FORT MYERS, Fla., Feb. 27, 2020 /PRNewswire/ --
- Chico's FAS delivers 2.2% comparable sales growth with
all brands reporting positive
- Improved product assortment favorably impacting
sales
- Fourth quarter GAAP loss of $0.04 per diluted share; Adjusted loss of
$0.03 per diluted share
Chico's FAS, Inc. (NYSE: CHS) (the "Company") today announced
its financial results for the fiscal 2019 fourth quarter and fiscal
year ended February 1, 2020.
Bonnie Brooks, CEO and President
of the Company, said, "We are extremely pleased with the
significant sequential turnaround in our business, resulting in our
first quarter of positive comparable sales for all three brands
since the fourth quarter of 2014. Our strong performance can be
primarily attributed to our disciplined focus on driving sales
through improved and elevated product aligned more closely to our
customer's expectations. In Q4, we continued to deliver on each of
our strategic priorities, with a renewed rigor and relentless
attention to every detail of operating our businesses. We are
especially pleased with both our significant digital growth and
frontline growth, as we continue to work towards delivering our
unique and personal service through all channels of the
company."
For the thirteen weeks ended February 1, 2020 ("the fourth
quarter"), the Company reported a net loss of $4.3 million, or $0.04 loss per diluted share, compared to a net
loss of $16.6 million, or
$0.14 loss per diluted share, for the
thirteen weeks ended February 2, 2019 ("last year's fourth
quarter"). The Company reported a fourth quarter adjusted net loss
of $3.5 million, or $0.03 loss per diluted share, compared to an
adjusted net loss of $8.6 million, or
$0.07 loss per diluted share, in last
year's fourth quarter, as presented in the related accompanying
GAAP to non-GAAP reconciliation.
For the fifty-two weeks ended February 1, 2020 ("fiscal
2019"), the Company reported a net loss of $12.8 million, or $0.11 loss per diluted share, compared to net
income of $35.6 million, or
$0.28 earnings per diluted share, for
the fifty-two weeks ended February 2, 2019 ("fiscal 2018").
The Company reported a fiscal 2019 adjusted net loss of
$2.6 million, or $0.02 loss per diluted share, compared to
adjusted net income of $38.8 million,
or $0.31 earnings per diluted share,
in fiscal 2018, as presented in the related accompanying GAAP to
non-GAAP reconciliation.
Fiscal 2019 Fourth Quarter Business Highlights
The following fiscal 2019 fourth quarter business highlights
reflect the Company's progress executing on its three strategic
priorities: (i) driving stronger sales through improved product and
marketing; (ii) optimizing the customer journey by simplifying,
digitizing and extending the Company's unique and personalized
service; and (iii) transforming sourcing and supply chain
operations to increase product speed to market and improve
quality.
- Chico's® reported positive comparable sales,
reflecting strong progress in our assortment with improvements in
quality, design and newness, as well as elevated marketing.
- White House Black Market® ("WHBM") reported positive
comparable sales enabled by our ability to quickly edit our
assortment and bring in new product. The rigors and discipline that
we put in place are working.
- Soma® delivered its sixth consecutive quarter of
positive comparable sales, driven by a strong response to our
holiday offering, including record breaking sales during peak
holiday period. Soma continues to offer innovative and
solution-oriented assortments that we believe our customers
love.
- The Company continues to focus on reducing its overall
China penetration and diversifying
its country of origin mix, which are tracking ahead of schedule.
The Company is making significant progress in securing partnerships
with key vendors to create a leaner, more efficient supply
chain.
Net Sales
For the fourth quarter, net sales were $527.1 million compared to $524.7 million in last year's fourth quarter.
This 0.4% increase reflects a comparable sales improvement of 2.2%,
partially offset by the impact of 77 net store closures since last
year's fourth quarter. The comparable sales improvement was driven
by higher average dollar sale and an increase in transaction
count.
For fiscal 2019, net sales were $2.0
billion compared to $2.1
billion in fiscal 2018. This 4.4% decrease reflects a
comparable sales decline of 3.4% as well as the impact of 77 net
store closures since fiscal 2018. The comparable sales decline was
driven by lower average dollar sale and a decrease in transaction
count.
