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Chico's FAS, Inc. Reports Fourth Quarter and Fiscal Year 2019 Results

02/27/2020

FORT MYERS, Fla., Feb. 27, 2020 /PRNewswire/ --

Chico's FAS Logo. (PRNewsFoto/Chico's FAS, Inc.) (PRNewsFoto/)

  • Chico's FAS delivers 2.2% comparable sales growth with all brands reporting positive
  • Improved product assortment favorably impacting sales
  • Fourth quarter GAAP loss of $0.04 per diluted share; Adjusted loss of $0.03 per diluted share

Chico's FAS, Inc. (NYSE: CHS) (the "Company") today announced its financial results for the fiscal 2019 fourth quarter and fiscal year ended February 1, 2020.

Bonnie Brooks, CEO and President of the Company, said, "We are extremely pleased with the significant sequential turnaround in our business, resulting in our first quarter of positive comparable sales for all three brands since the fourth quarter of 2014. Our strong performance can be primarily attributed to our disciplined focus on driving sales through improved and elevated product aligned more closely to our customer's expectations. In Q4, we continued to deliver on each of our strategic priorities, with a renewed rigor and relentless attention to every detail of operating our businesses. We are especially pleased with both our significant digital growth and frontline growth, as we continue to work towards delivering our unique and personal service through all channels of the company."

For the thirteen weeks ended February 1, 2020 ("the fourth quarter"), the Company reported a net loss of $4.3 million, or $0.04 loss per diluted share, compared to a net loss of $16.6 million, or $0.14 loss per diluted share, for the thirteen weeks ended February 2, 2019 ("last year's fourth quarter"). The Company reported a fourth quarter adjusted net loss of $3.5 million, or $0.03 loss per diluted share, compared to an adjusted net loss of $8.6 million, or $0.07 loss per diluted share, in last year's fourth quarter, as presented in the related accompanying GAAP to non-GAAP reconciliation.

For the fifty-two weeks ended February 1, 2020 ("fiscal 2019"), the Company reported a net loss of $12.8 million, or $0.11 loss per diluted share, compared to net income of $35.6 million, or $0.28 earnings per diluted share, for the fifty-two weeks ended February 2, 2019 ("fiscal 2018"). The Company reported a fiscal 2019 adjusted net loss of $2.6 million, or $0.02 loss per diluted share, compared to adjusted net income of $38.8 million, or $0.31 earnings per diluted share, in fiscal 2018, as presented in the related accompanying GAAP to non-GAAP reconciliation.

Fiscal 2019 Fourth Quarter Business Highlights

The following fiscal 2019 fourth quarter business highlights reflect the Company's progress executing on its three strategic priorities: (i) driving stronger sales through improved product and marketing; (ii) optimizing the customer journey by simplifying, digitizing and extending the Company's unique and personalized service; and (iii) transforming sourcing and supply chain operations to increase product speed to market and improve quality.

  • Chico's® reported positive comparable sales, reflecting strong progress in our assortment with improvements in quality, design and newness, as well as elevated marketing.
  • White House Black Market® ("WHBM") reported positive comparable sales enabled by our ability to quickly edit our assortment and bring in new product. The rigors and discipline that we put in place are working.
  • Soma® delivered its sixth consecutive quarter of positive comparable sales, driven by a strong response to our holiday offering, including record breaking sales during peak holiday period. Soma continues to offer innovative and solution-oriented assortments that we believe our customers love.
  • The Company continues to focus on reducing its overall China penetration and diversifying its country of origin mix, which are tracking ahead of schedule. The Company is making significant progress in securing partnerships with key vendors to create a leaner, more efficient supply chain.

Net Sales

For the fourth quarter, net sales were $527.1 million compared to $524.7 million in last year's fourth quarter. This 0.4% increase reflects a comparable sales improvement of 2.2%, partially offset by the impact of 77 net store closures since last year's fourth quarter. The comparable sales improvement was driven by higher average dollar sale and an increase in transaction count.

For fiscal 2019, net sales were $2.0 billion compared to $2.1 billion in fiscal 2018. This 4.4% decrease reflects a comparable sales decline of 3.4% as well as the impact of 77 net store closures since fiscal 2018. The comparable sales decline was driven by lower average dollar sale and a decrease in transaction count.

