Press release from PR Newswire
Chico's FAS, Inc. Reports Fourth Quarter Earnings Per Share up 25% to $0.15
Wednesday, February 22, 2012
Chico's FAS, Inc. Reports Fourth Quarter Earnings Per Share up 25% to $0.1507:15 EST Wednesday, February 22, 2012-- 8.7% comparable sales increase in fourth quarter - 11th consecutive positive quarter -- 20% quarterly sales increase, including first full quarter of Boston Proper -- Annual sales over $2 billion for first time, with comparable sales increasing 8.2% -- Full year EPS up 31%, excluding Boston Proper acquisition costsFORT MYERS, Fla., Feb. 22, 2012 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2011 fourth quarter and fiscal year ended January 28, 2012.(Logo: http://photos.prnewswire.com/prnh/20110920/FL71045LOGO) Net Income and Earnings per ShareFor the fourth quarter, net income was $25.1 million, or $0.15 per diluted share, an earnings per share increase of 25% compared to net income of $20.7 million, or $0.12 per diluted share, for last year's fourth quarter.For the fiscal year ended January 28, 2012, excluding non-recurring acquisition and integration costs, net income was $144.4 million, or $0.84 per diluted share, an earnings per share increase of 31% compared to net income of $115.4 million, or $0.64 per diluted share in fiscal 2010. For fiscal 2011, net income, including acquisition and integration costs, was $140.9 million, or $0.82 per diluted share.Net SalesFor the fourth quarter, net sales were $569.2 million, an increase of 19.8% compared to $475.0 million in last year's fourth quarter. The increase reflects a comparable sales increase of 8.7%, an 8.7% increase in square footage and $28.5 million in sales for Boston Proper. The consolidated comparable sales increase of 8.7% for the fourth quarter was on top of a 4.5% increase for last year's fourth quarter, and reflects increases in both average dollar sale and transaction count. The Chico's/Soma Intimates brands' comparable sales increased 5.5% on top of a 4.4% increase in last year's fourth quarter and the White House | Black Market ("WH|BM") brand's comparable sales increased 15.4% on top of a 4.7% increase in last year's fourth quarter. Gross MarginFor the fourth quarter, gross margin was $297.9 million, an increase of 17.9% compared to $252.7 million in last year's fourth quarter. As a percentage of net sales, gross margin was 52.3%, which was a 90 basis point decrease from last year's fourth quarter. This decrease was primarily attributable to planned strategic use of Chico's brand inventory for traffic-driving promotions during the fourth quarter and the inclusion of Boston Proper's results, which were partially offset by higher margins at the WH|BM and Soma Intimates brands due to increased full-price selling and effective promotional activities.Selling, General and Administrative ExpensesFor the fourth quarter, selling, general and administrative expenses (SG&A) were $259.3 million, an increase of 16.7% compared to $222.2 million in last year's fourth quarter. As a percentage of net sales, SG&A was 45.5%, which was a 130 basis point decrease from last year's fourth quarter. This decrease was primarily attributable to the sales leverage impact on store expenses and the inclusion of Boston Proper's results, partially offset by incremental marketing expenses.Tax RateFor the fourth quarter, the effective tax rate was 35.3% compared to 33.0% in last year's fourth quarter. The effective tax rate for last year reflected relatively higher levels of favorable state tax settlements.InventoriesExcluding $15.1 million of inventory related to Boston Proper, inventories increased approximately $19.6 million or 12.3% over last year, of which $11 million was for year-over-year new stores and $3 million was due to higher average unit costs. At the end of the fourth quarter, total inventories were $194.5 million compared to $159.8 million for the fourth quarter