FORT Myers, Fla., Nov. 30, 2021 /PRNewswire/ --
- Third quarter EPS per diluted share of $0.15; best third quarter performance since
2016
- Total Company third quarter sales increased 29%
year-over-year
- Gross margin rate improved to 40.7%; highest third
quarter level since 2014
- SG&A as a percent of sales of 35.7%; lowest level
since 2018
- Year-to-date income from operations of $50 million; higher than full year
2019
- Repaid one-third of outstanding long-term debt and ended
quarter with $137.5M of cash and
marketable securities
Chico's FAS, Inc. (NYSE: CHS) (the "Company" or "Chico's FAS")
today announced its financial results for the fiscal 2021 thirteen
weeks ended October 30, 2021 (the "third quarter").
Molly Langenstein, Chico's FAS
Chief Executive Officer and President, commented, "The third
quarter represents our best third quarter earnings performance
since 2016. We delivered robust year-over-year comparable
sales growth across all three brands, produced our best third
quarter gross margin performance since 2014 and continued our
disciplined expense management. This performance clearly
demonstrates the extraordinary progress we are making against our
turnaround plan."
"Our third quarter comparable sales growth of 28% was driven by
outperformance in store and digital sales channels. The sales
growth was propelled by meaningful enhancements in product and
marketing, which continued to significantly drive full-price
selling," Langenstein continued. Customers are enthusiastically
responding to our elevated quality and styling at both Chico's® and
White House Black Market®, as indicated by our third quarter
comparable sales growth of 23% and 33%, respectively, on
meaningfully lower inventory levels. At both apparel brands, we
achieved significantly faster sell-through rates, increased
productivity, more full-priced sales and higher maintained margins.
Soma® posted a 30% comparable sales increase over last year's third
quarter and a remarkable 44% increase over the third quarter of
2019, marking five consecutive quarters of comparable sales growth
at Soma. To continue driving the Soma business forward, we have
invested in inventory, capital and staffing, to position us to
capture additional market share and to become one of the largest
intimate apparel brands in the U.S. "
Langenstein concluded, "We are a digital-first, customer-led
company with a clear path for profitable growth. We have
three unique brands, each with their own opportunities for
expanding their customer bases, market share and sales. We
continue to improve our operating performance, strengthen our
balance sheet and build our team and infrastructure. We
believe we are poised to generate shareholder value over the long
term and look forward to continued success ahead."
Business Highlights
The Company's third quarter highlights include:
- Robust results: Chico's FAS continued its profitable
growth, posting $0.15 net income per
diluted share for the third quarter, compared to a $0.48 net loss per diluted share for the thirteen
weeks ended October 31, 2020 ("last
year's third quarter") and a $0.07
net loss per diluted share for the thirteen weeks ended
November 2, 2019 (the "third quarter
of fiscal 2019"; as a pre-pandemic reference). The current quarter
earnings represent the best third quarter performance since
2016.
- Continued improving sales performance at Chico's:
Comparable sales at Chico's increased 23.3% over last year's third
quarter. Chico's continued to benefit from elevated product styling
and quality enhancements, and customers particularly responded
enthusiastically to denim, wovens and sweaters. Inventories
remained lean, which fueled high productivity and increased
full-price sales in the quarter.
- Continued improving sales performance at White House Black
Market ("WHBM"): Comparable sales at WHBM grew 33.4% over last
year's third quarter. WHBM continued to benefit from elevated
quality and product enhancements, and customers particularly
responded to denim and new jacket silhouettes. Inventories remained
lean, which fueled high productivity and increased full-price sales
in the quarter.
- Continued exceptional sales growth at Soma: Soma posted
a 30.2% comparable sales increase over last year's third quarter
and a remarkable 43.5% comparable sales increase over the third
quarter of fiscal 2019. Data from market research firm NPD Group
Inc. shows that Soma's growth continues to outpace the market in
non-sport bras, panties and sleepwear. Management believes this
research, along with recent performance, is a clear indication that
Soma is well positioned to continue capturing additional market
share and grow into a billion dollar brand.
- 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,
influencers and other social efforts. These enhanced marketing
initiatives are driving more customers to our brands, with our
total customer count up nearly 8% from the third quarter last year,
and their average age continues to trend younger than existing
customers.
- Strong balance sheet: The Company ended the third
quarter with more than $137 million
in cash and marketable securities, even after repaying $50 million of long-term debt during the
quarter.
- Improved gross margin: The third quarter gross margin
rate rose to 40.7%, the best third quarter performance since fiscal
2014, driven by higher full-price sales, less promotional activity,
strategic inventory management and improved leverage of occupancy
costs on higher sales, partially offset by increases in raw
materials and freight costs.
