FORT MYERS, Fla., May 30,
2018 /PRNewswire/ --
- Reported first quarter EPS of $0.23 per diluted share
- Announced new sales-driving initiatives
- Continued strong cash flow generation
Chico's FAS, Inc. (NYSE: CHS) (the "Company") today announced
its financial results for the fiscal 2018 first quarter ended
May 5, 2018.
For the thirteen weeks ended May 5, 2018 (the "first
quarter"), the Company reported net income of $29.0 million, or $0.23 per diluted share, compared to net income
of $33.6 million, or $0.26 per diluted share, for the thirteen weeks
ended April 29, 2017 ("last year's first quarter").
"While we are pleased with the launch of our new sales-driving
initiatives, first quarter customer traffic was challenging," said
Shelley Broader, CEO and President
of the Company. "We leveraged strong inventory management and
targeted promotions, which resulted in an improvement in
trends."
"We are seeing initial success with our recently-launched
ShopRunner partnership and we look forward to the ramp up of our
brand offerings on Amazon.com and QVC." Ms. Broader continued,
"Over the long-term, we expect these new channels will drive
stronger customer traffic and sales. We remain confident in our
future and our ability to deliver sustainable growth and value
creation for shareholders."
Business Highlights
The Company continues to make progress on its strategic
initiative to build new channels of growth and increase brand
awareness. During the first quarter of 2018:
- The Company announced its collaboration with Amazon.com, Inc.
to offer a select assortment of Chico's brand merchandise on
Amazon.com.
- Soma, the Company's Intimate Apparel brand, debuted on the
multi-platform retailer QVC on May
5th during the "AM Style" broadcast. The brand's
popular Vanishing collection sold out in minutes.
- The Company launched its partnership with ShopRunner, the free
two-day shipping and seamless payment e-commerce network, at the
end of March. All three of the Company's brands, Chico's, White
House Black Market and Soma are available to ShopRunner's several
million active members.
Net Sales
For the first quarter, net sales were $561.8 million compared to $583.7 million in last year's first quarter. This
decrease of 3.8% primarily reflects a comparable sales decline of
5.9% and the impact of 41 net store closures since last year's
first quarter, partially offset by the favorable impact of the
calendar shift due to the 53rd week in fiscal 2017. The
comparable sales decline was primarily driven by lower transaction
count.
Comparable Sales
|
|
|
|
|
Thirteen Weeks
Ended
|
|
|
|
|
|
May 5, 2018
(1)
|
|
|
April 29,
2017
|
|
Chico's
|
|
|
|
|
(5.5)%
|
|
|
(10.0)%
|
|
White House Black
Market
|
|
|
|
|
(6.6)%
|
|
|
(9.7)%
|
|
Soma
|
|
|
|
|
(5.8)%
|
|
|
0.2 %
|
|
Total
Company
|
|
|
|
|
(5.9)%
|
|
|
(8.7)%
|
|
|
|
|
|
(1)
Comparable sales for the first quarter have been adjusted to
eliminate the impact of the calendar shift due to the
53rd week in fiscal 2017. Fiscal 2018 comparable sales
represents sales for the thirteen weeks ended May 5, 2018 compared
to sales for the thirteen weeks ended May 6, 2017.
|
Gross Margin
For the first quarter, gross margin was $226.9 million, or 40.4% of net sales, compared
to $237.4 million, or 40.7% of net
sales, in last year's first quarter. This 30 basis point decrease
primarily reflects the initial implementation costs and launch of a
new expedited shipping program, partially offset by a 70 basis
point improvement in maintained margin.
Selling, General and Administrative Expenses
For the first quarter, selling, general and administrative
expenses ("SG&A") were $186.4
million, or 33.2% of net sales, compared to $182.5 million, or 31.3% of net sales, for last
year's first quarter. This increase of $3.9
million, or 2.1%, primarily reflects investments in first
quarter marketing and technology.
Income Tax Expense
For the first quarter, the effective tax rate
was 27.9% compared to 38.2% for last year's first
quarter. The reduction in our effective tax rate for current year
of 10.3% is primarily the result of the Tax Cuts and Jobs Act of
2017 ("U.S. tax reform") which reduced the U.S. corporate income
tax rate from 35% to 21%. This reduction is partially offset by a
225 basis point increase related to excess tax benefits on the
accounting for employee share-based awards.
