FORT MYERS, Fla., Aug. 31,
2021 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS) (the
"Company" or "Chico's FAS") today announced its financial results
for the fiscal 2021 thirteen weeks ended July 31, 2021 (the
"second quarter").
"Our second quarter earnings performance was the best second
quarter Chico's FAS has posted since 2013, and these results show
the incredible progress we continue to make in our turnaround
strategy, despite pandemic challenges. Our return to profitability
in the quarter was driven by our strategic actions that grew sales,
expanded gross margin, and diligently controlled our expenses,"
noted Molly Langenstein, Chico's FAS
Chief Executive Officer and President.
Langenstein continued, "Our robust second quarter sales across
all three brands were propelled by our meaningful enhancements in
product and marketing, which continued to drive full-price selling,
reduce markdowns and produce higher gross margin. Soma®,
which posted a 53% sales increase over last year's second quarter,
we believe is well positioned to become one of the largest intimate
apparel brands in the U.S. Sales at both Chico's® and
White House Black Market® were strong, with
year-over-year second quarter growth of 59% and 48%, respectively.
Customers enthusiastically responded to our elevated styling and
quality in both apparel brands, which led to faster sell-through
rates and higher inventory productivity. Strategically planned
inventories, operating discipline and the ongoing benefit of our
prior cost reductions further added to our return to profitable
growth.
"We are a digital-first, customer-led company with a strong
portfolio of three unique brands. We believe there are ample
opportunities to further grow our customer bases, market share and
sales in each of these amazing brands. We look forward to reporting
our progress in the quarters ahead."
Business Highlights
The Company's second quarter highlights include:
- Return to profitability: Chico's FAS returned to
profitability, posting $0.21 net
income per diluted share for the second quarter, compared to a
$0.40 net loss per diluted share for
the thirteen weeks ended August 1,
2020 ("last year's second quarter") and a $0.02 net loss per diluted share for the thirteen
weeks ended August 3, 2019 (the
"second quarter of fiscal 2019"; using this as a pre-pandemic
reference). Current quarter earnings was the best second quarter
performance since 2013.
- Continued exceptional sales growth at Soma: Soma posted
a 53% sales increase over last year's second quarter and a 38%
comparable sales increase over the second quarter of fiscal 2019.
According to market research firm NPD, Group Inc., for the 12
months ended July 2021 compared to
the same period in 2019, Soma's growth exceeded that of the U.S.
market in non-sport bras, panties and sleepwear. In addition, as
customers' preferences have shifted to comfort, Soma strategically
increased its wireless assortment, taking more market share than
any other brands for the 12 months ended July 2021 compared to the same period in 2019. We
believe this research, along with our recent performance, is a
strong indication that Soma is well positioned to capture
additional market share.
- Continued improving sales performance at Chico's: Sales
at Chico's increased 59% over last year's second quarter. Chico's
continued to benefit from elevated product styling and quality
enhancements, and customers responded to newness, comfort features
and innovative fabrics. Inventories remained lean, which fueled
high productivity and more full-price sales in the quarter.
- Continued improving sales performance at White House Black
Market ("WHBM"): Sales at WHBM grew 48% over last year's second
quarter. WHBM continued to benefit from elevated quality and
product enhancements, and customers responded to newness and
seasonless fabrics. Inventories remained lean, which fueled high
productivity and more full-price sales in the quarter.
- Enhanced marketing continued to drive traffic as well as new
customers: Chico's FAS continued to elevate its marketing
efforts, allocating more resources to digital storytelling, social
influencers and other social efforts. These enhanced marketing
initiatives drove more reactivated customers from the previous year
as well as younger new customers which highlights the opportunities
for all three brands.
- Strong balance sheet: The Company ended the second
quarter with more than $137 million
in cash and marketable securities, an increase of nearly
$35 million over the first quarter of
fiscal 2021.
- Improved gross margin: The gross margin rate improved to
38.4% in the second quarter, the best performance in 13 consecutive
quarters, driven by controlled inventories and lower promotional
levels.
