FORT MYERS, Fla., June 10,
2020 /PRNewswire/ --
- Sales improving as stores open and gain
traction
- 63% of stores now open; 80% of fleet open by
Friday
- Double-digit increase in digital sales during the April
closure period
- Significant actions taken in Q1 to mitigate the financial
impact of the COVID-19 pandemic and improve liquidity
Chico's FAS, Inc. (NYSE: CHS) (the "Company") today announced
its financial results for the fiscal 2020 first quarter ended
May 2, 2020.
Bonnie Brooks, Chief Executive
Officer and President, Chico's FAS said: "We want to thank our
dedicated associates for their commitment and agility in meeting
the needs of our customers during the pandemic. As the impact of
COVID-19 on the retail industry became apparent, we took
immediate actions to safeguard the health and well-being of our
people and communities while simultaneously preserving the
financial stability of the Company.
During the temporary closure of our 1,341 boutiques across
North America and in becoming a
digital-only business for most of the quarter, the Company drove an
even greater level of customer engagement. We entered into Q1
with strong positive comp sales to the end of February that
continued the strong momentum built in fall 2019. During the first
quarter and now into the second, we have strengthened the Company's
liquidity and substantially reduced expenses and cash burn. We are
now halfway through the second quarter with an improved financial
foundation and focused on accelerating the growth strategies that
drove our significant success in the prior two quarters."
Molly Langenstein, Chief
Executive Office and President Elect, Chico's FAS said: "As we look
to the second quarter and the balance of 2020, we believe we will
be competitively stronger because of the measures we've taken to
liquidate our prior season inventory and remove it from our stores
and distribution centers. We are encouraged by our strong store
re-openings and the accelerated demand in our digital channels,
which demonstrate our customers' loyalty to our brands. As a result
of the product changes we made in the second half of 2019, we are
well-positioned to capitalize on the growth opportunities
ahead."
COVID-19 Business Actions Summary
- Temporarily closed all retail stores in North America on March
17, 2020 to safeguard our customers, employees and the
communities we serve;
- Temporarily furloughed the majority of employees, while
providing continued health benefits for eligible employees during
the furlough;
- Temporarily reduced a majority of non-furloughed associates'
salary or hours, including executive officers and the Board of
Directors' (the "Board") annual cash retainers;
- Adopted social distancing policies and enhanced safety
procedures for distribution center associates;
- Suspended rent payments commencing April
2020 and are in active discussions with landlords to find a
mutually beneficial and agreeable path forward;
-
- Engaged a third-party to assist in restructuring the lease
portfolio and to seek rent relief in the form of rent reductions,
rent abatements and other concessions;
- Quickly aligned merchandise receipts with conservative forecast
of market demand;
- Partnered with suppliers and vendors to reduce operating costs
and extend payment terms;
- Significantly reduced selling, general and administrative
("SG&A") expenses to better align operating costs with expected
sales;
- Suspended quarterly dividend beginning in the second quarter;
and
- Reduced capital expenditures primarily related to non-essential
maintenance and business essential expenditures.
- In addition to $117.6 million in
cash and marketable securities at the end of the first quarter, the
Company has substantial additional borrowing capacity under the
asset-based lending facility ("ABL") and by leveraging unencumbered
real estate.
- Borrowings under the ABL have no required principal repayments
until August 2023.
- The Company will realize meaningful added liquidity from
provisions of the Coronavirus Aid, Relief, and Economic Security
Act, including benefits from recent tax filings.
Stores Reopening and Operational Protocols
On April 27, 2020, the Company
announced a phased store reopening plan across North America commencing on May 4, 2020 in accordance with local, state and
federal health and safety guidelines and regulations. Currently,
the Company has 63% of stores open to the public under enhanced
safety precautions and reduced hours, and will have 80% of its
fleet open by June 12, 2020. As part
of its reopening plan, the Company also is offering customers Buy
On-Line, Pick-up In-Store (BOPIS) with contactless curbside pickup
and shop-by-appointment. Second quarter sales are planned to be
better than the first quarter, even as we work with limited store
hours and social distancing guidelines. We will continue to open
our remaining stores as states allow.
The Company has implemented in-store measures to ensure the
safety of employees and customers, including rigorous cleaning
routines, providing hand sanitizer stations in every store,
creating new flexible distance between clothing racks, and
adjusting fitting rooms to accommodate social distancing practices.
