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Chico's FAS, Inc. Reports 39% Increase in Third Quarter Earnings Per Share to $0.25



Chico's FAS, Inc. Reports 39% Increase in Third Quarter Earnings Per Share to
                                    $0.25

-- 9.9% increase in third quarter comparable sales

-- 15th consecutive quarter of double digit earnings per share growth

-- 31% increase in year-to-date earnings per share to a record $0.89

PR Newswire

FORT MYERS, Fla., Nov. 20, 2012

FORT MYERS, Fla., Nov. 20, 2012 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS)
today announced its financial results for the fiscal 2012 third quarter and
thirty-nine weeks ended October 27, 2012.

(Logo:  http://photos.prnewswire.com/prnh/20110920/FL71045LOGO)

For the third quarter, the Company reported net income of $41.7 million, an
increase of 57.4% compared to net income of $26.5 million in last year's third
quarter, and earnings per diluted share of $0.25, an increase of 56.3%
compared to $0.16 per diluted share in last year's third quarter. Excluding
non-recurring acquisition and integration costs related to the Boston Proper
acquisition, the Company's third quarter earnings per diluted share were
$0.25, an increase of 38.9% compared to $0.18 per diluted share in last year's
third quarter. These results represent the highest third-quarter earnings per
share since 2005.

For the thirty-nine weeks ended October 27, 2012, the Company reported net
income of $148.7 million, an increase of 28.4% compared to net income of
$115.8 million in the same period last year, and record earnings per diluted
share of $0.89, an increase of 34.8% compared to $0.66 per diluted share in
the same period last year. Excluding non-recurring acquisition and integration
costs related to the Boston Proper acquisition, the Company's earnings per
diluted share for the thirty-nine weeks ended October 27, 2012 were a record
$0.89, an increase of 30.9% compared to $0.68 per diluted share for the same
period last year.

Net Sales

For the third quarter, net sales were $636.7 million, an increase of 18.2%
compared to $538.5 million in last year's third quarter, reflecting comparable
sales growth of 9.9%, square footage increase of 8.2%, and Boston Proper sales
for seven incremental weeks of $16.7 million.  The 9.9% increase in comparable
sales for the third quarter was on top of a 3.7% increase in last year's third
quarter, for a two-year stack of 13.6%, and reflected increases in both
average dollar sale and transaction count.  The comparable sales growth
primarily reflected a positive customer response to the fall fashion
assortments and the effectiveness of the Company's innovative marketing plans.

The Chico's/Soma Intimates brands' comparable sales increased 11.6% following
a 0.6% increase in last year's third quarter for a two-year stack of 12.2%,
and the White House | Black Market ("WH|BM") brand's comparable sales
increased 6.4% on top of an 11.0% increase in last year's third quarter for a
two-year stack of 17.4%.

Gross Margin

For the third quarter, gross margin was $364.3 million, an increase of 20.8%
compared to $301.5 million in last year's third quarter.  As a percentage of
net sales, gross margin was 57.2%, a 120 basis point improvement from last
year's third quarter, primarily reflecting a higher level of full-price
selling and effective promotional activities, partially offset by incentive
compensation.

Selling, General and Administrative Expenses

For the third quarter, selling, general and administrative expenses ("SG&A")
were $297.2 million, an increase of 16.8% compared to $254.5 million in last
year's third quarter.  As a percentage of net sales, SG&A was 46.7%, a 60
basis point improvement from last year's third quarter, primarily reflecting
the sales leverage impact on store expenses, partially offset by higher
marketing expenses and incentive compensation.

Inventories

At the end of the third quarter, total inventories were $234.2 million
compared to $247.5 million at the end of the third quarter last year.
Inventories decreased by $13.3 million, or 5.4%, primarily reflecting planned
inventory reductions.   

Share Repurchase Program

During the third quarter of fiscal 2012, the Company repurchased 0.6 million
shares for $11.7 million under its $200 million share repurchase program
announced in November 2011. During the thirty-nine weeks ended October 27,
2012, the Company repurchased a total of 2.5 million shares for $37.4 million,
with $137.7 million remaining under the program at the end of the third
quarter.           

