FORT MYERS, Fla., Aug. 28, 2019 /PRNewswire/ --
- Second quarter GAAP loss of $0.02 per diluted share; Adjusted earnings of
$0.00 per diluted share
- Sequential improvement at Chico's brand; Soma delivers
double-digit comparable sales increase
- Provides outlook for third quarter 2019; Updates full
year fiscal 2019 outlook
Chico's FAS, Inc. (NYSE: CHS) (the "Company") today announced
its financial results for the fiscal 2019 second quarter ended
August 3, 2019.
For the thirteen weeks ended August 3, 2019 (the "second
quarter"), the Company reported a net loss of $2.3 million, or $0.02 loss per diluted share, compared to net
income of $16.8 million, or
$0.13 earnings per diluted share, for
the thirteen weeks ended August 4, 2018 ("last year's second
quarter"). The Company reported second quarter adjusted net loss of
$0.2 million, or $0.00 earnings per diluted share, as presented in
the related accompanying GAAP to non-GAAP reconciliation.
For the twenty-six weeks ended August 3, 2019, the Company
reported a net loss of $0.3 million,
or $0.00 earnings per diluted share,
compared to net income of $45.8
million, or $0.36 earnings per
diluted share, for the twenty-six weeks ended August 4, 2018.
For the twenty-six weeks ended August 3, 2019, the Company
reported adjusted net income of $5.4
million, or $0.05 earnings per
diluted share, as presented in the related accompanying GAAP to
non-GAAP reconciliation.
"We are seeing evidence of progress within our business and
reported second quarter results in line with our expectations. This
performance was driven by sequential improvement at Chico's and
continued strong comparable sales growth at Soma of 10.9% in the
second quarter. At White House Black Market, the changes we made in
product, marketing and in-store presentation are driving improved
sales trends in August compared to our second quarter results. We
expect these improvements to continue benefiting the brand
throughout the fall and holiday seasons," said Bonnie Brooks, CEO and President.
"We are committed to enhancing value creation at Chico's FAS and
are taking the necessary steps to do so. We have made significant
leadership changes and are focused on executing on our three
operating priorities to deliver sustainable, profitable growth,"
continued Ms. Brooks.
Fiscal 2019 Second Quarter Business Highlights
- The Company announced the appointment of Bonnie Brooks as CEO and President of Chico's
FAS and a new organizational structure for the Company.
Molly Langenstein was appointed
President, Apparel Group, leading Chico's and White House Black
Market ("WHBM"), and Mary van Praag,
President, Intimates Group, continues to lead Soma® and TellTale™.
The new structure and leadership appointments are designed to
strengthen the organization, create clear lines of responsibility
and accelerate sales driving priorities.
- Soma reported positive 10.9% comparable sales growth in the
second quarter, the brand's best comparable sales performance in
four years, and remains a leading performer in the industry. The
focus on innovation, improved aesthetic and additional marketing at
Soma are driving new customer acquisition.
- Chico's comparable sales improved sequentially compared to the
first quarter, driven by momentum in key items and better in-stock
positions.
- WHBM comparable sales were lower sequentially compared to the
first quarter due to product misses in color and print, which were
identified in the first quarter and have been addressed through
significant leadership changes and a more rigorous approval
process. The sales trends in the Fall 1 assortment, set in stores
and online in early August, have improved. The Company anticipates
the performance at the brand to gradually improve throughout the
fall and holiday seasons.
- The Company continues to make progress on executing its three
operating priorities which are driving stronger sales through
improved product and marketing; optimizing the customer journey by
simplifying, digitizing and extending the Company's unique and
personalized service; and transforming sourcing and supply chain
operations to increase product speed to market and improve
quality.
Net Sales
For the second quarter, net sales were $508.4 million compared to $544.7 million in last year's second quarter.
This decrease of 6.7% reflects a comparable sales decline of 6.1%
as well as the impact of 53 net store closures since last year's
second quarter. The comparable sales decline was driven by lower
average dollar sale and a decrease in transaction count. In the
second quarter, comparable sales at Soma continued to show strong
growth while Chico's posted quarter-over-quarter improvement.
