Press release from PR Newswire
Chico's FAS, Inc. Reports Record Second Quarter and First Half Results
Wednesday, August 22, 2012
Chico's FAS, Inc. Reports Record Second Quarter and First Half Results07:15 EDT Wednesday, August 22, 2012-- 28% increase in second quarter earnings per share to a record $0.32 -- 14th consecutive quarter of double digit EPS growth -- 5.6% comparable sales increase in second quarter, a 2-year stack of 18.4%FORT MYERS, Fla., Aug. 22, 2012 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2012 second quarter and twenty-six weeks ended July 28, 2012.(Logo: http://photos.prnewswire.com/prnh/20110920/FL71045LOGO ) For the second quarter, the Company reported net income of $53.4 million, an increase of 23% compared to net income of $43.4 million in last year's second quarter and record earnings per diluted share of $0.32, an increase of 28% compared to $0.25 per diluted share in last year's second quarter.For the twenty-six weeks ended July 28, 2012, the Company reported record net income of $107.0 million, an increase of 20% compared to net income of $89.3 million in the same period last year and record earnings per diluted share of $0.64, an increase of 25% compared to $0.51 per diluted share in the same period last year. Net Sales For the second quarter, net sales were $641.7 million, an increase of 16.4% compared to $551.4 million in last year's second quarter, reflecting comparable sales growth of 5.6%, square footage increase of 7.4%, and sales for Boston Proper of $32.6 million. The 5.6% increase in comparable sales for the second quarter was on top of a 12.8% increase in last year's second quarter, for a two-year stack of 18.4%, and reflected increases in both average dollar sale and transaction count. The Company's comparable sales growth primarily reflected the effectiveness of the Company's innovative marketing plans, a positive customer response to the Company's merchandise offering and new product launches.The Chico's/Soma Intimates brands' comparable sales increased 7.2% on top of an 11.9% increase in last year's second quarter for a two-year stack of 19.1%, and the White House | Black Market ("WH|BM") brand's comparable sales increased 2.3% on top of a 14.9% increase in last year's second quarter for a two-year stack of 17.2%.Gross MarginFor the second quarter, gross margin was $362.2 million, an increase of 17.1% compared to $309.3 million in last year's second quarter. As a percentage of net sales, gross margin was 56.4%, a 30 basis point improvement from last year's second quarter, primarily reflecting increased full-price selling and effective promotional activities, partially offset by the inclusion of Boston Proper's results.Selling, General and Administrative Expenses For the second quarter, selling, general and administrative expenses ("SG&A") were $276.1 million compared to $240.4 million in last year's second quarter. As a percentage of net sales, SG&A was 43.0%, a 60 basis point improvement from last year's second quarter, primarily reflecting the sales leverage impact on store expenses and the inclusion of Boston Proper's results. InventoriesAt the end of the second quarter, total inventories were $191.7 million compared to $190.7 million in the second quarter last year. Excluding $12.6 million related to Boston Proper, inventories decreased by $11.6 million or 6.1%, reflecting planned inventory reductions.Share Repurchase ProgramDuring the second quarter of fiscal 2012, the Company repurchased 1.8 million shares for $25.6 million under its $200 million share repurchase program announced in November 2011, with $149.4 million remaining under the program as of the end of the second quarter. For the four quarter period ended July 28, 2012, the Company repurchased 9.0 million shares for $110.6 million.OutlookAs a result of the Company's record first half results, the Company is updating its planning assumptions for fiscal 2012. The new planning assumptions are:Net sales of approximately $2.55 billion to $2.6 billion, which includes comparable store growth at a mid-single digit percent; Gross margin rate of approximately flat to 2011; SG&A expense, as a percentage of net sales, down approximately 50 basis points to 2011; One-time acquisition and integration costs for Boston Proper of approximately $4 million pre-tax; Effective tax rate of approximately 38%; Weighted average diluted shares of approximately 165 million, excluding any potential future impact of share repurchases; Inventory increase in-line with sales growth; and Capital expenditures of approximately $155 million, reflecting an additional $5 million for Boston Proper initiatives, including new stores in early fiscal 2013 and system integration costs. A conference call to review the second quarter is scheduled for today at 8:30 a.m. EDT. A live webcast of the call can be accessed 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 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 607 boutiques and 92 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 388 boutiques and 38 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 186 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, 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, www.chicosfas.com.