last year. Cash and Marketable SecuritiesCash and marketable securities at the end of the year totaled $247.9 million compared to $548.7 million at the end of last year, reflecting earnings in 2011, partially offset by $213 million for the acquisition of Boston Proper, $132 million in capital expenditures, $183 million of share repurchases, or 14 million shares, and $34 million in dividend payments. Share Repurchase ProgramDuring the fourth quarter of 2011, the Company repurchased 2.4 million shares for $25.0 million under its new $200 million share repurchase program announced in November. OutlookFor fiscal 2012, including Boston Proper, the Company's planning assumptions are:Net sales increase at a mid teens percentage rate to approximately $2.5 billion, which includes comparable sales growth at a mid-single-digit rate, approximately 9% growth in store square footage and approximately $30 million in sales from the 53rd week; Gross margin rate down approximately 50 basis points;SG&A expense, as a percentage of net sales, down approximately 50 basis points;Effective tax rate to be approximately 38%;Inventories to be in-line with sales growth; andCapital expenditures of approximately $150 million.A conference call to review the fourth quarter and year results is scheduled for today at 8:30 a.m. EST. A live webcast of the call will be available at the Events Calendar page of the Chico's FAS, Inc. corporate website, 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 gift 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 601 boutiques and 84 outlets throughout the U.S., publishes a monthly 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 363 boutiques and 27 outlets, publishes 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 169 boutiques and 17 outlets, publishes 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, 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 visit www.chicosfas.com.(Financial Tables Follow)Chico's FAS, Inc.Consolidated Statements of Income(in thousands, except per share amounts)Fifty-Two Weeks EndedThirteen Weeks EndedJanuary 28, 2012January 29, 2011January 28, 2012January 29, 2011(Unaudited)(Unaudited)(Unaudited)Amount% of Sales Amount % of SalesAmount% of Sales Amount % of SalesNet Sales:Chico's/Soma Intimates$ 1,460,51866.5$1,314,64969.0$354,05262.2$320,66067.5White House | Black Market696,35831.7590,30531.0186,68132.8154,31432.5Boston Proper39,4841.8??28,4745.0?? Total net sales2,196,360100.01,904,954100.0569,207100.0474,974100.0Cost of goods sold969,98944.2836,37943.9271,33547.7222,25146.8 Gross margin1,226,37155.81,068,57556.1297,87252.3252,72353.2Selling, general and administrative expenses:Selling, general and administrative expenses 998,86145.5891,49346.8259,13845.5222,21446.8Acquisition and integration costs5,1330.2??1480.0?? Total selling, general and administrative expenses 1,003,99445.7891,49346.8259,28645.5222,21446.8 Income from operations222,37710.1177,0829.338,5866.830,5096.4Interest income, net1,5970.11,7120.12120.03850.1 Income before income taxes223,97410.2178,7949.438,7986.830,8946.5Income tax provision83,1003.863,4003.313,7002.410,2002.1 Net income $ 140,8746.4$ 115,3946.1$ 25,0984.4$ 20,6944.4Per share data:Net income per common share-basic$ 0.82$ 0.65$ 0.15$ 0.12Net income per common & common equivalent share?diluted$ 0.82$ 0.64$ 0.15$ 0.12Weighted average common sharesoutstanding?basic169,153176,778163,871176,029Weighted average common & commonequivalent shares outstanding?diluted170,250178,034164,801177,197Dividends declared per share$ 0.20$ 0.16$ 0.05$ 0.04Chico's FAS, Inc.Consolidated Balance Sheets(in thousands)January 28,January 29,January 30,201220112010(Unaudited)ASSETS Current Assets: Cash and cash equivalents$ 58,919$ 14,695$ 37,043 Marketable securities, at fair value188,934534,019386,500 Inventories194,469159,814138,516 Prepaid expenses and other current assets55,10448,23737,921 Total Current