Comparable Sales


Thirteen Weeks Ended


Fifty-Two Weeks Ended


February 1, 2020


February 2, 2019


February 1, 2020


February 2, 2019

Chico's

0.9%


(7.9)%


(4.3)%


(6.8)%

White House Black Market

0.1


(2.9)


(7.9)


(4.6)

Soma

9.4


6.2


8.8


0.6

Total Company

2.2%


(3.8)%


(3.4)%


(4.9)%

Gross Margin

For the fourth quarter, gross margin was $171.4 million, or 32.5% of net sales, compared to $158.7 million, or 30.2% of net sales, in last year's fourth quarter. This 230-basis point increase primarily reflects a 180-basis point favorable net impact resulting from lower impairment and accelerated depreciation charges related to our retail fleet optimization plan, combined with a 150-basis point improvement in occupancy and omnichannel program costs as a percent of sales, partially offset by an approximate 100-basis point impact of incremental tariffs on maintained margin.

Selling, General and Administrative Expenses

For the fourth quarter, selling, general and administrative expenses ("SG&A") were $177.0 million, or 33.6% of net sales, compared to $180.8 million, or 34.4% of net sales, for last year's fourth quarter. This $3.9 million decrease primarily reflects a reduction in employee-related expenses and lower outside consultant costs.

Retail Fleet Optimization Plan

In the fourth quarter, the Company recorded pre-tax accelerated depreciation charges of property and equipment within cost of goods sold ("COGS") of $1.2 million related to our retail fleet optimization plan. On an after-tax basis, the fourth quarter impact of these charges was $0.8 million, or $0.01 earnings per diluted share. In last year's fourth quarter, the Company recorded pre-tax impairment and accelerated depreciation charges of property and equipment within COGS of $9.4 million and $1.3 million, respectively. On an after-tax basis, the impact of these charges on last year's fourth quarter was $8.1 million, or $0.07 earnings per diluted share.

Income Tax

For the fourth quarter, the effective tax rate was a benefit of 21.6% compared to a benefit of 24.5% for last year's fourth quarter. The unfavorability in the effective rate compared to last year's fourth quarter primarily reflects a smaller pre-tax loss than projected in the fourth quarter, the benefit of which was partially offset by foreign withholding taxes and state and local income tax liabilities in separate-filing jurisdictions.

The fiscal 2019 effective tax rate was a provision of (6.7)% compared to a fiscal 2018 provision of 17.8%. The fiscal 2019 effective tax rate primarily reflects an income tax benefit on an annual operating loss, offset by a valuation allowance on certain deferred tax assets and other adjustments for charitable contributions with limitations and employee share-based compensation expense. The favorable fiscal 2018 effective tax rate was primarily the result of the acceleration of deductions into the 2017 federal tax return as a result of the Tax Cuts and Jobs Act of 2017 ("Tax Act").

Cash, Marketable Securities and Debt

At the end of the fourth quarter, cash and marketable securities totaled $127.9 million while debt totaled $42.5 million.

Inventories

At the end of fiscal 2019, inventories totaled $246.7 million compared to $235.2 million at the end of fiscal 2018. This $11.5 million increase, or 4.9%, primarily reflects the ongoing investment in Soma inventory to fund growth.

Fiscal 2020 First Quarter and Full-Year Outlook

The Company is initiating outlook for fiscal 2020, which includes the incremental impact of tariffs while excluding fiscal 2019 net charges related to the Company's retail fleet optimization plan and the impact of severance and other related net charges ("Severance Charges"). The outlook for both the first quarter and fiscal year excludes the potential impact related to the coronavirus (COVID-19). In addition, the Company expects any incremental tariff impacts to be largely offset by sourcing initiatives.

For the fiscal 2020 first quarter, compared to the fiscal 2019 first quarter:

  • The Company anticipates a low single-digit increase in total net sales and consolidated comparable sales, reflecting continued progress and momentum in the business.
  • The Company expects gross margin as a percent of net sales to increase approximately 20 to 40 basis points, due primarily to strategic reductions in promotional depth as well as leverage of fixed costs on higher sales.
  • SG&A expenses are expected to be approximately flat, reflecting ongoing cost management, offset by investments in marketing and a return to target incentive compensation levels.