Cash and Marketable Securities
At the end of the first quarter, cash and marketable securities
totaled $254.7 million compared to
$169.8 million at the end of the
first quarter last year. This $85.0
million increase primarily reflects cash generated from
operating activities.
Inventories
At the end of the first quarter, inventories totaled
$253.8 million compared to
$273.9 million at the end of the
first quarter last year. This $20.1
million decrease, or 7.3%, primarily reflects our ability to
align inventory levels with sales.
Fiscal 2018 Second Quarter and Full-Year Outlook
For second quarter fiscal 2018, the Company is anticipating a
mid-to-high single digit decline in net sales and a low-to-mid
single digit decline in consolidated comparable sales. The Company
expects gross margin rate as a percentage of net sales to be
approximately flat compared to second quarter fiscal 2017. The
Company also anticipates SG&A expenses to be up slightly
compared to second quarter fiscal 2017.
For full-year fiscal 2018, the Company is anticipating a
mid-single digit decline in net sales and a low-to-mid single digit
decline in consolidated comparable sales. The Company expects gross
margin rate expansion in the range of 50 to 75 basis points over
fiscal 2017. The Company also anticipates SG&A expenses to be
approximately flat compared to fiscal 2017. Given the early nature
of the new sales-driving initiatives, we do not expect a material
impact to the Company's fiscal 2018 financial
results.
The Company estimates a fiscal 2018 tax rate in the range of 26%
to 28%. In addition, the Company anticipates 2018 capital
expenditures to be $60 million to
$70 million, primarily driven by
store reinvestments and technology enhancements.
ABOUT CHICO'S FAS, INC.
The Company, through its brands – Chico's, White House Black
Market and Soma, is a leading omni-channel specialty retailer of
women's private branded, sophisticated, casual-to-dressy clothing,
intimates and complementary accessories.
As of May 5, 2018, the Company operated 1,451 stores in the
US and Canada and sold merchandise
through 94 franchise locations in Mexico. The Company's merchandise is also
available at www.chicos.com, www.chicosofftherack.com, www.whbm.com
and www.soma.com as well as through third party channels. For more
detailed information on Chico's FAS, Inc., please go to our
corporate website at www.chicosfas.com. The information on our
corporate website is not, and shall not be deemed to be, a part of
this press release or incorporated into our federal securities law
filings.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
This press release contains "forward-looking statements," within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which reflect our current views with respect to certain
events that could have an effect on our future financial
performance. These statements, including without limitation
statements made in Ms. Broader's quotes and in the section entitled
"Fiscal 2018 Second Quarter and Full-Year Outlook," relate to
expectations concerning matters that are not historical fact and
may include the words or phrases such as "will," "should,"
"expects," "believes," "anticipates," "plans," "intends,"
"estimates," "approximately," "our planning assumptions," "future
outlook," and similar expressions. Except for historical
information, matters discussed in such statements are
forward-looking statements. These forward-looking statements are
based largely on information currently available to our management
and on our current expectations, assumptions, plans, estimates,
judgments and projections about our business and our industry, and
are subject to various risks and uncertainties that could cause
actual results to differ materially from historical results or
those currently anticipated. Although we believe our expectations
are based on reasonable estimates and assumptions, we cannot
guarantee their accuracy or our future performance, and there are a
number of known and unknown risks, uncertainties, contingencies,
and other factors (many of which are outside our control) that
could cause actual results to differ materially from those
expressed or implied by such forward-looking statements.
Accordingly, there is no assurance that our expectations will, in
fact, occur or that our estimates or assumptions will be correct,
and we caution investors and all others not to place undue reliance
on such forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to,
changes in the general economic and business environment, including
the expected impact of U.S. tax reform; changes in the general or
specialty retail or apparel industries; the availability of quality
store sites; the ability to successfully execute and achieve the
expected results of our business strategies, particular strategic
initiatives, including sales initiatives and multi-channel
strategies; customer traffic; our ability to leverage inventory
management and targeted promotions; the successful integration of
new members of our senior management team; changes in the political
environment that create consumer uncertainty; significant changes
to product import and distribution costs (such as unexpected
consolidation in the freight carrier industry, and the ability to
remain competitive with customer shipping terms and costs
pertaining to product deliveries and returns); new or increased
taxes or tariffs; significant shifts in consumer behavior; and
those other factors described in Item 1A, "Risk Factors" and in the
"Forward-Looking Statements" disclosure in Item 7. "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" of our latest annual report on Form 10-K and in Part
II, Item 1A, "Risk Factors" and the "Forward-Looking Statements"
disclosure in Part I, Item 2. "Management's Discussion and Analysis
of Financial Condition and Results of Operation" of our quarterly
reports on Form 10-Q and in other reports we file with or furnish
to the Securities and Exchange Commission. There can be no
assurance that the actual future results, performance, or
achievements expressed or implied by such forward-looking
statements will occur. All forward-looking statements that are made
or attributable to us are expressly qualified in their entirety by
this cautionary notice. 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.