- Continued cost discipline: Selling, general and
administrative ("SG&A") expenses declined to a 30.9% rate for
the second quarter, an improvement over both the second quarter
rates of fiscal 2020 and 2019, reflecting the impact of cost
savings initiatives put in place in prior years, continued cost
discipline efforts and sales leverage.
- Obtained additional meaningful rent reductions: In the
first half of fiscal 2021, Chico's FAS obtained approximately
$15 million in incremental savings
from landlords; this is in addition to the $65 million of reductions and abatements
negotiated during fiscal 2020, for a total savings of $80 million.
- Shop-in-shops: Forty-seven Soma shop-in-shops are now
successfully opened inside Chico's stores and are exceeding
expectations, driving new customers to both brands and further
expanding the Company's digital business.
Overview of Financial Results
For the second quarter, the Company reported net income of
$26.2 million, or $0.21 per diluted share, compared to a net loss
of $46.8 million, or $0.40 per diluted share, for last year's second
quarter. Last year's second quarter net loss included $8.0 million, or $0.07 per share, in significant after-tax
non-cash inventory write-offs as presented in the accompanying
Summary of Significant Non-Cash Charges table.
For the twenty-six weeks ended July 31, 2021, the Company
reported net income of $17.3 million,
or $0.14 per diluted share, compared
to a net loss of $225.1 million, or
$1.95 per diluted share, for the
twenty-six weeks ended August 1, 2020. Net loss for the
twenty-six weeks ended August 1, 2020 included $148.4 million, or $1.27 per share, in significant after-tax
non-cash charges as presented in the accompanying Summary of
Significant Non-Cash Charges table.
Sales
For the second quarter, net sales were $472.1 million compared to $306.2 million in last year's second quarter.
This 54.2% improvement primarily reflects the impact of temporary
store closures or limited hours during last year's second quarter,
partially offset by 29 net permanent store closures since last
year's second quarter.
Total Company comparable sales for the second quarter compared
to the second quarter of fiscal 2019 declined 1.6%, with Soma
improving 38.1% and Chico's and WHBM decreasing 14.3% and 5.4%,
respectively. Total Company on-hand inventories at the end of the
second quarter compared to the second quarter of fiscal 2019 were
down 19.6%, with Soma up 19.4% and Chico's and WHBM down 32.4% and
48.6%, respectively; correlating sales and on-hand inventory.
Gross Margin
For the second quarter, gross margin was $181.5 million, or 38.4% of net sales, compared
to $44.8 million, or 14.6% of net
sales, in last year's second quarter. The year-over-year
improvement in gross margin rate primarily reflects margin
expansion as a result of higher full price sales and less
promotional activity, improved leverage of occupancy costs with
rising sales, and the impact of inventory write-offs in last year's
second quarter, as reflected in the accompanying Summary of
Significant Non-Cash Charges table.
Selling, General and Administrative Expenses
For the second quarter, SG&A expenses were $145.8 million, or 30.9% of net sales, compared
to $107.3 million, or 35.0% of net
sales, for last year's second quarter, primarily reflecting the
benefit of fiscal 2020 cost savings initiatives and sales leverage.
The second quarter SG&A expense rate of 30.9% improved over the
33.7% rate in the second quarter of fiscal 2019.
Income Taxes
For the second quarter, the effective tax rate was 22.7%
compared to 25.7% for last year's second quarter. The 22.7%
effective tax rate primarily reflects a change in estimate from the
first quarter of fiscal 2021 due to an increase in the Company's
projected annual pre-tax income and an increase in annual projected
deferred tax assets on which a full valuation allowance exists,
partially offset by the impact of the annual loss projected during
the first quarter of fiscal 2021. The 25.7% effective tax rate for
last year's second quarter includes the annual benefit of the
fiscal 2020 pre-tax loss due the Coronavirus Aid, Relief, and
Economic Security Act, partially offset by the impact of
nondeductible book goodwill impairment charges.