These stores will initially operate on reduced hours and the
Company is managing capacity in accordance with local, state and
federal health and safety guidelines and regulations.
Digital Sales
The Company's digital sales remain strong as we continue to
leverage our digital platform, enhanced by our proprietary digital
styling software, Style ConnectSM, that enables us to
communicate directly with the majority of our customers to drive
the digital business. Digital sales in the first quarter exceeded
the same period last year, and we posted a double-digit increase in
April.
Overview of First Quarter Results
Results for the thirteen weeks ended May 2, 2020 (the
"first quarter") were negatively impacted due to the COVID-19
pandemic which led to the temporary closure of all stores across
North America and international
franchise locations in Mexico
during the second half of the first quarter. The Company recognized
significant impairment charges and inventory write-offs as a result
of the COVID-19 pandemic during the first quarter. The Company also
continued to incur payroll expenses and occupancy costs while
stores were closed. Results during the first quarter store closure
period were partially offset by strong digital commerce performance
and the Company's actions to align its cost structure with current
sales expectations.
The Company's first quarter cash flow was also negatively
impacted by the COVID-19 closure period, which resulted from the
Company paying for certain merchandise and expense payables as
planned for the first quarter, despite lost sales during the store
closure period. Further, the Company's cash burn during the first
quarter reflects the payment of the previously approved first
quarter fiscal 2020 dividend and the payout under the fiscal 2019
management incentive plan. The Company remains confident that it
currently has sufficient liquidity to repay its obligations as they
become due for the foreseeable future.
The following results include the impact of the COVID-19
pandemic. Please note the Company is not providing comparable sales
figures as we believe this is not a meaningful measure for the
first quarter due to the significant impact of store closures as a
result of the COVID-19 pandemic.
For the first quarter, the Company reported:
- Net loss of $178.3 million, or
$1.55 loss per diluted share,
compared to net income of $2.0
million, or $0.02 earnings per
diluted share, for the thirteen weeks ended May 4, 2019 ("last year's first quarter"). First
quarter net loss includes the after-tax impact of goodwill
impairment charges of $68.4 million,
or $0.59 per share, impairments on
other indefinite-lived intangible assets of $24.6 million, or $0.21 per share, inventory write-offs of
$26.1 million, or $0.23 per share, long-lived store asset
impairments of $13.9 million, or
$0.12 per share, and impairment on
right of use assets of $1.8 million,
or $0.02 per share. These charges
represent $177.2 million of the
pre-tax net loss and $134.8 million
of the after-tax net loss, or $1.17
per share, in the first quarter of fiscal 2020. Last year's first
quarter net income includes accelerated depreciation charges of
$3.6 million, or $0.03 per share.
- Net sales were $280.3 million,
down approximately 45.9%, compared to $517.7
million in last year's first quarter primarily as a result
of our closed stores during the second half of the first quarter,
partially offset by stronger digital commerce performance.
- Gross margin was $(11.1) million,
or (4.0)% of net sales, compared to $190.8
million, or 36.9% of net sales, in last year's first
quarter, primarily reflecting the impact of inventory write-offs of
$43.1 million and store impairments
of $20.9 million, as well as
deleverage of occupancy costs as a percent of sales.
- SG&A expenses were $130.2
million, or 46.4% of net sales, compared to $185.4 million, or 35.9% of net sales, for last
year's first quarter, reflecting the Company's actions to align its
cost structure with current and future sales expectations,
including temporarily placing the majority of its employees on
furlough and reducing the salary or hours of most remaining
employees, all executive officers and the Board's cash retainers by
50%, effective April 5, 2020, as well
as the benefit of other cost saving initiatives and reduced
marketing and other variable costs.
First Quarter Results
The following results include the impact of the COVID-19
pandemic. Please note the Company is not providing comparable sales
figures for the full first quarter as we believe this is not a
meaningful measure for the first quarter due to the significant
impact of store closures as a result of the COVID-19
pandemic.
For the first quarter, the Company reported a net loss of
$178.3 million, or $1.55 loss per diluted share, compared to net
income of $2.0 million, or
$0.02 earnings per diluted share, for
last year's first quarter. The first quarter results were
significantly impacted by the COVID-19 pandemic and included
significant after-tax charges totaling $134.8 million or $1.17 per share as detailed in the table
below.
