The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from PR Newswire

Chico's FAS, Inc. Reports First Quarter Earnings Per Share of $0.32

Wednesday, May 29, 2013

Chico's FAS, Inc. Reports First Quarter Earnings Per Share of $0.32

07:15 EDT Wednesday, May 29, 2013

-- Record quarterly net sales of $670.7 million
-- Flat comparable sales, on top of last year's 9.6% increase
-- Share repurchases of 3.4 million shares for $60 million
-- Opened 46 new stores, including two Boston Proper boutiques

FORT MYERS, Fla., May 29, 2013 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its fiscal 2013 first quarter financial results.

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

For the first quarter, when excluding non-recurring acquisition and integration costs related to the Boston Proper acquisition, the Company reported net income of $51.7 million, a decrease of 4.2% compared to net income of $54.0 million in last year's first quarter, and earnings per diluted share of $0.32, flat to a record $0.32 per diluted share in last year's first quarter. Including non-recurring acquisition and integration costs, the Company reported net income of $51.1 million, a decrease of 4.7% compared to net income of $53.6 million in last year's first quarter, and earnings per diluted share of $0.31, a decrease of 3.1% compared to $0.32 per diluted share in last year's first quarter.

Net Sales

For the first quarter, net sales were a record $670.7 million, an increase of 3.1% compared to $650.8 million in last year's first quarter, primarily reflecting 114 net new stores for a square footage increase of 9.0%. Comparable sales for the first quarter were flat following a 9.6% increase in last year's first quarter, reflecting higher transaction count offset by a decrease in average dollar sale. The comparable sales results primarily reflect the impact of an unusually cool spring and the cycling of strong comparable sales last year.

The Chico's/Soma Intimates brands' comparable sales decreased 2.8% following an 8.8% increase in last year's first quarter for a two-year stack of 6.0% and the White House | Black Market ("WH|BM") brand's comparable sales increased 6.4% following an 11.3% increase in last year's first quarter for a two-year stack of 17.7%.

Gross Margin

For the first quarter, gross margin was $386.8 million compared to $378.6 million in last year's first quarter.  As a percentage of net sales, gross margin was 57.7%, a 50 basis point decrease from last year's first quarter, primarily reflecting higher promotion of seasonal merchandise during an unusually cool spring and investment in new distribution automation partially offset by lower incentive compensation.

Selling, General and Administrative Expenses

For the first quarter, selling, general and administrative expenses ("SG&A") were $304.9 million compared to $291.7 million in last year's first quarter.  As a percentage of net sales, SG&A was 45.5%, a 70 basis point increase from last year's first quarter, primarily reflecting higher occupancy and marketing expenses as a percent of net sales partially offset by lower incentive compensation.  

Inventories

In-store inventory per selling square foot increased approximately 2.3% over the first quarter last year.  At the end of the first quarter, total inventories were $243.5 million compared to $213.7 million at the end of the first quarter last year. Inventories increased by $29.8 million, or 13.9%, primarily reflecting inventory to support a square footage increase of 9.0%. Excluding the impact of the calendar shift from last fiscal year's 53rd week, inventory increased approximately 9.2% from prior year.

Share Repurchase Program

During the first quarter of fiscal 2013, the Company repurchased 3.4 million shares for $60 million under its $300 million share repurchase program announced in February 2013, with $240 million remaining under the program as of the end of the first quarter.

ABOUT CHICO'S FAS, INC.

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

As of May 4, 2013, the Company operated 1,397 stores in the US. The Company's merchandise is also available at www.chicos.com, www.whbm.com, www.soma.com, and www.bostonproper.com. For more detailed information on Chico's FAS, Inc., please go to our corporate website at www.chicosfas.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.

Condensed Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)

Thirteen Weeks Ended

May 4, 2013

April 28, 2012

Amount

% of

Sales

Amount

% of

Sales

Net sales:

Chico's/Soma Intimates

$

424,661

63.3%

$

425,342

65.3%

White House | Black Market

220,398

32.9%

191,727

29.5%

Boston Proper

25,663

3.8%

33,748

5.2%

Total net sales

670,722

100.0%

650,817

100.0%

Cost of goods sold

283,878

42.3%

272,221

41.8%

Gross margin

386,844

57.7%

378,596

58.2%

Selling, general and administrative expenses

304,899

45.5%

291,676

44.8%

Acquisition and integration costs

914

0.1%

558

0.1%

Income from operations

81,031

12.1%

86,362

13.3%

Interest income, net

191

0.0%

183

0.0%

Income before income taxes

81,222

12.1%

86,545

13.3%

Income tax provision

30,100

4.5%

32,900

5.1%

Net income

$

51,122

7.6%

$

53,645

8.2%

Per share data:

Net income per common share-basic

$

0.31

$

0.32

Net income per common and common equivalent

share?diluted

$

0.31

$

0.32

Weighted average common shares outstanding?

basic

158,584

163,974

Weighted average common and common equivalent

shares outstanding?diluted

159,536

164,876

Dividends declared per share

$

0.110

$

0.105

 

Chico's FAS, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

May 4,

2013

February 2,

2013

April 28,

2012

(Unaudited)

(Unaudited)

ASSETS

 Current Assets:

Cash and cash equivalents

$

85,616

$

56,859

$

147,077

Marketable securities, at fair value

202,769

272,499

193,446

Inventories

243,472

206,849

213,676

Prepaid expenses and other current assets

55,280

61,786

50,973

               Total Current Assets

587,137

597,993

605,172

Property and Equipment, net

614,423

608,120

564,904

Other Assets:

Goodwill

238,693

238,693

238,693

Other intangible assets, net

126,665

127,754

131,022

Other assets, net

8,206

8,068

6,821

               Total Other Assets

373,564

374,515

376,536

$

1,575,124

$

1,580,628

$

1,546,612

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable

$

152,123

$

129,387

$

147,925

Other current liabilities

160,004

173,024

164,746

               Total Current Liabilities

312,127

302,411

312,671

Noncurrent Liabilities:

Deferred liabilities

137,929

132,374

128,054

Deferred taxes

52,221

52,644

49,528

               Total Noncurrent Liabilities

190,150

185,018

177,582

Stockholders' Equity:

Preferred stock

-

-

-

Common stock

1,621

1,628

1,677

Additional paid-in capital

355,162

348,775

313,756

Retained earnings

715,911

742,580

740,720

Accumulated other comprehensive income     

153

216

206

               Total Stockholders' Equity

1,072,847

1,093,199

1,056,359

$

1,575,124

$

1,580,628

$

1,546,612

 

Chico's FAS, Inc.

Condensed Consolidated Cash Flow Statements

(Unaudited)

(in thousands)

Thirteen Weeks Ended

May 4, 2013

April 28, 2012

Cash Flows From Operating Activities:

Net income

$

51,122

$

53,645

Adjustments to reconcile net income to net cash provided by operating activities:     

Depreciation and amortization

29,124

26,092

Deferred tax (benefit) expense

4,169

(2,014)

Stock-based compensation expense

7,492

5,318

Excess tax benefit from stock-based compensation

(1,028)

(3,136)

Deferred rent and lease credits

(4,263)

(4,027)

Loss on disposal and impairment of property and equipment

281

1,285

Changes in assets and liabilities, net of effects of acquisition:

                  Inventories

(36,623)

(19,206)

                  Prepaid expenses and other assets

1,545

3,284

                  Accounts payable

13,823

38,726

                  Accrued and other liabilities

(2,193)

36,845

                           Net cash provided by operating activities

63,449

136,812

Cash Flows From Investing Activities:

(Increase) Decrease in marketable securities

69,666

(4,633)

Purchases of property and equipment, net

(34,599)

(40,942)

                           Net cash (used in) provided by investing activities

35,067

(45,575)

Cash Flows From Financing Activities:

Proceeds from issuance of common stock

3,067

5,815

Excess tax benefit from stock-based compensation

1,028

3,136

Dividends paid 

(8,939)

(8,753)

Repurchase of common stock

(64,915)

(3,277)

                           Net cash used in financing activities

(69,759)

(3,079)

                           Net increase in cash and cash equivalents

28,757

88,158

Cash and Cash Equivalents, Beginning of period

56,859

58,919

Cash and Cash Equivalents, End of period

$

85,616

$

147,077

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 ("PSUs").

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):

Thirteen Weeks Ended

May 4, 2013

April 28, 2012

(dollars in thousands)

Numerator

Net income

$

51,122

$

53,645

Net income and dividends declared allocated to unvested 

               restricted stock

(1,187)

(933)

Net income available to common shareholders

$

49,935

$

52,712

Denominator

Weighted average common shares outstanding ? basic

158,584,066

163,973,850

Dilutive effect of stock options and PSUs outstanding

951,763

902,397

Weighted average common and common equivalent

               shares outstanding ? diluted

159,535,829

164,876,247

Net income per common share:

                       Basic

$

0.31

$

0.32

                       Diluted

$

0.31

$

0.32

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)

May 4, 2013

April 28, 2012

Net income:

GAAP basis

51,122

53,645

Add: Impact of acquisition and integration costs, net of tax     

575

346

Non-GAAP adjusted basis

$51,697

$53,991

Net income per diluted share:

GAAP basis

$0.31

$0.32

Add: Impact of acquisition and integration costs, net of tax 

0.01

0.00

Non-GAAP adjusted basis

$0.32

$0.32

 

Chico's FAS, Inc.

Store Count and Square Footage

As of May 4, 2013

(Unaudited)

As of 2/2/2013

NewStores

Closures

As of 5/4/2013

Store count:

Chico's frontline boutiques

606

8

(3)

611

Chico's outlets

99

3

-

102

WH|BM frontline boutiques

398

13

(2)

409

WH|BM outlets

45

3

-

48

Soma frontline boutiques

193

17

(1)

209

Soma outlets

16

-

-

16

Boston Proper frontline boutiques

-

2

-

2

Total Chico's FAS, Inc.

1,357

46

(6)

1,397

As of 2/2/2013

New Stores

Closures

Other

changes

in SSF

As of 5/4/2013

Net selling square footage (SSF):     

Chico's frontline boutiques

1,653,252

20,762

(7,777)

1,519

1,667,756

Chico's outlets

251,846

6,822

-

(177)

258,491

WH|BM frontline boutiques

873,183

32,118

(4,247)

9,061

910,115

WH|BM outlets

91,619

5,985

-

-

97,604

Soma frontline boutiques

370,770

33,747

(2,313)

(3,487)

398,717

Soma outlets

30,773

-

-

-

30,773

Boston Proper frontline boutiques

-

2,878

-

-

2,878

Total Chico's FAS, Inc.

3,271,443

102,312

(14,337)

6,916

3,366,332

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

SOURCE Chico's FAS, Inc.

Products
  • Globe Unlimited

    Digital all access pass across devices. subscribe

  • The Globe and Mail Newspaper

    Newspaper delivered to your doorstep. subscribe

  • Globe2Go

    The digital replica of our newspaper. subscribe

  • Globe eBooks

    A collection of articles by the Globe. subscribe

See all Globe Products

Advertise with us

GlobeLink.ca

Your number one partner for reaching Canada's Influential Achievers. learn more

The Globe at your Workplace
Our Company
Customer Service
Globe Recognition
Mobile Apps
NEWS APP
INVESTING APP
Other Sections