- Continued cost discipline: Selling, general and
administrative ("SG&A") expenses declined to 35.8% of net sales
for the third quarter, an improvement over the third quarter rates
of both 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 rent reductions: In the first nine
months of fiscal 2021, Chico's FAS obtained approximately
$22 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 $87 million. We believe these renegotiated store
leases will provide an occupancy tailwind and will further enhance
store profitability.
Overview of Financial Results
For the third quarter, the Company reported net income of
$18.2 million, or $0.15 per diluted share, compared to a net loss
of $55.9 million, or $0.48 per diluted share for last year's third
quarter. The Company reported a third quarter adjusted net income
of $22.1 million, or $0.18 per share, excluding $3.9 million after-tax in legal settlement
charges during the third quarter, as presented in the accompanying
GAAP to non-GAAP reconciliation. Last year's third quarter net loss
included $6.3 million, or
$0.06 per share, in significant
after-tax non-cash impairment charges as presented in the
accompanying Summary of Significant Non-Cash Charges table.
For the thirty-nine weeks ended October 30, 2021, the
Company reported net income of $35.5
million, or $0.29 per diluted
share, compared to a net loss of $281.0
million, or $2.43 per diluted
share, for the thirty-nine weeks ended October 31, 2020. The
Company reported an adjusted net income of $39.4 million, or $0.32 per share, excluding $3.9 million after-tax in legal settlement
charges during the thirty-nine weeks ended October 30, 2021 as
presented in the accompanying GAAP to non-GAAP reconciliation. Net
loss for the thirty-nine weeks ended October 31, 2020 included
$153.7 million, or $1.33 per share, in significant after-tax
non-cash charges as presented in the accompanying Summary of
Significant Non-Cash Charges table.
Sales
For the third quarter, net sales were $453.6 million compared to $351.4 million in last year's third quarter. This
29.1% improvement primarily reflects the decline in store sales
during last year's third quarter as a result of the pandemic and
higher full-price sales in the current year partially offset by 31
net permanent store closures since last year's third quarter.
Total Company comparable sales for the third quarter compared to
the third quarter of fiscal 2019 declined 2.7%, with Soma improving
43.5% and Chico's and WHBM decreasing 16.2% and 4.9%, respectively.
Total Company on-hand inventories at the end of the third quarter
compared to the third quarter of fiscal 2019 were down 18.8%, with
Soma up 36.6% and Chico's and WHBM down 46.2% and 38.8%,
respectively; correlating sales and on-hand inventory.
Comparable
Sales (1)
|
|
Thirteen Weeks
Ended
|
|
October 30,
2021
|
|
Compared to Fiscal
2020
|
|
Compared to Fiscal
2019
|
Chico's
|
23.3
|
%
|
|
(16.2)
|
%
|
White House Black
Market
|
33.4
|
|
|
(4.9)
|
|
Soma
|
30.2
|
|
|
43.5
|
|
Total
Company
|
27.9
|
|
|
(2.7)
|
|
|
(1)
The Company is not providing comparable sales figures for the
thirty-nine weeks ended October 30, 2021 compared to the
thirty-nine weeks ended October 31, 2020 as it is not a
meaningful measure due to the significant impact of the pandemic
during the thirty-nine weeks ended October 31,
2020.
|
Gross Margin
For the third quarter, gross margin was $184.4 million, or 40.7% of net sales, compared
to $77.2 million, or 22.0% of net
sales, in last year's third quarter. The year-over-year improvement
in gross margin rate primarily reflects higher full-price sales,
less promotional activity, strategic inventory management and
improved leverage of occupancy costs on higher sales, partially
offset by increases in raw materials and freight costs.
Selling, General and Administrative Expenses
For the third quarter, SG&A expenses were $162.5 million, or 35.8% of net sales, compared
to $153.1 million, or 43.6% of net
sales, for last year's third quarter, primarily reflecting the
benefit of fiscal 2020 cost savings initiatives and sales leverage,
slightly offset by the impact of $3.9 million in pre-tax litigation
settlement charges for the third quarter and pre-tax impairment
charges in last year's third quarter. Excluding the impact of the
$3.9 million pre-tax litigation
settlement charges in 2021, adjusted third quarter SG&A
expenses as a percent of sales was 35.0% compared to 37.3% in the
third quarter of fiscal 2019.
Income Taxes
For the third quarter, the effective tax rate was 9.9% compared
to 26.9% for last year's third quarter. The 9.9% effective tax rate
primarily reflects a change in estimate from the second quarter due
to an increase in annual projected deferred tax assets on which a
full valuation allowance exists, offset by a 2020 fiscal provision
to return benefit due to the reversal of a valuation allowance
related to 2020 temporary differences and the rate differential
provided by the Coronavirus Aid, Relief, and Economic Security
("CARES") Act. The 26.9% effective tax rate for last year's third
quarter includes the annual benefit of the fiscal 2020 pre-tax loss
due to the CARES Act, which was slightly offset by the impact of
nondeductible book goodwill impairment charges.