(Financial Tables Follow)
Executive Contact:
Julie
Lorigan
Vice President – Investor Relations,
Public Relations and Corporate Communications
Chico's FAS, Inc.
(239) 346-4199
Chico's FAS, Inc. • 11215 Metro Parkway • Fort Myers, Florida 33966 • (239)
277-6200
Chico's FAS, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Income
|
(Unaudited)
|
(in thousands,
except per share amounts)
|
|
|
Thirteen Weeks
Ended
|
|
May 5,
2018
|
|
April 29,
2017
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
Net
Sales:
|
|
|
|
|
|
|
|
Chico's
|
$
|
300,936
|
|
|
53.6
|
%
|
|
$
|
310,127
|
|
|
53.1
|
%
|
White House Black
Market
|
182,648
|
|
|
32.5
|
|
|
193,332
|
|
|
33.1
|
|
Soma
|
78,231
|
|
|
13.9
|
|
|
80,269
|
|
|
13.8
|
|
Total Net
Sales
|
561,815
|
|
|
100.0
|
|
|
583,728
|
|
|
100.0
|
|
Cost of goods
sold
|
334,947
|
|
|
59.6
|
|
|
346,315
|
|
|
59.3
|
|
Gross
Margin
|
226,868
|
|
|
40.4
|
|
|
237,413
|
|
|
40.7
|
|
Selling, general and
administrative expenses
|
186,419
|
|
|
33.2
|
|
|
182,539
|
|
|
31.3
|
|
Income from
Operations
|
40,449
|
|
|
7.2
|
|
|
54,874
|
|
|
9.4
|
|
Interest expense,
net
|
(245)
|
|
|
0.0
|
|
|
(455)
|
|
|
(0.1)
|
|
Income before
Income Taxes
|
40,204
|
|
|
7.2
|
|
|
54,419
|
|
|
9.3
|
|
Income tax
provision
|
11,200
|
|
|
2.0
|
|
|
20,800
|
|
|
3.5
|
|
Net
Income
|
$
|
29,004
|
|
|
5.2
|
%
|
|
$
|
33,619
|
|
|
5.8
|
%
|
Per Share
Data:
|
|
|
|
|
|
|
|
Net income per common
share-basic
|
$
|
0.23
|
|
|
|
|
$
|
0.26
|
|
|
|
Net income per common
and common equivalent share–diluted
|
$
|
0.23
|
|
|
|
|
$
|
0.26
|
|
|
|
Weighted average
common shares outstanding–basic
|
125,277
|
|
|
|
|
126,050
|
|
|
|
Weighted average
common and common equivalent shares outstanding–diluted
|
125,316
|
|
|
|
|
126,103
|
|
|
|
Dividends declared
per share
|
$
|
0.1700
|
|
|
|
|
$
|
0.1650
|
|
|
|
Chico's FAS, Inc.
