- Net sales increased 8.1% to $483 million with comparable store sales increasing 3.1% and direct-to-consumer sales increasing 41%
FORT MYERS, Fla., Nov. 17, 2010 /PRNewswire via COMTEX/ --Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2010 third quarter and nine months ended October 30, 2010.
Net Income and Earnings per Share
The Company reported net income of $28.8 million, or $0.16 per diluted share, for the third quarter compared to net income of $22.7 million, or $0.13 per diluted share, for last year's third quarter.
For the nine months ended October 30, 2010, the Company reported net income of $94.7 million, or $0.53 per diluted share, compared to net income of $52.1 million, or $0.29 per diluted share, reported for the same period last year. Excluding impairment charges recorded in both years, the Company's net income would have been $95.2 million, or $0.53 per diluted share, for the first nine months in 2010 compared to net income of $60.3 million, or $0.34 per diluted share, for the same period last year.
Sales
Net sales for the current quarter increased 8.1% to $483.0 million from $446.9 million in last year's third quarter. Consolidated comparable store sales increased 3.1% for the current quarter compared to a 12.8% increase for the same period last year. The Chico's/Soma Intimates brands' comparable store sales increased 1.5% compared to a 12.2% increase for the same period last year, and the White House | Black Market ("WH|BM") brand's comparable store sales increased 7.1% compared to a 14.4% increase for the same period last year. Direct-to-consumer sales, not included in comparable store sales, increased approximately 41%, to $34.4 million for the 2010 third quarter over last year's third quarter.
Gross Margin
Gross margin for the quarter increased $17.8 million, or approximately 7%, over last year's third quarter. However, expressed as a percentage of net sales, gross margin decreased 60 basis points to 57.0% from 57.6% in last year's third quarter. The gross margin rate decrease was primarily attributable to higher markdowns at Chico's frontline stores due to softer sales experienced earlier in the quarter. However, the decrease in the gross margin rate was partially offset by improved margins at outlet stores mainly due to increased penetration of made-for-outlet product.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") for the third quarter increased $9.9 million, or 4.5%, over last year's third quarter primarily due to higher store and direct operating costs associated with 64 net new stores opened since the end of last year's third quarter accompanied by a $7.0 million planned increase in marketing expenses. As a percentage of net sales, however, SG&A for the quarter decreased 170 basis points compared to last year's third quarter.
Store and direct operating expenses increased by $4.6 million over last year's third quarter primarily due to increased occupancy expense and store labor costs associated with 64 net new stores over last year, accompanied by increased in-store promotions and higher credit card fees due to higher sales volume compared to last year. However, expressed as a percentage of net sales, store and direct operating expenses decreased 190 basis points due to the leverage associated with improved comparable store sales.
Marketing expenses increased $7.0 million over last year's third quarter primarily due to increased television ads, particularly for the Soma brand, as well as increased online and print media campaigns across all three brands. As a percentage of net sales, marketing expenses increased 100 basis points compared to last year's third quarter.
National Store Support Center ("NSSC") expenses, including corporate and other non-brand specific expenses, decreased by $1.6 million from last year's third quarter mainly due to lower performance-based compensation accruals and good expense control. As a percentage of net sales, NSSC expenses decreased by 80 basis points assisted by the leverage associated with improved comparable store sales.
Inventories
End of quarter inventory increased $19.1 million, up 6% per selling square foot, compared to last year's end of third quarter. Excluding inventory purchased for new stores that will open in the fourth quarter, inventories are up 4.5% per square foot at cost. End of quarter inventory for the WH|BM brand increased approximately 10.5% per selling square foot versus down 21.7% per square foot last year, while Chico's brand inventory decreased approximately 1.2% quarter over quarter.
Cash Flow
Net cash provided by operating activities for the first nine months of 2010 decreased by $23.4 million over the same period last year primarily due to the increase in inventory investment accompanied by differences in the timing of accounts payable and accrued liabilities. These uses of cash were partially offset by higher net income. For the first nine months of fiscal 2010, the Company's capital expenditures totaled $58.5 million compared to $51.0 million for the same period last year.
Share Repurchase Program
In August 2010, the Board of Directors authorized the repurchase of up to $200 million of the Company's outstanding common stock, through January 2013. During the third quarter, the Company repurchased 2.1 million shares for $18.7 million. The Company, however, has no obligation to repurchase shares under this authorization, and the timing, actual number and value of any additional shares to be purchased will depend on the performance of Chico's stock price, market conditions and other considerations.
