010.

Fourth Quarter and Fiscal Year 2009 Financial Results

For the fourth quarter, the Company recorded net income of $17.5 million, or $0.10 per diluted share, compared to a net loss of $40.5 million, or $0.23 per diluted share, for last year's fourth quarter. The fourth quarter 2009 results included a non-cash impairment charge totaling approximately $1.3 million, net of tax, resulting from an additional write down of a note receivable to current market value. Excluding the $1.3 million charge in the current quarter and the $15.7 million, net of tax, impairment and restructuring charges in the prior year's fourth quarter, the Company had net income for the current quarter of $18.8 million, or $0.10 per diluted share, compared to a net loss of $24.8 million, or $0.14 per diluted share, for the like period last year.

For fiscal 2009, the Company had net income of $69.6 million, or $0.39 per diluted share compared to a net loss of $19.1 million, or $0.11 per diluted share for fiscal 2008. Excluding the impairment and restructuring charges in each year, the Company had net income for the year of $79.2 million, or $0.44 per diluted share versus a net loss of $4.9 million, or $0.03 per diluted share in the prior year.

Sales

Net sales for the fourth quarter increased from $373.4 million to $435.7 million, and for the full year net sales increased from $1.58 billion to $1.71 billion. Consolidated comparable store sales increased 14.6% for the quarter compared to a 13.0% decrease for the like period last year. The Chico's/Soma Intimates brands' comparable store sales increased 11.6% compared to a 16.1% decrease for the like period last year, and the White House | Black Market ("WH|BM") brand's comparable store sales increased 21.2% compared to a 5.0% decrease for the like period last year.

For fiscal 2009, consolidated comparable store sales increased 6.1% compared to a 15.1% decrease last year. The Chico's/Soma brands' comparable store sales increased 4.1% compared to a 17.4% decrease last year, and the WH|BM brand's comparable store sales increased 10.8% compared to a decrease of 8.0% last year.

Direct-to-consumer sales, not included in comparable store sales, increased approximately 42% for the fourth quarter over the like period last year and approximately 39% for the 2009 fiscal year over fiscal year 2008.

Gross Margin

For the quarter, gross margin, expressed as a percentage of net sales, increased 1,020 basis points to 54.6% from 44.4% in the prior year's fourth quarter. In dollars, gross margin increased from $166.0 million to $238.0 million, representing a $72 million pre tax improvement. The gross margin increase was attributable to significantly higher merchandise margins at both Chico's and WH|BM brands benefiting from substantially lower markdowns, improved full-price selling and, to a lesser extent, higher initial markups for both brands.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") for the fourth quarter declined from $228.4 million in the prior period to $212.0 million primarily due to the recognition of $23.7 million in pre-tax impairment and restructuring charges in the fourth quarter last year. Excluding both current year impairment charges and prior year impairment and restructuring charges, SG&A would have been $210.0 million for the current quarter compared to $204.8 million in the prior period, which represents a 2.5% increase in dollars but a 660 basis point improvement as a percentage of net sales.

Store operating expenses for the fourth quarter increased by $4.6 million, primarily due to increases in store occupancy and personnel costs. However, expressed as a percentage of net sales, store operating expenses decreased 500 basis points due to the leverage resulting from positive comparable store sales.

Marketing expenses for the fourth quarter increased by $0.4 million primarily due to an increase in print and television network advertising associated with expanded national marketing campaigns. However, expressed as a percentage of net sales, marketing expenses decreased by 60 basis points year over year.

National Store Support Center ("NSSC") expenses for the quarter, including corporate and other non-brand specific expenses, were about flat to last year but decreased by 100 basis points due to the leverage associated with improved comparable store sales.

Inventories

End of year inventory increased $6.1 million or approximately 5% from the prior year. Consolidated inventory at the end of the year increased 4% per selling square foot to $53 compared to $51 at the end of the prior year. End of year inventory for the WH|BM brand decreased approximately 5% per selling square foot over the prior year, while Chico's brand inventory increased approximately 3% year over year.