Comparable Sales
|
Thirteen Weeks
Ended
|
|
Fifty-Two Weeks
Ended
|
|
February 1,
2020
|
|
February 2,
2019
|
|
February 1,
2020
|
|
February 2,
2019
|
Chico's
|
0.9%
|
|
(7.9)%
|
|
(4.3)%
|
|
(6.8)%
|
White House Black
Market
|
0.1
|
|
(2.9)
|
|
(7.9)
|
|
(4.6)
|
Soma
|
9.4
|
|
6.2
|
|
8.8
|
|
0.6
|
Total
Company
|
2.2%
|
|
(3.8)%
|
|
(3.4)%
|
|
(4.9)%
|
Gross Margin
For the fourth quarter, gross margin was $171.4 million, or 32.5% of net sales, compared
to $158.7 million, or 30.2% of net
sales, in last year's fourth quarter. This 230-basis point increase
primarily reflects a 180-basis point favorable net impact resulting
from lower impairment and accelerated depreciation charges related
to our retail fleet optimization plan, combined with a 150-basis
point improvement in occupancy and omnichannel program costs as a
percent of sales, partially offset by an approximate 100-basis
point impact of incremental tariffs on maintained margin.
Selling, General and Administrative Expenses
For the fourth quarter, selling, general and administrative
expenses ("SG&A") were $177.0
million, or 33.6% of net sales, compared to $180.8 million, or 34.4% of net sales, for last
year's fourth quarter. This $3.9
million decrease primarily reflects a reduction in
employee-related expenses and lower outside consultant costs.
Retail Fleet Optimization Plan
In the fourth quarter, the Company recorded pre-tax accelerated
depreciation charges of property and equipment within cost of goods
sold ("COGS") of $1.2 million related
to our retail fleet optimization plan. On an after-tax basis, the
fourth quarter impact of these charges was $0.8 million, or $0.01 earnings per diluted share. In last year's
fourth quarter, the Company recorded pre-tax impairment and
accelerated depreciation charges of property and equipment within
COGS of $9.4 million and $1.3 million, respectively. On an after-tax
basis, the impact of these charges on last year's fourth quarter
was $8.1 million, or $0.07 earnings per diluted share.
Income Tax
For the fourth quarter, the effective tax rate was a benefit of
21.6% compared to a benefit of 24.5% for last year's fourth
quarter. The unfavorability in the effective rate compared to last
year's fourth quarter primarily reflects a smaller pre-tax loss
than projected in the fourth quarter, the benefit of which was
partially offset by foreign withholding taxes and state and local
income tax liabilities in separate-filing jurisdictions.
The fiscal 2019 effective tax rate was a provision of (6.7)%
compared to a fiscal 2018 provision of 17.8%. The fiscal 2019
effective tax rate primarily reflects an income tax benefit on an
annual operating loss, offset by a valuation allowance on certain
deferred tax assets and other adjustments for charitable
contributions with limitations and employee share-based
compensation expense. The favorable fiscal 2018 effective tax rate
was primarily the result of the acceleration of deductions into the
2017 federal tax return as a result of the Tax Cuts and Jobs Act of
2017 ("Tax Act").
Cash, Marketable Securities and Debt
At the end of the fourth quarter, cash and marketable securities
totaled $127.9 million while debt
totaled $42.5 million.
Inventories
At the end of fiscal 2019, inventories totaled $246.7 million compared to $235.2 million at the end of fiscal 2018. This
$11.5 million increase, or 4.9%,
primarily reflects the ongoing investment in Soma inventory to fund
growth.
Fiscal 2020 First Quarter and Full-Year Outlook
The Company is initiating outlook for fiscal 2020, which
includes the incremental impact of tariffs while excluding fiscal
2019 net charges related to the Company's retail fleet optimization
plan and the impact of severance and other related net charges
("Severance Charges"). The outlook for both the first quarter and
fiscal year excludes the potential impact related to the
coronavirus (COVID-19). In addition, the Company expects any
incremental tariff impacts to be largely offset by sourcing
initiatives.
For the fiscal 2020 first quarter, compared to the fiscal 2019
first quarter:
- The Company anticipates a low single-digit increase in total
net sales and consolidated comparable sales, reflecting continued
progress and momentum in the business.
