* Revenues rose 19.8% to a record $392 million
* Net income climbed to a record $52 million
* May comparable store sales currently in the 6-7% range, with Chico's in
the 3-4% range and WH|BM in the 22-23% range
* Company announces 25% square footage growth plan for fiscal 2007
FORT MYERS, Fla., May 25 /PRNewswire-FirstCall/ -- Chico's FAS, Inc.
(NYSE: CHS) today announced its financial results for the first quarter ended
April 29, 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030428/CHICOLOGO )
Net sales for the first quarter ended April 29, 2006, increased 19.8% to a
record $392 million from $327 million for the first quarter ended April 30,
2005. Net income rose to $52 million, or $0.29 a diluted share, compared to
net income of $47 million, or $0.26 a diluted share in the prior year's first
quarter. The effect of the adoption of SFAS 123R for the first quarter of
fiscal 2006 was approximately $.02 per diluted share. Comparable store sales
for the Company-owned stores increased 6.6% for the thirteen-week period ended
April 29, 2006 compared to the same thirteen-week period last year.
Scott A. Edmonds, President and CEO, commented, "Chico's FAS, Inc.
continues to be one of the most productive and profitable apparel retailers in
the industry. Even after implementing the new stock-based compensation
accounting requirements, Chico's still produced an overall operating margin in
excess of 20%. We saw solid increases in brand operating margins and our
quarterly results are in line with the guidance we provided earlier this
month. Both the Chico's and WH|BM brands produced over $1,000 in net sales
per selling square foot in fiscal 2005 and we are on pace to do at least the
same this year. We continue to be excited about the growth and expansion
opportunities for all of our brands, and our focus and commitment remain on
long term growth. We are making important investments in our newer brands as
we have transitioned to multiple platforms for growth. With these continuing
long term investments we expect there will be some continued pressure on the
overall operating margin percentage for the remainder of fiscal 2006 and the
first half of 2007. With that said, we still expect to significantly increase
the earnings and maintain one of the top operating margin percentages in the
retail apparel industry."
Mr. Edmonds continued, "We are further announcing a more aggressive fiscal
2007 store opening program that includes a 25% overall square footage growth
goal, following the 30% square footage growth goal for our current fiscal year
2006."
Some of the other first quarter highlights this year compared to the first
quarter results last year include the following:
* The Chico's/Soma brand sales, excluding catalog and Internet, increased
by 11% from $268 million to $297 million. Comparable store sales for
the combined brands, after nine years of double digit increases for the
Chico's brand, increased in the low single digit range, slightly below
management's announced expectations of an increase in the mid single
digit range. The average transaction amount for the Chico's and Soma
front-line stores increased by over 4%, while the merchandise margins
increased by 110 basis points in the Chico's brand and 460 basis points
in the Soma brand. The brand operating margin for Chico's improved 40
basis points, even after taking into account the newly required
deduction for stock-based compensation expense. The brand operating
margin for Soma, excluding a planned increase in marketing expenses,
increased by approximately 700 basis points.
* The WH|BM brand sales, excluding catalog and Internet, increased by 62%
from $49 million to $79 million, while comparable store sales for the
brand increased in the mid 30% range, continuing its trend of five
consecutive years of double digit same store sales increases. The
average transaction amount for the WH|BM brand increased by slightly
over 6%, although the merchandise margins declined by 20 basis points in
large part due to sweater markdowns taken in February. It should be
noted that the merchandise margins for the WH|BM brand in the months of
March and April were up between 40 to 190 basis points. This improving
merchandise margin trend has continued through May month-to-date, with
merchandise margins increasing by approximately 300 basis points. The
brand operating margin for WH|BM improved by 500 basis points for the
first quarter of fiscal 2006.
* Fitigues, our newest brand, which is undergoing infrastructure
improvements during fiscal 2006, reduced earnings per share slightly,
which is consistent with earlier management statements projecting that
Fitigues would have the effect of reducing earnings by approximately
$.01 to $.02 in fiscal 2006.
* Catalog and Internet sales saw an overall 55% increase, principally due
to the addition in fiscal 2006 of catalog and Internet sales of WH|BM
and Fitigues merchandise and a stepped up presence of Soma merchandise
in the catalog and Internet. The Chico's brand also experienced a solid
19% increase in its catalog and Internet sales.
* The outlet division, which includes sales from all four of the brands,
showed strong increases in both gross and operating margins as overall
gross margins in the division advanced by over 550 basis points, while
overall operating margins in the division improved by slightly over 700
basis points.
* Stock-based compensation expense associated with the adoption of SFAS
123R, which is new in fiscal 2006, reduced the gross margin by
$1.4 million, or 40 basis points, and increased SG&A costs by $3.5
million, or 90 basis points. Overall, this accounting change had the
effect of reducing net income and earnings per share for the first
quarter of fiscal 2006 by $3.4 million and approximately $.02 per
diluted share, respectively.