Cash and Marketable Securities

Cash and marketable securities at the end of fiscal 2009 increased 57.6% to $423.5 million from $268.7 million at the end of fiscal 2008. Net cash provided by operating activities for the fiscal year increased by $115.9 million over the prior year primarily as a result of higher cash flows from operations, and an increase in accounts payables. Additionally, the Company invested $67.9 million in capital expenditures in fiscal 2009 versus $104.6 million in fiscal 2008.

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 1,084 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 599 boutique and 45 outlet stores, publishes a catalog during key shopping periods throughout the year, and conducts e-commerce at http://www.chicos.com/.

White House | Black Market currently operates 333 boutique and 17 outlet stores, publishes a catalog highlighting its latest fashions and conducts e-commerce at http://www.whitehouseblackmarket.com/.

Soma Intimates is the Company's developing concept with 86 boutique stores and 4 outlet stores today. Soma Intimates also publishes a catalog for its customers and conducts e-commerce at http://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, http://www.chicosfas.com/.

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

                                              Fifty-Two Weeks Ended
                                              ---------------------
                                  (unaudited)
                                January 30, 2010         January 31, 2009
                                ----------------         ----------------

                                             % of                      % of
                               Amount        Sales        Amount       Sales
                               ------       -----         ------      -----
    Net sales:
    Chico's/Soma
     stores                  $1,125,192       65.7     $1,074,939       67.9
    WH|BM stores                489,631       28.6        436,875       27.6
    Direct-to-consumer           98,327        5.7         70,591        4.5
                                 ------        ---         ------        ---
          Total net sales     1,713,150      100.0      1,582,405      100.0

    Cost of goods sold          753,409       44.0        762,913       48.2
                                -------       ----        -------       ----
          Gross margin          959,741       56.0        819,492       51.8

    Selling, general and
     administrative expenses:
    Store operating expenses    647,040       37.8        645,352       40.8
    Marketing                    78,075        4.5         80,326        5.1
    National Store Support
     Center                     111,447        6.5        109,744        6.9
    Impairment and
     restructuring charges       15,026        0.9         23,664        1.5
                                 ------        ---         ------        ---
     Total selling, general,
      and administrative
      expenses                  851,588       49.7        859,086       54.3
                                -------       ----        -------       ----

          Income (loss)
           from operations      108,153        6.3        (39,594)      (2.5)

    Interest income, net          1,693        0.1          7,757        0.5
                                  -----        ---          -----        ---
          Income (loss)
           before income taxes  109,846        6.4        (31,837)      (2.0)

    Income tax provision
     (benefit)                   40,200        2.3        (12,700)      (0.8)
                                 ------        ---        -------       ----
          Net income (loss)     $69,646        4.1       $(19,137)      (1.2)
                                =======        ===       ========       ====

    Per share data:

    Net income (loss)
     per common share-basic       $0.39                    $(0.11)
                                  =====                    ======

    Net income (loss)
     per common & common
     equivalent share-diluted     $0.39                    $(0.11)
                                  =====                    ======

    Weighted average common
     shares outstanding-basic   177,499                   176,606
                                =======                   =======

    Weighted average common
     & common equivalent
     shares outstanding-diluted 178,858                   176,606
                                =======                   =======



                                        Thirteen Weeks Ended
                                        --------------------
                                 (unaudited)             (unaudited)
                              January 30, 2010        January 31, 2009
                              ----------------        ----------------

                                            % of                      % of
                             Amount        Sales        Amount       Sales
                             ------        -----        ------       -----
    Net sales:
    Chico's/Soma stores      $271,817        62.4      $242,887        65.0
    WH|BM stores              132,312        30.4       108,179        29.0
    Direct-to-consumer         31,601         7.2        22,313         6.0
                               ------         ---        ------         ---
          Total net sales     435,730       100.0       373,379       100.0