- The Company expects gross margin as a percent of net sales to
increase approximately 20 to 40 basis points, due primarily to
strategic reductions in promotional depth as well as leverage of
fixed costs on higher sales.
- SG&A expenses are expected to be approximately flat,
reflecting ongoing cost management, offset by investments in
marketing and a return to target incentive compensation
levels.
For full year fiscal 2020, compared to the full year fiscal
2019:
- The Company anticipates a low single-digit increase in total
net sales and consolidated comparable sales.
- The Company expects gross margin as a percent of net sales to
increase approximately 50 to 100 basis points, due primarily to
strategic reductions in promotional depth as well as leverage of
fixed costs on higher sales.
- SG&A expenses are expected to increase approximately
$10 million, reflecting investments
in marketing and a return to target incentive compensation levels,
partially offset by ongoing cost management.
- The Company estimates a fiscal 2020 tax expense in the range of
$3 to $5
million.
- Capital and cloud-based expenditures are expected to be
approximately $45 to $50 million, primarily driven by technology
enhancements and targeted reinvestments in stores.
Conference Call Information
The Company is hosting a live conference call on Thursday, February 27, 2020 beginning at
8:00 a.m. ET to review the operating
results for the fourth quarter. The conference call is being
webcast live over the Internet, which you may access in the
Investors section of the Company's 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, 9354763, 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 omnichannel
specialty retailer of women's private branded, sophisticated,
casual-to-dressy clothing, intimates and complementary
accessories.
As of February 1, 2020, the Company operated 1,341 stores
in the U.S. and Canada and sold
merchandise through 70 international franchise locations in
Mexico and 2 domestic franchise
airport locations. 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' quote
and in the section entitled "Fiscal 2020 First 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 revised
organizational structure, 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); the potential impact
of the coronavirus (COVID-19) on manufacturing operations in
China and our supply chain; 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)
Investor Relations Contact:
Tom Filandro
ICR, Inc.
(646) 277-1235
tom.filandro@icrinc.com
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
|
|
Fifty-Two Weeks
Ended
|
|
|
February 1,
2020
|
|
February 2,
2019
|
|
February 1,
2020
|
|
February 2,
2019
|
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
Net
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chico's
|
|
$
|
249,621
|
|
47.3%
|
|
$
|
251,460
|
|
48.0%
|
|
$
|
1,045,221
|
|
51.3%
|
|
$
|
1,098,707
|
|
51.6%
|
White House Black
Market
|
|
171,620
|
|
32.6
|
|
175,413
|
|
33.4
|
|
627,315
|
|
30.8
|
|
694,804
|
|
32.6
|
Soma
|
|
105,844
|
|
20.1
|
|
97,855
|
|
18.6
|
|
365,339
|
|
17.9
|
|
337,629
|
|
15.8
|
Total net
sales
|
|
527,085
|
|
100.0
|
|
524,728
|
|
100.0
|
|
2,037,875
|
|
100.0
|
|
2,131,140
|
|
100.0
|
Cost of goods
sold
|
|
355,698
|
|
67.5
|
|
366,027
|
|
69.8
|
|
1,335,997
|
|
65.6
|
|
