FORT MYERS, Fla., May 24,
2017 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS) (the
"Company") today announced its financial results for the fiscal
2017 first quarter ended April 29, 2017.
For the thirteen weeks ended April 29, 2017 (the "first
quarter"), the Company reported net income of $33.6 million, or $0.26 per diluted share, compared to net income
of $31.1 million, or $0.23 per diluted share, for the thirteen weeks
ended April 30, 2016 ("last year's first quarter"). In last
year's first quarter, the Company reported adjusted net income of
$33.4 million, or $0.25 adjusted earnings per diluted share. The
2016 first quarter adjusted results excluded EPS net charges of
$0.02 related to restructuring and
strategic charges, as presented in the accompanying GAAP to
non-GAAP reconciliation.
Shelley Broader, CEO and
President, said, "In this challenging retail environment, we remain
steadfast in executing against our strategic plan to increase
profitable sales and long-term earnings. Our flexible and
profitable operating model allowed us to drive improvement in our
operating income rate and earnings per share compared to last year
even though our comparable sales in the quarter were below our
expectations."
Net Sales
For the first quarter, net sales were $583.7 million compared to $643.0 million in last year's first quarter. This
decrease of 9.2% primarily reflects a decline in comparable sales
of 8.7%, driven by lower average dollar sale and a decline in
transaction count.
Comparable Sales
|
|
Thirteen Weeks
Ended
|
|
|
|
April 29,
2017
|
|
April 30,
2016
|
|
Chico's
|
|
(10.0)
|
%
|
|
(5.4)
|
%
|
|
White House Black
Market
|
|
(9.7)
|
%
|
|
(3.8)
|
%
|
|
Soma
|
|
0.2
|
%
|
|
0.5
|
%
|
|
Total
Company
|
|
(8.7)
|
%
|
|
(4.2)
|
%
|
|
Gross Margin
For the first quarter, gross margin was $237.4 million, or 40.7% of net sales, compared
to $262.3 million, or 40.8% of net
sales, in last year's first quarter. This 10 basis point decrease
primarily reflects sales deleverage of store occupancy expenses,
substantially offset by an improvement in merchandise margin.
Selling, General and Administrative Expenses
For the first quarter, selling, general and administrative
expenses ("SG&A") were $182.5
million, or 31.3% of net sales, compared to $208.1 million, or 32.4% of net sales, for last
year's first quarter. This $25.6
million decrease primarily reflects savings in store related
expenses, lower marketing spend and the benefit of other previously
announced cost reduction initiatives.
Income Tax Expense
For the first quarter, the effective tax rate was 38.2% compared
to 37.9% for last year's first quarter. This 30 basis point
increase primarily reflects the negative impact of adopting the new
employee share-based payment accounting standard (the "Standard").
Excluding the 50 basis point increase related to the Standard, the
effective tax rate for the first quarter of 2017 would have been
37.7% compared to 37.9% in last year's first quarter.
Inventories
At the end of the first quarter of 2017, inventories totaled
$273.9 million compared to
$268.0 million in the same period
last year. The $5.9 million increase
in inventories primarily reflected a $10.5
million increase in in-transit inventories, largely due to a
shift in shipping terms with a major vendor, partially offset by a
2.0% decrease in on-hand inventories compared to the same period
last year.
Share Repurchase Program
During the first quarter of fiscal 2017, under its $300.0 million share repurchase program announced
in November 2015, the Company
repurchased 0.7 million shares for $9.5 million, at a
weighted average of $13.65 per share.
There is $154.1 million remaining for future repurchases
under the program.
Fiscal 2017 Outlook
For fiscal 2017, the Company anticipates a mid single-digit
percentage decline in comparable sales. The Company expects gross
margin as a percent of net sales to be flat to up to a 30 basis
point increase for the year, with approximately flat SG&A
leverage. On-hand inventory in each quarter is expected to be down
compared to last year, as the Company continues to actively manage
inventory. Capital expenditures are expected to be $60 million to $70 million for the year.
ABOUT CHICO'S FAS, INC.
The Company, through its brands – Chico's, White House Black
Market, and Soma, is a leading omni-channel specialty retailer of
women's private branded, sophisticated, casual-to-dressy clothing,
intimates and complementary accessories.
