Board authorizes $200 million share repurchase program
FORT MYERS, Fla., Aug 18, 2010 /PRNewswire via COMTEX/ --
Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2010 second quarter and six months ended July 31, 2010.
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Net Income and Earnings per Share
The Company reported net income of $30.5 million, or $0.17 per diluted share for the second quarter compared to net income of $14.9 million, or $0.08 per diluted share for last year's second quarter. The second quarter 2009 results included non-cash impairment charges totaling approximately $3.1 million, net of tax. Excluding impairment charges, the Company's net income for the second quarter of 2009 would have been $18.0 million, or $0.10 per diluted share.
For the six months ended July 31, 2010, the Company reported net income of $65.9 million or $0.37 per diluted share, compared to net income of $29.4 million, or $0.17 per diluted share in the first six months of the prior year. Excluding impairment charges recorded in both years, the Company's net income would have been $66.4 million, or $0.37 per diluted share, for the first six months in 2010 compared to net income of $37.6 million, or $0.21 per diluted share for the comparable period last year.
Sales
Net sales for the quarter increased 10.8% to $465.4 million from $419.9 million in last year's second quarter. Consolidated comparable store sales increased 6.4% for the quarter compared to a 1.3% increase for the like period last year. The Chico's/Soma Intimates brands' comparable store sales increased 4.3% compared to a 0.4% increase for the like period last year, and the White House | Black Market ("WH|BM") brand's comparable store sales increased 11.2% compared to a 3.7% increase for the same period last year. Direct-to-consumer sales, not included in comparable store sales, increased approximately 36%, to $27.6 million for the 2010 second quarter over last year's second quarter.
Gross Margin
Gross margin for the quarter increased 12.2% to $259.2 million from $231.0 million in last year's second quarter. Gross margin, expressed as a percentage of net sales, increased 70 basis points to 55.7% from 55.0% in the last year's second quarter. The gross margin rate improvement was primarily attributable to higher margins for the WH|BM brand and continued gross margin improvement at Chico's outlet stores resulting from increased penetration of made-for-outlet product. These improvements were partially offset by decreased merchandise margins at Chico's front-line stores primarily due to higher markdowns in the month of July.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") for the quarter increased to $211.8 million from $207.0 million in last year's second quarter. SG&A dollars increased primarily due to higher store and direct operating costs associated with approximately 50 net new stores opened since last year's second quarter and the planned increase in marketing expenses. As a percentage of net sales, SG&A for the quarter decreased 380 basis points compared to last year's second quarter. Excluding the impairment charges recognized in the second quarter of last year, the SG&A rate improved 260 basis points as a percentage of net sales due primarily to the leverage resulting from the comparable store sales increase.
Store and direct operating expenses increased by $7.7 million in the second quarter, primarily due to increased occupancy expense, store labor costs, and higher credit card fees associated with approximately 50 net new opened stores over last year and higher sales volume versus last year. However, expressed as a percentage of net sales, store and direct operating expenses decreased 200 basis points due to the leverage resulting from the comparable store sales increase.
Marketing expenses increased $1.8 million in the second quarter primarily due to increased television, online and print media campaigns.
Inventories
End of quarter inventory increased $16.7 million or approximately 12.8% from last year's second quarter. Excluding an incremental $6.8 million of in-transit inventories and inventory earmarked for 18 net new stores slated for third quarter over last year, inventories per selling square foot were up only 1.4% over the end of second quarter last year.
Cash and Marketable Securities
Cash and marketable securities at the end of the quarter increased to $487.4 million from $377.5 million at the end of the second 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 first six months of 2010 decreased by $34.4 million over the same period last year primarily due to changes in working capital offset by higher net income. For the first half of fiscal 2010, the Company's capital expenditures totaled $34.4 million compared to $36.2 million for the same period last year.
Share Repurchase Program
The Board of Directors recently authorized the repurchase of up to $200 million of the Company's outstanding common stock, through January 2013. Repurchases under the program will be made in open market or privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18. The Company intends to fund the repurchase program from cash on hand and retire any shares repurchased. The Company, however, has no obligation to repurchase shares under this authorization, and the timing, actual number and value of shares to be purchased will depend on the performance of Chico's stock price and other market conditions.
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 1,128 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 55 outlet stores, publishes a catalog during key shopping periods throughout the year, and conducts e-commerce at www.chicos.com.
White House | Black Market currently operates 339 boutique and 18 outlet stores, publishes a catalog highlighting its latest fashions and conducts e-commerce at www.whbm.com.
Soma Intimates is the Company's developing concept with 110 boutique stores and 8 outlet stores today. Soma Intimates also publishes a catalog for its customers and conducts e-commerce at 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, www.chicosfas.com.
Executive Contact:
Robert C. Atkinson
Vice President-Investor Relations
Chico's FAS, Inc.
(239) 274-4199
(Financial Tables Follow)
Chico's FAS, Inc.