Product, marketing and in-store presentation adjustments to change
the performance at WHBM are underway.
Comparable Sales
|
|
Thirteen Weeks
Ended
|
|
Twenty-Six Weeks
Ended
|
|
|
August 3,
2019
|
|
August 4,
2018
|
|
August 3,
2019
|
|
August 4,
2018
|
Chico's
|
|
(5.6)
|
%
|
|
(3.8)
|
%
|
|
(6.8)
|
%
|
|
(4.7)
|
%
|
White House Black
Market
|
|
(16.1)
|
|
|
(3.5)
|
|
|
(13.0)
|
|
|
(5.1)
|
|
Soma
|
|
10.9
|
|
|
(0.9)
|
|
|
7.4
|
|
|
(3.2)
|
|
Total
Company
|
|
(6.1)
|
|
|
(3.2)
|
|
|
(6.6)
|
|
|
(4.6)
|
|
Gross Margin
For the second quarter, gross margin was $168.6 million, or 33.2% of net sales, compared
to $196.9 million, or 36.1% of net
sales, in last year's second quarter. This 290-basis point decrease
primarily reflects an increased effort to clear WHBM inventory,
continued charges related to our omnichannel programs and
accelerated depreciation as a result of our retail fleet
optimization plan announced in the fourth quarter of fiscal 2018.
Excluding the 60 basis-point impact of accelerated depreciation,
gross margin decreased 230 basis points.
Retail Fleet Optimization Plan
In the second quarter, the Company recorded pre-tax accelerated
depreciation charges of property and equipment within cost of goods
sold of $3.0 million, or 60 basis
points, related to our retail fleet optimization plan. On an
after-tax basis, the second quarter impact of these charges was
$2.2 million, or $0.02 earnings per diluted share.
Selling, General and Administrative Expenses
For the second quarter, selling, general and administrative
("SG&A") expenses were $171.0
million, or 33.7% of net sales, compared to $174.1 million, or 31.9% of net sales, for last
year's second quarter. This $3.1
million decrease primarily reflects a reduction in
non-payroll employee-related costs, partially offset by investments
in marketing in our intimates group.
Income Taxes
For the second quarter, the effective tax rate
was 0.0% compared to 25.4% for last year's
second quarter. The 0.0% effective tax rate was primarily the
result of an income tax benefit on the second quarter operating
loss, offset by a true-up from the first quarter provision due to
an increase in the forecasted annual effective tax rate. On a
non-GAAP basis, the second quarter effective tax rate was 48.0%
when excluding accelerated depreciation related to our retail fleet
optimization plan.
Cash, Marketable Securities and Debt
At the end of the second quarter, cash and marketable securities
totaled $163.1 million, a decrease of
$76.3 million compared to last year's
second quarter, while debt totaled $50.0
million, a decrease of $11.3
million from last year's second quarter. This $76.3 million decrease in cash and marketable
securities primarily reflects a return of cash to shareholders
through share repurchases and dividend payments.
Inventories
At the end of the second quarter, inventories totaled
$227.7 million compared to
$224.2 million at the end of last
year's second quarter. This $3.5
million, or 1.6%, increase primarily reflects investments in
our intimates group to fund growth, partially offset by the benefit
of inventory management in our apparel group.
Fiscal 2019 Third Quarter and Full-Year Outlook
The Company is initiating outlook for the third quarter of
fiscal 2019 and is updating its previously provided full year
fiscal 2019 outlook. The outlook for both the third quarter and
fiscal year excludes expected net charges related to the Company's
retail fleet optimization plan and any incremental impact from the
implementation of new tariffs.
The Company is managing through its turnaround and although
guidance has been tempered for the second half of the year, it does
anticipate gradual improvement in net sales and comparable sales
trends as traction from its operating priorities take hold.
For the fiscal 2019 third quarter, compared to the fiscal 2018
third quarter:
- The Company anticipates a low to
mid-single-digit decline in total net sales and consolidated
comparable sales.