As of April 29, 2017, the Company operated 1,492 stores in
the US and Canada and sold
merchandise through franchise locations in Mexico. The Company's merchandise is also
available at www.chicos.com, www.whbm.com, and www.soma.com. For
more detailed information on Chico's FAS, Inc., please go to our
corporate website at www.chicosfas.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
Some statements herein may be
"forward-looking statements," within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which reflect our
current views with respect to certain events that could have an
effect on our future financial performance, including but without
limitation, statements regarding our strategic plan to increase
profitable sales and long-term earnings, comparable sales, gross
margin, SG&A, operating margin and inventory levels. These
statements relate to expectations concerning matters that are not
historical fact and may include the words or phrases such as
"will," "should," "expects," "believes," "anticipates," "plans,"
"estimates," "approximately," "our planning assumptions," "future
outlook," and similar expressions. Except for historical
information, matters discussed in such statements are
forward-looking statements. These forward-looking statements are
based largely on information currently available to our management
and on our current expectations, assumptions, plans, estimates,
judgments and projections about our business and our industry, and
are subject to various risks and uncertainties that could cause
actual results to differ materially from historical results or
those currently anticipated. Although we believe our expectations
are based on reasonable estimates and assumptions, we cannot
guarantee their accuracy or our future performance, and there are a
number of known and unknown risks, uncertainties, contingencies,
and other factors (many of which are outside our control) that
could cause actual results to differ materially from those
expressed or implied by such forward-looking statements.
Accordingly, there is no assurance that our expectations will, in
fact, occur or that our estimates or assumptions will be correct,
and we caution investors and all others not to place undue reliance
on such forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to,
changes in the general economic and business environment; changes
in the general or specialty retail or apparel industries; the
availability of quality store sites; the ability to successfully
execute and achieve the expected results of our business
strategies, particular strategic initiatives, and organizational
redesign; the integration of our new management team; changes in
the political environment that create consumer uncertainty;
significant changes to product import and distribution costs (such
as unexpected consolidation in the freight carrier industry, and
the impact associated with our shift to a predominantly FOB
shipping structure); new or increased taxes or tariffs (such as the
proposed Border Adjustment Tax); significant shifts in consumer
behavior; and those other factors described in Item 1A, "Risk
Factors" and in the "Forward-Looking Statements" disclosure in Item
7. "Management's Discussion and Analysis of Financial Condition and
Results of Operations" of our latest annual report on Form 10-K.
There can be no assurance that the actual future results,
performance, or achievements expressed or implied by such
forward-looking statements will occur. Investors using
forward-looking statements are encouraged to review the Company's
latest annual report on Form 10-K, including management's
discussion and analysis therein, its filings on Form 10-Q, the
Company's filings on Form 8-K, and other federal securities law
filings for a description of other important factors that may
affect the Company's business, results of operations and financial
condition. All forward-looking statements that are made or
attributable to us are expressly qualified in their entirety by
this cautionary notice. The Company does not undertake to publicly
update or revise its forward looking statements even if experience
or future changes make it clear that projected results expressed or
implied in such statements will not be realized.
(Financial Tables Follow)
Executive Contact:
Jennifer
Powers
Vice President – Investor Relations
Chico's FAS, Inc.
(239) 346-4199
Chico's FAS, Inc.