Cash, Marketable Securities and Debt
At the end of the second quarter of fiscal 2021, cash and
marketable securities totaled $137.2
million. The $0.3 million
increase in third quarter cash and marketable securities compared
to the second quarter primarily reflects cash flow from operating
activities offset by a principal payment of $50.0 million on debt in the third
quarter.
At the end of the third quarter, cash and marketable securities
totaled $137.5 million compared to
$145.2 million at the end of last
year's third quarter. Debt at the end of the third quarter totaled
$99.0 million compared to
$149.0 million at the end of last
year's third quarter.
Inventories
At the end of the third quarter, inventories totaled
$277.7 million compared to
$256.5 million at the end of last
year's third quarter and $277.5
million at the end of the third quarter of fiscal 2019. The
$21.2 million, or 8.3%, increase from
last year's third quarter primarily reflects strategic inventory
management to align assortments with consumer demand to support the
Company's sales growth.
Fiscal 2021 Fourth Quarter Outlook
For the fiscal 2021 fourth quarter the Company currently
expects:
- Consolidated net sales of $495
million to $510 million;
- Gross margin rate as a percent of net sales of 33.0% to
34.5%;
- SG&A expenses as a percent of net sales of 32.3% to
32.8%;
- Effective income tax rate of 33.0%; and
- Earnings per diluted share of $0.00 to $0.05.
Conference Call Information
The Company is hosting a live conference call on Tuesday,
November 30, 2021 beginning at 8:00
a.m. ET to review the operating results for the third
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, 1141281, 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, 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 StyleConnectTM, the Company's proprietary
digital styling tool that enables customers to conveniently shop
wherever, whenever and however they prefer.
As of October 30, 2021, the Company operated 1,279 stores
in the U.S. and sold merchandise through 59 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 concerning our current
expectations, assumptions, plans, estimates, judgments and
projections about our business and our industry and other
statements that are not historical facts. . These statements,
including without limitation the quote from Ms. Langenstein and the
sections captioned "Business Highlights" and "Fiscal 2021 Fourth
Quarter Outlook," are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of
1995. In most cases, words or phrases such as "anticipates,"
"believes," "could," "estimates," "expects," "intends," "may,"
"will," "plans," "path," "outlook," "project," "should,"
"strategy," "potential," "confident" and similar expressions
identify forward-looking statements. These forward-looking
statements are based largely on information currently available to
our management and are subject to various 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, they are not
guarantees of performance. There is no assurance that our
expectations will 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, those described in Item 1A, "Risk Factors" in our most recent
Annual Report on Form 10-K and, from time to time, in Item 1A,
"Risk Factors" of our Quarterly Reports on Form 10-Q and the
following:
The effects of the pandemic, including uncertainties about its
depth and duration, new variants of COVID-19 that have emerged, the
speed, efficacy and availability of vaccines and treatments, its
impact on general economic conditions, consumer behavior and
discretionary spending, the effectiveness of any actions taken in
response to the pandemic, and the impact of the pandemic on our
manufacturing operations; the extent, availability and
effectiveness of any pandemic stimulus packages or loan programs,
including the CARES Act; the ability of 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
supply chain and other disruptions; increases in unemployment rates
and taxes; general economic conditions, inflation, consumer
confidence, consumer spending patterns and market disruptions
including pandemics or significant health hazards, severe weather
conditions, natural disasters, terrorist activities, financial
crises, political crises or other major events, or the prospect of
these events; shifts in consumer behavior, and our ability to
adapt, identify and respond to new and changing fashion trends and
customer preferences, and to coordinate product development with
buying and planning; changes in the general or specialty retail or
apparel industries, including market demand and overall level of
spending for women's private branded clothing and related
accessories; our ability to secure and maintain customer acceptance
of styles and in-store and online concepts; competition in the
markets in which we operate, including our ability to remain
competitive with customer shipping terms and costs; customer
traffic at our stores; fluctuations in foreign currency exchange
rates; significant changes in the costs of manufacturing, raw
materials, transportation, importing, distribution, labor and
advertising; the quality and timeliness of merchandise received
from suppliers; our ability to manage our store fleet, including
achieving the expected results of store openings or store closures;
our ability to appropriately manage our inventory and allocation
processes and leverage targeted promotions; our ability to maintain
our cost saving discipline; our ability to operate our retail
websites in a profitable manner; our ability to successfully
identify and implement additional sales and distribution channels;
our ability to successfully execute and achieve the expected
results of our business and brand strategies, awareness,
merchandising and marketing programs including, but not limited to,
the Company's turnaround strategy, retail fleet optimization plan,
sales initiatives and multi-channel strategies and five operating
priorities for fiscal 2021, which are: 1) continuing our ongoing
digital transformation; 2) further refining product through fit,
quality, fabric and innovation in each of our brands; 3) driving
increased customer engagement through marketing; 4) maintaining our
operating and cost discipline; and 5) further enhancing the
productivity of our real estate portfolio; our ability to utilize
our distribution center and other support facilities in an
efficient and effective manner; 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); U.S.
