FORT MYERS, Fla., Aug. 26,
2020 /PRNewswire/ --
- Sales improved 9.2% from the first quarter, driven by
strong digital performance and store reopenings
- Expense reductions accelerated with a second quarter
SG&A year-over-year dollar improvement of 37%
- Financial position and liquidity remain strong with
$124.5 million in cash and cash
equivalents
Chico's FAS, Inc. (NYSE: CHS) (the "Company") today announced
its financial results for the fiscal 2020 second quarter ended
August 1, 2020.
Molly Langenstein, Chief
Executive Officer and President, Chico's FAS said: "Our core
strengths - three distinctive brands with new product being well
received, a strong digital platform, a differentiated real estate
portfolio, our loyal customer base and solid balance sheet position
us for success. We are taking advantage of this unprecedented
period by capitalizing on these strengths and staying laser focused
on continuing our successful turnaround strategy, including
accelerating digital growth."
"As I enter my second year with the business, the things we
learned and improved last fall have been accelerated into the back
half of this year. In the second quarter, we substantially enhanced
our financial performance despite pandemic headwinds," Langenstein
continued. "Compared to the first quarter, our second quarter
digital and store sales trends improved 9.2% and gross margin rate
rose more than 1,800 basis points. We lowered year-over-year
SG&A expenses by 37% and we strengthened the balance sheet.
Store and digital conversion rates improved in the second quarter,
providing an indicator that our product changes to comfort, casual
and easy care fabrics are resonating with customers, giving us
confidence our financial and product initiatives combined with
relentless customer focus have positioned us to emerge a stronger
company. I remain excited and optimistic about the future of
Chico's FAS."
Business Highlights
The Company began the second quarter primarily as a digital-only
business, with year-over-year total digital sales increasing double
digits in the quarter. In May 2020,
the Company commenced its phased store reopening plan under
enhanced safety protocols and had opened approximately 96% of its
store base by the end of the second quarter. Overall, government
mandates delayed store reopening plans which resulted in stores
effectively being closed the same number of weeks in the second
quarter as in the first quarter.
Ms. Langenstein added, "The Company continues to focus on sales
and financial initiatives to improve its operational position.
Specifically:
- Our investments in and focus on our digital business are
delivering positive results. Year-over-year, digital sales in the
apparel group and intimates each grew double digits. Soma led the
way with digital sales improving 70% in the second quarter over
last year.
- COVID-19 presented a major challenge and we took the
opportunity to reassort inventory to customer demand.
- We achieved a 37% year-over-year SG&A improvement by
streamlining our organizational structure and aligning expenses
with sales.
- We are performing a strategic real estate review and
reevaluating each store's strategic value and profitability. We are
evaluating options for stores not meeting elevated standards and
taking action where warranted as evident by our recent exit of
frontline stores in Canada.
- We are partnering with landlords and achieving rent relief in
the form of rent reductions, abatements and other concessions to
partially mitigate the impact of COVID-19 on our business.
- Our financial position and liquidity have been strengthened
through accelerating online sales, store reopenings, an expense
structure aligned with sales and reductions in capital
spending.
- We continue to invest in and focus on innovation in technology,
product and marketing."
Overview of Financial Results
During the thirteen and twenty-six weeks ended August 1,
2020, the Company experienced varying degrees of business
disruptions and periods of store closures or reduced operating
hours as a result of the COVID-19 pandemic (the "pandemic").
Throughout the first half of the fiscal year, the Company was able
to navigate a rapidly changing retail landscape by leveraging its
omni-channel capabilities and reopening most of its stores. Sales
exceeded Company expectations across all brands during the back
half of the second quarter. At quarter-end, approximately 96% of
the store base were open to the public.
The Company recognized significant inventory write-offs and
impairment charges as a result of the pandemic during the thirteen
and twenty-six weeks ended August 1, 2020, however, the impact
was partially mitigated by strong digital commerce performance and
the Company's ongoing cost-saving measures.