Cash, Marketable Securities and Debt
At the end of the second quarter, cash and marketable securities
totaled $137.2 million compared to
$124.5 million at the end of last
year's second quarter. Debt at the end of the second quarter
totaled $149.0 million, remaining
unchanged from the end of last year's second quarter.
At the end of the first quarter of fiscal 2021, cash and
marketable securities totaled $102.4
million. The $34.8 million increase in second quarter
cash and marketable securities compared to the first quarter
primarily reflects cash flow from operating activities.
Inventories
At the end of the second quarter, inventories totaled
$202.1 million compared to
$235.8 million at the end of last
year's second quarter. This $33.7
million, or 14.3%, decrease primarily reflects conservative
inventory management to better align inventory and assortments with
consumer demand.
Fiscal 2021 Outlook
During the balance of fiscal 2021, we expect improving
year-over-year demand, but recognize that there is economic
uncertainty as we continue to manage through the COVID-19 pandemic
(the "pandemic"). In addition, we are facing macro supply chain
headwinds in the back half of the fiscal year that we expect will
impact sales and gross margin, including higher freight costs,
extended inbound transit times and product supplier handover delays
driven by the pandemic.
Accordingly, given the uncertainty caused by the pandemic, the
Company is not providing specific fiscal 2021 third quarter and
full year guidance at this time. The Company is, however, providing
high-level outlook expectations for the third quarter and full
fiscal year 2021. The ongoing financial impact of the pandemic is
not estimable with precision and may vary significantly from
estimates reflected in our high-level outlook expectations
below.
For the fiscal 2021 third quarter compared to the fiscal 2020
third quarter, the Company currently expects:
- Consolidated year-over-year net sales improvement between 18%
to 22%;
- Gross margin rate improvement of 13 to 15 percentage points
over last fiscal year;
- SG&A as a percent of net sales to improve 500 to 600 basis
points year-over-year; and
- Income tax rate of 34% to 35%.
For the fiscal 2021 full year compared to the fiscal 2020 full
year, the Company currently expects:
- Consolidated year-over-year net sales improvement between 32%
to 35%;
- Gross margin rate improvement of 20 to 22 percentage points
over last fiscal year;
- SG&A as a percent of net sales to improve 500 to 600 basis
points year-over-year; and
- Income tax rate of 34% to 35%.
Conference Call Information
The Company is hosting a live conference call on Tuesday,
August 31, 2021 beginning at 8:00 a.m.
ET to review the operating results for the second quarter.
The conference call is being webcast live over the Internet, which
you may access in the Investors section of the 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, 5110261, 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.
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, WHBM 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 StyleConnect™, the Company's proprietary
digital styling tool that enables customers to conveniently shop
wherever, whenever and however they prefer.
As of July 31, 2021, the Company operated 1,284 stores in
the U.S. and sold merchandise through 66 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
and www.soma.com as well as through third-party channels.
To learn more about Chico's FAS, please visit 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 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 sections
captioned "Business Highlights" and "Fiscal 2021 Outlook," 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 pandemic and uncertainties about its depth and duration, new
variants of COVID-19 that have emerged, and the speed, efficacy and
availability of vaccine and treatment developments, as well as the
impacts to general economic conditions and the economic slowdown
affecting consumer behavior and discretionary spending (during and
after the pandemic) and any temporary store restrictions (including
reduced hours or capacity) due to government mandates; the
effectiveness of store reopenings, cost reduction initiatives, the
extent, availability and effectiveness of any pandemic stimulus
packages or loan programs, including the Coronavirus Aid, Relief,
and Economic Security 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 pandemic, and the impact of the pandemic on our manufacturing
operations in China; our ability
to successfully implement any alternatives that we pursue including
our ability to maintain the cost savings described in this release;
government actions and policies; increases in unemployment rates
and taxes; local, regional, national and international economic
conditions; the risk that natural disasters, public health crises,
political uprisings, uncertainty or unrest, or other catastrophic
events could adversely affect our operations and financial results;
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; 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 turnaround strategy
and five fiscal 2021 operating priorities which are: continuing our
ongoing digital transformation; further refining product through
fit, quality, fabric and innovation; driving increased customer
engagement through marketing; maintaining our operating and cost
discipline; and further enhancing the productivity of our real
estate portfolio; cyber security or other data or security
breaches; 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 increases in
costs pertaining to product deliveries and returns, higher freight
costs, product supplier handover delays and extended inbound
transit times); the risks and uncertainties that are related to our
reliance on sourcing from foreign suppliers, including significant
economic labor, political or other shifts (including the impact of
changes in tariffs, taxes or other import regulations, particularly
with respect to China, or
legislation prohibiting certain imports from China); the quality and timeliness of
merchandise received from suppliers; changes in the costs of
manufacturing, raw materials, transportation, distribution, labor
and advertising; new or increased taxes or tariffs that could
impact, among other things, our sourcing from foreign suppliers;
the risk that future legislation may prohibit certain imports from
China; and significant shifts in
consumer behavior. Other risk factors are detailed in the Company's
Annual Report on Form 10-K and, from time to time, the Company's
Quarterly Reports on Form 10-Q 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.