1,367,726
|
|
64.2
|
Gross
margin
|
|
171,387
|
|
32.5
|
|
158,701
|
|
30.2
|
|
701,878
|
|
34.4
|
|
763,414
|
|
35.8
|
Selling, general and
administrative expenses
|
|
176,974
|
|
33.6
|
|
180,846
|
|
34.4
|
|
713,951
|
|
35.0
|
|
719,748
|
|
33.8
|
(Loss) income from
operations
|
|
(5,587)
|
|
(1.1)
|
|
(22,145)
|
|
(4.2)
|
|
(12,073)
|
|
(0.6)
|
|
43,666
|
|
2.0
|
Interest income
(expense), net
|
|
40
|
|
0.0
|
|
105
|
|
0.0
|
|
119
|
|
0.0
|
|
(353)
|
|
0.0
|
(Loss) income
before income taxes
|
|
(5,547)
|
|
(1.1)
|
|
(22,040)
|
|
(4.2)
|
|
(11,954)
|
|
(0.6)
|
|
43,313
|
|
2.0
|
Income tax (benefit)
provision
|
|
(1,200)
|
|
(0.3)
|
|
(5,400)
|
|
(1.0)
|
|
800
|
|
0.0
|
|
7,700
|
|
0.4
|
Net (loss)
income
|
|
$
|
(4,347)
|
|
(0.8)
|
|
$
|
(16,640)
|
|
(3.2)
|
|
$
|
(12,754)
|
|
(0.6)
|
|
$
|
35,613
|
|
1.6
|
Per share
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
common share-basic
|
|
$
|
(0.04)
|
|
|
|
$
|
(0.14)
|
|
|
|
$
|
(0.11)
|
|
|
|
$
|
0.28
|
|
|
Net (loss) income per
common and common
equivalent share–diluted
|
|
$
|
(0.04)
|
|
|
|
$
|
(0.14)
|
|
|
|
$
|
(0.11)
|
|
|
|
$
|
0.28
|
|
|
Weighted average
common shares
outstanding–basic
|
|
115,203
|
|
|
|
118,440
|
|
|
|
114,859
|
|
|
|
122,662
|
|
|
Weighted average
common and common
equivalent shares outstanding–diluted
|
|
115,203
|
|
|
|
118,440
|
|
|
|
114,859
|
|
|
|
122,729
|
|
|
Dividends declared
per common share
|
|
$
|
0.0875
|
|
|
|
$
|
0.085
|
|
|
|
$
|
0.35
|
|
|
|
$
|
0.34
|
|
|
Chico's FAS, Inc.
and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
(in
thousands)
|
|
|
February 1,
2020
|
|
February 2,
2019
|
|
ASSETS
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
63,972
|
|
$
|
124,128
|
Marketable
securities, at fair value
|
63,893
|
|
61,987
|
Inventories
|
246,737
|
|
235,218
|
Prepaid expenses and
other current assets
|
48,200
|
|
63,845
|
Total Current
Assets
|
422,802
|
|
485,178
|
Property and
Equipment, net
|
315,382
|
|
370,932
|
Right of Use
Assets
|
648,397
|
|
—
|
Other
Assets:
|
|
|
|
Goodwill
|
96,774
|
|
96,774
|
Other intangible
assets, net
|
38,930
|
|
38,930
|
Other assets,
net
|
20,374
|
|
15,220
|
Total Other
Assets
|
156,078
|
|
150,924
|
|
$
|
1,542,659
|
|
$
|
1,007,034
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
|
134,204
|
|
$
|
143,404
|
Current lease
liabilities
|
157,043
|
|
—
|
Other current and
deferred liabilities
|
114,498
|
|
131,820
|
Total Current
Liabilities
|
405,745
|
|
275,224
|
Noncurrent
Liabilities:
|
|
|
|
Long-term
debt
|
42,500
|
|
57,500
|
Long-term lease
liabilities
|
555,922
|
|
—
|
Other noncurrent and
deferred liabilities
|
8,188
|
|
89,109
|
Deferred
taxes
|
212
|
|
5,237
|
Total Noncurrent
Liabilities
|
606,822
|
|
151,846
|
Commitments and
Contingencies
|
|
|
|
Shareholders'
Equity:
|
|
|
|
Preferred
stock
|
—
|
|
—
|
Common
stock
|
1,184
|
|
1,169
|
Additional paid-in
capital
|
492,129
|
|
486,406
|
Treasury stock, at
cost
|
(494,395)
|
|
(494,395)
|
Retained
earnings
|
531,602
|
|
587,145
|
Accumulated other
comprehensive loss
|
(428)
|
|
(361)
|
Total
Shareholders' Equity
|
530,092
|
|
579,964
|
|
$
|
1,542,659
|
|
$
|
1,007,034
|
|
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)
|
|
|
Fifty-Two Weeks
Ended
|
|
February 1,
2020
|
|
February 2,
2019
|
Cash Flows from
Operating Activities:
|
|
|
|
Net (loss)
income