The Company's cash flow for the twenty-six weeks ended
August 1, 2020 also reflects the impact of the pandemic. We
continued to take aggressive and prudent actions to drive sales,
monetize inventory, reduce expenses and manage cash flows,
including suspending or reducing rent payments, and partnering with
suppliers and vendors to decrease operating costs and extend
payment terms to enhance the Company's financial position. The
Company believes it is well positioned to effectively navigate the
pandemic business environment and remains confident that it
currently has sufficient liquidity to repay its obligations as they
become due for the foreseeable future.
For the thirteen weeks ended August 1, 2020 (the "second
quarter"), the Company reported:
- A net loss of $46.8 million, or
$0.40 loss per diluted share, a
material improvement over the thirteen weeks ended May 2, 2020 (the "first quarter"). The second
quarter net loss includes the after-tax impact of inventory
write-offs of $8.0 million, or
$0.07 per share. For the thirteen
weeks ended August 3, 2019 ("last year's second quarter"), the
net loss was $2.3 million, or
$0.02 loss per diluted share. Last
year's second quarter net loss includes after-tax accelerated
depreciation charges of $2.2 million,
or $0.02 per share.
- Net sales were $306.2 million, an
improvement of 9.2% from the first quarter, reflecting the benefit
of strong digital sales and store reopenings. Sales decreased
approximately 39.8% from last year's second quarter, reflecting
disruptions related to the pandemic, including the
continuation of temporary store closures and limited hours during
the second quarter, as well as the impact of 74 net permanent store
closures since last year's second quarter, partially offset by
double-digit growth in digital performance.
- Gross margin was $44.8 million,
or 14.6% of net sales, up more than 1,800 basis points from the
first quarter. Gross margin in last year's second quarter was
$168.6 million, or 33.2% of net
sales. The second quarter year-over-year decrease in gross margin
primarily reflects the impact of temporary store closures which
resulted in deleverage of occupancy costs as a percent of net sales
as well as a pre-tax inventory write-off of $12.3 million, or 4.0% of net sales. The
inventory write-off was driven by the slower than planned cadence
of store reopenings during the first half of the second quarter and
less relevant work wear and special occasion product.
- Selling, general and administrative ("SG&A") expenses were
$107.3 million, or 35.0% of net
sales, compared to $171.0 million, or
33.7% of net sales, for last year's second quarter. The
$63.7 million decrease in SG&A
expenses reflects the Company's ongoing expense reduction
initiatives to align its cost structure with sales.
For the twenty-six weeks ended August 1, 2020, the Company
reported:
- A net loss of $225.1 million, or
$1.95 loss per diluted share,
compared to net loss of $0.3 million,
or $0.00 per diluted share, for the
twenty-six weeks ended August 3, 2019. The net loss for the
twenty-six weeks ended August 1, 2020 includes the after-tax
impact of goodwill impairment charges of $73.8 million, or $0.63 per share; impairments on other
indefinite-lived intangible assets of $24.7
million, or $0.21 per share;
inventory write-offs of $34.1
million, or $0.29 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
$189.5 million of the pre-tax net
loss and $148.4 million of the
after-tax loss, or $1.27 per share,
for the twenty-six weeks ended August 1, 2020. The net loss
for the twenty-six weeks ended August 3, 2019 includes
after-tax accelerated depreciation charges of $5.7 million, or $0.05 per share.
Financial Results
Results for the thirteen and twenty-six weeks ended
August 1, 2020 were significantly impacted by the pandemic and
included after-tax charges totaling $8.0
million, or $0.07 per share,
and $148.4 million, or $1.27 per share, respectively, as detailed in the
tables below.