and Subsidiaries
|
Condensed
Consolidated Statements of Income (Loss)
|
(Unaudited)
|
(in thousands,
except per share amounts)
|
|
|
Thirteen Weeks
Ended
|
|
Twenty-Six Weeks
Ended
|
|
July 31,
2021
|
|
August 1,
2020
|
|
July 31,
2021
|
|
August 1,
2020
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
Net
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chico's
|
$
|
221,389
|
|
|
46.9
|
%
|
|
$
|
139,584
|
|
|
45.6
|
%
|
|
$
|
398,410
|
|
|
46.3
|
%
|
|
$
|
271,021
|
|
|
46.3
|
%
|
White House Black
Market
|
122,043
|
|
|
25.9
|
|
|
82,253
|
|
|
26.9
|
|
|
226,090
|
|
|
26.3
|
|
|
166,173
|
|
|
28.3
|
|
Soma
|
128,627
|
|
|
27.2
|
|
|
84,337
|
|
|
27.5
|
|
|
235,520
|
|
|
27.4
|
|
|
149,244
|
|
|
25.4
|
|
Total Net
Sales
|
472,059
|
|
|
100.0
|
|
|
306,174
|
|
|
100.0
|
|
|
860,020
|
|
|
100.0
|
|
|
586,438
|
|
|
100.0
|
|
Cost of goods
sold
|
290,601
|
|
|
61.6
|
|
|
261,408
|
|
|
85.4
|
|
|
551,767
|
|
|
64.2
|
|
|
552,767
|
|
|
94.3
|
|
Gross
Margin
|
181,458
|
|
|
38.4
|
|
|
44,766
|
|
|
14.6
|
|
|
308,253
|
|
|
35.8
|
|
|
33,671
|
|
|
5.7
|
|
Selling, general and
administrative expenses
|
145,849
|
|
|
30.9
|
|
|
107,304
|
|
|
35.0
|
|
|
280,168
|
|
|
32.5
|
|
|
237,475
|
|
|
40.5
|
|
Goodwill and
intangible impairment charges
|
—
|
|
|
0.0
|
|
|
—
|
|
|
0.0
|
|
|
—
|
|
|
0.0
|
|
|
113,180
|
|
|
19.3
|
|
Income (Loss) from
Operations
|
35,609
|
|
|
7.5
|
|
|
(62,538)
|
|
|
(20.4)
|
|
|
28,085
|
|
|
3.3
|
|
|
(316,984)
|
|
|
(54.1)
|
|
Interest expense,
net
|
(1,722)
|
|
|
(0.3)
|
|
|
(507)
|
|
|
(0.2)
|
|
|
(3,427)
|
|
|
(0.4)
|
|
|
(851)
|
|
|
(0.1)
|
|
Income (Loss)
before Income Taxes
|
33,887
|
|
|
7.2
|
|
|
(63,045)
|
|
|
(20.6)
|
|
|
24,658
|
|
|
2.9
|
|
|
(317,835)
|
|
|
(54.2)
|
|
Income tax provision
(benefit)
|
7,700
|
|
|
1.7
|
|
|
(16,200)
|
|
|
(5.3)
|
|
|
7,400
|
|
|
0.9
|
|
|
(92,700)
|
|
|
(15.8)
|
|
Net Income
(Loss)
|
$
|
26,187
|
|
|
5.5
|
%
|
|
$
|
(46,845)
|
|
|
(15.3)
|
%
|
|
$
|
17,258
|
|
|
2.0
|
%
|
|
$
|
(225,135)
|
|
|
(38.4)
|
%
|
Per Share
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share - basic
|
$
|
0.22
|
|
|
|
|
$
|
(0.40)
|
|
|
|
|
$
|
0.15
|
|
|
|
|
$
|
(1.95)
|
|
|
|
Net income (loss) per
common and common equivalent share – diluted
|
$
|
0.21
|
|
|
|
|
$
|
(0.40)
|
|
|
|
|
$
|
0.14
|
|
|
|
|
$
|
(1.95)
|
|
|
|
Weighted average
common shares outstanding – basic
|
117,021
|
|
|
|
|
115,912
|
|
|
|
|
116,855
|
|
|
|
|
115,743
|
|
|
|
Weighted average
common and common equivalent shares outstanding –