Assets497,426756,765599,980 Property and Equipment, Net550,230517,377521,529Other Assets: Goodwill 238,69396,77496,774 Other intangible assets132,11238,93038,930 Other assets, net6,6916,17561,590 Total Other Assets377,496141,879197,294$ 1,425,152$ 1,416,021$ 1,318,803LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities: Accounts payable$ 100,395$ 106,665$ 79,219 Other current liabilities137,714114,612115,487 Total Current Liabilities238,109221,277194,706Noncurrent Liabilities: Deferred liabilities125,690129,837142,179 Deferred taxes52,125?? Total Deferred Liabilities177,815129,837142,179Stockholders' Equity: Preferred stock??? Common stock1,6571,7791,781 Additional paid-in capital302,612282,528268,109 Retained earnings 704,631780,212711,624 Accumulated other comprehensive income 328388404 Total Stockholders' Equity1,009,2281,064,907981,918$ 1,425,152$ 1,416,021$ 1,318,803Chico's FAS, Inc.Consolidated Cash Flow Statements(Unaudited)(in thousands)Fifty-Two Weeks EndedJanuary 28,January 29,20122011CASH FLOWS FROM OPERATING ACTIVITIES: Net income$ 140,874$ 115,394 Adjustments to reconcile net income to net cash provided by operating activities - Depreciation and amortization99,43094,113 Deferred tax expense19,48932,501 Stock-based compensation expense15,19810,548 Excess tax benefit from stock-based compensation(2,643)(2,655) Deferred rent and lease credits(19,073)(16,624) Loss on disposal of property and equipment2,9493,085 (Increase) in assets, net of effects of acquisition - Inventories(20,812)(21,298) Prepaid expenses and other current assets(3,491)(8,946) (Decrease) increase in liabilities, net of effects of acquisition - Accounts payable(14,571)27,446 Accrued and other deferred liabilities37,8316,062 Total adjustments114,307124,232 Net cash provided by operating activities255,181239,626CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of marketable securities(592,962)(579,488) Proceeds from sale of marketable securities937,987431,953 Acquisition of Boston Proper, Inc., net of cash acquired(213,561)? Purchases of property and equipment, net(131,757)(73,045) Net cash used in investing activities(293)(220,580)CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock4,5493,648 Excess tax benefit from stock-based compensation2,6432,655 Dividends paid (34,152)(28,489) Repurchase of common stock(183,290)(19,208) Cash paid for deferred financing costs(414)? Net cash used in financing activities(210,664)(41,394) Net increase (decrease) in cash and cash equivalents44,224(22,348)CASH AND CASH EQUIVALENTS, Beginning of period14,69537,043CASH AND CASH EQUIVALENTS, End of period$58,919$ 14,695SEC 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)Fifty-Two Weeks EndedNet income: January 28, 2012GAAP basis $ 140,874Add: Impact of acquisition and integration costs, net of tax3,574Non-GAAP adjusted basis$ 144,448Net income per diluted share:GAAP basis $ 0.82Add: Impact of acquisition and integration costs, net of tax 0.02Non-GAAP adjusted basis$ 0.84Chico's FAS, Inc.Boutique Count and Square FootageAs of January 28, 2012As of New As of 1/29/2011StoresClosures1/28/2012Store count:Chico's frontline boutiques59716(12)601Chico's outlets6320?83WH|BM frontline boutiques34231(9)364WH|BM outlets216?27Soma frontline boutiques12052(8)164Soma outlets812(3)17Total Chico's FAS, Inc.1,151137(32)1,256Remodels/Relos andAs of New change in As of 1/29/2011StoresClosuresSSF1/28/2012Net selling square footage (SSF):Chico's frontline boutiques1,606,39442,107(28,686)11,8591,631,674Chico's outlets166,12347,630?(278)213,475WH|BM frontline boutiques710,48071,132(19,903)6,733768,442WH|BM outlets40,42112,492?35053,263Soma frontline boutiques246,688104,661(18,521)(5,970)326,858Soma outlets14,81723,969(6,178)6832,676Total Chico's FAS, Inc.2,784,923301,991(73,288)12,7623,026,388Executive Contact:Todd VogensenVice President-Investor RelationsChico's FAS, Inc.(239) 346-4199SOURCE Chico's FAS, Inc.