Summary of
Significant Charges (1)
|
|
|
|
Thirteen Weeks
Ended
|
|
August 1,
2020
|
|
Amount,
pre-tax
|
|
% of Net
Sales
|
|
Amount,
after-tax
|
|
Per share
impact
|
|
(dollars in
thousands, except per share amounts)
|
Gross
margin:
|
|
|
|
|
|
|
|
Inventory
write-offs
|
$
|
12,256
|
|
|
4.0
|
%
|
|
$
|
8,028
|
|
|
$
|
0.07
|
|
Total significant
charges impacting gross margin
|
$
|
12,256
|
|
|
4.0
|
%
|
|
$
|
8,028
|
|
|
$
|
0.07
|
|
Summary of
Significant Charges (1)
|
|
|
|
Twenty-Six Weeks
Ended
|
|
August 1,
2020
|
|
Amount, pre-tax
(2)
|
|
% of Net
Sales
|
|
Amount,
after-tax
|
|
Per share
impact
|
|
(dollars in
thousands, except per share amounts)
|
Gross
margin:
|
|
|
|
|
|
|
|
Inventory
write-offs
|
$
|
55,357
|
|
|
9.4
|
%
|
|
$
|
34,134
|
|
|
$
|
0.29
|
|
Long-lived store
asset impairment
|
18,493
|
|
|
3.2
|
|
|
13,925
|
|
|
0.12
|
|
Right of use asset
impairment
|
2,442
|
|
|
0.4
|
|
|
1,839
|
|
|
0.02
|
|
Total significant
charges impacting gross margin
|
76,291
|
|
|
13.0
|
|
|
49,898
|
|
|
0.43
|
|
Goodwill and
intangible impairment:
|
|
|
|
|
|
|
|
Goodwill
impairment
|
80,414
|
|
|
13.7
|
|
|
73,837
|
|
|
0.63
|
|
Indefinite-lived
asset impairment
|
32,766
|
|
|
5.6
|
|
|
24,673
|
|
|
0.21
|
|
Total goodwill and
intangible impairment charges
|
113,180
|
|
|
19.3
|
|
|
98,510
|
|
|
0.84
|
|
Total significant
charges
|
$
|
189,471
|
|
|
32.3
|
%
|
|
$
|
148,408
|
|
|
$
|
1.27
|
|
|
|
(1) Includes only significant charges related to the
pandemic.
|
(2) May
not foot due to rounding.
|
Net Sales
For the second quarter, net sales were $306.2 million, an improvement of 9.2% from the
first quarter, reflecting the benefit of strong digital sales and
store reopenings. Sales decreased approximately 39.8% from last
year's second quarter, reflecting disruptions related to the
pandemic, including the continuation of temporary store closures
and limited hours during the second quarter, as well as the impact
of 74 net permanent store closures since last year's second
quarter, partially offset by double-digit growth in digital
performance.
The Company is not providing comparable sales figures for the
thirteen and twenty-six weeks ended August 1, 2020 as it is
not a meaningful measure due to the significant impact of store
closures as a result of the pandemic.
Gross Margin
For the second quarter, gross margin was $44.8 million, or 14.6% of net sales, up more
than 1,800 basis points from the first quarter. Gross margin in
last year's second quarter was $168.6
million, or 33.2% of net sales. The second quarter
year-over-year decrease in gross margin primarily reflects the
impact of temporary store closures which resulted in deleverage of
occupancy costs as a percent of net sales as well as a pre-tax
inventory write-off of $12.3 million,
or 4.0% of net sales. The inventory write-off was driven by the
slower than planned cadence of store reopenings during the first
half of the second quarter and less relevant work wear and special
occasion product.
Selling, General and Administrative Expenses
For the second quarter, SG&A expenses were $107.3 million, or 35.0% of net sales, compared
to $171.0 million, or 33.7% of net
sales, for last year's second quarter. The $63.7 million decrease in SG&A expenses
reflects the Company's ongoing expense reduction initiatives to
align its cost structure with sales.
Income Taxes
For the second quarter, the effective tax rate
was 25.7% compared to 0.0% for last year's
second quarter. The 25.7% effective tax rate includes the
annual benefit of the fiscal 2020 pre-tax loss due the Coronavirus
Aid, Relief, and Economic Security ("CARES") Act, which is slightly
offset by the impact of nondeductible book goodwill impairment
charges. In addition, during the second quarter, the Company
recognized a small valuation allowance against certain state tax
credit carryforwards that are expected to expire unutilized in the
future. The 0.0% effective tax rate for last year's second quarter
was primarily the result of an income tax benefit on the quarter's
operating loss, offset by a true-up from the first quarter
provision due to an increase in the forecasted annual effective tax
rate.