diluted
|
122,724
|
|
|
|
|
115,912
|
|
|
|
|
121,222
|
|
|
|
|
115,743
|
|
|
|
Dividends declared
per share
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
0.09
|
|
|
|
Chico's FAS,
Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
(in
thousands)
|
|
|
July 31,
2021
|
|
January 30,
2021
|
|
August 1,
2020
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
126,298
|
|
|
$
|
90,791
|
|
|
$
|
103,765
|
|
Marketable securities,
at fair value
|
10,891
|
|
|
18,559
|
|
|
20,742
|
|
Inventories
|
202,128
|
|
|
203,983
|
|
|
235,844
|
|
Prepaid expenses and
other current assets
|
50,428
|
|
|
30,565
|
|
|
31,446
|
|
Income taxes
receivable
|
41,698
|
|
|
58,140
|
|
|
85,940
|
|
Total Current
Assets
|
431,443
|
|
|
402,038
|
|
|
477,737
|
|
Property and
Equipment, net
|
208,925
|
|
|
241,370
|
|
|
271,750
|
|
Right of Use
Assets
|
529,945
|
|
|
586,061
|
|
|
571,992
|
|
Other
Assets:
|
|
|
|
|
|
Goodwill
|
16,360
|
|
|
16,360
|
|
|
16,360
|
|
Other intangible
assets, net
|
5,000
|
|
|
5,000
|
|
|
6,164
|
|
Other assets,
net
|
21,394
|
|
|
24,049
|
|
|
28,931
|
|
Total Other
Assets
|
42,754
|
|
|
45,409
|
|
|
51,455
|
|
|
$
|
1,213,067
|
|
|
$
|
1,274,878
|
|
|
$
|
1,372,934
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
119,387
|
|
|
$
|
116,506
|
|
|
$
|
108,166
|
|
Current lease
liabilities
|
163,376
|
|
|
194,551
|
|
|
218,691
|
|
Other current and
deferred liabilities
|
126,254
|
|
|
120,729
|
|
|
111,318
|
|
Total Current
Liabilities
|
409,017
|
|
|
431,786
|
|
|
438,175
|
|
Noncurrent
Liabilities:
|
|
|
|
|
|
Long-term
debt
|
149,000
|
|
|
149,000
|
|
|
149,000
|
|
Long-term lease
liabilities
|
454,164
|
|
|
515,797
|
|
|
482,380
|
|
Other noncurrent and
deferred liabilities
|
12,242
|
|
|
11,863
|
|
|
6,529
|
|
Deferred
taxes
|
1,558
|
|
|
1,313
|
|
|
52
|
|
Total Noncurrent
Liabilities
|
616,964
|
|
|
677,973
|
|
|
637,961
|
|
Commitments and
Contingencies
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
Preferred
stock
|
—
|
|
|
—
|
|
|
—
|
|
Common
stock
|
1,226
|
|
|
1,197
|
|
|
1,199
|
|
Additional paid-in
capital
|
503,168
|
|
|
498,488
|
|
|
495,163
|
|
Treasury stock, at
cost
|
(494,395)
|
|
|
(494,395)
|
|
|
(494,395)
|
|
Retained
earnings
|
177,077
|
|
|
159,765
|
|
|
294,708
|
|
Accumulated other
comprehensive gain
|
10
|
|
|
64
|
|
|
123
|
|
Total Shareholders'
Equity
|
187,086
|
|
|
165,119
|
|
|
296,798
|
|
|
$
|
1,213,067
|
|
|
$
|
1,274,878
|
|
|
$
|
1,372,934
|
|
Chico's FAS, Inc.
