- Revenues rose 16% to $453 million
- First quarter income from continuing operations was $49 million, or
$0.28 cents per diluted share
- Company opened 39 new stores and relocated/expanded 14 existing
stores during quarter
- May comparable store sales currently trending down in the mid single
digit range, with Chico's trending down in the mid single digit range
and WH|BM trending up in the low single digit range
FORT MYERS, Fla., May 30 /PRNewswire-FirstCall/ -- Chico's FAS, Inc.
(NYSE: CHS) today announced its financial results for the fiscal 2007 first
quarter ended May 5, 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030428/CHICOLOGO )
Net sales for the first quarter ended May 5, 2007 increased 16.0% to $453
million from $391 million for the fiscal 2006 first quarter ended April 29,
2006. Income from continuing operations for the fiscal 2007 first quarter was
$49 million, or $0.28 a diluted share, compared to income from continuing
operations of $53 million, or $0.29 a diluted share in the prior year's first
quarter. As previously reported, comparable store sales for the Company-owned
stores decreased 1.6% for the thirteen-week period ended May 5, 2007 compared
to the thirteen-week period last year ending May 6, 2006 (the Chico's brand
same store sales decreased by approximately 1% and the WH|BM brand's same
store sales decreased by approximately 2%).
Gross profit for the fiscal 2007 first quarter increased 16.0% to $280
million from $241 million in the prior year's first quarter. Gross profit as
a percentage of sales for the current quarter was 61.7%, unchanged from the
prior year's quarter. WH|BM front-line stores' merchandise margins in the
current quarter increased by approximately 180 basis points over such margins
in the prior year's first quarter, resulting in their highest ever first
quarter level. The margin increase at WH|BM was attributable primarily to
improved initial markups and a slightly lower markdown rate. At the same
time, the Chico's front-line stores' merchandise margins for the current
quarter came in slightly ahead of last year's record first quarter merchandise
margins. These record merchandise margins were offset by the mix effect
resulting from the WH|BM and Soma sales continuing to become a larger portion
of the Company's overall net sales (both WH|BM and Soma operate with lower
gross margins than the gross margins experienced by the Chico's brand), and to
a lesser extent, by the Company's continued investment in its product
development and merchandising functions for each of its three brands.
Selling, general and administrative expenses ("SG&A") for the fiscal 2007
first quarter increased 27.6% to $205 million from $161 million in the prior
year's first quarter. As a percentage of sales, SG&A in the current quarter
increased by approximately 410 basis points compared to the prior period due
to increased store operating expenses offset somewhat by reductions in
marketing and shared services costs as a percentage of sales. Store operating
expenses as a percentage of sales in the first quarter increased by
approximately 550 basis points compared to the prior period primarily due to
increased occupancy and personnel costs attributable mainly to the larger size
Chico's and WH|BM stores that the Company has been opening, the Company's
continuing increased investment in store payroll to improve service levels and
the mix effect of the WH|BM and Soma stores becoming a larger portion of the
Company's store base (both WH|BM and Soma brands operate with higher store
operating costs as a percentage of sales than the store operating costs as a
percentage of sales experienced by the Chico's brand). To a lesser degree,
store operating expenses as a percentage of sales also increased as a result
of additional store level promotions and outreach events across all brands as
well as from the deleverage associated with the Company's negative same store
sales.
Marketing costs as a percentage of sales for the fiscal 2007 first quarter
decreased by approximately 80 basis points as the Company reallocated a
portion of its marketing budget to the later fiscal 2007 quarters and shared
services expenses (including headquarters and other non-brand specific
expenses) for the fiscal 2007 first quarter decreased by 60 basis points
mainly due to a reduction in accrued incentive compensation for the fiscal
2007 first quarter when compared to the accrual in the prior year's first
quarter and the anniversarying of last year's one-time write off of costs
associated with the Company's decision not to move forward with its new
headquarters campus.
Scott A. Edmonds, President and CEO, commented, "Our first quarter income
from continuing operations of $49 million or $0.28 per share is in line with
our expectations, considering the softness in sales during the quarter,
particularly in April."
Mr. Edmonds continued, "We are pleased to see first quarter merchandise
margins at record levels for Chico's and White House | Black Market as we
continue to focus on providing our customers with a more compelling product
offering. As we expected, we have seen improvement in the White House | Black
Market product offerings and the resulting sales. Chico's May sales trends
continue to show softness; however, we are pleased with our gross margins. As
previously stated, we expect to see steady improvement in the Chico's same
store sales performance as we move closer to the Fall selling period."
Mr. Edmonds further said, "The additional resources allocated to our
direct-to-consumer area resulted in a 35% increase in sales during the first
quarter. This increase is a positive indication of the strong demand for our
product via the catalog and Internet."