Summary of
Significant Charges
|
|
|
|
Thirteen Weeks
Ended
|
|
May 2,
2020
|
|
Amount, pre-tax
(1)
|
|
% of Sales
(1)
|
|
Amount,
after-tax
|
|
Per share
impact
|
|
(dollars in
thousands, except per share amounts)
|
Gross
margin:
|
|
|
|
|
|
|
|
Inventory
write-offs
|
$
|
43,101
|
|
|
15.4
|
%
|
|
$
|
26,091
|
|
|
$
|
0.23
|
|
Long-lived store
asset impairment
|
18,493
|
|
|
6.6
|
|
|
13,907
|
|
|
0.12
|
|
Right of use asset
impairment
|
2,442
|
|
|
0.9
|
|
|
1,837
|
|
|
0.02
|
|
Total significant
charges impacting gross
margin
|
64,035
|
|
|
22.8
|
|
|
41,835
|
|
|
0.37
|
|
Goodwill and
intangible impairment:
|
|
|
|
|
|
|
|
Goodwill
impairment
|
80,414
|
|
|
28.7
|
|
|
68,362
|
|
|
0.59
|
|
Indefinite-lived
asset impairment
|
32,766
|
|
|
11.7
|
|
|
24,640
|
|
|
0.21
|
|
Total goodwill and
intangible impairment
charges
|
113,180
|
|
|
40.4
|
|
|
93,002
|
|
|
0.80
|
|
Total
|
$
|
177,215
|
|
|
63.2
|
%
|
|
$
|
134,837
|
|
|
$
|
1.17
|
|
|
(1)
May not foot due to rounding
|
Net Sales
For the first quarter, net sales were $280.3 million compared to $517.7 million in last year's first quarter. This
decrease of 45.9% reflects the impact of our closed stores during
the second half of the first quarter and 78 net store closures
since last year's first quarter, partially offset by strong digital
commerce performance. During the initial four weeks of fiscal 2020,
the Company's comparable sales increased 2.7% compared to the same
period last year, building on the positive sales momentum reported
in the fourth quarter of fiscal 2019.
Gross Margin
For the first quarter, gross margin was $(11.1) million, or (4.0)% of net sales, compared
to $190.8 million, or 36.9% of net
sales, in last year's first quarter. The decrease in gross margin
primarily reflects the impact of significant charges of
$64.0 million, or 22.8%, related to
inventory write-offs and store impairments as reflected in the
table above, as well as deleverage of occupancy costs as a percent
of sales as April rent was expensed in the first quarter for
accounting purposes, although the April rent payment was
suspended.
Selling, General and Administrative Expenses
For the first quarter, SG&A expenses were $130.2 million, or 46.4% of net sales, compared
to $185.4 million, or 35.9% of net
sales, for last year's first quarter. The decrease in SG&A
expenses primarily reflects the Company's actions to align its cost
structure with current and future sales expectations, including
temporarily placing the majority of its employees on furlough and
reducing the salary or hours of most remaining employees, all
executive officers and the Board's cash retainers by 50%, effective
April 5, 2020, as well as the benefit
of other cost saving initiatives and reduced marketing and other
variable costs.
Income Taxes
For the first quarter, the effective tax rate
was 30.0% compared to 62.7% for last year's
first quarter. The provision for the first quarter was
primarily impacted by the benefits provided by the enactment of the
CARES Act, which was slightly reduced by the unfavorable impact of
the Company's book goodwill impairment and share-based compensation
expense. The 62.7% effective tax rate for last year's first quarter
included the recognition of $2.0
million related to employee share-based compensation
expense, the impact of which was enhanced relative to the statutory
rate due to the Company's low pretax loss. These items account
for the variance between the effective tax rate for the first
quarter and last year's first quarter and the U.S. federal
statutory and state blended income tax rate of approximately
25%.
Cash, Marketable Securities and Debt
At the end of the first quarter, cash and marketable securities
totaled $117.6 million, while debt
totaled $149.0 million.
Inventories
At the end of the first quarter, inventories, net of inventory
reserves, totaled $273.1 million
compared to $242.4 million at the end
of last year's first quarter.