Quarterly Dividend
The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.04 per share on its common stock. The dividend will be payable on December 21, 2010 to Chico's FAS shareholders of record at the close of business on December 7, 2010. While it is the Company's intention to continue to pay a quarterly cash dividend in the future, any decision to pay future cash dividends will be made by the Board of Directors and will depend on future earnings, financial condition and other factors.
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 1,153 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 63 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 344 boutique and 21 outlet stores, publishes a catalog highlighting its latest fashions and conducts e-commerce at http://www.whbm.com/.
Soma Intimates is the Company's developing concept with 119 boutique stores and 8 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/.
(Financial Tables Follow)
Chico's FAS, Inc.
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share amounts)
|
|
|
Thirty-Nine Weeks Ended
|
|
Thirteen Weeks Ended
|
|
|
October 30, 2010
|
|
October 31, 2009
|
|
October 30, 2010
|
|
October 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
% of Sales
|
|
Amount
|
|
% of Sales
|
|
Amount
|
|
% of Sales
|
|
Amount
|
|
% of Sales
|
|
Net Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chico's/Soma Intimates
|
$ 993,989
|
|
69.5
|
|
$ 902,050
|
|
70.6
|
|
$337,629
|
|
69.9
|
|
$319,526
|
|
71.5
|
|
White House | Black Market
|
435,992
|
|
30.5
|
|
375,370
|
|
29.4
|
|
145,393
|
|
30.1
|
|
127,337
|
|
28.5
|
|
Net sales
|
1,429,981
|
|
100.0
|
|
1,277,420
|
|
100.0
|
|
483,022
|
|
100.0
|
|
446,863
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
614,128
|
|
42.9
|
|
555,713
|
|
43.5
|
|
207,955
|
|
43.0
|
|
189,585
|
|
42.4
|
|
Gross margin
|
815,853
|
|
57.1
|
|
721,707
|
|
56.5
|
|
275,067
|
|
57.0
|
|
257,278
|
|
57.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store and direct operating expenses
|
502,404
|
|
35.1
|
|
482,481
|
|
37.8
|
|
169,726
|
|
35.1
|
|
165,106
|
|
37.0
|
|
Marketing
|
79,019
|
|
5.5
|
|
58,976
|
|
4.6
|
|
31,928
|
|
6.6
|
|
24,974
|
|
5.6
|
|
National Store Support Center
|
87,035
|
|
6.1
|
|
85,123
|
|
6.7
|
|
29,252
|
|
6.1
|
|
30,887
|
|
6.9
|
|
Impairment charges
|
822
|
|
0.1
|
|
13,026
|
|
1.0
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Total selling, general and administrative expenses
|
669,280
|
|
46.8
|
|
639,606
|
|
50.1
|
|
230,906
|
|
47.8
|
|
220,967
|
|
49.5
|
|
Income from operations
|
146,573
|
|
10.3
|
|
82,101
|
|
6.4
|
|
44,161
|
|
9.2
|
|
36,311
|
|
8.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net
|
1,327
|
|
0.0
|
|
1,337
|
|
0.1
|
|
483
|
|
0.1
|
|
334
|
|
0.1
|
|
Income before income taxes
|
147,900
|
|
10.3
|
|
83,438
|
|
6.5
|
|
44,644
|
|
9.3
|
|
36,645
|
|
8.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
53,200
|
|
3.7
|
|
31,300
|
|
2.4
|
|
15,800
|
|
3.3
|
|
13,900
|
|
3.1
|
|
Net income
|
$ 94,700
|
|
6.6
|
|
$ 52,138
|
|
4.1
|
|
$ 28,844
|
|
6.0
|
|
$ 22,745
|
|
5.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share-basic
|
$ 0.53
|
|
|
|
$ 0.29
|
|
|
|
$ 0.16
|
|
|
|
$ 0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common & common equivalent share-diluted
|
$ 0.53
|
|
|
|
$ 0.29
|
|
|
|
$ 0.16
|
|
|
|
$ 0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding-basic
|
177,028
|
|
|
|
177,348
|
|
|
|
176,215
|
|
|
|
177,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common & common equivalent shares outstanding-diluted
|
178,320
|
|
|
|
178,516
|
|
|
|
177,262
|
|
|
|
179,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share
|
$ 0.12
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chico's FAS, Inc.