Some of the other highlights with respect to the first quarter results
include the following:
-- Chico's/Soma brand sales, excluding catalog and Internet, increased by
12.3% from $297 million in last year's first quarter to $333 million in
this year's first quarter, while WH|BM brand sales increased by 30.3%
from $79 million to $103 million quarter over quarter. The average
transaction for the Chico's front-line stores for the fiscal 2007 first
quarter was flat as compared to last year's first quarter, while the
WH|BM average transaction increased by 8.1% in this year's first
quarter versus last year's first quarter. The average unit retail for
the Chico's front-line stores for the fiscal 2007 first quarter
declined by 7.2% as compared to last year's first quarter, while the
WH|BM average unit retail increased by 5.4% quarter over quarter.
-- Net sales by catalog and Internet increased by 35.3% from $12.2 million
in last year's first quarter to $16.5 million in this year's first
quarter. The Company believes this increase is attributable to the
implementation of the Company's planned improvements in its website and
call center infrastructure and its approach to merchandising on the
website. The Company intends to continue making improvements to such
infrastructure and merchandising approach in an effort to further
promote sales through these channels.
-- On March 6, 2007, the Company announced the planned closure of the
Fitigues brand operations ("Fitigues"). Accordingly, for all periods
presented, the operating results for Fitigues are shown as discontinued
operations in the Company's consolidated statements of income. The
loss on discontinued operations, net of tax, which included certain
one-time costs related to employee severance and lease termination
costs, reduced the current quarter's earnings by approximately $.01 per
diluted share. The Company does not expect additional material costs
from such discontinued operations in future quarters.
-- The Company estimates the investment in its Soma brand reduced the
current quarter's earnings by approximately $.02 per diluted share.
The Company is now expecting that the investment in the continued
growth and development of the Soma brand will reduce fiscal year 2007
earnings by approximately $.07 to $.10 per diluted share.
-- During the fiscal 2007 first quarter, the Company opened 39 new stores
and closed 5 stores, in addition to the closure of certain Fitigues
stores. Also, during this first quarter, the Company expanded or
relocated 14 stores. The Company expects to open between 16 and 20
additional stores during the second quarter and to expand or relocate
between 14 and 16 stores during the second quarter.
-- Overall inventories increased approximately 28% since the beginning of
the year, versus a sales increase of 16%. The growth in inventories
was in large part a planned growth designed to address an unusually low
level of inventories at year-end ($57 per selling square foot). In
comparison, the Company's inventory per selling square foot as of the
end of the fiscal 2007 first quarter was $68, actually reflecting a
decrease from the Company's inventory per selling square foot of $75 as
of the end of the fiscal 2006 first quarter.
-- During the fiscal 2007 first quarter, the Company consummated the
purchase of 12 franchise stores together with the reacquisition of the
territorial franchise rights to the state of Minnesota as well as the
purchase of an additional franchise store in Florida. The preliminary
allocation of the purchase price for each of these transactions
resulted in an increase of approximately $34.2 million in goodwill and
$4.9 million in other intangible assets.
The Company is a specialty retailer of private branded, sophisticated,
casual-to-dressy clothing, intimates, complementary accessories, and other
non-clothing gift items. The Company operates 949 women's specialty stores,
including stores in 48 states, the District of Columbia, the U.S. Virgin
Islands and Puerto Rico operating under the Chico's, White House | Black
Market, and Soma Intimates names. The Company has 569 Chico's front-line
stores, 34 Chico's outlet stores, 268 White House | Black Market front-line
stores, 17 White House | Black Market outlet stores, 60 Soma Intimates front-
line stores and 1 Soma Intimates outlet store.
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 under Our Company
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 under Our Company
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
Chico's FAS, Inc.
Consolidated Balance Sheets
(in thousands)
May 5, February 3,
2007 2007
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $23,334 $37,203
Marketable securities, at market 250,560 238,336
Receivables 10,613 14,246
Inventories 141,473 110,840
Prepaid expenses 16,900 15,774
Land held for sale 38,130 38,120
Deferred taxes 19,084 17,337
Total Current Assets 500,094 471,856
Property and Equipment:
Land and land improvements 14,688 14,640
Building and building improvements 57,635 56,782
Equipment, furniture and fixtures 289,078 268,122
Leasehold improvements 327,886 301,670
Total Property and Equipment 689,287 641,214
Less accumulated depreciation and
amortization (201,161) (184,474)
Property and Equipment, Net 488,126 456,740
Other Assets:
Goodwill 96,774 62,596
Other intangible assets 38,948 34,040
Deferred taxes 13,173 11,837
Other assets, net 21,413 21,065
Total Other Assets 170,308 129,538
$1,158,528 $1,058,134
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $73,561 $55,696
Accrued liabilities 112,583 87,367
Current portion of deferred 1,179 1,169
liabilities
Total Current Liabilities 187,323 144,232
Noncurrent Liabilities:
Deferred liabilities 113,611 109,971
Total Noncurrent Liabilities 113,611 109,971
Stockholders' Equity:
Common stock 1,757 1,757
Additional paid-in capital 236,432 229,934
Retained earnings 619,398 572,240
Accumulated other comprehensive
income 7 -
Total Stockholders' Equity 857,594 803,931
$1,158,528 $1,058,134
Chico's FAS, Inc.