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share amounts)
Twenty-Six Weeks Ended
----------------------
July 31, 2010 August 1, 2009
------------- --------------
Amount % of Amount % of
------ Sales ------ Sales
----- -----
Net Sales:
Chico's/Soma Intimates $656,360 69.3 $582,524 70.1
White House | Black Market 290,599 30.7 248,033 29.9
Net sales 946,959 100.0 830,557 100.0
Cost of goods sold 406,173 42.9 366,128 44.1
------- ---- ------- ----
Gross margin 540,786 57.1 464,429 55.9
Selling, general and
administrative
expenses:
Store and direct operating
expenses 332,679 35.1 317,375 38.2
Marketing 47,091 5.0 34,002 4.1
National Store Support
Center 57,782 6.1 54,235 6.5
Impairment charges 822 0.1 13,026 1.6
--- --- ------ ---
Total selling, general and 438,374 46.3 418,638 50.4
administrative expenses ----
Income from operations 102,412 10.8 45,791 5.5
Interest income (expense),
net 844 0.1 1,003 0.1
--- --- ----- ---
Income before income taxes 103,256 10.9 46,794 5.6
Income tax provision 37,400 3.9 17,400 2.1
------ --- ------ ---
Net income $65,856 7.0 $29,394 3.5
======= === ======= ===
Per share data:
Net income per common
share-basic $0.37 $0.17
===== =====
Net income per common &
common $0.37 $0.17
equivalent share-diluted ===== =====
Weighted average common
shares 177,417 177,192
outstanding-basic ======= =======
Weighted average common &
common 178,807 178,021
equivalent shares
outstanding-diluted ======= =======
Dividends declared per
share $0.12 -
===== ===
Thirteen Weeks Ended
--------------------
July 31, 2010 August 1, 2009
------------- --------------
Amount % of Amount % of
------ Sales ------ Sales
----- -----
Net Sales:
Chico's/Soma Intimates $319,660 68.7 $294,602 70.2
White House | Black Market 145,711 31.3 125,313 29.8
Net sales 465,371 100.0 419,915 100.0
Cost of goods sold 206,164 44.3 188,874 45.0
------- ---- ------- ----
Gross margin 259,207 55.7 231,041 55.0
Selling, general and
administrative
expenses:
Store and direct operating
expenses 164,853 35.4 157,180 37.4
Marketing 18,011 3.9 16,168 3.9
National Store Support
Center 28,982 6.2 28,701 6.8
Impairment charges - - 4,968 1.2
--- --- ----- ---
Total selling, general and 211,846 45.5 207,017 49.3
administrative expenses ------- ---- -------
Income from operations 47,361 10.2 24,024 5.7
Interest income (expense),
net 394 0.0 (19) 0.0
--- --- --- ---
Income before income taxes 47,755 10.2 24,005 5.7
Income tax provision 17,300 3.7 9,100 2.2
------ --- ----- ---
Net income $30,455 6.5 $14,905 3.5
======= === ======= ===
Per share data:
Net income per common
share-basic $0.17 $0.08
===== =====
Net income per common &
common $0.17 $0.08
equivalent share-diluted ===== =====
Weighted average common
shares 177,499 177,228
outstanding-basic ======= =======
Weighted average common &
common 178,774 178,566
equivalent shares
outstanding-diluted ======= =======
Dividends declared per
share $0.04 -
===== ===
Chico's FAS, Inc.
Consolidated Balance Sheets
(in thousands)
July 31, January 30, August 1,
2010 2010 2009
---- ---- ----
(Unaudited) (Unaudited)
ASSETS
Current Assets:
Cash and cash
equivalents $17,559 $37,043 $44,143
Marketable
securities, at
fair value 469,829 386,500 333,367
Receivables 7,483 3,922 6,110
Income tax
receivable 657 312 1,156
Inventories 146,899 138,516 130,238
Prepaid expenses 27,018 24,023 26,088
Deferred taxes 9,823 9,664 15,555
----- ----- ------
Total Current
Assets 679,268 599,980 556,657
Property and Equipment:
Land and land
improvements 42,080 21,978 20,293
Building and
building
improvements 85,628 82,169 83,600
Equipment,
furniture and
fixtures 406,682 388,392 385,503
Leasehold
improvements 418,585 412,834 416,003
------- ------- -------
Total Property and
Equipment 952,975 905,373 905,399
Less accumulated
depreciation and
amortization (425,498) (383,844) (367,151)
-------- -------- --------
Property and
Equipment, Net 527,477 521,529 538,248
Other Assets:
Goodwill 96,774 96,774 96,774
Other intangible
assets 38,930 38,930 38,930
Deferred taxes 39,597 36,321 38,261
Other assets, net 4,940 25,269 27,131
----- ------ ------
Total Other Assets 180,241 197,294 201,096
------- ------- -------
$1,386,986 $1,318,803 $1,296,001
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $101,584 $79,219 $82,827
Accrued
liabilities 93,603 95,862 108,719
Current portion of
deferred
liabilities 19,681 19,625 19,160
------ ------ ------
Total Current
Liabilities 214,868 194,706 210,706
Noncurrent Liabilities:
Deferred
liabilities 137,437 142,179 152,800
Stockholders' Equity:
Common stock 1,789 1,781 1,774
Additional paid-
in capital 276,000 268,109 259,331
Retained earnings 756,043 711,624 671,372
Other accumulated
comprehensive
income 849 404 18
--- --- ---
Total
Stockholders'
Equity 1,034,681 981,918 932,495
--------- ------- -------
$1,386,986 $1,318,803 $1,296,001
========== ========== ==========
Chico's FAS, Inc.