and Subsidiaries
|
Condensed
Consolidated Cash Flow Statements
|
(Unaudited)
|
(in
thousands)
|
|
|
Twenty-Six Weeks
Ended
|
|
July 31,
2021
|
|
August 1,
2020
|
Cash Flows from
Operating Activities:
|
|
|
|
Net income
(loss)
|
$
|
17,258
|
|
|
$
|
(225,135)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
Goodwill and
intangible impairment charges
|
—
|
|
|
113,180
|
|
Inventory
write-offs
|
374
|
|
|
54,308
|
|
Depreciation and
amortization
|
27,348
|
|
|
33,613
|
|
Non-cash lease
expense
|
95,317
|
|
|
100,710
|
|
Exit of frontline
Canada operations
|
—
|
|
|
498
|
|
Right of use asset
impairment
|
—
|
|
|
3,236
|
|
Loss on disposal and
impairment of property and equipment, net
|
1,335
|
|
|
18,637
|
|
Deferred tax
benefit
|
250
|
|
|
(6,756)
|
|
Share-based
compensation expense
|
5,689
|
|
|
3,793
|
|
Changes in assets and
liabilities:
|
|
|
|
Inventories
|
1,481
|
|
|
(44,926)
|
|
Prepaid expenses and
other assets
|
(8,165)
|
|
|
2,743
|
|
Income tax
receivable
|
16,442
|
|
|
(78,809)
|
|
Accounts
payable
|
2,991
|
|
|
(26,300)
|
|
Accrued and other
liabilities
|
6,259
|
|
|
(338)
|
|
Lease
liability
|
(132,549)
|
|
|
(38,673)
|
|
Net cash provided by
(used in) operating activities
|
34,030
|
|
|
(90,219)
|
|
Cash Flows from
Investing Activities:
|
|
|
|
Purchases of
marketable securities
|
(219)
|
|
|
(5,212)
|
|
Proceeds from sale of
marketable securities
|
7,826
|
|
|
48,326
|
|
Purchases of property
and equipment
|
(5,150)
|
|
|
(8,151)
|
|
Net cash provided by
investing activities
|
2,457
|
|
|
34,963
|
|
Cash Flows from
Financing Activities:
|
|
|
|
Proceeds from
borrowings
|
—
|
|
|
106,500
|
|
Proceeds from issuance
of common stock
|
—
|
|
|
251
|
|
Dividends
paid
|
—
|
|
|
(10,701)
|
|
Payments of tax
withholdings related to share-based awards
|
(980)
|
|
|
(995)
|
|
Net cash (used in)
provided by financing activities
|
(980)
|
|
|
95,055
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
—
|
|
|
(6)
|
|
Net increase in cash
and cash equivalents
|
35,507
|
|
|
39,793
|
|
Cash and Cash
Equivalents, Beginning of period
|
90,791
|
|
|
63,972
|
|
Cash and Cash
Equivalents, End of period
|
$
|
126,298
|
|
|
$
|
103,765
|
|
Supplemental Detail on Net Income (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 income (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.
Net income (loss) per share is determined using the two-class
method when it is more dilutive than the treasury stock method.