For full year fiscal 2020, compared to the full year fiscal 2019:

  • The Company anticipates a low single-digit increase in total net sales and consolidated comparable sales.
  • The Company expects gross margin as a percent of net sales to increase approximately 50 to 100 basis points, due primarily to strategic reductions in promotional depth as well as leverage of fixed costs on higher sales.
  • SG&A expenses are expected to increase approximately $10 million, reflecting investments in marketing and a return to target incentive compensation levels, partially offset by ongoing cost management.
  • The Company estimates a fiscal 2020 tax expense in the range of $3 to $5 million.
  • Capital and cloud-based expenditures are expected to be approximately $45 to $50 million, primarily driven by technology enhancements and targeted reinvestments in stores.

Conference Call Information

The Company is hosting a live conference call on Thursday, February 27, 2020 beginning at 8:00 a.m. ET to review the operating results for the fourth quarter. The conference call is being webcast live over the Internet, which you may access in the Investors section of the Company's corporate website, www.chicosfas.com. A replay of the webcast will remain available online for one year at http://chicosfas.com/investors/events-and-presentations.

The phone number for the call is 1-877-883-0383. International callers should use 1-412-902-6506. The Elite Entry number, 9354763, is required to join the conference call. Interested participants should call 10-15 minutes prior to the 8:00 a.m. start to be placed in queue.

ABOUT CHICO'S FAS, INC.           

The Company, through its brands – Chico's, White House Black Market, Soma and TellTale is a leading omnichannel specialty retailer of women's private branded, sophisticated, casual-to-dressy clothing, intimates and complementary accessories.

As of February 1, 2020, the Company operated 1,341 stores in the U.S. and Canada and sold merchandise through 70 international franchise locations in Mexico and 2 domestic franchise airport locations. The Company's merchandise is also available at www.chicos.com, www.chicosofftherack.com, www.whbm.com, www.soma.com and www.mytelltale.com as well as through third party channels. For more detailed information on the Company, please go to our corporate website at www.chicosfas.com. The information on our corporate website is not, and shall not be deemed to be, a part of this press release or incorporated into our federal securities law filings.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect our current views with respect to certain events that could have an effect on our future financial performance. These statements, including without limitation statements made in Ms. Brooks' quote and in the section entitled "Fiscal 2020 First Quarter and Full-Year Outlook," relate to expectations concerning matters that are not historical fact and may include the words or phrases such as "will," "should," "expects," "believes," "anticipates," "plans," "intends," "estimates," "approximately," "our planning assumptions," "future outlook," and similar expressions. Except for historical information, matters discussed in such statements are forward-looking statements. These forward-looking statements are based largely on information currently available to our management and on our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry, and are subject to various risks and uncertainties that could cause actual results to differ materially from historical results or those currently anticipated. Although we believe our expectations are based on reasonable estimates and assumptions, we cannot guarantee their accuracy or our future performance, and there are a number of known and unknown risks, uncertainties, contingencies, and other factors (many of which are outside our control) that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Accordingly, there is no assurance that our expectations will, in fact, occur or that our estimates or assumptions will be correct, and we caution investors and all others not to place undue reliance on such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, changes in the general economic and business environment; changes in the general or specialty retail or apparel industries, including the extent of the market demand and overall level of spending for women's private branded clothing and related accessories; the availability of quality store sites; the effectiveness of our brand strategies, awareness and marketing programs; the ability to successfully execute and achieve the expected results of our business strategies and particular strategic initiatives (including, but not limited to, the Company's revised organizational structure, retail fleet optimization plan and three operating priorities which are driving stronger sales through improved product and marketing; optimizing the customer journey by simplifying, digitizing and extending the Company's unique and personalized service; and transforming sourcing and supply chain operations to increase product speed to market and improve quality), sales initiatives and multi-channel strategies; customer traffic; our ability to appropriately manage our inventory and allocation processes; our ability to leverage inventory management and targeted promotions; the successful recruitment of leadership and the successful integration of new members of our senior management team; uncertainties regarding future unsolicited offers to buy the Company and our ability to respond effectively to them as well as to actions of activist shareholders and others; changes in the political environment that create consumer uncertainty; the risk that our investments in merchandise or marketing initiatives may not deliver the results we anticipate; significant changes to product import and distribution costs (such as unexpected consolidation in the freight carrier industry, and the ability to remain competitive with customer shipping terms and costs pertaining to product deliveries and returns); the potential impact of the coronavirus (COVID-19) on manufacturing operations in China and our supply chain; new or increased taxes or tariffs (particularly with respect to China) that could impact, among other things, our sourcing from foreign suppliers; significant shifts in consumer behavior; and those other factors described in Item 1A, "Risk Factors" and in the "Forward-Looking Statements" disclosure in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our latest annual report on Form 10-K and in Part II, Item 1A, "Risk Factors" and the "Forward-Looking Statements" disclosure in Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operation" of our quarterly reports on Form 10-Q and in other reports we file with or furnish to the Securities and Exchange Commission. There can be no assurance that the actual future results, performance, or achievements expressed or implied by such forward-looking statements will occur. All forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice. 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.