and foreign governmental actions and policies and changes thereto;
the continuing performance, implementation and integration of our
management information systems; the impact of any system failure,
cyber security or other data security breaches, including any
security breaches resulting in the theft, transfer, or unauthorized
disclosure of customer, employee, or company information; our
ability to comply with any domestic and foreign information
security and privacy laws, regulations and technology platform
rules or other obligations related to data privacy and security;
the ability to attract, hire, train, motivate and retain qualified
employees in an inclusive environment; the successful recruitment
of leadership and transition of members of our senior management
team; uncertainties regarding future unsolicited offers to buy the
Company and actions of activist shareholders and others and our
ability to respond effectively; our ability to secure and protect
our intellectual property rights and to protect our reputation and
brand images; unanticipated changes in legal, regulatory or tax
laws; and our ability to comply with the terms of our Credit
Agreement, which includes restrictive provisions limiting our
flexibility in operating our business and obtaining credit on
reasonable terms.
These factors should be considered in evaluating forward-looking
statements contained herein. All forward-looking statements that
are made or attributable to us are expressly qualified in their
entirety by this cautionary notice. The forward-looking statements
included herein are only made as of the date of this press release.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
(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 Income (Loss)
|
(Unaudited)
|
(in thousands, except
per share amounts)
|
|
|
Thirteen Weeks
Ended
|
|
Thirty-Nine Weeks
Ended
|
|
October 30,
2021
|
|
October 31,
2020
|
|
October 30,
2021
|
|
October 31,
2020
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
Net
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chico's
|
$
|
203,505
|
|
|
44.9
|
%
|
|
$
|
163,847
|
|
|
46.6
|
%
|
|
$
|
601,914
|
|
|
45.8
|
%
|
|
$
|
434,868
|
|
|
46.4
|
%
|
White House Black
Market
|
138,159
|
|
|
30.4
|
|
|
104,024
|
|
|
29.6
|
|
|
364,250
|
|
|
27.7
|
|
|
270,197
|
|
|
28.8
|
|
Soma
|
111,980
|
|
|
24.7
|
|
|
83,545
|
|
|
23.8
|
|
|
347,500
|
|
|
26.5
|
|
|
232,789
|
|
|
24.8
|
|
Total Net
Sales
|
453,644
|
|
|
100.0
|
|
|
351,416
|
|
|
100.0
|
|
|
1,313,664
|
|
|
100.0
|
|
|
937,854
|
|
|
100.0
|
|
Cost of goods
sold
|
269,205
|
|
|
59.3
|
|
|
274,252
|
|
|
78.0
|
|
|
820,973
|
|
|
62.5
|
|
|
827,019
|
|
|
88.2
|
|
Gross
Margin
|
184,439
|
|
|
40.7
|
|
|
77,164
|
|
|
22.0
|
|
|
492,691
|
|
|
37.5
|
|
|
110,835
|
|
|
11.8
|
|
Selling, general and
administrative expenses
|
162,469
|
|
|
35.8
|
|
|
153,096
|
|
|
43.6
|
|
|
442,637
|
|
|
33.7
|
|
|
390,571
|
|
|
41.6
|
|
Goodwill and
intangible impairment charges
|
—
|
|
|
0.0
|
|
|
—
|
|
|
0.0
|
|
|
—
|
|
|
0.0
|
|
|
113,180
|
|
|
12.1
|
|
Income (Loss) from
Operations
|
21,970
|
|
|
4.9
|
|
|
(75,932)
|
|
|
(21.6)
|
|
|
50,054
|
|
|
3.8
|
|
|
(392,916)
|
|
|
(41.9)
|
|
Interest expense,
net
|
(1,744)
|
|
|
(0.4)
|
|
|
(536)
|
|
|
(0.2)
|
|
|
(5,170)
|
|
|
(0.4)
|
|
|
(1,387)
|
|
|
(0.1)
|
|
Income (Loss)
before Income Taxes
|
20,226
|
|
|
4.5
|
|
|
(76,468)
|
|
|
(21.8)
|
|
|
44,884
|
|
|
3.4
|
|
|
(394,303)
|
|
|
(42.0)
|
|
Income tax provision
(benefit)
|
2,000
|
|
|
0.5
|
|
|
(20,600)
|
|
|
(5.9)
|
|
|
9,400
|
|
|
0.7
|
|
|
(113,300)
|
|
|
(12.0)
|
|
Net Income
(Loss)
|
$
|
18,226
|
|
|
4.0
|
%
|
|
$
|
(55,868)
|
|
|
(15.9)
|
%
|
|
$
|
35,484
|
|
|
2.7
|
%
|
|
$
|
(281,003)
|
|
|
(30.0)
|
%
|
Per Share
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share - basic
|
$
|
0.15
|
|
|
|
|
$
|
(0.48)
|
|
|
|
|
$
|
0.30
|
|
|
|
|
$
|
(2.43)
|
|
|
|
Net income (loss) per
common and common equivalent share – diluted
|
$
|
0.15
|
|
|
|
|
$
|
(0.48)
|
|
|
|
|
$
|
0.29
|
|
|
|
|
$
|
(2.43)
|
|
|
|
Weighted average
common shares outstanding – basic
|
117,304
|
|
|
|
|
116,174
|
|
|
|
|
117,005
|
|
|
|
|
115,887
|
|
|
|
Weighted average
common and common equivalent shares outstanding –
diluted
|
123,166
|
|
|
|
|
116,174
|
|
|
|
|
121,897
|
|
|
|
|
115,887
|
|
|
|
Dividends declared
per share
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
0.09
|
|
|
|
Chico's FAS, Inc.