- The Company expects gross margin as a percent of net sales to
be down approximately 100 to 125 basis points as it clears through
seasonal inventory.
- SG&A expenses are expected to be approximately flat to down
slightly, reflecting ongoing cost management, offset by investment
in marketing in our intimates group.
For full year fiscal 2019, compared to full year fiscal
2018:
- The Company anticipates a mid-single digit decline in total net
sales and consolidated comparable sales, versus its previous
guidance of a low to
mid-single-digit decline in total net sales and consolidated
comparable sales.
- The Company expects gross margin as a percent of net sales to
be down 150 to 200 basis points versus its previous guidance of
down 50 to 100 basis points, due primarily to incremental costs in
the first half of fiscal 2019 associated with its omnichannel
programs and clearing of seasonal inventory.
- The Company anticipates SG&A expenses to be down
approximately $10 million, reflecting
ongoing cost management, consistent with previous guidance.
- The Company expects capital expenditures to be approximately
$45 million to $50 million, versus its previous guidance of
approximately $55 million, primarily
driven by store reinvestments and technology enhancements.
- The Company estimates third and fourth quarter income tax rates
to normalize in the range of 20% to 25%, which excludes accelerated
depreciation related to our fleet optimization plan.
Conference Call Information
The Company is hosting a live conference call on Wednesday,
August 28, 2019 beginning at 8:00 a.m.
ET to review the operating results for the second quarter.
The conference call is being webcast live over the Internet, which
you may access in the Investors section of the Chico's FAS,
Inc. corporate website, www.chicosfas.com. A replay of
the webcast will remain available online for one year
at http://chicosfas.com/investors/events-and-presentations.
The phone number for the call is
1-877-883-0383. International callers should use
1-412-902-6506. The Elite Entry number, 7758370, is required to
join the conference call. Interested participants should call 10-15
minutes prior to the 8:00 a.m. start
to be placed in queue.
ABOUT CHICO'S FAS, INC.
The Company, through its brands – Chico's, White House Black
Market, Soma and TellTale is a leading omni-channel specialty
retailer of women's private branded, sophisticated,
casual-to-dressy clothing, intimates and complementary
accessories.
As of August 3, 2019, the Company operated 1,387 stores in
the U.S. and Canada and sold
merchandise through 83 international franchise locations in
Mexico and 2 domestic franchise
airport stores. The Company's merchandise is also available at
www.chicos.com, www.chicosofftherack.com, www.whbm.com,
www.soma.com and www.mytelltale.com as well as through third-party
channels. For more detailed information on the Company, 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. Brooks' quotes
and in the section entitled "Fiscal 2019 Third 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; changes
in the general or specialty retail or apparel industries, including
the extent of the market demand and overall level of spending for
women's private branded clothing and related accessories; the
availability of quality store sites; the effectiveness of our brand
strategies, awareness and marketing programs; the ability to
successfully execute and achieve the expected results of our
business strategies and particular strategic initiatives
(including, but not limited to, the Company's retail fleet
optimization plan and three operating priorities which are driving
stronger sales through improved product and marketing; optimizing