Cash, Marketable Securities and Debt
At the end of the second quarter, cash and marketable securities
totaled $124.5 million. Debt at the
end of the second quarter totaled $149.0
million, remaining unchanged from the end of the first
quarter of fiscal 2020.
Inventories
At the end of the second quarter, inventories totaled
$235.8 million compared to
$227.7 million at the end of last
year's second quarter. Second quarter inventories were elevated
year-over-year due to merchandise in-transit and inventory held for
liquidation.
Fiscal 2020 Third Quarter and Full-Year Outlook
Given the ongoing market disruption caused by the pandemic and
related uncertainty on timing and extent of the market recovery,
the Company is not providing fiscal 2020 third-quarter or full-year
guidance at this time.
Conference Call Information
The Company is hosting a live conference call on Wednesday,
August 26, 2020 beginning at 8:30 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 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, 9283861, 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 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 August 1, 2020, the Company operated 1,313 stores in
the U.S. and sold merchandise through 69 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 the quote from Ms. Langenstein and the section
captioned "Business Highlights," relate to expectations and
projections regarding the Company's future performance and may
include the words "anticipate," "believe," "could," "estimate,"
"expect," "intend," "may," "will," "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 general
economic conditions and the economic slowdown affecting consumer
behavior and spending (before and after the COVID-19 pandemic) and
potential future temporary store closures due to government
mandates; the effectiveness of store reopenings, cost
reduction initiatives (including our ability to effectively
restructure our lease portfolio to obtain rent relief), the
extent, availability and effectiveness of any COVID-19 stimulus
packages or loan programs, including the CARES Act, the ability of
our third-party business partners, including our suppliers,
logistics providers, vendors and landlords, to meet their
obligations to us in light of financial stress, staffing shortages,
liquidity challenges, bankruptcy filings by other industry
participants and other disruptions due to the COVID-19 pandemic,
the impact of the COVID-19 pandemic on our manufacturing operations
in China, 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
exiting of store operations in Canada and other future permanent store
closures; 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
digital strategy, 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
Media Relations Contact:
Pashen Black
Director of Corporate Public Relations
(239) 218-3388
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
(Unaudited)
(in thousands, except
per share amounts)
|
|
|
|
Thirteen Weeks
Ended
|
|
Twenty-Six Weeks
Ended
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
Net
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chico's
|
$
|
139,584
|
|
|
45.6
|
%
|
|
$
|
268,924
|
|
|
52.9
|
%
|
|
$
|
271,021
|
|
|
46.3
|
%
|
|
$
|
545,626
|
|
|
53.2
|
%
|
White House Black
Market
|
82,253
|
|
|
26.9
|
|
|
139,809
|
|
|
27.5
|
|
|
166,173
|
|
|
28.3
|
|
|
300,754
|
|
|
29.3
|
|
Soma
|
84,337
|
|
|
27.5
|
|
|
99,623
|
|
|
19.6
|
|
|
149,244
|
|
|
25.4
|
|
|
179,704
|
|
|
17.5
|
|
Total Net