Fiscal 2020 Outlook
The Company previously withdrew its guidance issued in its
fourth quarter earnings release dated February 27, 2020 and is not providing updated
guidance at this time. The impact of the COVID-19 pandemic creates
uncertainty in predicting near-term performance. As previously
discussed, we have aggressively taken actions designed to balance
our cash flows with the current environment. We expect these
actions when combined with our strong financial position and
competitively advantaged brands will enable us to successfully
manage through the COVID-19 pandemic, allowing us to deliver sales
through a variety of channels, including our stores, through social
distancing sales practices such as curbside pickup, appointments
and Style Connect, in addition to growing digital sales.
The Company believes it has appropriately adjusted its floor
sets and receipts to align with sales expectations. Accordingly,
the Company does not currently expect significant inventory
write-offs over the remaining three quarters of fiscal 2020.
As a result of the Company's extensive measures to mitigate the
impact of the COVID-19 pandemic, including temporarily furloughing
the majority of employees, temporarily reducing a majority of
non-furloughed associates' salary or hours, aligning operating
costs with expected sales, and the organizational restructuring, we
expect to realize expense savings of approximately $230 million, or 24%, before rent expense.
There were 9 permanent store closures and no store openings in
the first quarter, and we anticipate closing approximately 50 to 60
stores permanently over the remainder of fiscal 2020. However, with
the disruption we have seen from the pandemic, we intend to
re-evaluate each location's future viability and modify our closure
plans accordingly. Additionally, since the end of last year's first
quarter, we have closed 84 stores.
Conference Call Information
The Company is hosting a live conference call on Wednesday,
June 10, 2020 beginning at 8:30 a.m.
ET to review the operating results for the first 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, 0077814, is required to
join the conference call. Interested participants should call 10-15
minutes prior to the 8:30 a.m. start
to be placed in queue.
ABOUT CHICO'S FAS, INC.
Chico's FAS is a Florida-based
fashion company founded in 1983 on Sanibel Island, Fla. The Company
reinvented the fashion retail experience by creating fashion
communities anchored by our Most Amazing Personal Service, which
put the customer at the center of everything we do. As one of the
leading fashion retailers in North
America, Chico's FAS is a company of three unique brands -
Chico's®, White House Black Market® and
Soma® - each thriving in their own white space, founded
by women, led by women, providing solutions that millions of women
say give them confidence and joy.
Our Company has a passion for fashion, and each day, we provide
clothing, shoes and accessories, intimate apparel and expert
styling in our brick-and-mortar boutiques, digital online boutiques
and through Style Connect, the Company's proprietary digital
styling tool that enables customers to conveniently shop wherever,
whenever and however they prefer.
As of May 2, 2020, the Company operated 1,332 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.
To learn more about Chico's FAS, visit 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 statements
that constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. The
statements, including without limitation quotes from Ms. Brooks and
Ms. Langenstein and the sections captioned "COVID-19 Business
Actions Summary" and "Liquidity and the CARES Act," relate to
expectations and projections regarding the Company's future
performance and may include the words "anticipate," "believe,"
"could," "estimate," "expect," "intend," "may," "plan," "outlook,"
"project," "should," "strategy," "potential", "confident" and
similar terms. 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
risks and uncertainties that could cause actual results to differ