|
$
|
(12,754)
|
|
$
|
35,613
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
88,411
|
|
91,333
|
Non-cash lease
expense
|
212,595
|
|
—
|
Loss on disposal and
impairment of long-lived assets, net
|
2,343
|
|
13,628
|
Deferred tax
benefit
|
(3,326)
|
|
(2,100)
|
Share-based
compensation expense
|
7,145
|
|
19,783
|
Deferred rent and
lease credits
|
—
|
|
(19,527)
|
Changes in assets and
liabilities:
|
|
|
|
Inventories
|
(11,519)
|
|
(2,316)
|
Prepaid expenses and
other assets
|
(11,302)
|
|
1,250
|
Accounts
payable
|
(9,525)
|
|
25,097
|
Accrued and other
liabilities
|
(603)
|
|
(4,687)
|
Lease
liability
|
(228,121)
|
|
—
|
Net cash provided by
operating activities
|
33,344
|
|
158,074
|
Cash Flows from
Investing Activities:
|
|
|
|
Purchases of
marketable securities
|
(49,663)
|
|
(38,693)
|
Proceeds from sale of
marketable securities
|
47,955
|
|
37,007
|
Purchases of property
and equipment
|
(33,939)
|
|
(54,187)
|
Net cash used in
investing activities
|
(35,647)
|
|
(55,873)
|
Cash Flows from
Financing Activities:
|
|
|
|
Proceeds from
borrowings
|
—
|
|
61,250
|
Payments on
borrowings
|
(15,000)
|
|
(72,500)
|
Proceeds from
issuance of common stock
|
1,143
|
|
1,548
|
Dividends
paid
|
(41,179)
|
|
(43,208)
|
Repurchase of common
stock
|
—
|
|
(81,052)
|
Payments of tax
withholdings related to share-based awards
|
(2,550)
|
|
(3,715)
|
Net cash used in
financing activities
|
(57,586)
|
|
(137,677)
|
Effects of exchange
rate changes on cash and cash equivalents
|
(267)
|
|
(467)
|
Net decrease in cash
and cash equivalents
|
(60,156)
|
|
(35,943)
|
Cash and Cash
Equivalents, Beginning of period
|
124,128
|
|
160,071
|
Cash and Cash
Equivalents, End of period
|
$
|
63,972
|
|
$
|
124,128
|
|
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
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
composed 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 fifty-two weeks ended February 1, 2020 and
February 2, 2019, potential common shares were excluded from
the computation of diluted income per common 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
|
|
Fifty-Two Weeks
Ended
|
|
|
February 1,
2020
|
|
February 2,
2019
|
|
February 1,
2020
|
|
February 2,
2019
|
Numerator
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(4,347)
|
|
$
|
(16,640)
|
|
$
|
(12,754)
|
|
$
|
35,613
|
Net income and
dividends declared allocated to
participating securities
|
|
—
|
|
—
|
|
—
|
|
(879)
|
Net (loss) income
available to common
shareholders
|
|
$
|
(4,347)
|
|
$
|
(16,640)
|
|
$
|
(12,754)
|
|
$
|
34,734
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
– basic
|
|
115,203
|
|
118,440
|
|
114,859
|
|
122,662
|
Dilutive effect of
non-participating securities
|
|
—
|
|
—
|
|
—
|
|
67
|
Weighted average
common and common
equivalent shares outstanding – diluted
|
|
115,203
|
|
118,440
|
|
114,859
|
|
122,729
|
Net (loss) income
per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.04)
|
|
$
|
(0.14)
|
|
$
|
(0.11)
|
|
$
|
0.28
|
Diluted
|
|
$
|
(0.04)
|
|
$
|
(0.14)
|
|
$
|
(0.11)
|
|
$
|
0.28
|
GAAP to Non-GAAP Reconciliation of Net (Loss)
Income and (Loss) Income Per Diluted 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, Severance Charges in connection
with actions taken to reposition our organizational structure, and
the fiscal 2018 impact of the Tax Act.