Sales
|
306,174
|
|
|
100.0
|
|
|
508,356
|
|
|
100.0
|
|
|
586,438
|
|
|
100.0
|
|
|
1,026,084
|
|
|
100.0
|
|
Cost of goods
sold
|
261,408
|
|
|
85.4
|
|
|
339,734
|
|
|
66.8
|
|
|
552,767
|
|
|
94.3
|
|
|
666,631
|
|
|
65.0
|
|
Gross
Margin
|
44,766
|
|
|
14.6
|
|
|
168,622
|
|
|
33.2
|
|
|
33,671
|
|
|
5.7
|
|
|
359,453
|
|
|
35.0
|
|
Selling, general and
administrative expenses
|
107,304
|
|
|
35.0
|
|
|
170,983
|
|
|
33.7
|
|
|
237,475
|
|
|
40.5
|
|
|
356,391
|
|
|
34.7
|
|
Goodwill and
intangible impairment
|
—
|
|
|
0.0
|
|
|
—
|
|
|
0.0
|
|
|
113,180
|
|
|
19.3
|
|
|
—
|
|
|
0.0
|
|
(Loss) Income from
Operations
|
(62,538)
|
|
|
(20.4)
|
|
|
(2,361)
|
|
|
(0.5)
|
|
|
(316,984)
|
|
|
(54.1)
|
|
|
3,062
|
|
|
0.3
|
|
Interest (expense)
income, net
|
(507)
|
|
|
(0.2)
|
|
|
52
|
|
|
0.0
|
|
|
(851)
|
|
|
(0.1)
|
|
|
54
|
|
|
0.0
|
|
(Loss) Income
before Income Taxes
|
(63,045)
|
|
|
(20.6)
|
|
|
(2,309)
|
|
|
(0.5)
|
|
|
(317,835)
|
|
|
(54.2)
|
|
|
3,116
|
|
|
0.3
|
|
Income tax (benefit)
provision
|
(16,200)
|
|
|
(5.3)
|
|
|
—
|
|
|
0.0
|
|
|
(92,700)
|
|
|
(15.8)
|
|
|
3,400
|
|
|
0.3
|
|
Net
Loss
|
$
|
(46,845)
|
|
|
(15.3)
|
%
|
|
$
|
(2,309)
|
|
|
(0.5)
|
%
|
|
$
|
(225,135)
|
|
|
(38.4)
|
%
|
|
$
|
(284)
|
|
|
0.0
|
%
|
Per Share
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share - basic
|
$
|
(0.40)
|
|
|
|
|
$
|
(0.02)
|
|
|
|
|
$
|
(1.95)
|
|
|
|
|
$
|
—
|
|
|
|
Net loss per common
and common equivalent share – diluted
|
$
|
(0.40)
|
|
|
|
|
$
|
(0.02)
|
|
|
|
|
$
|
(1.95)
|
|
|
|
|
$
|
—
|
|
|
|
Weighted average
common shares outstanding – basic
|
115,912
|
|
|
|
|
114,802
|
|
|
|
|
115,743
|
|
|
|
|
114,618
|
|
|
|
Weighted average
common and common equivalent shares outstanding –
diluted
|
115,912
|
|
|
|
|
114,802
|
|
|
|
|
115,743
|
|
|
|
|
114,618
|
|
|
|
Dividends declared
per share
|
$
|
—
|
|
|
|
|
$
|
0.0875
|
|
|
|
|
$
|
0.0900
|
|
|
|
|
$
|
0.2625
|
|
|
|
Chico's FAS, Inc.
and Subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited)
(in
thousands)
|
|
|
|
August 1,
2020
|
|
February 1,
2020
|
|
August 3,
2019
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
103,765
|
|
|
$
|
63,972
|
|
|
$
|
99,634
|
|
Marketable
securities, at fair value
|
20,742
|
|
|
63,893
|
|
|
63,446
|
|
Inventories
|
235,844
|
|
|
246,737
|
|
|
227,736
|
|
Prepaid expenses and
other current assets
|
31,446
|
|
|
41,069
|
|
|
41,469
|
|
Income taxes
receivable
|
85,940
|
|
|
7,131
|
|
|
6,450
|
|
Total Current
Assets
|
477,737
|
|
|
422,802
|
|
|
438,735
|
|
Property and
Equipment, net
|
271,750
|
|
|
315,382
|
|
|
337,049
|
|
Right of Use
Assets
|
571,992
|
|
|
648,397
|
|
|
697,332
|
|
Other
Assets:
|
|
|
|
|
|
Goodwill
|
16,360
|
|
|
96,774
|
|
|
96,774
|
|
Other intangible
assets, net
|
6,164
|
|
|
38,930
|
|
|
38,930
|
|
Other assets,
net
|
28,931
|
|
|
20,374
|
|
|
17,468
|
|
Total Other
Assets
|
51,455
|
|
|
156,078
|
|
|
153,172
|
|
|
$
|
1,372,934
|
|
|
$
|
1,542,659
|
|
|
$
|
1,626,288
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
108,166
|
|
|
$
|
134,204
|
|
|
$
|
137,142
|
|
Current lease
liabilities
|
218,691
|
|
|
157,043
|
|
|
158,866
|
|
Other current and
deferred liabilities
|
111,318
|
|
|
114,498
|
|
|
108,861
|
|
Total Current
Liabilities
|
438,175
|
|
|
405,745
|
|
|
404,869
|
|
Noncurrent
Liabilities:
|
|
|
|
|
|
Long-term
debt
|
149,000
|
|
|
42,500
|
|
|
50,000
|
|
Long-term lease
liabilities
|
482,380
|
|
|
555,922
|
|
|
611,308
|
|
Other noncurrent and
deferred liabilities
|
6,529
|
|
|