Outlook

The Company's planning assumptions for fiscal 2012 are:

  o Net sales of approximately $2.55 to $2.6 billion, which includes
    comparable sales growth at a mid-single digit percent; 
  o Gross margin rate up approximately 25 to 50 basis points to 2011;
  o SG&A expense, as a percentage of net sales, down approximately 50 basis
    points to 2011;
  o One-time acquisition and integration costs for Boston Proper of
    approximately $4 million pre-tax;
  o Effective tax rate of approximately 38%;
  o Weighted average diluted shares of approximately 165 million, excluding
    the impact of any future share repurchases;
  o Inventories increasing in-line with sales growth; and,
  o Capital expenditures of approximately $155 million.

A conference call to review the third quarter is scheduled for today at 8:30
a.m. EST.  A live webcast of the call can be accessed at the Events Calendar
page of the Chico's FAS, Inc. corporate website at www.chicosfas.com.

ABOUT CHICO'S FAS, INC.

The Company, through its brands – Chico's, White House | Black Market, Soma
Intimates, and Boston Proper, is a women's specialty retailer of private
branded, sophisticated, casual-to-dressy clothing, intimates, complementary
accessories, and other non-clothing items.

The Chico's brand offers women a combination of great style, one-of-a-kind
details and warm personal service. Chico's currently operates 614 boutiques
and 99 outlets throughout the U.S., mails a catalog and offers round-the-clock
shopping at www.chicos.com.

White House | Black Market strives to make women feel beautiful with apparel
and accessories in the honest simplicity of black and white and the
individuality of styles built from it. White House | Black Market currently
operates 401 boutiques and 45 outlets, mails a catalog highlighting its latest
fashions and connects with customers at www.whbm.com.

Soma Intimates offers beautiful and sensual lingerie, loungewear and beauty.
Soma Intimates currently operates 194 boutiques and 16 outlets, mails a
catalog coinciding with key shopping periods and sells direct-to-consumer at
www.soma.com.  

Boston Proper is a leading direct-to-consumer retailer of women's high-end
apparel and accessories. Boston Proper provides unique, distinctive fashion
designed for today's independent, confident and active woman. The merchandise
focus is about creating a daring, modern style with a sensual feel and is
available exclusively through the Boston Proper catalog and website at
www.bostonproper.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 at 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 27, 2012   October 29, 2011   October 27,      October 29,
                                                          2012             2011
                    Amount      % of   Amount      % of   Amount    % of   Amount   % of
                                Sales              Sales            Sales           Sales
Net sales:
Chico's/Soma        $1,251,632  64.9   $1,106,466  68.0   $         64.6   $        66.3
Intimates                                                  411,671         357,208
White House | Black 583,473     30.2   509,677     31.3   197,248   31.0   170,328  31.6
Market
Boston Proper       94,099      4.9    11,010      0.7    27,746    4.4    11,010   2.1
Total net sales     1,929,204   100.0  1,627,153   100.0  636,665   100.0  538,546  100.0
Cost of goods sold  824,132     42.7   698,655     42.9   272,369   42.8   237,038  44.0
Gross margin        1,105,072   57.3   928,498     57.1   364,296   57.2   301,508  56.0
Selling, general
and administrative  864,987     44.8   739,723     45.5   297,190   46.7   254,522  47.3
expenses
Acquisition and     1,321       0.1    4,985       0.3    480       0.0    4,985    0.9
integration costs
Income from         238,764     12.4   183,790     11.3   66,626    10.5   42,001   7.8
operations
Interest income,    633         0.0    1,386       0.1    231       0.0    566      0.1
net
Income before       239,397     12.4   185,176     11.4   66,857    10.5   42,567   7.9
income taxes  
Income tax          90,700      4.7    69,400      4.3    25,200    4.0    16,100   3.0
provision
Net income          $           7.7    $           7.1    $         6.5    $        4.9
                    148,697            115,776             41,657          26,467
Per share data:
Net income per      $                  $                  $                $      
common share-basic  0.89               0.67                0.25            0.16
Net income per
common and common   $                  $                  $                $      
equivalent          0.89               0.66                0.25            0.16
share–diluted
Weighted average
common shares       163,683            170,912            163,253          166,519
outstanding–basic
Weighted average
common and common
                    164,754            172,092            164,411          167,575
equivalent shares
outstanding–diluted
Dividends declared  $                  $                  $                $      
per share           0.1575             0.15                     -                -

 

Chico's FAS, Inc.