(Financial Tables Follow)

Investor Relations Contact:
Tom Filandro
ICR, Inc.
(646) 277-1235
tom.filandro@icrinc.com

Chico's FAS, Inc. • 11215 Metro Parkway • Fort Myers, Florida 33966 • (239) 277-6200

 

Chico's FAS, Inc. and Subsidiaries

Condensed Consolidated Statements of (Loss) Income

(Unaudited)

(in thousands, except per share amounts)




Thirteen Weeks Ended


Fifty-Two Weeks Ended



February 1, 2020


February 2, 2019


February 1, 2020


February 2, 2019



Amount


% of
Sales


Amount


% of
Sales


Amount


% of
Sales


Amount


% of
Sales

Net sales:

















Chico's


$

249,621


47.3%


$

251,460


48.0%


$

1,045,221


51.3%


$

1,098,707


51.6%

White House Black Market


171,620


32.6


175,413


33.4


627,315


30.8


694,804


32.6

Soma


105,844


20.1


97,855


18.6


365,339


17.9


337,629


15.8

Total net sales


527,085


100.0


524,728


100.0


2,037,875


100.0


2,131,140


100.0

Cost of goods sold


355,698


67.5


366,027


69.8


1,335,997


65.6


1,367,726


64.2

Gross margin


171,387


32.5


158,701


30.2


701,878


34.4


763,414


35.8

Selling, general and administrative expenses


176,974


33.6


180,846


34.4


713,951


35.0


719,748


33.8

(Loss) income from operations


(5,587)


(1.1)


(22,145)


(4.2)


(12,073)


(0.6)


43,666


2.0

Interest income (expense), net


40


0.0


105


0.0


119


0.0


(353)


0.0

(Loss) income before income taxes


(5,547)


(1.1)


(22,040)


(4.2)


(11,954)


(0.6)


43,313


2.0

Income tax (benefit) provision


(1,200)


(0.3)


(5,400)


(1.0)


800


0.0


7,700


0.4

Net (loss) income


$

(4,347)


(0.8)


$

(16,640)


(3.2)


$

(12,754)


(0.6)


$

35,613


1.6

Per share data:

















Net (loss) income per common share-basic


$

(0.04)




$

(0.14)




$

(0.11)




$

0.28



Net (loss) income per common and common
equivalent share–diluted


$

(0.04)




$

(0.14)




$

(0.11)




$

0.28



Weighted average common shares
outstanding–basic


115,203




118,440




114,859




122,662



Weighted average common and common
equivalent shares outstanding–diluted


115,203




118,440




114,859




122,729



Dividends declared per common share


$

0.0875




$

0.085




$

0.35




$

0.34



 

 

Chico's FAS, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)



February 1, 2020


February 2, 2019


ASSETS

Current Assets:




Cash and cash equivalents

$

63,972


$

124,128

Marketable securities, at fair value

63,893


61,987

Inventories

246,737


235,218

Prepaid expenses and other current assets

48,200


63,845

Total Current Assets

422,802


485,178

Property and Equipment, net

315,382


370,932

Right of Use Assets

648,397


Other Assets:




Goodwill

96,774


96,774

Other intangible assets, net

38,930


38,930

Other assets, net

20,374


15,220

Total Other Assets

156,078


150,924


$

1,542,659


$

1,007,034


LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:




Accounts payable

$

134,204


$

143,404

Current lease liabilities

157,043


Other current and deferred liabilities

114,498


131,820

Total Current Liabilities

405,745


275,224

Noncurrent Liabilities:




Long-term debt

42,500


57,500

Long-term lease liabilities

555,922


Other noncurrent and deferred liabilities

8,188


89,109

Deferred taxes

212


5,237

Total Noncurrent Liabilities

606,822


151,846

Commitments and Contingencies




Shareholders' Equity:




Preferred stock


Common stock

1,184


1,169

Additional paid-in capital

492,129


486,406

Treasury stock, at cost

(494,395)


(494,395)

Retained earnings

531,602


587,145

Accumulated other comprehensive loss

(428)


(361)

Total Shareholders' Equity

530,092


579,964


$

1,542,659


$

1,007,034


The Company adopted Accounting Standard Update ("ASU") 2016-02, Leases, and related amendments as of February 3, 2019 under the modified retrospective approach and, therefore, has not revised comparative periods.

 

 

Chico's FAS, Inc. and Subsidiaries

Condensed Consolidated Cash Flow Statements

(Unaudited)

(in thousands)



Fifty-Two Weeks Ended


February 1, 2020


February 2, 2019

Cash Flows from Operating Activities:




Net (loss) income

$

(12,754)


$

35,613

Adjustments to reconcile net (loss) income to net cash provided by operating activities:




Depreciation and amortization

88,411


91,333

Non-cash lease expense

212,595


Loss on disposal and impairment of long-lived assets, net

2,343


13,628

Deferred tax benefit

(3,326)


(2,100)

Share-based compensation expense

7,145


19,783

Deferred rent and lease credits


(19,527)

Changes in assets and liabilities:




Inventories

(11,519)


(2,316)

Prepaid expenses and other assets

(11,302)


1,250

Accounts payable

(9,525)


25,097

Accrued and other liabilities

(603)


(4,687)

Lease liability

(228,121)


Net cash provided by operating activities

33,344


158,074

Cash Flows from Investing Activities:




Purchases of marketable securities

(49,663)


(38,693)

Proceeds from sale of marketable securities

47,955


37,007

Purchases of property and equipment

(33,939)


(54,187)

Net cash used in investing activities

(35,647)


(55,873)

Cash Flows from Financing Activities:




Proceeds from borrowings


61,250

Payments on borrowings

(15,000)


(72,500)

Proceeds from issuance of common stock

1,143


1,548

Dividends paid

(41,179)


(43,208)

Repurchase of common stock


(81,052)

Payments of tax withholdings related to share-based awards

(2,550)


(3,715)

Net cash used in financing activities

(57,586)


(137,677)

Effects of exchange rate changes on cash and cash equivalents

(267)


(467)

Net decrease in cash and cash equivalents

(60,156)


(35,943)

Cash and Cash Equivalents, Beginning of period

124,128


160,071

Cash and Cash Equivalents, End of period

$

63,972


$

124,128


The Company adopted ASU 2016-02, Leases, and related amendments as of February 3, 2019 under the modified retrospective approach and, therefore, has not revised comparative periods

Supplemental Detail on Net (Loss) Income Per Share Calculation

In accordance with accounting guidance, unvested share-based payment awards that include non-forfeitable rights to dividends, whether paid or unpaid, are considered participating securities. As a result, such awards are required to be included in the calculation of earnings per common share pursuant to the "two-class" method. For the Company, participating securities are composed entirely of unvested restricted stock awards and performance-based restricted stock units ("PSUs") that have met their relevant performance criteria.

Net income per share is determined using the two-class method when it is more dilutive than the treasury stock method. Basic net income per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period, including participating securities. Diluted net income per share reflects the dilutive effect of potential common shares from non-participating securities such as stock options, PSUs and restricted stock units. For the thirteen and fifty-two weeks ended February 1, 2020 and February 2, 2019, potential common shares were excluded from the computation of diluted income per common share to the extent they were antidilutive.

