- Revenues totaled $409.3 million for the fourth quarter and rose 4.3%
to $1.71 billion for the 52-week year
- Fourth quarter net loss was $20.5 million, or $0.12 per diluted share
- 2007 fiscal year net income was $88.9 million, or $0.50 per diluted
share
- Company opened 128 net new stores and relocated/expanded 52 stores
during fiscal year for a net selling square footage increase of
approximately 23%
- Company sees opportunity for earnings improvement in second half of
2008
FORT MYERS, Fla., March 5 /PRNewswire-FirstCall/ -- Chico's FAS, Inc.
(NYSE: CHS) today announced its financial results for the fourth quarter and
fiscal year ended February 2, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080211/CHICOSLOGO )
Net sales for the thirteen-week period ended February 2, 2008 decreased
7.9% to $409.3 million from $444.6 million reported for the fourteen-week
period ended February 3, 2007. Net loss for the fiscal 2007 fourth quarter,
which consisted of thirteen weeks, was $20.5 million, or $0.12 per diluted
share, compared to net income of $18.2 million, or $0.10 per diluted share in
the prior year's fourth quarter, which consisted of fourteen weeks. As
previously reported, comparable store sales decreased 15.7% for the thirteen-
week period ended February 2, 2008 compared to the comparable thirteen-week
period last year ended February 3, 2007 (with the Chico's brand same store
sales decrease being approximately 16% and the WH|BM brand's same store sales
decrease being approximately 17%).
Net sales for the fifty-two week fiscal year ended February 2, 2008
increased 4.3% to $1.71 billion from $1.64 billion for the fifty-three week
fiscal year ended February 3, 2007. Net income for the fifty-two week fiscal
year ended February 2, 2008 was $88.9 million, or $0.50 per diluted share,
compared to $166.6 million, or $0.93 per diluted share, for the fifty-three
week fiscal year ended February 3, 2007. As previously reported, comparable
store sales decreased 8.1% for the fifty-two week period ended February 2,
2008 compared to the comparable fifty-two week period last year ended February
3, 2007 (with the Chico's brand same store sales decrease being approximately
8% and the WH|BM brand's same store sales decrease being approximately 9%).
Gross profit for the fourth quarter decreased 19.2% to $195.1 million from
$241.5 million in the prior year's fourth quarter. Gross profit as a
percentage of sales for the current quarter was 47.7%, compared to 54.3% in
the prior year's fourth quarter. Chico's front-line stores' merchandise
margins in the fourth quarter decreased by approximately 680 basis points
compared to the prior year's fourth quarter primarily due to an aggressive
markdown strategy aimed at lowering Fall carryover levels at year end. Gross
profit percentage was also negatively impacted by lower merchandise margins in
the direct to consumer and outlet channels primarily due to higher markdown
rates as a result of lower than anticipated sales at the front-line stores.
To a lesser extent, the Company's overall gross margin was also impacted by
the Company's continued investment in its product development and
merchandising functions and by higher cancellation charges attributable to
reducing Spring inventory commitments.
Selling, general and administrative expenses ("SG&A") for the fourth
quarter increased 11.0% to $229.3 million from $206.6 million in the prior
year's fourth quarter. As a percentage of sales, SG&A in the fourth quarter
increased by approximately 960 basis points compared to the prior period
primarily due to increased store operating expenses, increases in marketing
spend and from the deleverage associated with the Company's negative same
store sales, combined with the reduction in sales associated with the extra
week last year.
Store operating expenses as a percentage of sales in the fourth quarter
increased by approximately 530 basis points compared to the prior period
primarily due to increased occupancy costs attributable mainly to the
investment in larger sized Chico's and WH|BM new and expanded stores, the mix
effect of the WH|BM and Soma Intimates 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) and from the deleverage
associated with the Company's negative same store sales, combined with the
reduction in sales associated with the extra week last year.
Marketing costs as a percentage of sales for the fiscal 2007 fourth
quarter increased by approximately 190 basis points primarily due to the
Company's planned increase in its marketing spend in an effort to protect and
enhance its market share and to highlight its Fall and Holiday product
offerings. Shared services expenses (including headquarters and other non-
brand specific expenses) as a percentage of sales for the fiscal 2007 fourth
quarter increased by 240 basis points mainly due to increased personnel
relocation and recruitment costs, technology and marketing support costs and
from the deleverage associated with the Company's negative same store sales,
combined with the reduction in sales associated with the extra week last year.