materially from historical results or those expressed or implied by
such forward-looking statements. Although we believe our
expectations are based on reasonable estimates and assumptions,
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 actual results
to differ include, but are not limited to: the effects of the
COVID-19 pandemic and uncertainties about its depth and duration,
including any resurgence, as well as the impacts to economic
conditions and consumer behavior, including, among others:
temporary store closures due to government mandates, the extent,
availability and effectiveness of any COVID-19 stimulus packages or
loan programs, and trends in consumer behavior and spending during
and after the end of the pandemic; our ability to successfully
implement any alternatives that we pursue including our ability to
achieve the cost savings and additional liquidity described in this
release; government actions and policies; increases in unemployment
rates and taxes; local, regional, national and international
economic conditions; 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 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 organizational restructure, 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 transition of 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 that could impact, among other things,
our sourcing from foreign suppliers; and significant shifts in
consumer behavior. Other risk factors are detailed from time to
time in the Company's Quarterly Reports on Form 10-Q, Annual Report
on Form 10-K and other reports filed with the Securities and
Exchange Commission. These factors should be considered in
evaluating forward–looking statements contained herein. There can
be no assurance that the actual future results, performance, or
achievements expressed or implied by such forward-looking
statements will occur. 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
|
|
May 2,
2020
|
|
May 4,
2019
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
Net
Sales:
|
|
|
|
|
|
|
|
Chico's
|
$
|
131,437
|
|
|
46.9
|
%
|
|
$
|
276,702
|
|
|
53.4
|
%
|
White House Black
Market
|
83,920
|
|
|
29.9
|
|
|
160,945
|
|
|
31.1
|
|
Soma
(1)
|
64,907
|
|
|
23.2
|
|
|
80,081
|
|
|
15.5
|
|
Total Net
Sales
|
280,264
|
|
|
100.0
|
|
|
517,728
|
|
|
100.0
|
|
Cost of goods
sold
|
291,359
|
|
|
104.0
|
|
|
326,897
|
|
|
63.1
|
|
Gross
Margin
|
(11,095)
|
|
|
(4.0)
|
|
|
190,831
|
|
|
36.9
|
|
Selling, general and
administrative expenses
|
130,171
|
|
|
46.4
|
|
|
185,408
|
|
|
35.9
|
|
Goodwill and
intangible impairment
|
113,180
|
|
|
40.4
|
|
|
—
|
|
|
0.0
|
|
(Loss) Income from
Operations
|
(254,446)
|
|
|
(90.8)
|
|
|
5,423
|
|
|
1.0
|
|
Interest (expense)
income, net
|
(344)
|
|
|
(0.1)
|
|
|
2
|
|
|
0.0
|
|
(Loss) Income
before Income Taxes
|
(254,790)
|
|
|
(90.9)
|
|
|
5,425
|
|
|
1.0
|
|
Income tax (benefit)
provision
|
(76,500)
|
|
|
(27.3)
|
|
|
3,400
|
|
|
0.6
|
|
Net (Loss)
Income
|
$
|
(178,290)
|
|
|
(63.6)
|
%
|
|
$
|
2,025
|
|
|
0.4
|
%
|
Per Share
Data:
|
|
|
|
|
|
|
|
Net (loss) income per
common share - basic
|
$
|
(1.55)
|
|
|
|
|
$
|
0.02
|
|
|
|
Net (loss) income per
common and common equivalent share – diluted
|
$
|
(1.55)
|
|
|
|
|
$
|
0.02
|
|
|
|
Weighted average
common shares outstanding – basic
|
115,574
|
|
|
|
|
114,434
|
|
|
|
Weighted average
common and common equivalent shares outstanding –
diluted
|
115,574
|
|
|
|
|
114,787
|
|
|
|
Dividends declared
per share
|
$
|
0.09
|
|
|
|
|
$
|
0.175
|
|
|
|
|
(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)
|
|
|
May 2,
2020
|
|
February 1,
2020
|
|
May 4,
2019
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
89,841
|
|
|
$
|
63,972
|
|
|
$
|
105,141
|
|
Marketable
securities, at fair value
|
27,755
|
|
|
63,893
|
|
|
62,836
|
|
Inventories
|
273,126
|
|
|
246,737
|
|
|
242,402
|
|
Prepaid expenses and
other current assets
|
102,682
|
|
|
48,200
|
|
|
45,900
|
|
Total Current
Assets
|
493,404
|
|
|
422,802
|
|
|
456,279
|
|
Property and
Equipment, net
|
285,714
|
|
|
315,382