The following unaudited table sets forth the computation of net (loss) income per basic and diluted share shown on the face of the accompanying condensed consolidated statements of (loss) income (in thousands, except per share amounts):



Thirteen Weeks Ended


Fifty-Two Weeks Ended



February 1, 2020


February 2, 2019


February 1, 2020


February 2, 2019

Numerator









Net (loss) income


$

(4,347)


$

(16,640)


$

(12,754)


$

35,613

Net income and dividends declared allocated to
participating securities





(879)

Net (loss) income available to common
shareholders


$

(4,347)


$

(16,640)


$

(12,754)


$

34,734

Denominator









Weighted average common shares outstanding
– basic


115,203


118,440


114,859


122,662

Dilutive effect of non-participating securities





67

Weighted average common and common
equivalent shares outstanding – diluted


115,203


118,440


114,859


122,729

Net (loss) income per common share:









Basic


$

(0.04)


$

(0.14)


$

(0.11)


$

0.28

Diluted


$

(0.04)


$

(0.14)


$

(0.11)


$

0.28

GAAP to Non-GAAP Reconciliation of Net (Loss) Income and (Loss) Income Per Diluted Share

The Company reports information in accordance with GAAP. The Company's management does not, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Further, the non-GAAP measures utilized by the Company may be unique to the Company, as they may be different from non-GAAP measures used by other companies. The Company believes presenting these non-GAAP measures, which exclude items that are not comparable from period to period, is useful to investors and others in evaluating the Company's ongoing operating and financial results in a manner that is consistent with management's evaluation of business performance and understanding how such results compare with the Company's historical performance. The reconciliation below excludes the impact of the Company's retail fleet optimization plan, Severance Charges in connection with actions taken to reposition our organizational structure, and the fiscal 2018 impact of the Tax Act.

A reconciliation of net (loss) income and (loss) income per diluted share on a GAAP basis to net (loss) income and (loss) income per diluted share on a non-GAAP basis for the thirteen weeks and fifty-two weeks ended February 1, 2020 and February 2, 2019 is presented in the table below:

Chico's FAS, Inc. and Subsidiaries

GAAP to Non-GAAP Reconciliation of Net (Loss) Income and (Loss) Income per Diluted Share

(Unaudited)

(in thousands, except per share amounts)




Thirteen Weeks Ended


Fifty-Two Weeks Ended



February 1, 2020


February 2, 2019


February 1, 2020


February 2, 2019

Net (loss) income: (1)


















GAAP basis


$

(4,347)


$

(16,640)


$

(12,754)


$

35,613

Accelerated depreciation (2)


841


957


8,102


957

Impairment (2)



7,123



7,123

Severance Charges




2,080


Tax Act





(4,869)

Non-GAAP adjusted basis


$

(3,506)


$

(8,560)


$

(2,572)


$

38,824










Net (loss) income per common and common equivalent share–diluted: (1)

















GAAP basis


$

(0.04)


$

(0.14)


$

(0.11)


$

0.28

Accelerated depreciation (2)


0.01


0.01


0.07


0.01

Impairment (2)



0.06



0.06

Severance Charges




0.02


Tax Act





(0.04)

Non-GAAP adjusted basis


$

(0.03)


$

(0.07)


$

(0.02)


$

0.31


(1)  All adjustments to net (loss) income are presented net of tax.

(2)  Reflects the incremental impact of our retail fleet optimization plan.

GAAP to Non-GAAP Reconciliation of Purchases of Property and Equipment to Total Capital Spend

As noted above, the Company reports information in accordance with GAAP. The Company's management does not, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.      

Total capital spend is a non-GAAP financial measure which the Company defines as purchases of property and equipment plus capitalized implementation costs in a cloud computing arrangement ("CCA") service contact. In the third quarter of fiscal 2018, we adopted the guidance of Accounting Standards Update 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which aligns the requirements for capitalizing implementation costs in a CCA service contract with the requirements for capitalizing implementation costs incurred for an internal-use software license. Capitalized implementation costs in CCA service contracts are presented in the same line item of the balance sheet and cash flow statement that a prepayment of fees for the associated hosting arrangement is presented.