    Cost of goods sold        197,697        45.4       207,423        55.6
                              -------        ----       -------        ----
          Gross margin        238,033        54.6       165,956        44.4

    Selling, general
     and administrative
     expenses:
    Store operating expenses  164,559        37.8       159,916        42.8
    Marketing                  19,099         4.4        18,653         5.0
    National Store
     Support Center            26,324         6.0        26,191         7.0
    Impairment and
     restructuring charges      2,000         0.4        23,664         6.3
                                -----         ---        ------         ---
     Total selling,
      general, and
      administrative
      expenses                211,982        48.6       228,424        61.1
                              -------        ----       -------        ----

          Income (loss) from
           operations          26,051         6.0       (62,468)      (16.7)

    Interest income, net          357         0.1         1,324         0.3
                                  ---         ---         -----         ---
          Income (loss)
           before income
           taxes               26,408         6.1       (61,144)      (16.4)

    Income tax provision
     (benefit)                  8,900         2.1       (20,600)       (5.5)
                                -----         ---       -------        ----
          Net income (loss)   $17,508         4.0      $(40,544)      (10.9)
                              =======         ===      ========       =====

    Per share data:

    Net income (loss)
     per common share-basic     $0.10                   $( 0.23)
                                =====                   =======

    Net income (loss)
     per common &
     common equivalent
     share-diluted              $0.10                   $( 0.23)
                                =====                   =======

    Weighted average
     common shares
     outstanding-basic        177,950                   177,069
                              =======                   =======

    Weighted average
     common & common
     equivalent shares
     outstanding-diluted      179,509                   177,069
                              =======                   =======




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

                              January 30,       January 31,    February 2,
                                 2010             2009            2008
                                 ----             ----            ----
                             (Unaudited)
                          ASSETS
     Current Assets:
         Cash and cash
          equivalents           $37,043          $26,549       $13,801
         Marketable
          securities, at
          market                386,500          242,153       260,469
         Receivables              3,922           33,993        11,924
         Income tax receivable      312           11,706        23,973
         Inventories            138,516          132,413       144,261
         Prepaid expenses        24,023           21,702        18,999
         Deferred taxes           9,664           17,859        13,306
                                -------          -------       -------

              Total Current
               Assets           599,980          486,375       486,733

     Property and Equipment:
         Land and land
          improvements           21,978           18,627        17,867
         Building and building
          improvements           82,169           74,998        62,877
         Equipment, furniture
          and fixtures          388,392          376,218       347,937
         Leasehold
          improvements          412,834          418,691       396,650
                                -------          -------       -------
               Total Property
                and Equipment   905,373          888,534       825,331
         Less accumulated
          depreciation and
          amortization         (383,844)        (327,989)     (257,378)
                               --------         --------      --------
               Property and
                Equipment, Net  521,529          560,545       567,953

    Other Assets:
         Goodwill                96,774           96,774        96,774
         Other intangible
          assets                 38,930           38,930        38,930
         Deferred taxes          36,321           38,458        22,503
         Other assets, net       25,269            5,101        37,233
                                -------          -------       -------

              Total Other
               Assets           197,294          179,263       195,440
                                -------          -------       -------
                             $1,318,803       $1,226,183    $1,250,126
                             ==========       ==========    ==========

                   LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities:

         Accounts payable       $79,219          $56,542       $79,030
         Accrued liabilities     95,862           88,446       100,726
         Current portion of
          deferred liabilities    2,221            1,748         1,437
                                  -----            -----         -----
              Total Current
               Liabilities      177,302          146,736       181,193

    Noncurrent Liabilities:
         Deferred liabilities   159,583          177,251       156,417