Consolidated Balance Sheets
(in thousands)
|
|
|
October 30,
|
|
January 30,
|
|
October 31,
|
|
|
2010
|
|
2010
|
|
2009
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
ASSETS
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
$ 21,930
|
|
$ 37,043
|
|
$ 60,985
|
|
Marketable securities, at fair value
|
483,622
|
|
386,500
|
|
362,322
|
|
Receivables
|
4,901
|
|
3,922
|
|
5,845
|
|
Income tax receivable
|
12,814
|
|
312
|
|
728
|
|
Inventories
|
179,110
|
|
138,516
|
|
160,030
|
|
Prepaid expenses
|
23,442
|
|
24,023
|
|
24,152
|
|
Deferred taxes
|
14,347
|
|
9,664
|
|
7,524
|
|
Total Current Assets
|
740,166
|
|
599,980
|
|
621,586
|
|
|
|
|
|
|
|
|
Property and Equipment:
|
|
|
|
|
|
|
Land and land improvements
|
42,351
|
|
21,978
|
|
20,311
|
|
Building and building improvements
|
87,246
|
|
82,169
|
|
84,062
|
|
Equipment, furniture and fixtures
|
420,420
|
|
388,392
|
|
395,225
|
|
Leasehold improvements
|
425,237
|
|
412,834
|
|
416,003
|
|
Total Property and Equipment
|
975,254
|
|
905,373
|
|
915,601
|
|
Less accumulated depreciation and amortization
|
(447,354)
|
|
(383,844)
|
|
(386,999)
|
|
Property and Equipment, Net
|
527,900
|
|
521,529
|
|
528,602
|
|
|
|
|
|
|
|
|
Other Assets:
|
|
|
|
|
|
|
Goodwill
|
96,774
|
|
96,774
|
|
96,774
|
|
Other intangible assets
|
38,930
|
|
38,930
|
|
38,930
|
|
Deferred taxes
|
1,027
|
|
36,321
|
|
39,398
|
|
Other assets, net
|
5,112
|
|
25,269
|
|
27,323
|
|
Total Other Assets
|
141,843
|
|
197,294
|
|
202,425
|
|
|
$ 1,409,909
|
|
$ 1,318,803
|
|
$ 1,352,613
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
Current Liabilities:
|
|
|
|
|
|
|
Accounts payable
|
$ 100,650
|
|
$ 79,219
|
|
$ 97,238
|
|
Accrued liabilities
|
108,377
|
|
95,862
|
|
123,069
|
|
Current portion of deferred liabilities
|
19,905
|
|
19,625
|
|
19,517
|
|
Total Current Liabilities
|
228,932
|
|
194,706
|
|
239,824
|
|
|
|
|
|
|
|
|
Noncurrent Liabilities:
|
|
|
|
|
|
|
Deferred liabilities
|
132,665
|
|
142,179
|
|
150,538
|
|
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
Common stock
|
1,776
|
|
1,781
|
|
1,779
|
|
Additional paid-in capital
|
279,227
|
|
268,109
|
|
266,112
|
|
Retained earnings
|
766,619
|
|
711,624
|
|
694,116
|
|
Other accumulated comprehensive income
|
690
|
|
404
|
|
244
|
|
Total Stockholders' Equity
|
1,048,312
|
|
981,918
|
|
962,251
|
|
|
$ 1,409,909
|
|
$ 1,318,803
|
|
$ 1,352,613
|
|
|
|
|
|
|
|
|
|
|
Chico's FAS, Inc.
Consolidated Cash Flow Statements
(Unaudited)
(in thousands)
|
|
|
Thirty-Nine Weeks Ended
|
|
|
October 30,
2010
|
October 31,
2009
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
Net income
|
$ 94,700
|
$ 52,138
|
|
Adjustments to reconcile net income to net cash provided by operating activities --
Depreciation and amortization
|
70,218
|
72,407
|
|
Deferred tax expense
|
29,828
|
9,394
|
|
Stock-based compensation expense
|
8,874
|
6,543
|
|
Excess tax benefit from stock-based compensation
|
(1,223)
|
(1,473)
|
|
Impairment charges
|
822
|
13,026
|
|
Deferred rent expense, net
|
(6,245)
|
(7,721)
|
|
Loss on disposal of property and equipment
|
1,090
|
1,361
|
|
(Increase) decrease in assets --
Receivables, net
|
(978)
|
2,314
|
|
Income tax receivable
|
(12,503)
|
10,978
|
|
Inventories
|
(40,593)
|
(27,617)
|
|
Prepaid expenses and other
|
737
|
(2,671)
|
|
Increase in liabilities --
Accounts payable
|
21,431
|
40,696
|
|
Accrued and other deferred liabilities
|
10,749
|
30,884
|
|
Total adjustments
|
82,207
|