Total capital spend is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for, purchases of property and equipment or other financial measures prepared in accordance with GAAP. Our method of determining non-GAAP financial measures may differ from other companies' methods and therefore may not be comparable to those used by other companies.

A reconciliation of purchases of property and equipment on a GAAP basis to total capital spend on a non-GAAP basis for the fifty-two weeks ended February 1, 2020 is presented in the table below:

Chico's FAS, Inc. and Subsidiaries

Reconciliation of Purchases of Property and Equipment to Total Capital Spend

(Unaudited)

(in thousands)




Fifty-Two Weeks Ended



February 1, 2020

Purchases of property and equipment


$

33,939

Capitalized implementation costs in CCA service contracts


10,714

Total capital spend


$

44,653

 

 

Chico's FAS, Inc. and Subsidiaries

Store Count and Square Footage

Thirteen Weeks Ended February 1, 2020

(Unaudited)












November 2, 2019


New Stores


Closures


February 1, 2020



Store count:










Chico's frontline boutiques

536



(11)


525



Chico's outlets

123


1


(1)


123



Chico's Canada

4




4



WHBM frontline boutiques

376



(14)


362



WHBM outlets

63



(4)


59



WHBM Canada

6




6



Soma frontline boutiques

247


1


(4)


244



Soma outlets

18




18



Total Chico's FAS, Inc.

1,373


2


(34)


1,341
























November 2, 2019


New Stores


Closures


Other changes in
SSF


February 1, 2020

Net selling square footage (SSF):










Chico's frontline boutiques

1,457,547



(27,799)


(156)


1,429,592

Chico's outlets

310,242


2,034


(2,355)



309,921

Chico's Canada

9,695





9,695

WHBM frontline boutiques

879,008



(32,451)


2,221


848,778

WHBM outlets

132,456



(8,721)



123,735

WHBM Canada

15,588





15,588

Soma frontline boutiques

467,370


1,294


(7,887)


(624)


460,153

Soma outlets

34,329





34,329

Total Chico's FAS, Inc.

3,306,235


3,328


(79,213)


1,441


3,231,791


As of February 1, 2020, the Company's franchise operations consisted of 70 international retail locations in Mexico and 2 domestic franchise airport locations.

 

 

Chico's FAS, Inc. and Subsidiaries

Store Count and Square Footage

Fifty-Two Weeks Ended February 1, 2020

(Unaudited)



February 2, 2019


New Stores


Closures


February 1, 2020



Store count:










Chico's frontline boutiques

551


1


(27)


525



Chico's outlets

125


2


(4)


123



Chico's Canada

4




4



WHBM frontline boutiques

390


1


(29)


362



WHBM outlets

65


1


(7)


59



WHBM Canada

6




6



Soma frontline boutiques

258


1


(15)


244



Soma outlets

19



(1)


18



Total Chico's FAS, Inc.

1,418


6


(83)


1,341
























February 2, 2019


New Stores


Closures


Other changes
in SSF


February 1, 2020

Net selling square footage (SSF):










Chico's frontline boutiques

1,502,688


2,335


(69,769)


(5,662)


1,429,592

Chico's outlets

315,400


4,329


(9,808)



309,921

Chico's Canada

9,695





9,695

WHBM frontline boutiques

909,849


2,746


(66,204)


2,387


848,778

WHBM outlets

135,863


3,299


(15,427)



123,735

WHBM Canada

14,891




697


15,588

Soma frontline boutiques

488,509


1,294


(28,311)


(1,339)


460,153

Soma outlets

35,774



(1,445)



34,329

Total Chico's FAS, Inc.

3,412,669


14,003


(190,964)


(3,917)


3,231,791


As of February 1, 2020, the Company's franchise operations consisted of 70 international retail locations in Mexico and 2 domestic franchise airport locations.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/chicos-fas-inc-reports-fourth-quarter-and-fiscal-year-2019-results-301012089.html

SOURCE Chico's FAS, Inc.

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Investor Contact

  • David M. Oliver

  • Senior Vice President, Finance - Controller
  • cfo@chicos.com