Scott A. Edmonds, Chairman, President & CEO, stated, "Our financial
results for the fourth quarter of 2007 were certainly disappointing. While we
attribute much of our under-performance to last year's merchandising issues,
some of the corrective measures we have taken are being masked by the slowdown
in retail overall and in the missy sector in particular. We further
anticipate the women's sector will continue to face major challenges this
spring. Accordingly, we have pulled back our inventory commitments for much
of 2008, and continue to attack all elements of our expense structure."
Mr. Edmonds continued, "We are seeing improving comp trends in the White
House | Black Market brand, and continuing strong top-line performance for the
Soma Intimates brand. The Chico's brand is on a slower path to recovery but
is making progress. We are actively addressing issues in our accessories
division and Travelers collection, and recently added a senior level merchant
to each of these areas. We would expect to see improvement in these
categories later in the year."
Mr. Edmonds further stated, "We are currently forecasting negative
comparable store sales for the first half of 2008, and expect to have lower
earnings than the first half of 2007. Our current expectations are to return
to positive comparable store sales increases in the second half of 2008
resulting in overall earnings growth during this time frame."
Mr. Edmonds further noted, "We have also significantly lowered our capital
expenditure plans for 2008. Our total capital expenditure plan for 2008
ranges from approximately $120-$125 million compared to approximately $202
million of capital expenditures in 2007. We have pulled back our real estate
growth targets for 2008 and 2009, and we do not intend to increase the number
of new stores beyond current commitments until we see improvements in the
economy and our own performance."
Mr. Edmonds concluded, "Despite the current challenges, we continue to
have confidence in our long-term strategies and remain optimistic about our
future. We have assembled a strong management team and continue to attract
world-class talent in key areas such as merchandising, production, and
marketing. As I have previously stated, we are steadfastly committed to
protecting our free cash flow and our strong balance sheet that includes
approximately $275 million in cash and marketable securities and no debt.
This should position us to take advantage of any market opportunities when
overall economic conditions improve."
Some of the other highlights with respect to the fourth quarter and year
end results include the following:
- The Chico's/Soma brand sales, excluding catalog and Internet,
decreased by 11.2% from $316.1 million in last year's fourth quarter
to $280.8 million in this year's fourth quarter, while WH|BM brand
sales decreased slightly by 1.7% from $109.9 million to $108.0 million
quarter over quarter. The average transaction size for the Chico's
front-line stores during the fiscal 2007 fourth quarter decreased by
approximately 11% while the average transaction size at WH|BM front-
line stores decreased by approximately 7% compared to last year's
fourth quarter. The average unit retail for the Chico's front-line
stores for the fiscal 2007 fourth quarter declined by 13% as compared
to last year's fourth quarter, while the WH|BM average unit retail was
essentially flat quarter over quarter.
- Net sales by catalog and Internet increased by 26.5% from $16.2
million in last year's fourth quarter to $20.5 million in this year's
fourth quarter, despite the reduction in sales associated with the
extra week last year. The Company believes this increase is
attributable to continuing investment in each brand's website and call
center infrastructure.
- 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. During this year's fourth quarter, the Company incurred only
a small amount of additional costs from such discontinued operations;
similarly, the Company does not expect to incur any material
additional costs in future quarters associated with such discontinued
operations.
- The Company estimates the dilutive impact from its Soma operations
approximated $0.04 per diluted share in the fourth quarter, which
included approximately $1.4 million for television advertising and an
approximate $1.4 million charge to close 3 underperforming stores.
- The Company opened 40 new stores during the fourth quarter of fiscal
2007 and closed 6 stores. In addition, the Company expanded or
relocated 6 additional stores during the quarter. During the 2007
fiscal year, the Company opened 143 new stores, closed 15 stores,
closed the 10 remaining Fitigues stores, and reacquired 13 franchise
stores, along with expanding or relocating 52 stores, representing a
growth rate of approximately 23% in net selling square footage.
- The Company's inventory per selling square foot at the end of the
2007 fiscal year was $60, reflecting a small increase from the
Company's inventory per selling square foot of $57 at the end of the
2006 fiscal year. This increase is largely attributable to the early
Easter and an earlier catalog drop compared to last year.