A reconciliation of net (loss) income and (loss) income per
diluted share on a GAAP basis to net (loss) income and (loss)
income per diluted share on a non-GAAP basis for the thirteen weeks
and fifty-two weeks ended February 1, 2020 and
February 2, 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
|
|
Fifty-Two Weeks
Ended
|
|
|
February 1,
2020
|
|
February 2,
2019
|
|
February 1,
2020
|
|
February 2,
2019
|
Net (loss) income:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
basis
|
|
$
|
(4,347)
|
|
$
|
(16,640)
|
|
$
|
(12,754)
|
|
$
|
35,613
|
Accelerated
depreciation (2)
|
|
841
|
|
957
|
|
8,102
|
|
957
|
Impairment
(2)
|
|
—
|
|
7,123
|
|
—
|
|
7,123
|
Severance
Charges
|
|
—
|
|
—
|
|
2,080
|
|
—
|
Tax Act
|
|
—
|
|
—
|
|
—
|
|
(4,869)
|
Non-GAAP adjusted
basis
|
|
$
|
(3,506)
|
|
$
|
(8,560)
|
|
$
|
(2,572)
|
|
$
|
38,824
|
|
|
|
|
|
|
|
|
|
Net (loss) income
per common and common equivalent share–diluted:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
basis
|
|
$
|
(0.04)
|
|
$
|
(0.14)
|
|
$
|
(0.11)
|
|
$
|
0.28
|
Accelerated
depreciation (2)
|
|
0.01
|
|
0.01
|
|
0.07
|
|
0.01
|
Impairment
(2)
|
|
—
|
|
0.06
|
|
—
|
|
0.06
|
Severance
Charges
|
|
—
|
|
—
|
|
0.02
|
|
—
|
Tax Act
|
|
—
|
|
—
|
|
—
|
|
(0.04)
|
Non-GAAP adjusted
basis
|
|
$
|
(0.03)
|
|
$
|
(0.07)
|
|
$
|
(0.02)
|
|
$
|
0.31
|
|
(1) All adjustments to net
(loss) income are presented net of tax.
|
(2) Reflects the
incremental impact of our retail fleet optimization
plan.
|
GAAP to Non-GAAP Reconciliation of Purchases
of Property and Equipment to Total Capital Spend
As noted above, 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.
Total capital spend is a non-GAAP financial measure which the
Company defines as purchases of property and equipment plus
capitalized implementation costs in a cloud computing arrangement
("CCA") service contact. In the third quarter of fiscal 2018, we
adopted the guidance of Accounting Standards Update 2018-15,
Intangibles - Goodwill and Other - Internal-Use Software:
Customer's Accounting for Implementation Costs Incurred in a Cloud
Computing Arrangement that is a Service Contract, which aligns
the requirements for capitalizing implementation costs in a CCA
service contract with the requirements for capitalizing
implementation costs incurred for an internal-use software license.
Capitalized implementation costs in CCA service contracts are
presented in the same line item of the balance sheet and cash flow
statement that a prepayment of fees for the associated hosting
arrangement is presented.
Total capital spend is not a measure of financial performance
under GAAP and should be considered in addition to, and not as a
substitute for, purchases of property and equipment or other
financial measures prepared in accordance with GAAP. Our method of
determining non-GAAP financial measures may differ from other
companies' methods and therefore may not be comparable to those
used by other companies.
A reconciliation of purchases of property and equipment on a
GAAP basis to total capital spend on a non-GAAP basis for the
fifty-two weeks ended February 1, 2020 is presented in the
table below:
Chico's FAS, Inc.
and Subsidiaries
|
Reconciliation of
Purchases of Property and Equipment to Total Capital
Spend
|
(Unaudited)
|
(in
thousands)
|
|
|
|
Fifty-Two Weeks
Ended
|
|
|
February 1,
2020
|
Purchases of property
and equipment
|
|
$
|
33,939
|
Capitalized
implementation costs in CCA service contracts
|
|
10,714
|
Total capital
spend
|
|
$
|
44,653
|
Chico's FAS, Inc.
and Subsidiaries
|
Store Count and
Square Footage
|
Thirteen Weeks Ended
February 1, 2020
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
November 2,
2019
|
|
New Stores
|
|
Closures
|
|
February 1,
2020
|
|
|
Store
count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
536
|
|
—
|
|
(11)
|
|
525
|
|
|
Chico's
outlets
|
123
|
|
1
|
|
(1)
|
|
123
|
|
|
Chico's
Canada
|
4
|
|
—
|
|
—
|
|
4
|
|
|
WHBM frontline
boutiques
|
376
|
|
—
|
|
(14)
|
|
362
|
|
|
WHBM
outlets
|
63
|
|
—
|
|
(4)
|
|
59
|
|
|
WHBM
Canada
|
6
|
|
—
|
|
—
|
|
6
|
|
|
Soma frontline
boutiques
|
247
|
|
1
|
|
(4)
|
|
244
|
|
|
Soma
outlets
|
18
|
|
—
|
|
—
|
|
18
|
|
|
Total Chico's FAS,
Inc.