the customer journey by simplifying, digitizing and extending the
Company's unique and personalized service; and transforming
sourcing and supply chain operations to increase product speed to
market and improve quality), sales initiatives and multi-channel
strategies; customer traffic; our ability to appropriately manage
our inventory and allocation processes; our ability to leverage
inventory management and targeted promotions; the successful
recruitment of leadership and the successful integration of new
members of our senior management team; uncertainties regarding
future unsolicited offers to buy the Company and our ability to
respond effectively to them as well as to actions of activist
shareholders and others; changes in the political environment that
create consumer uncertainty; the risk that our investments in
merchandise or marketing initiatives may not deliver the results we
anticipate; 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 (particularly with
respect to China) that could
impact, among other things, our sourcing from foreign suppliers;
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 (Loss) Income
|
(Unaudited)
|
(in thousands, except
per share amounts)
|
|
|
Thirteen Weeks
Ended
|
|
Twenty-Six Weeks
Ended
|
|
August 3,
2019
|
|
August 4,
2018
|
|
August 3,
2019
|
|
August 4,
2018
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
Net
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chico's
|
$
|
268,924
|
|
|
52.9
|
%
|
|
$
|
286,808
|
|
|
52.7
|
%
|
|
$
|
545,626
|
|
|
53.2
|
%
|
|
$
|
587,744
|
|
|
53.1
|
%
|
White House Black
Market
|
139,809
|
|
|
27.5
|
|
|
168,938
|
|
|
31.0
|
|
|
300,754
|
|
|
29.3
|
|
|
351,586
|
|
|
31.8
|
|
Soma (1)
|
99,623
|
|
|
19.6
|
|
|
88,974
|
|
|
16.3
|
|
|
179,704
|
|
|
17.5
|
|
|
167,205
|
|
|
15.1
|
|
Total Net
Sales
|
508,356
|
|
|
100.0
|
|
|
544,720
|
|
|
100.0
|
|
|
1,026,084
|
|
|
100.0
|
|
|
1,106,535
|
|
|
100.0
|
|
Cost of goods
sold
|
339,734
|
|
|
66.8
|
|
|
347,853
|
|
|
63.9
|
|
|
666,631
|
|
|
65.0
|
|
|
682,800
|
|
|
61.7
|
|
Gross
Margin
|
168,622
|
|
|
33.2
|
|
|
196,867
|
|
|
36.1
|
|
|
359,453
|
|
|
35.0
|
|
|
423,735
|
|
|
38.3
|
|
Selling, general and
administrative
expenses
|
170,983
|
|
|
33.7
|
|
|
174,089
|
|
|
31.9
|
|
|
356,391
|
|
|
34.7
|
|
|
360,508
|
|
|
32.6
|
|
(Loss) Income from
Operations
|
(2,361)
|
|
|
(0.5)
|
|
|
22,778
|
|
|
4.2
|
|
|
3,062
|
|
|
0.3
|
|
|
63,227
|
|
|
5.7
|
|
Interest income
(expense), net
|
52
|
|
|
0.0
|
|
|
(310)
|
|
|
(0.1)
|
|
|
54
|
|
|
0.0
|
|
|
(555)
|
|
|
0.0
|
|
(Loss) Income
before Income
Taxes
|
(2,309)
|
|
|
(0.5)
|
|
|
22,468
|
|
|
4.1
|
|
|
3,116
|
|
|
0.3
|
|
|
62,672
|
|
|
5.7
|
|
Income tax
provision
|
—
|
|
|
0.0
|
|
|
5,700
|
|
|
1.0
|
|
|
3,400
|
|
|
0.3
|
|
|
16,900
|
|
|
1.6
|
|
Net (Loss)
Income
|
$
|
(2,309)
|
|
|
(0.5)
|
%
|
|
$
|
16,768
|
|
|
3.1
|
%
|
|
$
|
(284)
|
|
|
0.0
|
%
|
|
$
|
45,772
|
|
|
4.1
|
%
|
Per Share
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
common share -
basic
|
$
|
(0.02)
|
|
|
|
|
$
|
0.13
|
|
|
|
|
$
|
0.00
|
|
|
|
|
$
|
0.36
|
|
|
|
|
Net (loss) income per
common and
common equivalent share – diluted
|
$
|
(0.02)
|
|
|
|
|
$
|
0.13
|
|
|
|
|
$
|
0.00
|
|
|
|
|
$
|
0.36
|
|
|
|
|
Weighted average
common shares
outstanding – basic
|
114,802
|
|
|
|
|
124,730
|
|
|
|
|
114,618
|
|
|
|
|
125,003
|
|
|
|
Weighted average
common and common
equivalent shares outstanding – diluted
|
114,802
|
|
|
|
|
124,774
|
|
|
|
|
114,618
|
|
|
|
|
125,054
|
|
|
|
Dividends declared
per share
|
$
|
0.0875
|
|
|
|
|
$
|
0.085
|
|
|
|
|
$
|
0.2625
|
|
|
|
|
$
|
0.255
|
|
|
|
|
|
(1)
Includes TellTale net sales, which is not a significant
component of Soma revenue.