Basic net income (loss) per share is computed by dividing net
income (loss) available to common shareholders by the
weighted-average number of common shares outstanding during the
period, including participating securities. Diluted net income
(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
July 31, 2021 and August 1, 2020, potential common shares
were excluded from the computation of diluted income (loss) per
common share to the extent they were antidilutive.
The following unaudited table sets forth the computation of net
income (loss) per basic and diluted common share shown on the face
of the accompanying condensed consolidated statements of income
(loss) (in thousands, except per share amounts):
|
|
Thirteen Weeks
Ended
|
|
Twenty-Six Weeks
Ended
|
|
|
July 31,
2021
|
|
August 1,
2020
|
|
July 31,
2021
|
|
August 1,
2020
|
Numerator
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
26,187
|
|
|
$
|
(46,845)
|
|
|
$
|
17,258
|
|
|
$
|
(225,135)
|
|
Net income and
dividends declared allocated to participating securities
|
|
(235)
|
|
|
—
|
|
|
(171)
|
|
|
(193)
|
|
Net income (loss)
available to common shareholders
|
|
$
|
25,952
|
|
|
$
|
(46,845)
|
|
|
$
|
17,087
|
|
|
$
|
(225,328)
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding – basic
|
|
117,021
|
|
|
115,912
|
|
|
116,855
|
|
|
115,743
|
|
Dilutive effect of
non-participating securities
|
|
5,703
|
|
|
—
|
|
|
4,367
|
|
|
—
|
|
Weighted average
common and common equivalent shares outstanding –
diluted
|
|
122,724
|
|
|
115,912
|
|
|
121,222
|
|
|
115,743
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per common share (1):
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.22
|
|
|
$
|
(0.40)
|
|
|
$
|
0.15
|
|
|
$
|
(1.95)
|
|
Diluted
|
|
$
|
0.21
|
|
|
$
|
(0.40)
|
|
|
$
|
0.14
|
|
|
$
|
(1.95)
|
|
|
(1)
Due to the differences between quarterly and year-to-date
weighted average share counts and the effect of quarterly rounding
to the nearest cent per share, the year-to-date calculation of net
income (loss) per basic and diluted common share may not equal the
sum of the quarters.
|
Supplemental Detail on Significant Non-Cash Charges
A summary of significant non-cash charges related to the impact
of the pandemic on results for the thirteen and twenty-six weeks
ended August 1, 2020 is presented in the tables below:
Summary of
Significant Non-Cash 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
|
|
Total significant
non-cash charges
|
$
|
12,256
|
|
|
4.0
|
%
|
|
$
|
8,028
|
|
|
$
|
0.07
|
|
|
|
Twenty-Six Weeks
Ended
|
|
August 1,
2020
|
|
Amount, pre-tax
(3)
|
|
% 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 (2)
|
18,493
|
|
|
3.2
|
|
|
13,925
|
|
|
0.12
|
|
Right of use store
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 charges:
|
|
|
|
|
|
|
|
Goodwill
impairment
|
80,414
|
|
|
13.7
|
|
|
73,837
|
|
|
0.63
|
|
Indefinite-lived asset
impairment
|
32,766
|
|
|
5.6
|
|
|
24,673
|
|
|
0.21
|
|
Total significant
goodwill and intangible impairment charges
|
113,180
|
|
|
19.3
|
|
|
98,510
|
|
|
0.84
|
|
Total significant
non-cash charges
|
$
|
189,471
|
|
|
32.3
|
%
|
|
$
|
148,408
|
|
|
$
|
1.27
|
|
|
(1)
All significant charges relate to the impact of the pandemic.