(Financial Tables Follow) Chico's FAS, Inc.Consolidated Statements of Income(Unaudited) (in thousands, except per share amounts) Twenty-Six Weeks Ended Thirteen Weeks EndedJuly 28, 2012July 30, 2011July 28, 2012July 30, 2011Amount% of Sales Amount % of SalesAmount% of Sales Amount % of Sales Net Sales: Chico's/Soma Intimates$ 839,96065.0$ 749,25868.8$ 414,61864.6$ 374,32467.9 White House | Black Market386,22529.9339,34931.2194,49830.3177,12532.1 Boston Proper66,3545.1??32,6065.1?? Net sales1,292,539100.01,088,607100.00641,722100.0551,449100.0 Cost of goods sold551,76342.7461,61742.4279,54243.6242,12243.9 Gross margin740,77657.3626,99057.6362,18056.4309,32756.1 Selling, general and administrative expenses567,79743.9485,20144.6276,12143.0240,35643.6 Acquisition and integration costs8410.1??2830.0?? Income from operations172,13813.3141,78913.085,77613.468,97112.5 Interest income, net4020.08200.12190.04200.1 Income before income taxes172,54013.3142,60913.185,99513.469,39112.6 Income tax provision65,5005.053,3004.932,6005.126,0004.7 Net income $ 107,0408.3$ 89,3098.2$ 53,3958.3$ 43,3917.9 Per share data: Net income per common share-basic$ 0.64$ 0.51$ 0.32$ 0.25 Net income per common and common equivalent share?diluted$ 0.64$ 0.51$ 0.32$ 0.25Weighted average common shares outstanding?basic163,898173,082163,822171,282Weighted average common and common equivalent shares outstanding?diluted164,834174,298164,732172,495 Dividends declared per share$ 0.1575$ 0.15$ 0.0525$ 0.05 Chico's FAS, Inc.Consolidated Balance Sheets(in thousands)July 28,January 28,July 30,201220122011(Unaudited)(Unaudited)ASSETSCurrent Assets: Cash and cash equivalents$ 109,466$ 58,919$ 56,109 Marketable securities, at fair value248,480188,934448,211 Inventories191,694194,469190,745 Prepaid expenses and other current assets52,64255,10457,190Total Current Assets 602,282497,426752,255Property and Equipment, net576,788550,230524,782Other Assets: Goodwill 238,693238,69396,774 Other intangible assets, net129,933132,11238,930 Other assets, net6,6286,6915,532 Total Other Assets375,254377,496141,236$ 1,554,324$ 1,425,152$ 1,418,273LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities: Accounts payable$ 139,800$ 100,395$ 132,703 Other current liabilities151,936137,714113,035Total Current Liabilities291,736238,109245,738Noncurrent Liabilities: Deferred liabilities129,782125,690127,227 Deferred taxes50,84052,1252,969Total Noncurrent Liabilities180,622177,815130,196Stockholders' Equity: Preferred stock??? Common stock1,6601,6571,722 Additional paid-in capital320,161302,612293,881 Retained earnings 759,838704,631746,006 Accumulated other comprehensive income 307328730Total Stockholders' Equity1,081,9661,009,2281,042,339$ 1,554,324$ 1,425,152$ 1,418,273 Chico's FAS, Inc.Consolidated Cash Flow Statements(Unaudited)(in thousands)Twenty-Six Weeks EndedJuly 28,2012July 30,2011CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 107,040$ 89,309 Adjustments to reconcile net income to net cash provided by operating activities ? Depreciation and amortization52,65548,353 Deferred tax (benefit) expense(4,490)4,845 Stock-based compensation expense11,0058,365 Excess tax benefit from stock-based compensation(3,367)(1,642) Deferred rent and lease credits (8,082)(9,167) Loss on disposal and impairment of property and equipment1,7591,756Decrease (increase) in assets ? Inventories2,775(30,931) Prepaid expenses and other assets5,519(12,416)Increase in liabilities ? Accounts payable30,68917,417 Accrued and other deferred liabilities30,0326,637 Total adjustments118,49533,217 Net cash provided by operating activities225,535122,526 CASH FLOWS FROM INVESTING ACTIVITIES: (Increase) decrease in marketable securities(59,568)86,150 Purchases of property and equipment(78,755)(56,265) Net cash (used in) provided by investing activities(138,323)29,885 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock6,5242,762 Excess tax benefit from stock-based compensation3,3671,642 Dividends paid (17,530)(17,521) Repurchase of common stock(29,026)(97,880) Net cash used in financing activities (36,665)(110,997) Net increase in cash and cash equivalents50,54741,414CASH AND CASH EQUIVALENTS, Beginning of period58,91914,695CASH AND CASH EQUIVALENTS, End of period$ 109,466$ 56,109 Supplemental Detail on Earnings Per Share CalculationIn 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 common 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): Twenty-Six Weeks Ended Thirteen Weeks Ended July 28,2012 July 30,2011 July 28,2012 July 30,2011Net income $ 107,040$ 89,309$ 53,395$ 43,391Net income and dividends declared allocated to unvested restricted stock(1,941)(1,110)(1,006)(573)Net income available to common stockholders$ 105,099$ 88,199$ 52,389$ 42,818Weighted average common shares outstanding ? basic 163,898173,082163,822171,282Weighted average common and common equivalent shares outstanding ? diluted164,834174,298164,732172,495Net income per common share: Basic$ 0.64$ 0.51$ 0.32$ 0.25 Diluted $ 0.64$ 0.51$ 0.32$ 0.25 Chico's FAS, Inc.Boutique Count and Square FootageAs of July 28, 2012As of New As of 4/28/2012StoresClosures7/28/2012Store count:Chico's frontline boutiques6034(1)606Chico's outlets863?89WH|BM frontline boutiques37212(1)383WH|BM outlets307?37Soma frontline boutiques17710(2)185Soma outlets15??15Total Chico's FAS, Inc.1,28336(4)1,315Remodels/Relos andAs of New change in As of 4/28/2012StoresClosuresSSF7/28/2012Net selling square footage (SSF):Chico's frontline boutiques1,637,53910,312(4,720)2,3121,645,443Chico's outlets220,6646,724??227,388WH|BM frontline boutiques793,66332,461(1,707)1,329825,746WH|BM outlets59,77514,427??74,202Soma frontline boutiques346,35619,490(2,938)(5,110)357,798Soma outlets29,057???29,057Total Chico's FAS, Inc.3,087,05483,414(9,365)(1,469)3,159,634 Executive Contact: Todd VogensenVice President-Investor Relations Chico's FAS, Inc.(239) 346-4199 SOURCE Chico's FAS, Inc.