8,188
|
|
|
8,860
|
|
Deferred
taxes
|
52
|
|
|
212
|
|
|
2,129
|
|
Total Noncurrent
Liabilities
|
637,961
|
|
|
606,822
|
|
|
672,297
|
|
Commitments and
Contingencies
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
Preferred
stock
|
—
|
|
|
—
|
|
|
—
|
|
Common
stock
|
1,199
|
|
|
1,184
|
|
|
1,180
|
|
Additional paid-in
capital
|
495,163
|
|
|
492,129
|
|
|
487,789
|
|
Treasury stock, at
cost
|
(494,395)
|
|
|
(494,395)
|
|
|
(494,395)
|
|
Retained
earnings
|
294,708
|
|
|
531,602
|
|
|
554,694
|
|
Accumulated other
comprehensive gain (loss)
|
123
|
|
|
(428)
|
|
|
(146)
|
|
Total
Shareholders' Equity
|
296,798
|
|
|
530,092
|
|
|
549,122
|
|
|
$
|
1,372,934
|
|
|
$
|
1,542,659
|
|
|
$
|
1,626,288
|
|
Chico's FAS, Inc.
and Subsidiaries
Condensed
Consolidated Cash Flow Statements
(Unaudited)
(in
thousands)
|
|
|
|
Twenty-Six Weeks
Ended
|
|
August 1,
2020
|
|
August 3,
2019
|
Cash Flows from
Operating Activities:
|
|
|
|
Net loss
|
$
|
(225,135)
|
|
|
$
|
(284)
|
|
Adjustments to
reconcile net loss to net cash (used in) provided by operating
activities:
|
|
|
|
Goodwill and
intangible impairment
|
113,180
|
|
|
—
|
|
Inventory
write-offs
|
54,308
|
|
|
6,232
|
|
Depreciation and
amortization
|
33,613
|
|
|
46,826
|
|
Non-cash lease
expense
|
100,710
|
|
|
106,961
|
|
Exit of frontline
Canada operations
|
498
|
|
|
—
|
|
Right of use asset
impairment
|
3,236
|
|
|
—
|
|
Loss on disposal and
impairment of property and equipment, net
|
18,637
|
|
|
196
|
|
Deferred tax
benefit
|
(6,756)
|
|
|
(2,639)
|
|
Share-based
compensation expense
|
3,793
|
|
|
3,486
|
|
Changes in assets and
liabilities:
|
|
|
|
Inventories
|
(44,926)
|
|
|
1,250
|
|
Prepaid expenses and
other assets
|
2,743
|
|
|
(9,897)
|
|
Income tax
receivable
|
(78,809)
|
|
|
5,465
|
|
Accounts
payable
|
(26,300)
|
|
|
(16,509)
|
|
Accrued and other
liabilities
|
(338)
|
|
|
(5,884)
|
|
Lease
liability
|
(38,673)
|
|
|
(114,186)
|
|
Net cash (used in)
provided by operating activities
|
(90,219)
|
|
|
21,017
|
|
Cash Flows from
Investing Activities:
|
|
|
|
Purchases of
marketable securities
|
(5,212)
|
|
|
(25,615)
|
|
Proceeds from sale of
marketable securities
|
48,326
|
|
|
24,384
|
|
Purchases of property
and equipment
|
(8,151)
|
|
|
(14,076)
|
|
Net cash provided by
(used in) investing activities
|
34,963
|
|
|
(15,307)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
Proceeds from
borrowings
|
106,500
|
|
|
—
|
|
Payments on
borrowings
|
—
|
|
|
(7,500)
|
|
Proceeds from
issuance of common stock
|
251
|
|
|
392
|
|
Dividends
paid
|
(10,701)
|
|
|
(20,633)
|
|
Payments of tax
withholdings related to share-based awards
|
(995)
|
|
|
(2,484)
|
|
Net cash provided by
(used in) financing activities
|
95,055
|
|
|
(30,225)
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
(6)
|
|
|
21
|
|
Net increase
(decrease) in cash and cash equivalents
|
39,793
|
|
|
(24,494)
|
|
Cash and Cash
Equivalents, Beginning of period
|
63,972
|
|
|
124,128
|
|
Cash and Cash
Equivalents, End of period
|
$
|
103,765
|
|
|
$
|
99,634
|
|
Supplemental Detail on Net Loss 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 loss 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 per share is determined using the two-class method when
it is more dilutive than the treasury stock method. Basic net loss
per share is computed by dividing net loss available to common
shareholders by the weighted-average number of common shares
outstanding during the period, including participating securities.