|
Chico's FAS, Inc.
and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
|
|
|
August 3,
2019
|
|
February 2,
2019
|
|
August 4,
2018
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
99,634
|
|
|
$
|
124,128
|
|
|
$
|
177,641
|
|
Marketable
securities, at fair value
|
63,446
|
|
|
61,987
|
|
|
61,727
|
|
Inventories
|
227,736
|
|
|
235,218
|
|
|
224,233
|
|
Prepaid expenses and
other current assets
|
47,919
|
|
|
63,845
|
|
|
57,301
|
|
Total Current
Assets
|
438,735
|
|
|
485,178
|
|
|
520,902
|
|
Property and
Equipment, net
|
337,049
|
|
|
370,932
|
|
|
393,525
|
|
Right of Use
Assets
|
697,332
|
|
|
—
|
|
|
—
|
|
Other
Assets:
|
|
|
|
|
|
Goodwill
|
96,774
|
|
|
96,774
|
|
|
96,774
|
|
Other intangible
assets, net
|
38,930
|
|
|
38,930
|
|
|
38,930
|
|
Other assets,
net
|
17,468
|
|
|
15,220
|
|
|
13,327
|
|
Total Other
Assets
|
153,172
|
|
|
150,924
|
|
|
149,031
|
|
|
$
|
1,626,288
|
|
|
$
|
1,007,034
|
|
|
$
|
1,063,458
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
137,142
|
|
|
$
|
143,404
|
|
|
$
|
139,604
|
|
Current lease
liabilities
|
158,866
|
|
|
—
|
|
|
—
|
|
Other current and
deferred liabilities
|
108,861
|
|
|
131,820
|
|
|
119,497
|
|
Total Current
Liabilities
|
404,869
|
|
|
275,224
|
|
|
259,101
|
|
Noncurrent
Liabilities:
|
|
|
|
|
|
Long-term
debt
|
50,000
|
|
|
57,500
|
|
|
61,250
|
|
Long-term lease
liabilities
|
611,308
|
|
|
—
|
|
|
—
|
|
Other noncurrent and
deferred liabilities
|
8,860
|
|
|
89,109
|
|
|
97,454
|
|
Deferred
taxes
|
2,129
|
|
|
5,237
|
|
|
4,640
|
|
Total Noncurrent
Liabilities
|
672,297
|
|
|
151,846
|
|
|
163,344
|
|
Commitments and
Contingencies
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
Preferred
stock
|
—
|
|
|
—
|
|
|
—
|
|
Common
stock
|
1,180
|
|
|
1,169
|
|
|
1,257
|
|
Additional paid-in
capital
|
487,789
|
|
|
486,406
|
|
|
476,480
|
|
Treasury stock, at
cost
|
(494,395)
|
|
|
(494,395)
|
|
|
(444,252)
|
|
Retained
earnings
|
554,694
|
|
|
587,145
|
|
|
607,643
|
|
Accumulated other
comprehensive loss
|
(146)
|
|
|
(361)
|
|
|
(115)
|
|
Total
Shareholders' Equity
|
549,122
|
|
|
579,964
|
|
|
641,013
|
|
|
$
|
1,626,288
|
|
|
$
|
1,007,034
|
|
|
$
|
1,063,458
|
|
|
The Company
adopted Accounting Standard Update ("ASU") 2016-02, Leases,
and related amendments as of February 3, 2019 under the modified
retrospective approach and, therefore, has not revised comparative
periods.
|
Chico's FAS, Inc.