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 1,038 women's specialty stores,
including stores in 49 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 604 Chico's front-line
stores, 37 Chico's outlet stores, 309 White House | Black Market front-line
stores, 19 White House | Black Market outlet stores, 68 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
(Financial Tables Follow)
Chico's FAS, Inc.
Consolidated Balance Sheets
(in thousands)
February 2, February 3,
2008 2007
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $13,801 $37,203
Marketable securities, at market 260,469 238,336
Receivables 11,924 14,246
Income tax receivable 23,973 2,493
Inventories 144,261 110,840
Prepaid expenses 18,999 15,774
Land held for sale - 38,120
Deferred taxes 13,306 17,337
Total Current Assets 486,733 474,349
Property and Equipment:
Land and land improvements 17,867 14,640
Building and building improvements 62,877 56,782
Equipment, furniture and fixtures 347,937 268,122
Leasehold improvements 396,650 301,670
Total Property and Equipment 825,331 641,214
Less accumulated depreciation and
amortization (257,378) (184,474)
Property and Equipment, Net 567,953 456,740
Other Assets:
Goodwill 96,774 62,596
Other intangible assets 38,930 34,040
Deferred taxes 22,503 11,837
Other assets 37,233 21,065
Total Other Assets 195,440 129,538
$1,250,126 $1,060,627
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $88,134 $55,696
Accrued liabilities 91,622 82,971
Current portion of deferred liabilities 1,437 1,169
Total Current Liabilities 181,193 139,836
Noncurrent Liabilities:
Deferred liabilities 156,417 116,860
Total Noncurrent Liabilities 156,417 116,860
Stockholders' Equity:
Common stock 1,762 1,757
Additional paid-in capital 249,639 229,934
Retained earnings 661,115 572,240
Total Stockholders' Equity 912,516 803,931
$1,250,126 $1,060,627
Chico's FAS, Inc.
Consolidated Statements of Income
(in thousands, except per share amounts)
Fifty-Two Weeks Fifty-Three Weeks
Ended Ended
(unaudited)
February 2, 2008 February 3, 2007
Amount % of Amount % of
Sales Sales
Net sales by Chico's/Soma stores $1,223,217 71.4 $1,210,474 73.8
Net sales by
White House | Black Market stores 418,901 24.4 367,063 22.4
Net sales by catalog & Internet 72,093 4.2 52,959 3.2
Other net sales 115 0.0 10,431 0.6
Net sales 1,714,326 100.0 1,640,927 100.0
Cost of goods sold 745,265 43.5 673,742 41.1
Gross profit 969,061 56.5 967,185 58.9
Selling, general and administrative
expenses:
Store operating expenses 633,288 36.9 525,529 32.0
Marketing 82,736 4.8 66,465 4.0
Shared services 131,579 7.7 111,491 6.8
Total selling, general, and
administrative expenses 847,603 49.4 703,485 42.8
Income (loss) from operations 121,458 7.1 263,700 16.1
Gain on sale of investment 6,833 0.4 - -
Interest income, net 10,869 0.6 10,626 0.6
Income (loss) before taxes 139,160 8.1 274,326 16.7
Income tax provision (benefit) 48,012 2.8 99,635 6.1
Income (loss) from continuing
operations 91,148 5.3 174,691 10.6
Loss on discontinued
operations, net of tax 2,273 0.1 8,055 0.5
Net income (loss) $88,875 5.2 $166,636 10.1
Per share data:
Income (loss) from continuing
operations per common share-basic $0.52 $0.99
Loss on discontinued operations per
common share-basic $(0.01) $(0.05)
Net income (loss) per common
share-basic $0.51 $0.94
Income (loss) from continuing
operations per common share-diluted $0.51 $0.98
Loss on discontinued operations per
common share-diluted $(0.01) $(0.05)
Net income (loss) per common &
common equivalent share-diluted $0.50 $0.93
Weighted average common shares
outstanding-basic 175,574 177,273
Weighted average common & common
equivalent shares outstanding-
diluted 176,355 178,452
Chico's FAS, Inc.