and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
(in
thousands)
|
|
|
October 30,
2021
|
|
January 30,
2021
|
|
October 31,
2020
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
134,458
|
|
|
$
|
90,791
|
|
|
$
|
126,497
|
|
Marketable securities,
at fair value
|
3,006
|
|
|
18,559
|
|
|
18,667
|
|
Inventories
|
277,738
|
|
|
203,983
|
|
|
256,542
|
|
Prepaid expenses and
other current assets
|
51,841
|
|
|
30,565
|
|
|
36,766
|
|
Income taxes
receivable
|
13,125
|
|
|
58,140
|
|
|
56,774
|
|
Total Current
Assets
|
480,168
|
|
|
402,038
|
|
|
495,246
|
|
Property and
Equipment, net
|
199,853
|
|
|
241,370
|
|
|
256,715
|
|
Right of Use
Assets
|
494,808
|
|
|
586,061
|
|
|
582,074
|
|
Other
Assets:
|
|
|
|
|
|
Goodwill
|
16,360
|
|
|
16,360
|
|
|
16,360
|
|
Other intangible
assets, net
|
5,000
|
|
|
5,000
|
|
|
6,164
|
|
Other assets,
net
|
25,413
|
|
|
24,049
|
|
|
37,839
|
|
Total Other
Assets
|
46,773
|
|
|
45,409
|
|
|
60,363
|
|
|
$
|
1,221,602
|
|
|
$
|
1,274,878
|
|
|
$
|
1,394,398
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
172,897
|
|
|
$
|
116,506
|
|
|
$
|
147,354
|
|
Current lease
liabilities
|
177,563
|
|
|
194,551
|
|
|
208,351
|
|
Other current and
deferred liabilities
|
140,982
|
|
|
120,729
|
|
|
123,474
|
|
Total Current
Liabilities
|
491,442
|
|
|
431,786
|
|
|
479,179
|
|
Noncurrent
Liabilities:
|
|
|
|
|
|
Long-term
debt
|
99,000
|
|
|
149,000
|
|
|
149,000
|
|
Long-term lease
liabilities
|
415,458
|
|
|
515,797
|
|
|
509,118
|
|
Other noncurrent and
deferred liabilities
|
6,647
|
|
|
11,863
|
|
|
14,284
|
|
Deferred
taxes
|
1,500
|
|
|
1,313
|
|
|
52
|
|
Total Noncurrent
Liabilities
|
522,605
|
|
|
677,973
|
|
|
672,454
|
|
Commitments and
Contingencies
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
Preferred
stock
|
—
|
|
|
—
|
|
|
—
|
|
Common
stock
|
1,225
|
|
|
1,197
|
|
|
1,199
|
|
Additional paid-in
capital
|
505,419
|
|
|
498,488
|
|
|
496,993
|
|
Treasury stock, at
cost
|
(494,395)
|
|
|
(494,395)
|
|
|
(494,395)
|
|
Retained
earnings
|
195,306
|
|
|
159,765
|
|
|
238,877
|
|
Accumulated other
comprehensive gain
|
—
|
|
|
64
|
|
|
91
|
|
Total Shareholders'
Equity
|
207,555
|
|
|
165,119
|
|
|
242,765
|
|
|
$
|
1,221,602
|
|
|
$
|
1,274,878
|
|
|
$
|
1,394,398
|
|
Chico's FAS, Inc.