* The Company opened 19 new stores during the quarter, closed 3 stores,
reacquired 1 franchised store and added the 11 net new Fitigues store
chain to its store base. In addition, the Company expanded or relocated
5 additional stores.
* Overall inventories increased 21%, approximately in line with the
overall 20% sales growth. The Company's inventory per selling square
foot was up slightly from $72 of inventory per selling square foot for
the comparable period last year to $74 of inventory per selling square
foot this year. This slight increase was principally due to several
factors including the Fitigues acquisition, expanded direct to consumer
offerings for all four brands, and the increase in the average price
point and its related costs.
Future Outlook:
* The Company continues to forecast mid single digit same store sales
increases for the balance of the year for the Chico's brand. The
Company is forecasting mid-teen same store sales increases for the rest
of fiscal 2006 for the WH|BM brand as WH|BM anniversaries the 30, 40 and
50% increases experienced in the last three quarters of fiscal 2005.
* Based on the above same store sales forecast, and after taking into
consideration the first quarter earnings and May sales results, the
Company is now forecasting fiscal 2006 diluted earnings per share in
the range of $1.20 to $1.24, which is net of an estimated stock
compensation expense of approximately $.08 per diluted share associated
with the adoption of SFAS 123R, a slight decrease from its previously
issued guidance for fiscal 2006 of $1.23 to $1.26 per diluted share,
which also is net of an estimated stock compensation expense of
approximately $.08 per diluted share associated with the adoption of
SFAS 123R (note that this previous guidance had been stated as a 25%
earnings growth rate, excluding the effect of adoption of SFAS 123R).
* The Company is planning a 30% increase in its selling square footage
during fiscal 2006, which is expected to result from approximately 140
to 150 net new stores and 60 to 65 relocations and expansions of
existing stores. The anticipated breakdown of new stores by brand for
fiscal 2006 is as follows: 63 to 67 WH|BM stores, 45 to 47 Chico's
stores and 33 to 36 Soma stores. The Company's Form 10-K for fiscal
2005 sets forth the Company's expectations for the break down of store
openings by quarter. The relocations and expansions will likely be 75%-
80% Chico's stores and 20%-25% WH|BM stores, with a quarterly breakdown
comparable to the quarterly breakdown for new stores.
* The Company has increased the square footage growth plan for fiscal 2007
to 25% from its original goal of a 20% increase, with an estimated 165
to 190 net new stores and 40 to 60 relocations/expansions. At this
time, the Company estimates these new openings will be broken down by
brand as follows: 55 to 65 Soma stores (including full line stores and
boutique stores), 60 to 70 WH|BM stores, 45 to 50 Chico's stores and
approximately 5 new Fitigues stores.
The Company is a specialty retailer of private label, sophisticated,
casual-to-dressy clothing, intimates, complementary accessories, and other
non-clothing gift items. The Company operates 796 women's specialty stores,
including stores in 47 states, the District of Columbia, the U.S. Virgin
Islands and Puerto Rico operating under the Chico's, White House | Black
Market, Soma by Chico's and Fitigues names. The Company owns 507 Chico's
front-line stores, 31 Chico's outlet stores, 206 White House | Black Market
front-line stores, 9 White House | Black Market outlet stores, 19 Soma by
Chico's stores, 10 Fitigues front-line stores and 1 Fitigues outlet store;
franchisees own and operate 13 Chico's stores.
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, please call (877) 424-4267 to listen to the
Company's monthly sales information and investor relations line
A copy of a slide show addressing the Company's recent financial results and
current plans for expansion is available on the Company's website at
http://www.chicos.com in the investor relations section
Additional investor information on Chico's FAS, Inc. is available free of
charge on the Company's website at http://www.chicos.com in the investor
relations section
(Financial Tables Follow)
Chico's FAS, Inc.
Consolidated Balance Sheets
(in thousands)
April 29, January 29,
2006 2006
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $26,987 $3,035
Marketable securities, at market 380,240 401,445
Receivables 6,094 7,240
Income taxes receivable -- 5,013
Inventories 115,557 95,421
Prepaid expenses 15,136 13,497
Deferred taxes 14,821 12,327
Total Current Assets 558,835 537,978
Property and Equipment:
Land and land improvements 52,754 44,893
Building and building
improvements 54,164 35,573
Equipment, furniture and
fixtures 203,064 187,970
Leasehold improvements 220,243 209,342
Total Property and
Equipment 530,225 477,778
Less accumulated
depreciation and
amortization (145,938) (131,846)
Property and Equipment,
Net 384,287 345,932
Other Assets:
Goodwill 69,348 61,796
Other intangible assets 34,019 34,041
Other assets, net 20,432 19,666
Total Other Assets 123,799 115,503
$1,066,921 $999,413
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $64,779 $47,434
Accrued liabilities 91,807 74,586
Current portion of
deferred liabilities 743 648
Total Current
Liabilities 157,329 122,668
Noncurrent Liabilities:
Deferred liabilities 68,795 65,189
Deferred taxes 877 5,129
Total Noncurrent
Liabilities 69,672 70,318
Stockholders' Equity:
Common stock 1,812 1,817
Additional paid-in capital 211,948 202,878
Unearned compensation -- (3,710)
Retained earnings 626,290 605,537
Accumulated other
comprehensive loss (130) (95)
Total Stockholders'
Equity 839,920 806,427
$1,066,921 $999,413
Chico's FAS, Inc.