|
1,373
|
|
2
|
|
(34)
|
|
1,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 2,
2019
|
|
New Stores
|
|
Closures
|
|
Other changes in
SSF
|
|
February 1,
2020
|
Net selling square
footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,457,547
|
|
—
|
|
(27,799)
|
|
(156)
|
|
1,429,592
|
Chico's
outlets
|
310,242
|
|
2,034
|
|
(2,355)
|
|
—
|
|
309,921
|
Chico's
Canada
|
9,695
|
|
—
|
|
—
|
|
—
|
|
9,695
|
WHBM frontline
boutiques
|
879,008
|
|
—
|
|
(32,451)
|
|
2,221
|
|
848,778
|
WHBM
outlets
|
132,456
|
|
—
|
|
(8,721)
|
|
—
|
|
123,735
|
WHBM
Canada
|
15,588
|
|
—
|
|
—
|
|
—
|
|
15,588
|
Soma frontline
boutiques
|
467,370
|
|
1,294
|
|
(7,887)
|
|
(624)
|
|
460,153
|
Soma
outlets
|
34,329
|
|
—
|
|
—
|
|
—
|
|
34,329
|
Total Chico's FAS,
Inc.
|
3,306,235
|
|
3,328
|
|
(79,213)
|
|
1,441
|
|
3,231,791
|
|
As of
February 1, 2020, the Company's franchise operations consisted
of 70 international retail locations in Mexico and 2 domestic
franchise airport locations.
|
Chico's FAS, Inc.
and Subsidiaries
|
Store Count and
Square Footage
|
Fifty-Two Weeks Ended
February 1, 2020
|
(Unaudited)
|
|
|
February 2,
2019
|
|
New Stores
|
|
Closures
|
|
February 1,
2020
|
|
|
Store
count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
551
|
|
1
|
|
(27)
|
|
525
|
|
|
Chico's
outlets
|
125
|
|
2
|
|
(4)
|
|
123
|
|
|
Chico's
Canada
|
4
|
|
—
|
|
—
|
|
4
|
|
|
WHBM frontline
boutiques
|
390
|
|
1
|
|
(29)
|
|
362
|
|
|
WHBM
outlets
|
65
|
|
1
|
|
(7)
|
|
59
|
|
|
WHBM
Canada
|
6
|
|
—
|
|
—
|
|
6
|
|
|
Soma frontline
boutiques
|
258
|
|
1
|
|
(15)
|
|
244
|
|
|
Soma
outlets
|
19
|
|
—
|
|
(1)
|
|
18
|
|
|
Total Chico's FAS,
Inc.
|
1,418
|
|
6
|
|
(83)
|
|
1,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 2,
2019
|
|
New Stores
|
|
Closures
|
|
Other changes
in SSF
|
|
February 1,
2020
|
Net selling square
footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,502,688
|
|
2,335
|
|
(69,769)
|
|
(5,662)
|
|
1,429,592
|
Chico's
outlets
|
315,400
|
|
4,329
|
|
(9,808)
|
|
—
|
|
309,921
|
Chico's
Canada
|
9,695
|
|
—
|
|
—
|
|
—
|
|
9,695
|
WHBM frontline
boutiques
|
909,849
|
|
2,746
|
|
(66,204)
|
|
2,387
|
|
848,778
|
WHBM
outlets
|
135,863
|
|
3,299
|
|
(15,427)
|
|
—
|
|
123,735
|
WHBM
Canada
|
14,891
|
|
—
|
|
—
|
|
697
|
|
15,588
|
Soma frontline
boutiques
|
488,509
|
|
1,294
|
|
(28,311)
|
|
(1,339)
|
|
460,153
|
Soma
outlets
|
35,774
|
|
—
|
|
(1,445)
|
|
—
|
|
34,329
|
Total Chico's FAS,
Inc.
|
3,412,669
|
|
14,003
|
|
(190,964)
|
|
(3,917)
|
|
3,231,791
|
|
As of
February 1, 2020, the Company's franchise operations consisted
of 70 international retail locations in Mexico and 2 domestic
franchise airport locations.
|
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SOURCE Chico's FAS, Inc.