Press Release Details

- Net sales increased 17.3% to $481.6 million with direct-to-consumer sales increasing 31%
- $481.9 million of cash and marketable securities at quarter-end

FORT MYERS, Fla., May 19 /PRNewswire-FirstCall/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2010 first quarter ended May 1, 2010.  

(Logo: http://www.newscom.com/cgi-bin/prnh/20091112/FL09527LOGO )

First Quarter 2010 Financial Results  

The Company recorded net income of $35.4 million, or $0.20 per diluted share for the first quarter compared to net income of $14.5 million, or $0.08 per diluted share for last year's first quarter.  Last year's first quarter 2009 results included non-cash impairment charges totaling approximately $5.1 million, net of tax.  Excluding those impairment charges, the Company had net income for the first quarter of 2009 of $19.6 million, or $0.11 per diluted share.

Sales

Net sales increased from $410.6 million in last year's first quarter to $481.6 million in the current quarter.  Consolidated comparable store sales increased 14.9% for the quarter compared to a 3.2% decrease for the like period last year.  The Chico's/Soma Intimates brands' comparable store sales increased 14.8% compared to a 6.0% decrease for the like period last year, and the White House | Black Market ("WH|BM") brand's comparable store sales increased 15.3% compared to a 4.2% increase for the like period last year.  Direct-to-consumer sales, not included in comparable store sales, increased approximately 31% for the 2010 first quarter over last year's first quarter.

Gross Margin

Gross margin increased from $233.4 million in last year's first quarter to $281.6 million in the current quarter.  Gross margin, expressed as a percentage of net sales, increased 170 basis points to 58.5% from 56.8% in the last year's first quarter.  The gross margin rate improvement was primarily attributable to lower markdowns at front-line stores, higher initial markups and continued gross margin improvement at Chico's outlet stores resulting from increased penetration of made-for-outlet product.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") increased from $211.6 million in last year's first quarter to $226.5 million in the current quarter.  SG&A increased primarily due to a planned increase in marketing spend and higher store operating costs associated with new stores and the increase in sales.  Excluding the impairment charges recognized in the first quarter of last year, the SG&A rate improved 250 basis points as a percentage of net sales due to the leverage resulting from positive comparable store sales.

Store operating expenses increased by $8.5 million in the first quarter, primarily due to an increase in store personnel costs and credit card fees.  However, expressed as a percentage of net sales, store operating expenses decreased 400 basis points due to the leverage resulting from positive comparable store sales.  

Marketing expenses increased by $11.2 million in the first quarter primarily due to planned increases related to television and print media campaigns.  Expressed as a percentage of net sales, marketing expenses increased 170 basis points over the same period last year.  

National Store Support Center ("NSSC") expenses, including corporate and other non-brand specific expenses, increased by $3.3 million in the first quarter mainly due to increased performance-based compensation.  However, as a percentage of net sales, NSSC expenses decreased by 20 basis points due to the leverage associated with improved comparable store sales.

Inventories

End of quarter inventory increased $14.7 million or approximately 10.1% from last year's first quarter.  Consolidated inventory at the end of the quarter increased 7.1% per selling square foot to $60 compared to $56 at the end of the last year's first quarter.  End of quarter inventory for the WH|BM brand decreased approximately 4.6% per selling square foot over the same period last year, while Chico's brand inventory increased approximately 7.5% quarter over quarter.  

Cash and Marketable Securities

Cash and marketable securities at the end of the quarter increased to $481.9 million from $325.0 million at the end of the first quarter fiscal 2009 and from $423.5 million as of the end of fiscal 2009.  

Cash Flow

Net cash provided by operating activities for the fiscal quarter increased by $10.5 million over the same period last year primarily as a result of the increases in net income and accounts payable and accrued liabilities, which were partially offset by the increase in inventories.  The Company's capital expenditures were $15.3 million in the first quarter of fiscal 2010 versus $12.7 million in fiscal 2009's first quarter.

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 1,104 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 598 boutique and 50 outlet stores, publishes a catalog during key shopping periods throughout the year, and conducts e-commerce at http://www.chicos.com/.

White House | Black Market currently operates 334 boutique and 17 outlet stores, publishes a catalog highlighting its latest fashions and conducts e-commerce at http://www.whitehouseblackmarket.com/.

Soma Intimates is the Company's developing concept with 100 boutique stores and 5 outlet stores today.  Soma Intimates also publishes a catalog for its customers and conducts e-commerce at http://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, http://www.chicosfas.com/.

SEC Regulation G - The Company reports its consolidated financial results in accordance with generally accepted accounting principles (GAAP).  However, to supplement these consolidated financial results, management believes that certain non-GAAP operating results, which exclude impairment and certain other non-recurring charges, may provide a more meaningful measure on which to compare the Company's results of operations between periods.  The Company believes these non-GAAP results provide useful information to both management and investors by excluding certain expenses that impact the comparability of the results.  A reconciliation of net income and earnings per diluted share on a GAAP basis to net income and earnings per diluted share on a non-GAAP basis is presented in the table below:

SOURCE Chico's FAS, Inc.