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share amounts)
Thirteen Weeks Ended
May 5, 2007 April 29, 2006
% of % of
Amount Sales Amount Sales
Net sales by Chico's/Soma stores $ 333,052 73.5 $ 296,560 75.9
Net sales by White House |
Black Market stores 103,467 22.9 79,419 20.3
Net sales by catalog & Internet 16,454 3.6 12,161 3.1
Other net sales 115 0.0 2,523 0.7
Net sales 453,088 100.0 390,663 100.0
Cost of goods sold 173,323 38.3 149,557 38.3
Gross profit 279,765 61.7 241,106 61.7
Selling, general and
administrative expenses:
Store operating expenses 154,693 34.1 111,688 28.6
Marketing 18,119 4.0 18,864 4.8
Shared services 32,291 7.1 30,148 7.7
Total selling, general and
administrative expenses 205,103 45.2 160,700 41.1
Income from operations 74,662 16.5 80,406 20.6
Interest income, net 2,245 0.5 3,130 0.8
Income before taxes 76,907 17.0 83,536 21.4
Income tax provision 27,764 6.2 30,575 7.8
Income from continuing
operations 49,143 10.8 52,961 13.6
Loss on discontinued operations,
net of tax 1,985 0.4 496 0.2
Net income $ 47,158 10.4 $ 52,465 13.4
Per share data:
Income from continuing operations
per common share-basic $ 0.28 $ 0.29
Loss on discontinued operations
per common share-basic (0.01) (0.00)
Net income per common and common
equivalent share-basic $ 0.27 $ 0.29
Income from continuing operations
per common share-diluted $ 0.28 $ 0.29
Loss on discontinued operations
per common share-diluted (0.01) (0.00)
Net income per common and common
equivalent share-diluted $ 0.27 $ 0.29
Weighted average common shares
outstanding-basic 175,421 181,490
Weighted average common and
common equivalent shares
outstanding-diluted 176,595 183,063
Chico's FAS, Inc.
Consolidated Cash Flow Statements
(Unaudited)
(In thousands)
Thirteen Weeks Ended
May 5, April 29,
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $47,158 $52,465
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization, cost of goods
sold 2,530 1,653
Depreciation and amortization, other 19,772 13,534
Deferred tax benefit (3,451) (6,804)
Stock-based compensation expense, cost of goods
sold 1,422 1,538
Stock-based compensation expense, general,
administrative and store operating expenses 3,604 3,766
Deficiency (excess) tax benefit of stock-based
compensation 88 (2,629)
Deferred rent expense, net 1,644 749
Loss on disposal of property and equipment - 242
Decrease (increase) in assets -
Receivables, net 1,861 6,128
Inventories (29,600) (19,413)
Prepaid expenses and other (1,462) (2,383)
Increase in liabilities -
Accounts payable 17,865 17,346
Accrued and other deferred liabilities 27,014 23,408
Total adjustments 41,287 37,135
Net cash provided by operating activities 88,445 89,600
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchases) sales of marketable securities (12,216) 21,170
Purchase of Fitigues assets - (7,527)
Purchase of Minnesota franchise rights and stores (32,896) -
Acquisition of other franchise stores (6,361) (761)
Purchases of property and equipment (52,267) (53,590)
Net cash used in investing activities (103,740) (40,708)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 1,612 4,152
(Deficiency) excess tax benefit of stock-based
compensation (88) 2,629
Repurchase of common stock (98) (31,721)
Net cash provided by (used in) financing
activities 1,426 (24,940)
Net (decrease) increase in cash and cash
equivalents (13,869) 23,952
CASH AND CASH EQUIVALENTS, Beginning of period 37,203 3,035
CASH AND CASH EQUIVALENTS, End of period 23,334 $26,987
SOURCE Chico's FAS, Inc.
-0- 05/30/2007
/CONTACT: Executive Contacts, 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, Inc./
/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
SU: ERN
KK-AA
-- CLW099 --
6767 05/30/2007 16:05 EDT http://www.prnewswire.com