Consolidated Statements of Income
(in thousands, except per share amounts)
Thirteen Weeks Fourteen Weeks
Ended Ended
(unaudited) (unaudited)
February 2, 2008 February 3, 2007
Amount % of Amount % of
Sales Sales
Net sales by Chico's/Soma stores $280,817 68.6 $316,050 71.1
Net sales by
White House | Black Market stores 107,973 26.4 109,894 24.7
Net sales by catalog & Internet 20,507 5.0 16,218 3.6
Other net sales - - 2,469 0.6
Net sales 409,297 100.0 444,631 100.0
Cost of goods sold 214,193 52.3 203,171 45.7
Gross profit 195,104 47.7 241,460 54.3
Selling, general and administrative expenses:
Store operating expenses 165,628 40.5 156,321 35.2
Marketing 26,840 6.6 20,983 4.7
Shared services 36,878 9.0 29,299 6.6
Total selling, general, and
administrative expenses 229,346 56.1 206,603 46.5
Income (loss) from operations (34,242) (8.4) 34,857 7.8
Gain on sale of investment - - - -
Interest income, net 2,692 0.7 2,322 0.6
Income (loss) before taxes (31,550) (7.7) 37,179 8.4
Income tax provision (benefit) (11,053) (2.7) 12,838 2.9
Income (loss) from continuing
operations (20,497) (5.0) 24,341 5.5
Loss on discontinued operations,
net of tax 40 0.0 6,160 1.4
Net income (loss) $(20,537) (5.0) $18,181 4.1
Per share data:
Income (loss) from continuing
operations per common share-basic $(0.12) $0.14
Loss on discontinued operations
per common share-basic $(0.00) $(0.04)
Net income (loss) per common
share-basic $(0.12) $0.10
Income (loss) from continuing
operations per common share-diluted $(0.12) $0.14
Loss on discontinued operations
per common share-diluted $(0.00) $(0.04)
Net income (loss) per common &
common equivalent share-diluted $(0.12) $0.10
Weighted average common shares
outstanding-basic 175,604 175,326
Weighted average common & common
equivalent shares outstanding-
diluted 175,604 176,393
Chico's FAS, Inc.
Consolidated Cash Flow Statements
(in thousands)
February 2, February 3,
2008 2007
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $88,875 $166,636
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization, cost
of goods sold 10,386 7,564
Depreciation and amortization, other 81,593 61,840
Deferred tax benefit (6,635) (22,324)
Stock-based compensation expense, cost
of goods sold 4,909 6,004
Stock-based compensation expense, other 12,171 15,237
Excess tax benefit of stock-based compensation (209) (2,365)
Deferred rent expense, net 9,508 6,867
Goodwill impairment loss - 6,752
Gain on sale of investment (6,833) -
(Gain) loss on disposal of property and
equipment (908) 826
Increase in assets -
Receivables, net (18,770) (4,517)
Inventories (32,388) (14,696)
Prepaid expenses and other (3,958) (3,676)
Increase in liabilities -
Accounts payable 32,437 8,262
Accrued and other deferred liabilities 38,469 56,584
Total adjustments 119,772 122,358
Net cash provided by operating
activities 208,647 288,994
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (1,213,435) (162,690)
Proceeds from sale of marketable securities 1,191,302 325,894
Purchase of Fitigues assets - (7,527)
Purchase of Minnesota franchise rights and
stores (32,896) -
Acquisition of other franchise stores (6,361) (811)
Proceeds from sale of land 13,426 -
Proceeds from sale of investment 15,090 -
Purchases of property and equipment (202,223) (218,311)
Net cash used in investing activities (235,097) (63,445)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 3,533 6,402
Excess tax benefit of stock-based compensation 209 2,365
Repurchase of common stock (694) (200,148)
Net cash provided by (used in) financing
activities 3,048 (191,381)
Net (decrease) increase in cash and cash
equivalents (23,402) 34,168
CASH AND CASH EQUIVALENTS, Beginning of period 37,203 3,035
CASH AND CASH EQUIVALENTS, End of period $13,801 $37,203
Executive Contacts:
Kent A. Kleeberger F. Michael Smith
Executive Vice President Vice President
Chief Financial Officer Investor and Community Relations
Chico's FAS, Inc. Chico's FAS, Inc.
(239) 274-4987 (239) 274-4797
SOURCE Chico's FAS, Inc.
-0- 03/05/2008
/CONTACT: Kent A. Kleeberger, Executive Vice President, Chief Financial
Officer, +1-239-274-4987; 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/20080211/CHICOSLOGO
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 FAS
SU: ERN ERP
CB-JK
-- CLW021 --
6397 03/05/2008 07:30 EST http://www.prnewswire.com