Consolidated Cash Flow Statements
(Unaudited)
(in thousands)
Twenty-Six Weeks Ended
----------------------
July 31, August 1,
2010 2009
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $65,856 $29,394
------- -------
Adjustments to reconcile net income
to net cash 46,636 48,630
provided by operating activities -
Depreciation and amortization
Deferred tax (benefit) expense (3,628) 2,501
Stock-based compensation expense 5,950 4,177
Excess tax benefit from stock-based
compensation (1,011) (115)
Impairment charges 822 13,026
Deferred rent expense, net (4,361) (5,787)
Loss on disposal of property and
equipment 992 711
(Increase) decrease in assets - (3,578) 2,048
Receivables, net
Income tax receivable (346) 10,550
Inventories (8,382) 2,175
Prepaid expenses and other (2,666) (4,416)
Increase (decrease) in liabilities - 15,210 26,285
Accounts payable
Accrued and other deferred
liabilities (1,574) 15,183
------ ------
Total adjustments 44,064 114,968
--- ----
Net cash provided by operating
activities 109,920 144,362
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (82,884) (91,331)
Purchases of property and equipment (34,380) (36,235)
------- -------
Net cash used in investing activities (117,264) (127,566)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
stock 1,378 773
Excess tax benefit from stock-based
compensation 1,011 115
Dividends paid (14,282) -
Repurchase of common stock (247) (90)
---- ---
Net cash (used in) provided by
financing activities (12,140) 798
------- ---
Net (decrease) increase in cash and
cash equivalents (19,484) 17,594
CASH AND CASH EQUIVALENTS, Beginning
of period 37,043 26,549
------ ------
CASH AND CASH EQUIVALENTS, End of
period $17,559 $44,143
======= =======
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:
Chico's FAS, Inc.
Non-GAAP to GAAP Reconciliation of Net Income and Diluted EPS
(in thousands, except per share amounts)
Twenty-Six Weeks Ended Thirteen Weeks Ended
Net income: July 31, August 1, July 31, August 1,
----------- 2010 2009 2010 2009
---- ---- ---- ----
GAAP basis $65,856 $29,394 $30,455 $14,905
Add: Impact
of
impairment
charges 822 13,026 - 4,968
Less: Tax
effect on
impairment
charges (298) (4,846) - (1,883)
Non-GAAP
adjusted
basis $66,380 $37,574 $30,455 $17,990
======= ======= ======= =======
Net income
per diluted
share:
------------
GAAP basis $0.37 $0.17 $0.17 $0.08
Add: Impact
of
impairment
charges, net
of tax 0.00 0.04 - 0.02
---- ---- --- ----
Non-GAAP
adjusted
basis $0.37 $0.21 $0.17 $0.10
===== ===== ===== =====
Chico's FAS, Inc.
Boutique Count and Square Footage
As of July 31, 2010
As of New As of
5/1/2010 Stores Closures 7/31/2010
-------- ------ -------- ---------
Store count:
Chico's
frontline
boutiques 598 2 (2) 598
Chico's outlets 50 3 - 53
WH|BM frontline
boutiques 334 3 - 337
WH|BM outlets 17 1 - 18
Soma frontline
boutiques 95 10 - 105
Soma outlets 5 2 - 7
--- --- --- ---
Total Chico's
FAS 1,099 21 (2) 1,118
===== === === =====
Remodels/
Relos and
As of New change in As of
5/1/2010 Stores Closures SSF 7/31/2010
-------- ------ -------- --- ---------
Net selling
square footage:
Chico's
frontline
boutiques 1,608,645 3,349 (3,775) (1,521) 1,606,698
Chico's outlets 135,820 6,555 - - 142,375
WH|BM frontline
boutiques 687,485 6,468 - 2,065 696,018
WH|BM outlets 32,712 1,979 - - 34,691
Soma frontline
boutiques 183,816 21,469 - (538) 204,747
Soma outlets 9,277 3,569 - - 12,846
Total Chico's
FAS 2,657,755 43,389 (3,775) 6 2,697,375
========= ====== ====== === =========
SOURCE Chico's FAS, Inc.