    Stockholders' Equity:
         Common stock             1,781            1,771         1,762
         Additional paid-in
          capital               268,109          258,312       249,639
         Retained earnings      711,624          641,978       661,115
         Other accumulated
          comprehensive income      404              135             -
                                    ---              ---           ---
            Total Stockholders'
             Equity             981,918          902,196       912,516
                                -------          -------       -------
                             $1,318,803       $1,226,183    $1,250,126
                             ==========       ==========    ==========



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

                                                      Fifty-Two Weeks Ended
                                                      ---------------------
                                                   January 30,    January 31,
                                                      2010           2009
                                                  -----------    -----------
                                                  (Unaudited)

    CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income (loss)                              $69,646      $(19,137)
                                                     -------      --------
      Adjustments to reconcile net income (loss) to
       net cash provided by operating activities -
         Depreciation and amortization, cost of
          goods sold                                   8,372         8,782
         Depreciation and amortization, other         88,000        88,790
         Deferred tax expense (benefit)                5,647       (20,507)
         Stock-based compensation expense, cost of
          goods sold                                   2,163         2,769
         Stock-based compensation expense, other       5,239         9,821
         Excess tax benefit of stock-based
          compensation                                (3,194)         (100)
         Impairment charges                           15,026        13,691
         Deferred rent expense, net                    2,338         6,060
         Loss on disposal of property and equipment    1,372           761
      Decrease (increase) in assets -
         Receivables, net                              4,237         3,766
         Income tax receivable                        11,394        12,267
         Inventories                                  (6,103)       11,847
         Prepaid expenses and other                   (2,489)        4,224
      Increase (decrease) in liabilities -
         Accounts payable                             22,677       (22,488)
         Accrued and other deferred liabilities       (8,955)       (1,100)
                                                      ------        ------
              Total adjustments                      145,724       118,583
                                                     -------       -------
              Net cash provided by operating
               activities                            215,370        99,446
                                                     -------        ------

    CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of marketable securities            (590,223)     (569,358)
      Proceeds from sale of marketable securities    446,146       587,809
      Purchases of property and equipment            (67,920)     (104,615)
                                                     -------      --------
              Net cash used in investing activities (211,997)      (86,164)
                                                     -------       -------

     CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from issuance of common stock           4,857           306
      Excess tax benefit of stock-based compensation   3,194           100
      Cash paid for deferred financing costs               -          (629)
      Repurchase of common stock                        (930)         (311)
                                                        ----          ----
              Net cash provided by (used in)
               financing activities                    7,121          (534)
                                                       -----           ----

             Net increase in cash and cash
              equivalents                             10,494        12,748
     CASH AND CASH EQUIVALENTS, Beginning of period   26,549        13,801
                                                      ------        ------
     CASH AND CASH EQUIVALENTS, End of period        $37,043       $26,549
                                                     =======       =======

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 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 (Loss) and Diluted EPS
               (in thousands, except per share amounts)


                      Fifty-Two Weeks Ended             Thirteen Weeks Ended
    Net income     January 30,     January 31,     January 30,     January 31,
     (loss):          2010            2009            2010            2009
    -------        ----------      ----------      ------------    ----------

    GAAP basis       $69,646        ($19,137)       $17,508        ($40,544)
    Add: Impact
     of impairment
     charges          15,026          23,664          2,000          23,664
     Less: Tax
     effect on
     impairment
     charges          (5,499)         (9,440)          (674)         (7,969)
                      ------          ------           ----          ------
    Non-GAAP
     adjusted
     basis           $79,173         ($4,913)       $18,834        ($24,849)
                     =======         =======        =======        ========

    Net income (loss)
     per diluted share:
    -------------------

    GAAP basis         $0.39          ($0.11)         $0.10          ($0.23)
    Add: Impact
     of impairment
     charges, net
     of tax             0.05            0.08           0.00            0.09
                        ----            ----           ----            ----
    Non-GAAP
     adjusted
     basis             $0.44          ($0.03)         $0.10          ($0.14)
                      ======           =====         ======          ======


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



SOURCE Chico's FAS, Inc.

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