and Subsidiaries
|
Condensed
Consolidated Cash Flow Statements
|
(Unaudited)
|
(in
thousands)
|
|
|
Thirty-Nine Weeks
Ended
|
|
October 30,
2021
|
|
October 31,
2020
|
Cash Flows from
Operating Activities:
|
|
|
|
Net income
(loss)
|
$
|
35,484
|
|
|
$
|
(281,003)
|
|
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
|
|
|
59,687
|
|
Depreciation and
amortization
|
39,662
|
|
|
48,536
|
|
Non-cash lease
expense
|
139,116
|
|
|
163,072
|
|
Exit of frontline
Canada operations
|
—
|
|
|
498
|
|
Right of use asset
impairment
|
—
|
|
|
3,236
|
|
Loss on disposal and
impairment of property and equipment, net
|
1,432
|
|
|
27,554
|
|
Deferred tax
benefit
|
190
|
|
|
(18,409)
|
|
Share-based
compensation expense
|
8,836
|
|
|
5,600
|
|
Changes in assets and
liabilities:
|
|
|
|
Inventories
|
(74,129)
|
|
|
(71,004)
|
|
Prepaid expenses and
other assets
|
(13,830)
|
|
|
(2,704)
|
|
Income tax
receivable
|
45,015
|
|
|
(49,643)
|
|
Accounts
payable
|
56,503
|
|
|
12,923
|
|
Accrued and other
liabilities
|
16,643
|
|
|
19,097
|
|
Lease
liability
|
(166,990)
|
|
|
(94,500)
|
|
Net cash provided by
(used in) operating activities
|
88,306
|
|
|
(63,880)
|
|
Cash Flows from
Investing Activities:
|
|
|
|
Purchases of
marketable securities
|
(269)
|
|
|
(5,351)
|
|
Proceeds from sale of
marketable securities
|
15,753
|
|
|
50,500
|
|
Purchases of property
and equipment
|
(8,246)
|
|
|
(9,537)
|
|
Net cash provided by
investing activities
|
7,238
|
|
|
35,612
|
|
Cash Flows from
Financing Activities:
|
|
|
|
Proceeds from
borrowings
|
—
|
|
|
255,500
|
|
Payments on
borrowings
|
(50,000)
|
|
|
(149,000)
|
|
Payments of debt
issuance costs
|
—
|
|
|
(4,279)
|
|
Proceeds from issuance
of common stock
|
—
|
|
|
412
|
|
Dividends
paid
|
—
|
|
|
(10,701)
|
|
Payments of tax
withholdings related to share-based awards
|
(1,877)
|
|
|
(1,133)
|
|
Net cash (used in)
provided by financing activities
|
(51,877)
|
|
|
90,799
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
—
|
|
|
(6)
|
|
Net increase in cash
and cash equivalents
|
43,667
|
|
|
62,525
|
|
Cash and Cash
Equivalents, Beginning of period
|
90,791
|
|
|
63,972
|
|
Cash and Cash
Equivalents, End of period
|
$
|
134,458
|
|
|
$
|
126,497
|
|
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 thirty-nine weeks
ended October 30, 2021 and October 31, 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
|
|
Thirty-Nine Weeks
Ended
|
|
|
October 30,
2021
|
|
October 31,
2020
|
|
October 30,
2021
|
|
October 31,
2020
|
Numerator
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
18,226
|
|
|
$
|
(55,868)
|
|
|
$
|
35,484
|
|
|
$
|
(281,003)
|
|
Net income and
dividends declared allocated to participating securities
|
|
(123)
|
|
|
—
|
|
|
(313)
|
|
|
(173)
|
|
Net income (loss)
available to common shareholders
|
|
$
|
18,103
|
|
|
$
|
(55,868)
|
|
|
$
|
35,171
|
|
|
$
|
(281,176)
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding – basic
|
|
117,304
|
|
|
116,174
|
|
|
117,005
|
|
|
115,887
|
|
Dilutive effect of
non-participating securities
|
|
5,862
|
|
|
—
|
|
|
4,892
|
|
|
—
|
|
Weighted average
common and common equivalent shares outstanding –
diluted
|
|
123,166
|
|
|
116,174
|
|
|
121,897
|
|
|
115,887
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per common share (1):
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.15
|
|
|
$
|
(0.48)
|
|
|
$
|
0.30
|
|
|
$
|
(2.43)
|
|
Diluted
|
|
$
|
0.15
|
|
|
$
|
(0.48)
|
|
|
$
|
0.29
|
|
|
$
|
(2.43)
|
|
|
(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.
|
GAAP to Non-GAAP Reconciliation
The Company reports information in accordance with U.S.
generally accepted accounting principles ("GAAP"). However, this
press release includes non-GAAP financial measures that are not
based on any standardized methodology prescribed by GAAP. Non-GAAP
financial measures should be used supplemental to, and not as an
alternative to, the Company's GAAP financial results, and the
Company's management does not, nor does it suggest that investors
should, consider non-GAAP financial measures in isolation from, or
as a substitute for, financial information prepared in accordance
with GAAP. Further, the non-GAAP measures utilized by the Company
may be unique to the Company, as they may be different from
non-GAAP measures used by other companies. The Company
believes presenting these non-GAAP measures, which exclude items
that are not comparable from period to period, is useful to
investors and others in evaluating the Company's ongoing operating
and financial results in a manner that is consistent with
management's evaluation of business performance and understanding
how such results compare with the Company's historical performance.