and Subsidiaries
Condensed
Consolidated Statements of Income
(Unaudited)
(in thousands,
except per share amounts)
|
|
|
Thirteen Weeks
Ended
|
|
April 29,
2017
|
|
April 30,
2016
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
Net
sales:
|
|
|
|
|
|
|
|
Chico's
|
$
|
310,127
|
|
|
53.1
|
|
|
$
|
348,704
|
|
|
54.2
|
|
White House Black
Market
|
193,332
|
|
|
33.1
|
|
|
214,993
|
|
|
33.5
|
|
Soma
|
80,269
|
|
|
13.8
|
|
|
79,280
|
|
|
12.3
|
|
Total net
sales
|
583,728
|
|
|
100.0
|
|
|
642,977
|
|
|
100.0
|
|
Cost of goods
sold
|
346,315
|
|
|
59.3
|
|
|
380,642
|
|
|
59.2
|
|
Gross
margin
|
237,413
|
|
|
40.7
|
|
|
262,335
|
|
|
40.8
|
|
Selling, general and
administrative expenses
|
182,539
|
|
|
31.3
|
|
|
208,141
|
|
|
32.4
|
|
Restructuring and
strategic charges
|
—
|
|
|
0.0
|
|
|
3,651
|
|
|
0.5
|
|
Income from
operations
|
54,874
|
|
|
9.4
|
|
|
50,543
|
|
|
7.9
|
|
Interest expense,
net
|
(455)
|
|
|
(0.1)
|
|
|
(459)
|
|
|
(0.1)
|
|
Income before
income taxes
|
54,419
|
|
|
9.3
|
|
|
50,084
|
|
|
7.8
|
|
Income tax
provision
|
20,800
|
|
|
3.5
|
|
|
19,000
|
|
|
3.0
|
|
Net
income
|
$
|
33,619
|
|
|
5.8
|
|
|
$
|
31,084
|
|
|
4.8
|
|
Per share
data:
|
|
|
|
|
|
|
|
Net income per common
share-basic
|
$
|
0.26
|
|
|
|
|
$
|
0.23
|
|
|
|
Net income per common
and common equivalent share–diluted
|
$
|
0.26
|
|
|
|
|
$
|
0.23
|
|
|
|
Weighted average
common shares outstanding–basic
|
126,050
|
|
|
|
|
131,594
|
|
|
|
Weighted average
common and common equivalent shares outstanding–diluted
|
126,103
|
|
|
|
|
131,689
|
|
|
|
Dividends declared
per share
|
$
|
0.1650
|
|
|
|
|
$
|
0.1600
|
|
|
|
Chico's FAS, Inc.
and Subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited)
(in
thousands)
|
|
|
April 29,
2017
|
|
January 28,
2017
|
|
April 30,
2016
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
119,142
|
|
|
$
|
142,135
|
|
|
$
|
56,502
|
|
Marketable
securities, at fair value
|
50,629
|
|
|
50,370
|
|
|
50,479
|
|
Inventories
|
273,878
|
|
|
232,363
|
|
|
267,988
|
|
Prepaid expenses and
other current assets
|
45,183
|
|
|
50,350
|
|
|
48,105
|
|
Income taxes
receivable
|
1,717
|
|
|
2,408
|
|
|
10,928
|
|
Assets held for
sale
|
—
|
|
|
—
|
|
|
16,525
|
|
Total Current
Assets
|
490,549
|
|
|
477,626
|
|
|
450,527
|
|
Property and
Equipment, net
|
460,845
|
|
|
477,185
|
|
|
535,470
|
|
Other
Assets:
|
|
|
|
|
|
Goodwill
|
96,774
|
|
|
96,774
|
|
|
96,774
|
|
Other intangible
assets, net
|
38,930
|
|
|
38,930
|
|
|
38,930
|
|
Other assets,
net
|
18,432
|
|
|
18,479
|
|
|
14,415
|
|
Total Other
Assets
|
154,136
|
|
|
154,183
|
|
|
150,119
|
|
|
$
|
1,105,530
|
|
|
$
|
1,108,994
|
|
|
$
|
1,136,116
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
133,278
|
|
|
$
|
116,378
|
|
|
$
|
144,767
|
|
Current
debt
|
15,000
|
|
|
16,250
|
|
|
10,000
|
|
Other current and
deferred liabilities
|
149,151
|
|
|
170,232
|
|
|
142,091
|
|
Total Current
Liabilities
|
297,429
|
|
|
302,860
|
|
|
296,858
|
|
Noncurrent
Liabilities:
|
|
|
|
|
|
Long-term
debt
|
64,801
|
|
|
68,535
|
|
|
79,735
|
|
Deferred
liabilities
|
115,543
|
|
|
118,543
|
|
|
129,306
|
|
Deferred
taxes
|
14,613
|
|
|
9,883
|
|
|
16,740
|
|
Total Noncurrent
Liabilities
|
194,957
|
|
|
196,961
|
|
|
225,781
|
|
Commitments and
Contingencies
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
Preferred
stock
|
—
|
|
|
—
|
|
|
—
|
|
Common
stock
|
1,295
|
|
|
1,288
|
|
|
1,336
|
|
Additional paid-in
capital
|
453,999
|
|
|
452,756
|
|
|
436,581
|
|
Treasury stock, at
cost
|
(395,585)
|
|
|
(386,094)
|
|
|
(326,418)
|
|
Retained
earnings
|
553,466
|
|
|
541,251
|
|
|
501,936
|
|
Accumulated other
comprehensive (loss) income
|
(31)
|
|
|
(28)
|
|
|
42
|
|
Total
Shareholders' Equity
|
613,144
|
|
|
609,173
|
|
|
613,477
|
|
|
$
|
1,105,530
|
|
|
$
|
1,108,994
|
|
|
$
|
1,136,116
|
|
Chico's FAS, Inc.