and Subsidiaries
Condensed Consolidated Cash Flow Statements
(Unaudited)
(in thousands)
|
|
|
Twenty-Six Weeks
Ended
|
|
August 3,
2019
|
|
August 4,
2018
|
Cash Flows from
Operating Activities:
|
|
|
|
Net (loss)
income
|
$
|
(284)
|
|
|
$
|
45,772
|
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
46,826
|
|
|
45,870
|
|
Non-cash lease
expense
|
106,961
|
|
|
—
|
|
Loss on disposal and
impairment of property and equipment, net
|
196
|
|
|
1,778
|
|
Deferred tax
benefit
|
(2,639)
|
|
|
(2,600)
|
|
Share-based
compensation expense
|
3,486
|
|
|
10,238
|
|
Deferred rent and
lease credits
|
—
|
|
|
(10,101)
|
|
Changes in assets and
liabilities:
|
|
|
|
Inventories
|
7,482
|
|
|
8,669
|
|
Prepaid expenses and
other assets
|
(4,432)
|
|
|
5,864
|
|
Accounts
payable
|
(16,509)
|
|
|
10,440
|
|
Accrued and other
liabilities
|
(5,884)
|
|
|
(16,329)
|
|
Lease
liability
|
(114,186)
|
|
|
—
|
|
Net cash provided by
operating activities
|
21,017
|
|
|
99,601
|
|
Cash Flows from
Investing Activities:
|
|
|
|
Purchases of
marketable securities
|
(25,615)
|
|
|
(17,315)
|
|
Proceeds from sale of
marketable securities
|
24,384
|
|
|
15,718
|
|
Purchases of property
and equipment
|
(14,076)
|
|
|
(19,844)
|
|
Net cash used in
investing activities
|
(15,307)
|
|
|
(21,441)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
Proceeds from
borrowings
|
—
|
|
|
61,250
|
|
Payments on
borrowings
|
(7,500)
|
|
|
(68,750)
|
|
Proceeds from
issuance of common stock
|
392
|
|
|
679
|
|
Dividends
paid
|
(20,633)
|
|
|
(22,012)
|
|
Repurchase of common
stock
|
—
|
|
|
(28,443)
|
|
Payments of tax
withholdings related to share-based awards
|
(2,484)
|
|
|
(3,226)
|
|
Net cash used in
financing activities
|
(30,225)
|
|
|
(60,502)
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
21
|
|
|
(88)
|
|
Net (decrease)
increase in cash and cash equivalents
|
(24,494)
|
|
|
17,570
|
|
Cash and Cash
Equivalents, Beginning of period
|
124,128
|
|
|
160,071
|
|
Cash and Cash
Equivalents, End of period
|
$
|
99,634
|
|
|
$
|
177,641
|
|
|
The Company
adopted ASU 2016-02, Leases, and related amendments as of
February 3, 2019 under the modified retrospective approach and,
therefore, has not revised comparative periods.
|
Supplemental
Detail on Net (Loss) Income Per Common 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 and twenty-six weeks ended
August 3, 2019 and August 4, 2018, potential common
shares were excluded from the computation of diluted income per
share to the extent they were antidilutive.