Diluted net loss per share reflects the dilutive effect of
potential common shares from non-participating securities such as
restricted stock awards granted after fiscal 2019, stock options,
PSUs and restricted stock units. For the thirteen and twenty-six
weeks ended August 1, 2020 and August 3, 2019, potential
common shares were excluded from the computation of diluted loss
per share to the extent they were antidilutive.
The following unaudited table sets forth the computation of net
loss per basic and diluted share shown on the face of the
accompanying condensed consolidated statements of loss (in
thousands, except per share amounts):
|
|
Thirteen Weeks
Ended
|
|
Twenty-Six Weeks
Ended
|
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
Numerator
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(46,845)
|
|
|
$
|
(2,309)
|
|
|
$
|
(225,135)
|
|
|
$
|
(284)
|
|
Net income and
dividends declared allocated to participating securities
|
|
—
|
|
|
—
|
|
|
(193)
|
|
|
—
|
|
Net loss available to
common shareholders
|
|
$
|
(46,845)
|
|
|
$
|
(2,309)
|
|
|
$
|
(225,328)
|
|
|
$
|
(284)
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding – basic
|
|
115,912
|
|
|
114,802
|
|
|
115,743
|
|
|
114,618
|
|
Dilutive effect of
non-participating securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Weighted average
common and common equivalent shares outstanding –
diluted
|
|
115,912
|
|
|
114,802
|
|
|
115,743
|
|
|
114,618
|
|
|
|
|
|
|
|
|
|
|
Net loss per
common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.40)
|
|
|
$
|
(0.02)
|
|
|
$
|
(1.95)
|
|
|
$
|
—
|
|
Diluted
|
|
$
|
(0.40)
|
|
|
$
|
(0.02)
|
|
|
$
|
(1.95)
|
|
|
$
|
—
|
|
Chico's FAS, Inc.
and Subsidiaries
|
Store Count and
Square Footage
|
Thirteen Weeks Ended
August 1, 2020
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
May 2,
2020
|
|
New
Stores
|
|
Closures
|
|
August 1,
2020
|
|
|
Store
Count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
523
|
|
|
—
|
|
|
(3)
|
|
|
520
|
|
|
|
Chico's
outlets
|
123
|
|
|
—
|
|
|
—
|
|
|
123
|
|
|
|
Chico's
Canada
|
4
|
|
|
—
|
|
|
(4)
|
|
|
—
|
|
|
|
WHBM frontline
boutiques
|
357
|
|
|
—
|
|
|
(3)
|
|
|
354
|
|
|
|
WHBM
outlets
|
57
|
|
|
—
|
|
|
(1)
|
|
|
56
|
|
|
|
WHBM
Canada
|
6
|
|
|
—
|
|
|
(6)
|
|
|
—
|
|
|
|
Soma frontline
boutiques
|
244
|
|
|
—
|
|
|
(2)
|
|
|
242
|
|
|
|
Soma
outlets
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
|
Total Chico's FAS,
Inc.