|
|
|
353,183
|
|
Right of Use
Assets
|
612,161
|
|
|
648,397
|
|
|
729,950
|
|
Other
Assets:
|
|
|
|
|
|
Goodwill
|
16,360
|
|
|
96,774
|
|
|
96,774
|
|
Other intangible
assets, net
|
6,164
|
|
|
38,930
|
|
|
38,930
|
|
Other assets,
net
|
42,901
|
|
|
20,374
|
|
|
16,099
|
|
Total Other
Assets
|
65,425
|
|
|
156,078
|
|
|
151,803
|
|
|
$
|
1,456,704
|
|
|
$
|
1,542,659
|
|
|
$
|
1,691,215
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
140,396
|
|
|
$
|
134,204
|
|
|
$
|
135,964
|
|
Current lease
liabilities
|
190,811
|
|
|
157,043
|
|
|
160,731
|
|
Other current and
deferred liabilities
|
108,707
|
|
|
114,498
|
|
|
120,919
|
|
Total Current
Liabilities
|
439,914
|
|
|
405,745
|
|
|
417,614
|
|
Noncurrent
Liabilities:
|
|
|
|
|
|
Long-term
debt
|
149,000
|
|
|
42,500
|
|
|
53,750
|
|
Long-term lease
liabilities
|
520,323
|
|
|
555,922
|
|
|
645,796
|
|
Other noncurrent and
deferred liabilities
|
6,630
|
|
|
8,188
|
|
|
10,719
|
|
Deferred
taxes
|
30
|
|
|
212
|
|
|
3,893
|
|
Total Noncurrent
Liabilities
|
675,983
|
|
|
606,822
|
|
|
714,158
|
|
Commitments and
Contingencies
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
Preferred
stock
|
—
|
|
|
—
|
|
|
—
|
|
Common
stock
|
1,196
|
|
|
1,184
|
|
|
1,180
|
|
Additional paid-in
capital
|
493,140
|
|
|
492,129
|
|
|
485,805
|
|
Treasury stock, at
cost
|
(494,395)
|
|
|
(494,395)
|
|
|
(494,395)
|
|
Retained
earnings
|
341,563
|
|
|
531,602
|
|
|
567,233
|
|
Accumulated other
comprehensive loss
|
(697)
|
|
|
(428)
|
|
|
(380)
|
|
Total
Shareholders' Equity
|
340,807
|
|
|
530,092
|
|
|
559,443
|
|
|
$
|
1,456,704
|
|
|
$
|
1,542,659
|
|
|
$
|
1,691,215
|
|
Chico's FAS, Inc.
and Subsidiaries
|
Condensed
Consolidated Cash Flow Statements
|
(Unaudited)
|
(in
thousands)
|
|
|
Thirteen Weeks
Ended
|
|
May 2,
2020
|
|
May 4,
2019
|
Cash Flows from
Operating Activities:
|
|
|
|
Net (loss)
income
|
$
|
(178,290)
|
|
|
$
|
2,025
|
|
Adjustments to
reconcile net (loss) income to net cash (used in) provided by
operating
activities:
|
|
|
|
Goodwill and
intangible impairment
|
113,180
|
|
|
—
|
|
Inventory
write-offs
|
43,101
|
|
|
4,934
|
|
Depreciation and
amortization
|
17,777
|
|
|
23,837
|
|
Non-cash lease
expense
|
51,018
|
|
|
52,232
|
|
Right of use asset
impairment
|
2,442
|
|
|
—
|
|
Loss on disposal and
impairment of property and equipment, net
|
18,637
|
|
|
113
|
|
Deferred tax
benefit
|
(22,067)
|
|
|
(732)
|
|
Share-based
compensation expense
|
1,704
|
|
|
1,494
|
|
Changes in assets and
liabilities:
|
|
|
|
Inventories
|
(69,490)
|
|
|
(12,118)
|
|
Prepaid expenses and
other assets
|
(55,955)
|
|
|
(1,138)
|
|
Accounts
payable
|
5,966
|
|
|
(17,745)
|
|
Accrued and other
liabilities
|
(7,537)
|
|
|
9,685
|
|
Lease
liability
|
(19,119)
|
|
|
(56,876)
|
|
Net cash (used in)
provided by operating activities
|
(98,633)
|
|
|
5,711
|
|
Cash Flows from
Investing Activities:
|
|
|
|
Purchases of
marketable securities
|
(5,191)
|
|
|
(15,084)
|
|
Proceeds from sale of
marketable securities
|
41,156
|
|
|
14,313
|
|
Purchases of property
and equipment
|
(6,464)
|
|
|
(7,666)
|
|
Net cash provided by
(used in) investing activities
|
29,501
|
|
|
(8,437)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
Proceeds from
borrowings
|
106,500
|
|
|
—
|
|
Payments on
borrowings
|
—
|
|
|
(3,750)
|
|
Proceeds from
issuance of common stock
|
252
|
|
|
346
|
|
Dividends
paid
|
(10,686)
|
|
|
(10,345)
|
|
Payments of tax
withholdings related to share-based awards
|
(933)
|
|
|
(2,430)
|
|
Net cash provided by
(used in) financing activities
|
95,133
|
|
|
(16,179)
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
(132)
|
|
|
(82)
|
|
Net increase
(decrease) in cash and cash equivalents
|
25,869
|
|
|
(18,987)
|
|
Cash and Cash
Equivalents, Beginning of period
|
63,972
|
|
|
124,128
|
|
Cash and Cash
Equivalents, End of period
|
$
|
89,841
|
|
|
$
|
105,141
|
|
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 granted
prior to fiscal 2020 and performance-based restricted stock units
("PSUs") that have met their relevant performance criteria.