Less significant charges that may have been incurred are not
reflected in the table above.
|
(2)
Primarily includes impairment on leasehold improvements at
certain underperforming stores.
|
(3) May not foot due to
rounding.
|
Chico's FAS, Inc.
and Subsidiaries
|
Store Count and
Square Footage
|
Thirteen Weeks Ended
July 31, 2021
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
May 1,
2021
|
|
New
Stores
|
|
Closures
|
|
July 31,
2021
|
|
|
Store
Count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
513
|
|
|
—
|
|
|
(5)
|
|
|
508
|
|
|
|
Chico's
outlets
|
123
|
|
|
—
|
|
|
—
|
|
|
123
|
|
|
|
WHBM frontline
boutiques
|
344
|
|
|
—
|
|
|
(3)
|
|
|
341
|
|
|
|
WHBM
outlets
|
55
|
|
|
—
|
|
|
(1)
|
|
|
54
|
|
|
|
Soma frontline
boutiques
|
240
|
|
|
—
|
|
|
—
|
|
|
240
|
|
|
|
Soma
outlets
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
|
Total Chico's FAS,
Inc.
|
1,293
|
|
|
—
|
|
|
(9)
|
|
|
1,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 1,
2021
|
|
New
Stores
|
|
Closures
|
|
Other Changes
in
SSF
|
|
July 31,
2021
|
Net Selling Square
Footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,398,808
|
|
|
—
|
|
|
(13,066)
|
|
|
—
|
|
|
1,385,742
|
|
Chico's
outlets
|
309,921
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309,921
|
|
WHBM frontline
boutiques
|
806,975
|
|
|
—
|
|
|
(7,152)
|
|
|
—
|
|
|
799,823
|
|
WHBM
outlets
|
115,147
|
|
|
—
|
|
|
(2,423)
|
|
|
—
|
|
|
112,724
|
|
Soma frontline
boutiques
|
452,799
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
452,799
|
|
Soma
outlets
|
34,329
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,329
|
|
Total Chico's FAS,
Inc.
|
3,117,979
|
|
|
—
|
|
|
(22,641)
|
|
|
—
|
|
|
3,095,338
|
|
|
As of July 31,
2021, the Company's franchise operations consisted of 66
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 July 31, 2021
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
January 30,
2021
|
|
New
Stores
|
|
Closures
|
|
July 31,
2021
|
|
|
Store
count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
517
|
|
|
—
|
|
|
(9)
|
|
|
508
|
|
|
|
Chico's
outlets
|
123
|
|
|
—
|
|
|
—
|
|
|
123
|
|
|
|
WHBM frontline
boutiques
|
347
|
|
|
—
|
|
|
(6)
|
|
|
341
|
|
|
|
WHBM
outlets
|
56
|
|
|
—
|
|
|
(2)
|
|
|
54
|
|
|
|
Soma frontline
boutiques
|
241
|
|
|
—
|
|
|
(1)
|
|
|
240
|
|
|
|
Soma
outlets
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
|
Total Chico's FAS,
Inc.
|
1,302
|
|
|
—
|
|
|
(18)
|
|
|
1,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 30,
2021
|
|
New
Stores
|
|
Closures
|
|
Other Changes
in
SSF
|
|
July 31,
2021
|
Net Selling Square
Footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,411,356
|
|
|
—
|
|
|
(25,614)
|
|
|
—
|
|
|
1,385,742
|
|
Chico's
outlets
|
309,921
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309,921
|
|
WHBM frontline
boutiques
|
814,157
|
|
|
—
|
|
|
(14,334)
|
|
|
—
|
|
|
799,823
|
|
WHBM
outlets
|
117,484
|
|
|
—
|
|
|
(4,760)
|
|
|
—
|
|
|
112,724
|
|
Soma frontline
boutiques
|
454,557
|
|
|
—
|
|
|
(1,758)
|
|
|
—
|
|
|
452,799
|
|
Soma
outlets
|
34,329
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,329
|
|
Total Chico's FAS,
Inc.
|
3,141,804
|
|
|
—
|
|
|
(46,466)
|
|
|
—
|
|
|
3,095,338
|
|
|
As of July 31,
2021, the Company's franchise operations consisted of 66
international retail locations in Mexico and 2 domestic airport
locations.
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/chicos-fas-inc-reports-second-quarter-results-301365429.html
SOURCE Chico's FAS, Inc.