and Subsidiaries
Condensed
Consolidated Cash Flow Statements
(Unaudited)
(in
thousands)
|
|
|
Thirteen Weeks
Ended
|
|
April 29,
2017
|
|
April 30,
2016
|
Cash Flows From
Operating Activities:
|
|
|
|
Net income
|
$
|
33,619
|
|
|
$
|
31,084
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
25,145
|
|
|
27,957
|
|
Loss on disposal and
impairment of property and equipment
|
513
|
|
|
597
|
|
Deferred income
taxes
|
4,905
|
|
|
307
|
|
Stock-based
compensation expense
|
5,794
|
|
|
5,546
|
|
Deferred rent and
lease credits
|
(4,358)
|
|
|
(5,007)
|
|
Changes in assets and
liabilities:
|
|
|
|
Inventories
|
(41,516)
|
|
|
(34,154)
|
|
Prepaid expenses and
other current assets
|
5,264
|
|
|
(3,613)
|
|
Income tax
receivable
|
691
|
|
|
18,230
|
|
Accounts
payable
|
6,358
|
|
|
4,814
|
|
Accrued and other
liabilities
|
(19,724)
|
|
|
(13,029)
|
|
Net cash provided by
operating activities
|
16,691
|
|
|
32,732
|
|
Cash Flows From
Investing Activities:
|
|
|
|
Purchases of
marketable securities
|
(8,491)
|
|
|
(11,403)
|
|
Proceeds from sale of
marketable securities
|
8,259
|
|
|
11,156
|
|
Purchases of property
and equipment, net
|
(9,531)
|
|
|
(13,056)
|
|
Net cash used in
investing activities
|
(9,763)
|
|
|
(13,303)
|
|
Cash Flows From
Financing Activities:
|
|
|
|
Payments on
borrowings
|
(5,000)
|
|
|
(2,500)
|
|
Proceeds from
issuance of common stock
|
1,062
|
|
|
1,177
|
|
Dividends
paid
|
(10,862)
|
|
|
(10,864)
|
|
Repurchase of common
stock
|
(9,498)
|
|
|
(36,637)
|
|
Payments of tax
withholdings related to stock-based awards
|
(5,599)
|
|
|
(4,023)
|
|
Net cash used in
financing activities
|
(29,897)
|
|
|
(52,847)
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
(24)
|
|
|
(31)
|
|
Net decrease in cash
and cash equivalents
|
(22,993)
|
|
|
(33,449)
|
|
Cash and Cash
Equivalents, Beginning of period
|
142,135
|
|
|
89,951
|
|
Cash and Cash
Equivalents, End of period
|
$
|
119,142
|
|
|
$
|
56,502
|
|
Supplemental Detail on Net Income Per Share
Calculation
In accordance with accounting guidance, unvested share-based
payment awards that include non-forfeitable rights to dividends,
whether paid or unpaid, are considered participating securities. As
a result, such awards are required to be included in the
calculation of earnings per common share pursuant to the
"two-class" method. For the Company, participating securities are
composed entirely of unvested restricted stock awards and
performance-based restricted stock units ("PSUs") that have met
their relevant performance criteria.
Net income per share is determined using the two-class method
when it is more dilutive than the treasury stock method. Basic net
income per share is computed by dividing net income available to
common shareholders by the weighted-average number of common shares
outstanding during the period. Diluted net income per share
reflects the dilutive effect of potential common shares from
non-participating securities such as stock options and PSUs. For
the thirteen weeks ended April 29, 2017 and April 30,
2016, potential common shares were excluded from the computation of
diluted EPS to the extent they were antidilutive.