and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
(in
thousands)
|
|
|
May 5,
2018
|
|
February 3,
2018
|
|
April 29,
2017
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
193,547
|
|
|
$
|
160,071
|
|
|
$
|
119,142
|
|
Marketable
securities, at fair value
|
61,196
|
|
|
60,060
|
|
|
50,629
|
|
Inventories
|
253,777
|
|
|
233,726
|
|
|
273,878
|
|
Prepaid expenses and
other current assets
|
53,494
|
|
|
60,668
|
|
|
46,900
|
|
Total Current
Assets
|
562,014
|
|
|
514,525
|
|
|
490,549
|
|
Property and
Equipment, net
|
407,569
|
|
|
421,038
|
|
|
460,845
|
|
Other
Assets:
|
|
|
|
|
|
Goodwill
|
96,774
|
|
|
96,774
|
|
|
96,774
|
|
Other intangible
assets, net
|
38,930
|
|
|
38,930
|
|
|
38,930
|
|
Other assets,
net
|
10,707
|
|
|
16,338
|
|
|
18,432
|
|
Total Other
Assets
|
146,411
|
|
|
152,042
|
|
|
154,136
|
|
|
$
|
1,115,994
|
|
|
$
|
1,087,605
|
|
|
$
|
1,105,530
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
138,439
|
|
|
$
|
118,253
|
|
|
$
|
133,278
|
|
Current
debt
|
15,000
|
|
|
15,000
|
|
|
15,000
|
|
Other current and
deferred liabilities
|
145,893
|
|
|
133,715
|
|
|
149,151
|
|
Total Current
Liabilities
|
299,332
|
|
|
266,968
|
|
|
297,429
|
|
Noncurrent
Liabilities:
|
|
|
|
|
|
Long-term
debt
|
49,868
|
|
|
53,601
|
|
|
64,801
|
|
Deferred
liabilities
|
99,330
|
|
|
103,282
|
|
|
115,543
|
|
Deferred
taxes
|
6,560
|
|
|
7,372
|
|
|
14,613
|
|
Total Noncurrent
Liabilities
|
155,758
|
|
|
164,255
|
|
|
194,957
|
|
Commitments and
Contingencies
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
Preferred
stock
|
—
|
|
|
—
|
|
|
—
|
|
Common
stock
|
1,292
|
|
|
1,275
|
|
|
1,295
|
|
Additional paid-in
capital
|
471,458
|
|
|
468,806
|
|
|
453,999
|
|
Treasury stock, at
cost
|
(413,465)
|
|
|
(413,465)
|
|
|
(395,585)
|
|
Retained
earnings
|
601,801
|
|
|
599,810
|
|
|
553,466
|
|
Accumulated other
comprehensive loss
|
(182)
|
|
|
(44)
|
|
|
(31)
|
|
Total
Shareholders' Equity
|
660,904
|
|
|
656,382
|
|
|
613,144
|
|
|
$
|
1,115,994
|
|
|
$
|
1,087,605
|
|
|
$
|
1,105,530
|
|
Chico's FAS, Inc.
and Subsidiaries
|
Condensed
Consolidated Cash Flow Statements
|
(Unaudited)
|
(in
thousands)
|
|
|
Thirteen Weeks
Ended
|
|
May 5,
2018
|
|
April 29,
2017
|
Cash Flows from
Operating Activities:
|
|
|
|
Net income
|
$
|
29,004
|
|
|
$
|
33,619
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
22,445
|
|
|
25,145
|
|
Loss on disposal and
impairment of property and equipment
|
1,031
|
|
|
513
|
|
Deferred income
taxes
|
(838)
|
|
|
4,905
|
|
Share-based
compensation expense
|
5,055
|
|
|
5,794
|
|
Deferred rent and
lease credits
|
(5,594)
|
|
|
(4,358)
|
|
Changes in assets and
liabilities:
|
|
|
|
Inventories
|
(20,875)
|
|
|
(41,516)
|
|
Prepaid expenses and
other current assets
|
12,270
|
|
|
5,955
|
|
Accounts
payable
|
9,253
|
|
|
6,358
|
|
Accrued and other
liabilities
|
10,143
|
|
|
(19,724)
|
|
Net cash provided by
operating activities
|
61,894
|
|
|
16,691
|
|
Cash Flows from
Investing Activities:
|
|
|
|
Purchases of
marketable securities
|
(9,123)
|
|
|
(8,491)
|
|
Proceeds from sale of
marketable securities
|
7,965
|
|
|
8,259
|
|
Purchases of property
and equipment, net
|
(9,991)
|
|
|
(9,531)
|
|
Net cash used in
investing activities
|
(11,149)
|
|
|
(9,763)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
Payments on
borrowings
|
(3,750)
|
|
|
(5,000)
|
|
Proceeds from
issuance of common stock
|
605
|
|
|
1,062
|
|
Dividends
paid
|
(11,065)
|
|
|
(10,862)
|
|
Repurchase of common
stock
|
—
|
|
|
(9,498)
|
|
Payments of tax
withholdings related to share-based awards
|
(2,991)
|
|
|
(5,599)
|
|
Net cash used in
financing activities
|
(17,201)
|
|
|
(29,897)
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
(68)
|
|
|
(24)
|
|
Net increase
(decrease) in cash and cash equivalents
|
33,476
|
|
|
(22,993)
|
|
Cash and Cash
Equivalents, Beginning of period
|
160,071
|
|
|
142,135
|
|
Cash and Cash
Equivalents, End of period
|
$
|
193,547
|
|
|
$
|
119,142
|
|
Supplemental
Detail on Net Income 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 earnings
per common share pursuant to the "two-class" method. For the
Company, participating securities are comprised entirely of
unvested restricted stock awards and performance-based restricted
stock units ("PSUs") that have met their relevant performance
criteria.