Consolidated Balance Sheets

(in thousands)

 
                          October 27, 2012  January 28, 2012  October 29, 2011
                          (Unaudited)                         (Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $    79,102       $    58,919       $    49,485
Marketable securities, at      292,393           188,934           190,328
fair value
Inventories                    234,199           194,469           247,530
Prepaid expenses and           57,436            55,104            56,224
other current assets
Total Current Assets           663,130           497,426           543,567
Property and Equipment,        591,346           550,230           542,362
net
Other Assets:
Goodwill                       238,693           238,693           238,952
Other intangible assets,       128,844           132,112           133,201
net
Other assets, net              6,787             6,691             6,660
Total Other Assets             374,324           377,496           378,813
                          $    1,628,800    $    1,425,152    $    1,464,742
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable          $    137,600      $    100,395      $    144,196
Other current liabilities      178,685           137,714           135,259
Total Current Liabilities      316,285           238,109           279,455
Noncurrent Liabilities:
Deferred liabilities           132,574           125,690           126,486
Deferred taxes                 49,626            52,125            46,611
Total Noncurrent               182,200           177,815           173,097
Liabilities
Stockholders' Equity:
Preferred stock                -                 -                 -
Common stock                   1,663             1,657             1,676
Additional paid-in             338,703           302,612           297,480
capital
Retained earnings              789,743           704,631           712,766
Accumulated other              206               328               268
comprehensive income     
Total Stockholders'            1,130,315         1,009,228         1,012,190
Equity
                          $    1,628,800    $    1,425,152    $    1,464,742

 

Chico's FAS, Inc.

Consolidated Cash Flow Statements

(Unaudited)

(in thousands)

 
                                            Thirty-Nine Weeks Ended
                                            October 27, 2012  October 29, 2011
Cash Flows From Operating Activities:
Net income                                  $    148,697      $    115,776
Adjustments to reconcile net income to net
cash provided by

operating activities —
Depreciation and amortization                    80,085            72,952
Deferred tax (benefit) expense                   (7,809)           11,399
Stock-based compensation expense                 18,931            11,051
Excess tax benefit from stock-based              (6,757)           (1,758)
compensation
Deferred rent and lease credits                  (12,130)          (14,106)
Loss on disposal and impairment of property      2,045             2,603
and equipment
Changes in assets and liabilities, net of
effects of acquisition —
Inventories                                      (39,730)          (73,485)
Prepaid expenses and other assets                2,419             (1,359)
Accounts payable                                 37,205            29,131
Accrued and other liabilities                    66,993            28,805
Net cash provided by operating activities        289,949           181,009
Cash Flows From Investing Activities:
(Increase) decrease in marketable                (103,582)         343,570
securities
Acquisition of Boston Proper, Inc., net of       -                 (212,733)
cash acquired
Purchases of property and equipment, net         (119,922)         (98,174)
Net cash (used in) provided by investing         (223,504)         32,663
activities
Cash Flows From Financing Activities:
Proceeds from issuance of common stock           14,277            3,567
Excess tax benefit from stock-based              6,757             1,758
compensation
Dividends paid                                   (26,266)          (25,888)
Repurchase of common stock                       (41,030)          (157,905)
Cash paid for deferred financing costs           -                 (414)
Net cash used in financing activities            (46,262)          (178,882)
Net increase in cash and cash equivalents        20,183            34,790
Cash and Cash Equivalents, Beginning of          58,919            14,695
period
Cash and Cash Equivalents, End of period    $    79,102       $    49,485

 

Supplemental Detail on Earnings Per Share Calculation

In accordance with accounting guidance, unvested share-based payment awards
that include non-forfeitable rights to dividends, whether paid or unpaid, are
considered participating securities.  As a result, such awards are required to
be included in the calculation of basic earnings per share pursuant to the
"two-class" method.  For the Company, participating securities are comprised
of unvested restricted stock awards. 