The following unaudited table sets forth the computation of
basic and diluted net income per share shown on the face of the
accompanying condensed consolidated statements of operations (in
thousands, except per share amounts):
|
|
Thirteen Weeks
Ended
|
|
|
April 29,
2017
|
|
April 30,
2016
|
|
|
|
|
|
Numerator
|
|
|
|
|
Net income
|
|
$
|
33,619
|
|
|
$
|
31,084
|
|
Net income and
dividends declared allocated to participating securities
|
|
(741)
|
|
|
(646)
|
|
Net income available
to common shareholders
|
|
$
|
32,878
|
|
|
$
|
30,438
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
Weighted average
common shares outstanding – basic
|
|
126,050
|
|
|
131,594
|
|
Dilutive effect of
non-participating securities
|
|
53
|
|
|
95
|
|
Weighted average
common and common equivalent shares outstanding –
diluted
|
|
126,103
|
|
|
131,689
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
Basic
|
|
$
|
0.26
|
|
|
$
|
0.23
|
|
Diluted
|
|
$
|
0.26
|
|
|
$
|
0.23
|
|
Supplemental Detail on GAAP to Non-GAAP
Reconciliation
SEC Regulation G - The Company reports its consolidated
financial results in accordance with generally accepted accounting
principles (GAAP). However, to supplement these consolidated
financial results, management believes that certain non-GAAP
results should be considered in addition to, not as a substitute
for, GAAP measures. These non-GAAP measures exclude results related
to certain strategic charges.
A reconciliation of net income and net income per diluted share
on a GAAP basis to net income and net income per diluted share on a
non-GAAP basis for the thirteen weeks ended April 30, 2016 is
presented in the table below:
Chico's FAS, Inc.
and Subsidiaries
|
GAAP to Non-GAAP
Reconciliation of Net Income and Diluted EPS
|
(Unaudited)
|
(in thousands, except
per share amounts)
|
|
|
|
|
|
Thirteen Weeks
Ended
|
|
|
April 30,
2016
|
|
|
|
Net
income:
|
|
|
GAAP basis
|
|
$
|
31,084
|
|
Restructuring and
strategic charges
|
|
2,266
|
|
Non-GAAP adjusted
basis
|
|
$
|
33,350
|
|
|
|
|
Net income per
diluted share:
|
|
|
GAAP basis
|
|
$
|
0.23
|
|
Restructuring and
strategic charges
|
|
0.02
|
|
Non-GAAP adjusted
basis
|
|
$
|
0.25
|
|
Chico's FAS, Inc.
and Subsidiaries
|
Store Count and
Square Footage
|
Thirteen Weeks Ended
April 29, 2017
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
January 28,
2017
|
|
New Stores
|
|
Closures
|
|
April 29,
2017
|
|
|
Store
count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
587
|
|
|
—
|
|
|
(5)
|
|
|
582
|
|
|
|
Chico's
outlets
|
116
|
|
|
1
|
|
|
—
|
|
|
117
|
|
|
|
Chico's
Canada
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
|
WHBM frontline
boutiques
|
423
|
|
|
—
|
|
|
(4)
|
|
|
419
|
|
|
|
WHBM
outlets
|
71
|
|
|
—
|
|
|
—
|
|
|
71
|
|
|
|
WHBM
Canada
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
|
Soma frontline
boutiques
|
275
|
|
|
1
|
|
|
(2)
|
|
|
274
|
|
|
|
Soma
outlets
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
|
Total Chico's FAS,
Inc.
|
1,501
|
|
|
2
|
|
|
(11)
|
|
|
1,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 28,
2017
|
|
New Stores
|
|
Closures
|
|
Other
changes in
SSF
|
|
April 29,
2017
|
Net selling square
footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,606,730
|
|
|
—
|
|
|
(10,573)
|
|
|
(2,063)
|
|
|
1,594,094
|
|
Chico's
outlets
|
291,455
|
|
|
2,337
|
|
|
—
|
|
|
225
|
|
|
294,017
|
|
Chico's
Canada
|
9,695
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,695
|
|
WHBM frontline
boutiques
|
984,754
|
|
|
—
|
|
|
(9,293)
|
|
|
675
|
|
|
976,136
|
|
WHBM
outlets
|
148,457
|
|
|
—
|
|
|
—
|
|
|
58
|
|
|
148,515
|
|
WHBM
Canada
|
14,891
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,891
|
|
Soma frontline
boutiques
|
519,945
|
|
|
2,189
|
|
|
(3,781)
|
|
|
825
|
|
|
519,178
|
|
Soma
outlets
|
35,637
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,637
|
|
Total Chico's FAS,
Inc.
|
3,611,564
|
|
|
4,526
|
|
|
(23,647)
|
|
|
(280)
|
|
|
3,592,163
|
|
As of April 29, 2017, the Company also sold merchandise
through 93 international franchise locations.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/chicos-fas-inc-reports-first-quarter-results-300462805.html
SOURCE Chico's FAS, Inc.