|
|
Net income per share
is determined using the two-class method when it is more dilutive
than the treasury stock method. Basic net income per share is
computed by dividing net income available to common shareholders by
the weighted-average number of common shares outstanding during the
period, including participating securities. Diluted net income per
share reflects the dilutive effect of potential common shares from
non-participating securities such as stock options, PSUs and
restricted stock units. For the thirteen weeks ended May 5,
2018 and April 29, 2017, potential common shares were excluded
from the computation of diluted EPS to the extent they were
antidilutive.
|
|
The following
unaudited table sets forth the computation of basic and diluted net
income per share shown on the face of the accompanying condensed
consolidated statements of income (in thousands, except per share
amounts):
|
|
|
|
Thirteen Weeks
Ended
|
|
|
May 5,
2018
|
|
April 29,
2017
|
Numerator
|
|
|
|
|
Net income
|
|
$
|
29,004
|
|
|
$
|
33,619
|
|
Net income and
dividends declared allocated to participating securities
|
|
(714)
|
|
|
(741)
|
|
Net income available
to common shareholders
|
|
$
|
28,290
|
|
|
$
|
32,878
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
Weighted average
common shares outstanding – basic
|
|
125,277
|
|
|
126,050
|
|
Dilutive effect of
non-participating securities
|
|
39
|
|
|
53
|
|
Weighted average
common and common equivalent shares outstanding –
diluted
|
|
125,316
|
|
|
126,103
|
|
|
|
|
|
|
Net Income Per
Share:
|
|
|
|
|
Basic
|
|
$
|
0.23
|
|
|
$
|
0.26
|
|
Diluted
|
|
$
|
0.23
|
|
|
$
|
0.26
|
|
Chico's FAS, Inc.
and Subsidiaries
|
Store Count and
Square Footage
|
Thirteen Weeks Ended
May 5, 2018
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
February 3,
2018
|
|
New
Stores
|
|
Closures
|
|
May 5,
2018
|
|
|
Store
Count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
568
|
|
|
—
|
|
|
(4)
|
|
|
564
|
|
|
|
Chico's
outlets
|
120
|
|
|
—
|
|
|
—
|
|
|
120
|
|
|
|
Chico's
Canada
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
|
WHBM frontline
boutiques
|
404
|
|
|
—
|
|
|
(1)
|
|
|
403
|
|
|
|
WHBM
outlets
|
69
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|
|
WHBM
Canada
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
|
Soma frontline
boutiques
|
270
|
|
|
—
|
|
|
(4)
|
|
|
266
|
|
|
|
Soma
outlets
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
|
Total Chico's FAS,
Inc.
|
1,460
|
|
|
—
|
|
|
(9)
|
|
|
1,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 3,
2018
|
|
New
Stores
|
|
Closures
|
|
Other changes in
SSF
|
|
May 5,
2018
|
Net Selling Square
Footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,555,671
|
|
|
—
|
|
|
(11,458)
|
|
|
(1,604)
|
|
|
1,542,609
|
|
Chico's
outlets
|
302,088
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
302,088
|
|
Chico's
Canada
|
9,695
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,695
|
|
WHBM frontline
boutiques
|
939,606
|
|
|
—
|
|
|
(2,345)
|
|
|
670
|
|
|
937,931
|
|
WHBM
outlets
|
143,963
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
143,963
|
|
WHBM
Canada
|
14,891
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,891
|
|
Soma frontline
boutiques
|
511,989
|
|
|
—
|
|
|
(7,335)
|
|
|
—
|
|
|
504,654
|
|
Soma
outlets
|
35,541
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,541
|
|
Total Chico's FAS,
Inc.
|
3,513,444
|
|
|
—
|
|
|
(21,138)
|
|
|
(934)
|
|
|
3,491,372
|
|
|
As of May 5,
2018, the Company also sold merchandise through 94 international
franchise locations.
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/chicos-fas-inc-reports-first-quarter-results-300656017.html
SOURCE Chico's FAS, Inc.