148,121
|
|
Net cash provided by operating activities
|
176,907
|
200,259
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
Purchases of marketable securities
|
(96,836)
|
(120,061)
|
|
Purchases of property and equipment
|
(58,501)
|
(51,016)
|
|
Net cash used in investing activities
|
(155,337)
|
(171,077)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
Proceeds from issuance of common stock
|
2,137
|
3,960
|
|
Excess tax benefit from stock-based compensation
|
1,223
|
1,473
|
|
Dividends paid
|
(21,389)
|
-
|
|
Repurchase of common stock
|
(18,654)
|
(179)
|
|
Net cash (used in) provided by financing activities
|
(36,683)
|
5,254
|
|
Net (decrease) increase in cash and cash equivalents
|
(15,113)
|
34,436
|
|
CASH AND CASH EQUIVALENTS, Beginning of period
|
37,043
|
26,549
|
|
CASH AND CASH EQUIVALENTS, End of period
|
$ 21,930
|
$ 60,985
|
|
|
|
|
|
|
|
|
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)
|
|
|
Thirty-Nine Weeks Ended
|
|
Thirteen Weeks Ended
|
|
|
|
|
|
|
|
|
|
|
Net income:
|
October 30,
2010
|
|
October 31,
2009
|
|
October 30,
2010
|
|
October 31,
2009
|
|
|
|
|
|
|
|
|
|
|
GAAP basis
|
$94,700
|
|
$52,138
|
|
$28,844
|
|
$22,745
|
|
Add: Impact of impairment charges
|
822
|
|
13,026
|
|
-
|
|
-
|
|
Less: Tax effect on impairment charges
|
(296)
|
|
(4,886)
|
|
-
|
|
-
|
|
Non-GAAP adjusted basis
|
$95,226
|
|
$60,278
|
|
$28,844
|
|
$22,745
|
|
|
|
|
|
|
|
|
|
|
Net income per diluted share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP basis
|
$ 0.53
|
|
$ 0.29
|
|
$ 0.16
|
|
$ 0.13
|
|
Add: Impact of impairment charges, net of tax
|
0.00
|
|
0.05
|
|
-
|
|
-
|
|
Non-GAAP adjusted basis
|
$ 0.53
|
|
$ 0.34
|
|
$ 0.16
|
|
$ 0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chico's FAS, Inc.
Boutique Count and Square Footage
As of October 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
New
|
|
|
|
As of
|
|
|
|
|
|
|
7/31/2010
|
|
Stores
|
|
Closures
|
|
10/30/2010
|
|
|
|
Store count:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chico's frontline boutiques
|
|
|
598
|
|
-
|
|
-
|
|
598
|
|
|
|
Chico's outlets
|
|
|
53
|
|
7
|
|
-
|
|
60
|
|
|
|
WH|BM frontline boutiques
|
|
|
337
|
|
7
|
|
-
|
|
344
|
|
|
|
WH|BM outlets
|
|
|
18
|
|
2
|
|
-
|
|
20
|
|
|
|
Soma frontline boutiques
|
|
|
105
|
|
9
|
|
-
|
|
114
|
|
|
|
Soma outlets
|
|
|
7
|
|
1
|
|
-
|
|
8
|
|
|
|
Total Chico's FAS, Inc.
|
|
|
1,118
|
|
26
|
|
-
|
|
1,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remodels/
|
|
|
|
|
|
|
|
|
|
|
|
|
Relos and
|
|
|
|
|
|
|
As of
|
|
New
|
|
|
|
change in
|
|
As of
|
|
|
|
|
7/31/2010
|
|
Stores
|
|
Closures
|
|
SSF
|
|
10/30/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net selling square footage (SSF):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chico's frontline boutiques
|
|
|
1,606,698
|
|
-
|
|
-
|
|
2,209
|
|
1,608,907
|
|
Chico's outlets
|
|
|
142,375
|
|
16,229
|
|
-
|
|
-
|
|
158,604
|
|
WH|BM frontline boutiques
|
|
|
696,018
|
|
16,524
|
|
-
|
|
(461)
|
|
712,081
|
|
WH|BM outlets
|
|
|
34,691
|
|
3,763
|
|
-
|
|
-
|
|
38,454
|
|
Soma frontline boutiques
|
|
|
204,747
|
|
28,223
|
|
-
|
|
(130)
|
|
232,840
|
|
Soma outlets
|
|
|
12,846
|
|
1,971
|
|
-
|
|
-
|
|
14,817
|
|
Total Chico's FAS, Inc.
|
|
|
2,697,375
|
|
66,710
|
|
-
|
|
1,618
|
|
2,765,703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Contact:
Robert C. Atkinson
Vice President-Investor Relations
Chico's FAS, Inc.
(239) 274-4199
SOURCE Chico's FAS, Inc.