|
|
The following
unaudited table sets forth the computation of net (loss) income per
basic and diluted share shown on the face of the accompanying
condensed consolidated statements of (loss) income (in thousands,
except per share amounts):
|
|
|
|
Thirteen Weeks
Ended
|
|
Twenty-Six Weeks
Ended
|
|
|
August 3,
2019
|
|
August 4,
2018
|
|
August 3,
2019
|
|
August 4,
2018
|
Numerator
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(2,309)
|
|
|
$
|
16,768
|
|
|
$
|
(284)
|
|
|
$
|
45,772
|
|
Net income and
dividends declared allocated to
participating securities
|
|
—
|
|
|
(444)
|
|
|
—
|
|
|
(1,169)
|
|
Net (loss) income
available to common
shareholders
|
|
$
|
(2,309)
|
|
|
$
|
16,324
|
|
|
$
|
(284)
|
|
|
$
|
44,603
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding –
basic
|
|
114,802
|
|
|
124,730
|
|
|
114,618
|
|
|
125,003
|
|
Dilutive effect of
non-participating securities
|
|
—
|
|
|
44
|
|
|
—
|
|
|
51
|
|
Weighted average
common and common
equivalent shares outstanding – diluted
|
|
114,802
|
|
|
124,774
|
|
|
114,618
|
|
|
125,054
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.02)
|
|
|
$
|
0.13
|
|
|
$
|
0.00
|
|
|
$
|
0.36
|
|
Diluted
|
|
$
|
(0.02)
|
|
|
$
|
0.13
|
|
|
$
|
0.00
|
|
|
$
|
0.36
|
|
GAAP to Non-GAAP
Reconciliation of Net (Loss) Income and (Loss) Income Per Diluted
Common Share
|
|
The Company reports
information in accordance with GAAP. The Company's management does
not, nor does it suggest that investors should, consider non-GAAP
financial measures in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP. Further,
the non-GAAP measures utilized by the Company may be unique to the
Company, as they may be different from non-GAAP measures used by
other companies. The Company believes presenting these
non-GAAP measures, which exclude items that are not comparable from
period to period, is useful to investors and others in evaluating
the Company's ongoing operating and financial results in a manner
that is consistent with management's evaluation of business
performance and understanding how such results compare with the
Company's historical performance. The reconciliation below excludes
the impact of the Company's retail fleet optimization plan
announced in the fourth quarter of fiscal 2018.
|
|
A reconciliation of
net (loss) income and (loss) income per diluted share on a GAAP
basis to net (loss) income and income per diluted share on a
non-GAAP basis for the thirteen and twenty-six weeks ended
August 3, 2019 is presented in the table below:
|
|
Chico's FAS, Inc.
and Subsidiaries
|
GAAP to Non-GAAP
Reconciliation of Net (Loss) Income and (Loss) Income per Diluted
Share
|
(Unaudited)
|
(in thousands, except
per share amounts)
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
|
|
Twenty-Six Weeks
Ended
|
|
|
August 3,
2019
|
Net (loss)
income:
|
|
|
|
|
|
|
|
|
|
GAAP
basis
|
|
$
|
(2,309)
|
|
|
$
|
(284)
|
|
Accelerated
depreciation, net of tax (1)
|
|
2,158
|
|
|
5,725
|
|
Non-GAAP adjusted
basis
|
|
$
|
(151)
|
|
|
$
|
5,441
|
|
|
|
|
|
|
Net (loss) income
per common and common equivalent share–diluted:
|
|
|
|
|
|
|
|
|
|
GAAP
basis
|
|
$
|
(0.02)
|
|
|
$
|
0.00
|
|
Accelerated
depreciation, net of tax (1)
|
|
0.02
|
|
|
0.05
|
|
Non-GAAP adjusted
basis
|
|
$
|
0.00
|
|
|
$
|
0.05
|
|
|
(1)
Reflects the impact of accelerated depreciation on property and
equipment due to the change in the useful life of store assets for
store closures added as a result of the Company's retail fleet
optimization plan.
|
Chico's FAS, Inc.
and Subsidiaries
|
Store Count and
Square Footage
|
Thirteen Weeks Ended
August 3, 2019
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
May 4,
2019
|
|
New
Stores
|
|
Closures
|
|
August 3,
2019
|
|
|
Store
Count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
548
|
|
|
—
|
|
|
(11)
|
|
|
537
|
|
|
|
Chico's
outlets
|
125
|
|
|
—
|
|
|
(1)
|
|
|
124
|
|
|
|
Chico's
Canada
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
|
WHBM frontline
boutiques
|
386
|
|
|
—
|
|
|
(6)
|
|
|
380
|
|
|
|
WHBM
outlets
|
65
|
|
|
—
|
|
|
(2)
|
|
|
63
|
|
|
|
WHBM
Canada
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
|
Soma frontline
boutiques
|
257
|
|
|
—
|
|
|
(3)
|
|
|
254
|
|
|
|
Soma
outlets
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
|
Total Chico's FAS,
Inc.