Net (loss) income per share is determined using the two-class
method when it is more dilutive than the treasury stock method.
Basic net (loss) income per share is computed by dividing net
(loss) income available to common shareholders by the
weighted-average number of common shares outstanding during the
period, including participating securities. Diluted net (loss)
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 2, 2020 and May 4, 2019, potential common shares were
excluded from the computation of diluted (loss) 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
|
|
|
May 2,
2020
|
|
May 4,
2019
|
Numerator
|
|
|
|
|
Net (loss)
income
|
|
$
|
(178,290)
|
|
|
$
|
2,025
|
|
Net income and
dividends declared allocated to participating securities
|
|
(358)
|
|
|
—
|
|
Net (loss) income
available to common shareholders
|
|
$
|
(178,648)
|
|
|
$
|
2,025
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
Weighted average
common shares outstanding – basic
|
|
115,574
|
|
|
114,434
|
|
Dilutive effect of
non-participating securities
|
|
—
|
|
|
353
|
|
Weighted average
common and common equivalent shares outstanding –
diluted
|
|
115,574
|
|
|
114,787
|
|
|
|
|
|
|
Net (loss) income
per common share:
|
|
|
|
|
Basic
|
|
$
|
(1.55)
|
|
|
$
|
0.02
|
|
Diluted
|
|
$
|
(1.55)
|
|
|
$
|
0.02
|
|
Chico's FAS, Inc.
and Subsidiaries
|
Store Count and
Square Footage
|
Thirteen Weeks Ended
May 2, 2020
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
February 1,
2020
|
|
New
Stores
|
|
Closures
|
|
May 2,
2020
|
|
|
Store
Count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
525
|
|
|
—
|
|
|
(2)
|
|
|
523
|
|
|
|
Chico's
outlets
|
123
|
|
|
—
|
|
|
—
|
|
|
123
|
|
|
|
Chico's
Canada
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
|
WHBM frontline
boutiques
|
362
|
|
|
—
|
|
|
(5)
|
|
|
357
|
|
|
|
WHBM
outlets
|
59
|
|
|
—
|
|
|
(2)
|
|
|
57
|
|
|
|
WHBM
Canada
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
|
Soma frontline
boutiques
|
244
|
|
|
—
|
|
|
—
|
|
|
244
|
|
|
|
Soma
outlets
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
|
Total Chico's FAS,
Inc.
|
1,341
|
|
|
—
|
|
|
(9)
|
|
|
1,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 1,
2020
|
|
New
Stores
|
|
Closures
|
|
Other Changes
in
SSF
|
|
May 2,
2020
|
Net Selling Square
Footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,429,592
|
|
|
—
|
|
|
(5,270)
|
|
|
—
|
|
|
1,424,322
|
|
Chico's
outlets
|
309,921
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309,921
|
|
Chico's
Canada
|
9,695
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,695
|
|
WHBM frontline
boutiques
|
848,778
|
|
|
—
|
|
|
(11,388)
|
|
|
—
|
|
|
837,390
|
|
WHBM
outlets
|
123,735
|
|
|
—
|
|
|
(4,298)
|
|
|
253
|
|
|
119,690
|
|
WHBM
Canada
|
15,588
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,588
|
|
Soma frontline
boutiques
|
460,153
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
460,153
|
|
Soma
outlets
|
34,329
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,329
|
|
Total Chico's FAS,
Inc.
|
3,231,791
|
|
|
—
|
|
|
(20,956)
|
|
|
253
|
|
|
3,211,088
|
|
|
As of May 2,
2020, the Company's franchise operations consisted of 70
international retail locations in Mexico and 2 domestic airport
locations.
|
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SOURCE Chico's FAS, Inc.