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Chico's FAS, Inc. Reports a 30% Increase in First Quarter Earnings Per Diluted Share of $0.26 vs. $0.20

05/18/2011
Net sales increased 11.5% to $537.2 million with comparable sales increasing 7.7%

FORT MYERS, Fla., May 18, 2011 /PRNewswire via COMTEX/ --

Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2011 first quarter ended April 30, 2011.

 

(Logo: http://photos.prnewswire.com/prnh/20091112/FL09527LOGO )

Net Income and Earnings per Share

The Company reported net income of $45.9 million, or $0.26 per diluted share, for the first quarter of fiscal 2011 compared to net income of $35.4 million, or $0.20 per diluted share, reported for the same period last year.

Net Sales

Net sales for the first quarter increased 11.5% to $537.2 million from $481.6 million in last year's first quarter. Consolidated comparable sales, which include direct-to-consumer (DTC) sales, increased 7.7% for the first quarter on top of a 16.0% increase for the same period last year. The Chico's/Soma Intimates brands' comparable sales increased 7.8% following a 16.1% increase for the same period last year, and the White House | Black Market ("WH|BM") brand's comparable sales increased 7.4% following a 15.7% increase for the same period last year.

Gross Margin

Gross margin for the first quarter, expressed as a percentage of net sales, increased 60 basis points to 59.1% from 58.5% in last year's first quarter. The gross margin rate increase was attributable to increased margins at Chico's and WH|BM frontline stores primarily driven by improved in-season sell-through in the current period versus the same period last year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") for the first quarter, expressed as a percentage of net sales, decreased 150 basis points compared to last year's first quarter. SG&A dollars, however, increased $18.3 million, or 8.1%, over last year's first quarter primarily due to higher store and direct operating costs associated with 85 net new stores opened since the end of last year's first quarter.

Store and direct operating expenses increased by $12.3 million over last year's first quarter primarily due to increased occupancy expense and store labor costs associated with 85 net new stores over last year, accompanied by increased credit card fees due to higher sales volume compared to last year. However, expressed as a percentage of net sales, store and direct operating expenses decreased 130 basis points due to the leverage associated with the comparable store sales increase.

Marketing expenses increased $1.8 million over last year's first quarter primarily due to incremental television advertising for the Soma brand as well as increased e-marketing initiatives for all three brands.

National Store Support Center ("NSSC") expenses, including corporate and other non-brand specific expenses, increased by $3.6 million from last year's first quarter but were flat to last year as a percentage of net sales.

Inventories

End of quarter inventory increased $38.1 million or approximately 23.7% from last year's first quarter. Excluding an incremental $9.6 million of in-transit inventories this year over last year, inventory per selling square foot would have been $66 versus $60, an increase of 9.5% compared to last year. The increase in year-over-year comparable sales including DTC, along with the anticipated opening of 21 net, new stores in the May-June 2011 timeframe, contributed to the increased inventory per selling square foot over last year.

Share Repurchase Program

During the first quarter of 2011, the Company repurchased 2.6 million shares for $36.3 million and has $145.4 million remaining under the original $200 million authorization approved by the Board of Directors in August 2010.

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 1,192 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 593 boutique and 71 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 351 boutique and 24 outlet stores, publishes a catalog highlighting its latest fashions and conducts e-commerce at www.whbm.com.

Soma Intimates is the Company's developing concept with 141 boutique stores and 12 outlet stores 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.

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

(Financial Tables Follow)

Chico's FAS, Inc.

Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)





Thirteen Weeks Ended












April 30, 2011


May 1, 2010












Amount


% of Sales


Amount


% of Sales










Net Sales:









Chico's/Soma Intimates


$ 374,934


69.8


$ 336,700


69.9

White House | Black Market


162,224


30.2


144,888


30.1

Net sales


537,158


100.0


481,588


100.0










Cost of goods sold


219,495


40.9


200,008


41.5

Gross margin


317,663


59.1


281,580


58.5










Selling, general and administrative expenses:









Store and direct operating expenses


180,114


33.5


167,826


34.8

Marketing


30,898


5.7


29,080


6.0

National Store Support Center


32,431


6.0


28,800


6.0

Impairment charges


1,402


0.3


822


0.2

Total selling, general and administrative expenses


244,845


45.5


226,528


47.0










Income from operations


72,818


13.6


55,052


11.5










Interest income, net


400


0.0


450


0.0

Income before income taxes


73,218


13.6


55,502


11.5










Income tax provision


27,300


5.1


20,100


4.1

Net income


$ 45,918


8.5


$ 35,402


7.4










Per share data:









Net income per common share-basic


$ 0.26




$ 0.20












Net income per common and common equivalent share-diluted


$ 0.26




$ 0.20












Weighted average common shares outstanding-basic


174,881




177,336












Weighted average common and common equivalent shares outstanding-diluted


176,112




178,833



Dividends declared per share


$ 0.10




$ 0.08




Chico's FAS, Inc.