The reconciliation below excludes the unfavorable impact of
litigation settlement charges.
A reconciliation of net income and income per diluted share on a
GAAP basis to adjusted net income and adjusted net income per
diluted share on a non-GAAP basis, SG&A expenses as a percent
of sales and adjusted SG&A expenses as a percent of sales for
the thirteen and thirty-nine weeks ended October 30, 2021 is
presented in the table below:
GAAP to Non-GAAP
Reconciliation of Adjusted Net Income and Adjusted Net Income Per
Diluted Share and Adjusted Selling, General and Administrative
Expenses, percent of sales
|
(Unaudited)
|
(in
thousands)
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
|
|
Thirty-Nine Weeks
Ended
|
|
|
October 30,
2021
|
Net
Income:
|
|
|
|
|
|
|
|
|
|
Net Income GAAP
basis
|
|
$
|
18,226
|
|
|
$
|
35,484
|
|
Litigation settlement
charges
|
|
3,910
|
|
|
3,910
|
|
Adjusted Net
Income (Non-GAAP adjusted basis)
|
|
$
|
22,136
|
|
|
$
|
39,394
|
|
|
|
|
|
|
Net income per
common and common equivalent share - diluted:
|
|
|
|
|
|
|
|
|
|
Net income per
common and common share equivalent (GAAP basis)
|
|
$
|
0.15
|
|
|
$
|
0.29
|
|
Litigation settlement
charges
|
|
0.03
|
|
|
0.03
|
|
Adjusted net
income per common share equivalent (Non-GAAP adjusted
basis)
|
|
$
|
0.18
|
|
|
$
|
0.32
|
|
|
|
|
|
|
Selling, general
and administrative expenses, percent of sales:
|
|
|
|
|
|
|
|
|
|
Selling, general
and administrative expenses, percent of sales (GAAP
basis)
|
|
35.8
|
%
|
|
33.7
|
%
|
Litigation settlement
charges
|
|
(0.8)
|
|
|
(0.3)
|
|
Adjusted selling,
general and administrative expenses percent of sales (Non-GAAP
adjusted basis)
|
|
35.0
|
%
|
|
33.4
|
%
|
Supplemental Detail on Significant Non-Cash Fiscal 2020
Charges
A summary of significant non-cash charges related to the impact
of the pandemic on results for the thirteen and thirty-nine weeks
ended October 31, 2020 is presented in the tables below:
Summary of
Significant Non-Cash Charges (1)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
|
|
October 31,
2020
|
|
Amount,
pre-tax
|
|
% of Net
Sales
|
|
Amount,
after-tax
|
|
Per share
impact
|
|
(dollars in
thousands, except per share amounts)
|
Selling, general and
administrative expenses:
|
|
|
|
|
|
|
|
Other long-lived asset
impairment (2)
|
$
|
8,383
|
|
|
2.4
|
%
|
|
$
|
6,303
|
|
|
$
|
0.06
|
|
Total significant
charges impacting selling, general and administrative
expenses
|
8,383
|
|
|
2.4
|
|
|
6,303
|
|
|
0.06
|
|
Total significant
non-cash charges
|
$
|
8,383
|
|
|
2.4
|
%
|
|
$
|
6,303
|
|
|
$
|
0.06
|
|
|
Thirty-Nine Weeks
Ended
|
|
October 31,
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
|
$
|
55,357
|
|
|
5.9
|
%
|
|
$
|
34,107
|
|
|
$
|
0.29
|
|
Long-lived store asset
impairment (3)
|
18,493
|
|
|
2.0
|
|
|
13,905
|
|
|
0.12
|
|
Right of use store
asset impairment
|
2,442
|
|
|
0.3
|
|
|
1,836
|
|
|
0.02
|
|
Total significant
charges impacting gross margin
|
76,292
|
|
|
8.2
|
|
|
49,848
|
|
|
0.43
|
|
Selling, general and
administrative expenses:
|
|
|
|
|
|
|
|
Other long-lived asset
impairment (2)
|
8,383
|
|
|
0.9
|
|
|
6,303
|
|
|
0.06
|
|
Total significant
charges impacting selling, general and administrative
expenses
|
8,383
|
|
|
0.9
|
|
|
6,303
|
|
|
0.06
|
|
Goodwill and
intangible impairment charges:
|
|
|
|
|
|
|
|
Goodwill
impairment
|
80,414
|
|
|
8.6
|
|
|
72,900
|
|
|
0.63
|
|
Indefinite-lived asset
impairment
|
32,766
|
|
|
3.5
|
|
|
24,637
|
|
|
0.21
|
|
Total significant
goodwill and intangible impairment charges
|
113,180
|
|
|
12.1
|
|
|
97,537
|
|
|
0.84
|
|
Total significant
non-cash charges
|
$
|
197,855
|
|
|
21.2
|
%
|
|
$
|
153,688
|
|
|
$
|
1.33
|
|
|
(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)
Includes impairment on capitalized implementation costs related
to our cloud computing arrangements and other technology-related
assets.