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share amounts)
Thirteen Weeks Ended
April 29, 2006 April 30, 2005
Amount % of Sales Amount % of Sales
Net sales by Chico's/
Soma stores $296,560 75.7 $267,606 81.8
Net sales by White
House | Black
Market stores 79,419 20.3 49,163 15.0
Net sales by catalog
& Internet 12,336 3.1 7,956 2.4
Other net sales 3,666 0.9 2,530 0.8
Net sales 391,981 100.0 327,255 100.0
Cost of goods sold 150,590 38.4 125,198 38.3
Gross profit 241,391 61.6 202,057 61.7
General, administrative
and store operating
expenses 148,234 37.8 119,274 36.4
Depreciation and
amortization 13,534 3.5 9,370 2.9
Income from
operations 79,623 20.3 73,413 22.4
Interest income, net 3,130 0.8 1,509 0.5
Income before
taxes 82,753 21.1 74,922 22.9
Income tax provision 30,288 7.7 27,722 8.5
Net income $ 52,465 13.4 $ 47,200 14.4
Per share data:
Net income per common
share -- basic $0.29 $0.26
Net income per common
& common equivalent
share -- diluted $0.29 $0.26
Weighted average common
shares outstanding --
basic 181,490 179,605
Weighted average common
& common equivalent
shares outstanding --
diluted 183,063 181,383
Chico's FAS, Inc.
Consolidated Cash Flow Statements
(Unaudited)
(In thousands)
Thirteen Weeks Ended
April 29 April 30
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $52,465 $47,200
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization, cost of
goods sold 1,653 1,065
Depreciation and amortization, other 13,534 9,370
Deferred tax benefit (6,804) (4,560)
Stock-based compensation expense, cost of
goods sold 1,538 100
Stock-based compensation expense, general,
administrative and store operating expenses 3,766 287
Excess tax benefit of stock-based compensation (2,629) --
Tax benefit of stock options exercised -- 9,433
Deferred rent expense, net 749 874
Loss (gain) on impairment and disposal of property
and equipment 242 (7)
(Increase) decrease in assets --
Receivables, net 6,128 (3,179)
Inventories (19,413) (19,135)
Prepaid expenses and other (2,383) (1,979)
Increase in liabilities --
Accounts payable 17,346 16,473
Accrued and other deferred liabilities 23,408 24,041
Total adjustments 37,135 32,783
Net cash provided by operating activities 89,600 79,983
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales (purchases) of marketable securities 21,170 (52,907)
Purchase of Fitigues assets (7,527) --
Acquisition of franchise store (761) --
Purchases of property and equipment (59,590) (25,296)
Net cash used in investing activities (40,708) (78,203)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 4,152 9,033
Excess tax benefit of stock-based compensation 2,629 --
Repurchase of common stock (31,721) --
Net cash (used in) provided by
financing activities (24,940) 9,033
Net increase in cash and cash equivalents 23,952 10,813
CASH AND CASH EQUIVALENTS, Beginning of period 3,035 14,426
CASH AND CASH EQUIVALENTS, End of period $26,987 $25,239
Executive Contacts:
Charles J. Kleman
Executive Vice President
Chief Financial Officer
Chico's FAS, Inc.
(239) 274-4105
F. Michael Smith
Vice President
Investor and Community Relations
Chico's FAS, Inc.
(239) 274-4797
SOURCE Chico's FAS, Inc.
-0- 05/25/2006
/CONTACT: Charles J. Kleman, Executive Vice President, Chief Financial
Officer, +1-239-274-4105, or F. Michael Smith, Vice President, Investor and
Community Relations, +1-239-274-4797, both of Chico's FAS/
/Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20030428/CHICOLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com /
/Web site: http://www.chicos.com /
(CHS)
CO: Chico's FAS, Inc.
ST: Florida
IN: REA FAX
SU: ERN SLS ERP
MD
-- FLTH010 --
2731 05/25/2006 16:05 EDT http://www.prnewswire.com