|
1,410
|
|
|
—
|
|
|
(23)
|
|
|
1,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 4,
2019
|
|
New
Stores
|
|
Closures
|
|
Other Changes
in SSF
|
|
August 3,
2019
|
Net Selling Square
Footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,492,827
|
|
|
—
|
|
|
(28,721)
|
|
|
(1,273)
|
|
|
1,462,833
|
|
Chico's
outlets
|
315,400
|
|
|
—
|
|
|
(2,462)
|
|
|
—
|
|
|
312,938
|
|
Chico's
Canada
|
9,695
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,695
|
|
WHBM frontline
boutiques
|
900,856
|
|
|
—
|
|
|
(13,140)
|
|
|
(702)
|
|
|
887,014
|
|
WHBM
outlets
|
135,863
|
|
|
—
|
|
|
(4,340)
|
|
|
—
|
|
|
131,523
|
|
WHBM
Canada
|
14,891
|
|
|
—
|
|
|
—
|
|
|
697
|
|
|
15,588
|
|
Soma frontline
boutiques
|
486,461
|
|
|
—
|
|
|
(6,091)
|
|
|
—
|
|
|
480,370
|
|
Soma
outlets
|
35,774
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,774
|
|
Total Chico's FAS,
Inc.
|
3,391,767
|
|
|
—
|
|
|
(54,754)
|
|
|
(1,278)
|
|
|
3,335,735
|
|
|
As of August 3,
2019, the Company's franchise operations consisted of 83
international retail locations in Mexico and 2 domestic airport
stores.
|
Chico's FAS, Inc.
and Subsidiaries
|
Store Count and
Square Footage
|
Twenty-Six Weeks
Ended August 3, 2019
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
February 2,
2019
|
|
New
Stores
|
|
Closures
|
|
August 3,
2019
|
|
|
Store
count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
551
|
|
|
—
|
|
|
(14)
|
|
|
537
|
|
|
|
Chico's
outlets
|
125
|
|
|
—
|
|
|
(1)
|
|
|
124
|
|
|
|
Chico's
Canada
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
|
WHBM frontline
boutiques
|
390
|
|
|
—
|
|
|
(10)
|
|
|
380
|
|
|
|
WHBM
outlets
|
65
|
|
|
—
|
|
|
(2)
|
|
|
63
|
|
|
|
WHBM
Canada
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
|
Soma frontline
boutiques
|
258
|
|
|
—
|
|
|
(4)
|
|
|
254
|
|
|
|
Soma
outlets
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
|
Total Chico's FAS,
Inc.
|
1,418
|
|
|
—
|
|
|
(31)
|
|
|
1,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 2,
2019
|
|
New
Stores
|
|
Closures
|
|
Other Changes
in SSF
|
|
August 3,
2019
|
Net Selling Square
Footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,502,688
|
|
|
—
|
|
|
(37,471)
|
|
|
(2,384)
|
|
|
1,462,833
|
|
Chico's
outlets
|
315,400
|
|
|
—
|
|
|
(2,462)
|
|
|
—
|
|
|
312,938
|
|
Chico's
Canada
|
9,695
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,695
|
|
WHBM frontline
boutiques
|
909,849
|
|
|
—
|
|
|
(22,258)
|
|
|
(577)
|
|
|
887,014
|
|
WHBM
outlets
|
135,863
|
|
|
—
|
|
|
(4,340)
|
|
|
—
|
|
|
131,523
|
|
WHBM
Canada
|
14,891
|
|
|
—
|
|
|
—
|
|
|
697
|
|
|
15,588
|
|
Soma frontline
boutiques
|
488,509
|
|
|
—
|
|
|
(8,139)
|
|
|
—
|
|
|
480,370
|
|
Soma
outlets
|
35,774
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,774
|
|
Total Chico's FAS,
Inc.
|
3,412,669
|
|
|
—
|
|
|
(74,670)
|
|
|
(2,264)
|
|
|
3,335,735
|
|
|
As of August 3,
2019, the Company's franchise operations consisted of 83
international retail locations in Mexico and 2 domestic airport
stores.
|
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SOURCE Chico's FAS, Inc.