|
(3) Primarily includes
impairment on leasehold improvements at certain underperforming
stores.
|
Chico's FAS, Inc.
and Subsidiaries
|
Store Count and
Square Footage
|
Thirteen Weeks Ended
October 30, 2021
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
July 31,
2021
|
|
New
Stores
|
|
Closures
|
|
October 30,
2021
|
|
|
Store
Count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
508
|
|
|
—
|
|
|
(2)
|
|
|
506
|
|
|
|
Chico's
outlets
|
123
|
|
|
—
|
|
|
—
|
|
|
123
|
|
|
|
WHBM frontline
boutiques
|
341
|
|
|
—
|
|
|
(1)
|
|
|
340
|
|
|
|
WHBM
outlets
|
54
|
|
|
—
|
|
|
—
|
|
|
54
|
|
|
|
Soma frontline
boutiques
|
240
|
|
|
—
|
|
|
(2)
|
|
|
238
|
|
|
|
Soma
outlets
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
|
Total Chico's FAS,
Inc.
|
1,284
|
|
|
—
|
|
|
(5)
|
|
|
1,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31,
2021
|
|
New
Stores
|
|
Closures
|
|
Other Changes in
SSF
|
|
October 30,
2021
|
Net Selling Square
Footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,385,742
|
|
|
—
|
|
|
(4,323)
|
|
|
—
|
|
|
1,381,419
|
|
Chico's
outlets
|
309,921
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309,921
|
|
WHBM frontline
boutiques
|
799,823
|
|
|
—
|
|
|
(2,522)
|
|
|
—
|
|
|
797,301
|
|
WHBM
outlets
|
112,724
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
112,724
|
|
Soma frontline
boutiques
|
452,799
|
|
|
—
|
|
|
(4,026)
|
|
|
—
|
|
|
448,773
|
|
Soma
outlets
|
34,329
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,329
|
|
Total Chico's FAS,
Inc.
|
3,095,338
|
|
|
—
|
|
|
(10,871)
|
|
|
—
|
|
|
3,084,467
|
|
|
As of
October 30, 2021, the Company's franchise operations consisted
of 59 international retail locations in Mexico and 2 domestic
airport locations.
|
Chico's FAS, Inc.
and Subsidiaries
|
Store Count and
Square Footage
|
Thirty-Nine Weeks
Ended October 30, 2021
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
January 30,
2021
|
|
New
Stores
|
|
Closures
|
|
October 30,
2021
|
|
|
Store
count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
517
|
|
|
—
|
|
|
(11)
|
|
|
506
|
|
|
|
Chico's
outlets
|
123
|
|
|
—
|
|
|
—
|
|
|
123
|
|
|
|
WHBM frontline
boutiques
|
347
|
|
|
—
|
|
|
(7)
|
|
|
340
|
|
|
|
WHBM
outlets
|
56
|
|
|
—
|
|
|
(2)
|
|
|
54
|
|
|
|
Soma frontline
boutiques
|
241
|
|
|
—
|
|
|
(3)
|
|
|
238
|
|
|
|
Soma
outlets
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
|
Total Chico's FAS,
Inc.
|
1,302
|
|
|
—
|
|
|
(23)
|
|
|
1,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 30,
2021
|
|
New
Stores
|
|
Closures
|
|
Other Changes in
SSF
|
|
October 30,
2021
|
Net Selling Square
Footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,411,356
|
|
|
—
|
|
|
(29,937)
|
|
|
—
|
|
|
1,381,419
|
|
Chico's
outlets
|
309,921
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309,921
|
|
WHBM frontline
boutiques
|
814,157
|
|
|
—
|
|
|
(16,856)
|
|
|
—
|
|
|
797,301
|
|
WHBM
outlets
|
117,484
|
|
|
—
|
|
|
(4,760)
|
|
|
—
|
|
|
112,724
|
|
Soma frontline
boutiques
|
454,557
|
|
|
—
|
|
|
(5,784)
|
|
|
—
|
|
|
448,773
|
|
Soma
outlets
|
34,329
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,329
|
|
Total Chico's FAS,
Inc.
|
3,141,804
|
|
|
—
|
|
|
(57,337)
|
|
|
—
|
|
|
3,084,467
|
|
|
As of
October 30, 2021, the Company's franchise operations consisted
of 59 international retail locations in Mexico and 2 domestic
airport locations.
|
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SOURCE Chico's FAS, Inc.