Consolidated Balance Sheets

(in thousands)



April 30,


January 29,


May 1,


2011


2011


2010


(Unaudited)




(Unaudited)

ASSETS

Current Assets:






Cash and cash equivalents

$ 123,409


$ 14,695


$ 32,694

Marketable securities, at fair value

442,815


534,019


449,167

Receivables

5,590


3,845


3,857

Income tax receivable

713


6,565


631

Inventories

198,544


159,814


160,448

Prepaid expenses

27,368


26,851


25,546

Deferred taxes

11,479


10,976


10,684

Total Current Assets

809,918


756,765


683,027







Property and Equipment:






Land and land improvements

43,161


42,468


22,043

Building and building improvements

90,813


89,328


82,440

Equipment, furniture and fixtures

434,330


428,217


398,132

Leasehold improvements

429,559


426,141


414,369

Total Property and Equipment

997,863


986,154


916,984

Less accumulated depreciation and amortization

(489,900)


(468,777)


(405,140)

Property and Equipment, Net

507,963


517,377


511,844







Other Assets:






Goodwill

96,774


96,774


96,774

Other intangible assets

38,930


38,930


38,930

Deferred taxes

1,791


964


38,755

Other assets, net

5,342


5,211


25,119

Total Other Assets

142,837


141,879


199,578


$ 1,460,718


$ 1,416,021


$ 1,394,449







LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:






Accounts payable

$ 127,758


$ 106,665


$ 101,570

Accrued liabilities

121,974


94,852


126,720

Current portion of deferred liabilities

20,854


19,760


19,622

Total Current Liabilities

270,586


221,277


247,912







Noncurrent Liabilities:






Deferred liabilities

127,769


129,837


139,600







Stockholders' Equity:






Preferred stock

-


-


-

Common stock

1,762


1,779


1,787

Additional paid-in capital

287,853


282,528


272,153

Retained earnings

772,215


780,212


732,741

Accumulated other comprehensive income

533


388


256

Total Stockholders' Equity

1,062,363


1,064,907


1,006,937


$ 1,460,718


$ 1,416,021


$ 1,394,449


Chico's FAS, Inc.

Consolidated Cash Flow Statements

(Unaudited)

(in thousands)



Thirteen Weeks Ended


April 30,

2011


May 1,

2010

CASH FLOWS FROM OPERATING ACTIVITIES:




Net income

$ 45,918


$ 35,402

Adjustments to reconcile net income to net cash

provided by operating activities --

Depreciation and amortization

24,188


23,362

Deferred tax benefit

(1,375)


(3,640)

Stock-based compensation expense

3,636


2,831

Excess tax benefit from stock-based compensation

(762)


(707)

Impairment charges

1,402


822

Deferred rent and lease credits

(4,330)


(4,140)

Loss on disposal of property and equipment

32


766

(Increase) decrease in assets --




Receivables, net

(1,745)


65

Income tax receivable

5,852


(319)

Inventories

(38,730)


(21,932)

Prepaid expenses and other

(648)


(1,373)

Increase in liabilities --





Accounts payable

12,283


15,203

Accrued and other deferred liabilities

31,240


33,123

Total adjustments

31,043


44,061

Net cash provided by operating activities

76,961


79,463


CASH FLOWS FROM INVESTING ACTIVITIES:




Decrease (increase) in marketable securities

91,349


(62,816)

Purchases of property and equipment

(16,208)


(15,264)

Net cash provided by (used in) investing activities

75,141


(78,080)





CASH FLOWS FROM FINANCING ACTIVITIES:




Proceeds from issuance of common stock

1,373


920

Excess tax benefit from stock-based compensation

762


707

Dividends paid

(8,835)


(7,136)

Repurchase of common stock

(36,688)


(223)

Net cash used in financing activities

(43,388)


(5,732)

Net increase (decrease) in cash and cash equivalents

108,714


(4,349)

CASH AND CASH EQUIVALENTS, Beginning of period

14,695


37,043

CASH AND CASH EQUIVALENTS, End of period

$ 123,409


$ 32,694






Chico's FAS, Inc.

Boutique Count and Square Footage

As of April 30, 2011








































As of


New




As of






1/29/2011


Stores


Closures


4/30/2011



Store count:
























Chico's frontline boutiques



597


2


(4)


595



Chico's outlets



63


8


-


71



WH|BM frontline boutiques



342


9


(1)


350



WH|BM outlets



21


3


-


24



Soma frontline boutiques



120


16


(2)


134



Soma outlets



8


4


(2)


10



Total Chico's FAS, Inc.



1,151


42


(9)


1,184




































Remodels/












Relos and






As of


New




change in


As of




1/29/2011


Stores


Closures


SSF


4/30/2011













Net selling square footage (SSF):
























Chico's frontline boutiques



1,606,394


4,582


(7,102)


1,877


1,605,751

Chico's outlets



166,123


18,933


-


-


185,056

WH|BM frontline boutiques



710,480


20,035


(1,273)


1,383


730,625

WH|BM outlets



40,421


5,925


-


-


46,346

Soma frontline boutiques



246,688


32,346


(5,240)


(446)


273,348

Soma outlets



14,817


8,138


(4,207)


(594)


18,154

Total Chico's FAS, Inc.



2,784,923


89,959


(17,822)


2,220


2,859,280


SOURCE Chico's FAS, Inc.

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