|
1,332
|
|
|
—
|
|
|
(19)
|
|
|
1,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 2,
2020
|
|
New
Stores
|
|
Closures
|
|
Other Changes in
SSF
|
|
August 1,
2020
|
Net Selling Square
Footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,424,322
|
|
|
—
|
|
|
(9,793)
|
|
|
2,437
|
|
|
1,416,966
|
|
Chico's
outlets
|
309,921
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309,921
|
|
Chico's
Canada
|
9,695
|
|
|
—
|
|
|
(9,695)
|
|
|
—
|
|
|
—
|
|
WHBM frontline
boutiques
|
837,390
|
|
|
—
|
|
|
(6,193)
|
|
|
(834)
|
|
|
830,363
|
|
WHBM
outlets
|
119,690
|
|
|
—
|
|
|
(2,206)
|
|
|
—
|
|
|
117,484
|
|
WHBM
Canada
|
15,588
|
|
|
—
|
|
|
(15,588)
|
|
|
—
|
|
|
—
|
|
Soma frontline
boutiques
|
460,153
|
|
|
—
|
|
|
(3,259)
|
|
|
(288)
|
|
|
456,606
|
|
Soma
outlets
|
34,329
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,329
|
|
Total Chico's FAS,
Inc.
|
3,211,088
|
|
|
—
|
|
|
(46,734)
|
|
|
1,315
|
|
|
3,165,669
|
|
|
As of August 1,
2020, the Company's franchise operations consisted of 69
international retail locations in Mexico and 2 domestic airport
locations.
|
Chico's FAS, Inc.
and Subsidiaries
|
Store Count and
Square Footage
|
Twenty-Six Weeks
Ended August 1, 2020
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
February 1,
2020
|
|
New
Stores
|
|
Closures
|
|
August 1,
2020
|
|
|
Store
count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
525
|
|
|
—
|
|
|
(5)
|
|
|
520
|
|
|
|
Chico's
outlets
|
123
|
|
|
—
|
|
|
—
|
|
|
123
|
|
|
|
Chico's
Canada
|
4
|
|
|
—
|
|
|
(4)
|
|
|
—
|
|
|
|
WHBM frontline
boutiques
|
362
|
|
|
—
|
|
|
(8)
|
|
|
354
|
|
|
|
WHBM
outlets
|
59
|
|
|
—
|
|
|
(3)
|
|
|
56
|
|
|
|
WHBM
Canada
|
6
|
|
|
—
|
|
|
(6)
|
|
|
—
|
|
|
|
Soma frontline
boutiques
|
244
|
|
|
—
|
|
|
(2)
|
|
|
242
|
|
|
|
Soma
outlets
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
|
Total Chico's FAS,
Inc.
|
1,341
|
|
|
—
|
|
|
(28)
|
|
|
1,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 1,
2020
|
|
New
Stores
|
|
Closures
|
|
Other Changes in
SSF
|
|
August 1,
2020
|
Net Selling Square
Footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,429,592
|
|
|
—
|
|
|
(15,063)
|
|
|
2,437
|
|
|
1,416,966
|
|
Chico's
outlets
|
309,921
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309,921
|
|
Chico's
Canada
|
9,695
|
|
|
—
|
|
|
(9,695)
|
|
|
—
|
|
|
—
|
|
WHBM frontline
boutiques
|
848,778
|
|
|
—
|
|
|
(17,581)
|
|
|
(834)
|
|
|
830,363
|
|
WHBM
outlets
|
123,735
|
|
|
—
|
|
|
(6,504)
|
|
|
253
|
|
|
117,484
|
|
WHBM
Canada
|
15,588
|
|
|
—
|
|
|
(15,588)
|
|
|
—
|
|
|
—
|
|
Soma frontline
boutiques
|
460,153
|
|
|
—
|
|
|
(3,259)
|
|
|
(288)
|
|
|
456,606
|
|
Soma
outlets
|
34,329
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,329
|
|
Total Chico's FAS,
Inc.
|
3,231,791
|
|
|
—
|
|
|
(67,690)
|
|
|
1,568
|
|
|
3,165,669
|
|
|
As of August 1,
2020, the Company's franchise operations consisted of 69
international retail locations in Mexico and 2 domestic airport
locations.
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/chicos-fas-inc-reports-second-quarter-results-301118285.html
SOURCE Chico's FAS, Inc.