Earnings per share is determined using the two-class method, as it is more
dilutive than the treasury stock method.  Basic earnings per share is computed
by dividing net income available to common stockholders by the
weighted-average number of common shares outstanding during the period. 
Diluted earnings per share reflects the dilutive effect of potential common
shares from securities such as stock options and performance-based restricted
stock units.

The following table sets forth the computation of basic and diluted earnings
per share shown on the face of the accompanying consolidated statements of
income (in thousands, except per share amounts):

                            Thirty-Nine Weeks Ended   Thirteen Weeks Ended
                            October 27,  October 29,  October 27,  October 29,
                            2012         2011         2012         2011
Numerator
 
                            $ 148,697    $  115,776   $   41,657   $   26,467
Net income
 

Net income and dividends
declared                      (2,730)       (1,462)       (789)        (362)

allocated to unvested
restricted stock
 

Net income available to     $ 145,967    $  114,314   $   40,868   $   26,105
common

stockholders
Denominator
 
                            163,682,768  170,912,046  163,253,220  166,518,711
Weighted average common
shares outstanding – basic
                                                                    
                              1,070,757
Dilutive effect of                       1,179,739    1,157,510    1,056,062
outstanding awards
 

Weighted average common and                                         
common
                            164,753,525  172,091,785  164,410,730  167,574,773
equivalent shares
outstanding – diluted     
 

Net income per common share
Basic                       $ 0.89       $  0.67      $   0.25     $   0.16
Diluted                     $ 0.89       $  0.66      $   0.25     $   0.16

 

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 certain non-recurring
charges including acquisition and integration costs, 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 27,  October 29,  October 27,  October 29,
                            2012         2011         2012         2011
GAAP basis                  $148,697     $115,776     $41,657      $26,467
Add: Impact of acquisition
and integration costs, net  820          3,533        299          3,533

of tax
Non-GAAP adjusted basis     $149,517     $119,309     $41,956      $30,000
Net income per diluted
share:
GAAP basis                  $0.89        $0.66        $0.25        $0.16
Add: Impact of acquisition
and integration costs, net  0.00         0.02         0.00         0.02

of tax 
Non-GAAP adjusted basis     $0.89        $0.68        $0.25        $0.18

 

Chico's FAS, Inc.

Boutique Count and Square Footage

As of October 27, 2012
                           As of      New               As of
                           7/28/2012  Stores  Closures  10/27/2012
Store count:
Chico's frontline          606        5       –         611
boutiques
Chico's outlets            89         6       –         95
WH|BM frontline            383        17      (1)       399
boutiques
WH|BM outlets              37         6       –         43
Soma frontline boutiques   185        7       (1)       191
Soma outlets               15         1       –         16
Total Chico's FAS, Inc.    1,315      42      (2)       1,355
                                                        Other
                           As of      New               changes in  As of
                           7/28/2012  Stores  Closures  SSF         10/27/2012
Net selling square
footage (SSF):
Chico's frontline          1,645,443  13,685  –         1,096       1,660,224
boutiques
Chico's outlets            227,388    14,553  –         –           241,941
WH|BM frontline            825,746    41,823  (1,836)   2,555       868,288
boutiques
WH|BM outlets              74,202     13,111  –         –           87,313
Soma frontline boutiques   357,798    14,102  (1,810)   (4,620)     365,470
Soma outlets               29,057     1,716   –         –           30,773
Total Chico's FAS, Inc.    3,159,634  98,990  (3,646)   (969)       3,254,009

 

Executive Contact: 
Todd Vogensen
Vice President-Investor Relations 
Chico's FAS, Inc.
(239) 346-4199

SOURCE Chico's FAS, Inc.

Website: http://www.chicos.com
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