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8-K - 8-K - CHICO'S FAS, INC. | d401280d8k.htm |
Exhibit 99.1
Chicos FAS, Inc. 11215 Metro Parkway Fort Myers, Florida 33966 (239) 277-6200
Chicos FAS, Inc. Reports Record Second Quarter
and First Half Results
| 28% increase in second quarter earnings per share to a record $0.32 |
| 14th consecutive quarter of double digit EPS growth |
| 5.6% comparable sales increase in second quarter, a 2-year stack of 18.4% |
Fort Myers, FL August 22, 2012 Chicos FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2012 second quarter and twenty-six weeks ended July 28, 2012.
For the second quarter, the Company reported net income of $53.4 million, an increase of 23% compared to net income of $43.4 million in last years second quarter and record earnings per diluted share of $0.32, an increase of 28% compared to $0.25 per diluted share in last years second quarter.
For the twenty-six weeks ended July 28, 2012, the Company reported record net income of $107.0 million, an increase of 20% compared to net income of $89.3 million in the same period last year and record earnings per diluted share of $0.64, an increase of 25% compared to $0.51 per diluted share in the same period last year.
Net Sales
For the second quarter, net sales were $641.7 million, an increase of 16.4% compared to $551.4 million in last years second quarter, reflecting comparable sales growth of 5.6%, square footage increase of 7.4%, and sales for Boston Proper of $32.6 million. The 5.6% increase in comparable sales for the second quarter was on top of a 12.8% increase in last years second quarter, for a two-year stack of 18.4%, and reflected increases in both average dollar sale and transaction count. The Companys comparable sales growth primarily reflected the effectiveness of the Companys innovative marketing plans, a positive customer response to the Companys merchandise offering and new product launches.
The Chicos/Soma Intimates brands comparable sales increased 7.2% on top of an 11.9% increase in last years second quarter for a two-year stack of 19.1%, and the White House | Black Market (WH|BM) brands comparable sales increased 2.3% on top of a 14.9% increase in last years second quarter for a two-year stack of 17.2%.
Gross Margin
For the second quarter, gross margin was $362.2 million, an increase of 17.1% compared to $309.3 million in last years second quarter. As a percentage of net sales, gross margin was 56.4%, a 30 basis point improvement from last years second quarter, primarily reflecting increased full-price selling and effective promotional activities, partially offset by the inclusion of Boston Propers results.
Page 1 of 8
Selling, General and Administrative Expenses
For the second quarter, selling, general and administrative expenses (SG&A) were $276.1 million compared to $240.4 million in last years second quarter. As a percentage of net sales, SG&A was 43.0%, a 60 basis point improvement from last years second quarter, primarily reflecting the sales leverage impact on store expenses and the inclusion of Boston Propers results.
Inventories
At the end of the second quarter, total inventories were $191.7 million compared to $190.7 million in the second quarter last year. Excluding $12.6 million related to Boston Proper, inventories decreased by $11.6 million or 6.1%, reflecting planned inventory reductions.
Share Repurchase Program
During the second quarter of fiscal 2012, the Company repurchased 1.8 million shares for $25.6 million under its $200 million share repurchase program announced in November 2011, with $149.4 million remaining under the program as of the end of the second quarter. For the four quarter period ended July 28, 2012, the Company repurchased 9.0 million shares for $110.6 million.
Outlook
As a result of the Companys record first half results, the Company is updating its planning assumptions for fiscal 2012. The new planning assumptions are:
| Net sales of approximately $2.55 billion to $2.6 billion, which includes comparable store growth at a mid-single digit percent; |
| Gross margin rate of approximately flat to 2011; |
| SG&A expense, as a percentage of net sales, down approximately 50 basis points to 2011; |
| One-time acquisition and integration costs for Boston Proper of approximately $4 million pre-tax; |
| Effective tax rate of approximately 38%; |
| Weighted average diluted shares of approximately 165 million, excluding any potential future impact of share repurchases; |
| Inventory increase in-line with sales growth; and |
| Capital expenditures of approximately $155 million, reflecting an additional $5 million for Boston Proper initiatives, including new stores in early fiscal 2013 and system integration costs. |
A conference call to review the second quarter is scheduled for today at 8:30 a.m. EDT. A live webcast of the call can be accessed at the Events Calendar page of the Chicos FAS, Inc. corporate website, www.chicosfas.com.
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ABOUT CHICOS FAS, INC.
The Company, through its brands Chicos, White House | Black Market, Soma Intimates, and Boston Proper, is a womens specialty retailer of private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing items.
The Chicos brand offers women a combination of great style, one-of-a-kind details and warm personal service. Chicos currently operates 607 boutiques and 92 outlets throughout the U.S., mails a catalog and offers round-the-clock shopping at www.chicos.com.
White House | Black Market strives to make women feel beautiful with apparel and accessories in the honest simplicity of black and white and the individuality of styles built from it. White House | Black Market currently operates 388 boutiques and 38 outlets, mails a catalog highlighting its latest fashions and connects with customers at www.whbm.com.
Soma Intimates offers beautiful and sensual lingerie, loungewear and beauty. Soma Intimates currently operates 186 boutiques and 16 outlets, mails a catalog coinciding with key shopping periods and sells direct-to-consumer at www.soma.com.
Boston Proper is a leading direct-to-consumer retailer of womens high-end apparel and accessories. Boston Proper provides unique, distinctive fashion designed for todays independent, confident and active woman. The merchandise focus is about creating a daring, modern style with a sensual feel and is available exclusively through the Boston Proper catalog and website, www.bostonproper.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements contained herein, including without limitation, statements addressing the beliefs, plans, objectives, estimates or expectations of the Company or future results or events constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements involve known or unknown risks, including, but not limited to, general economic and business conditions, and conditions in the specialty retail industry. There can be no assurance that the actual future results, performance, or achievements expressed or implied by such forward-looking statements will occur. Users of forward-looking statements are encouraged to review the Companys latest annual report on Form 10-K, its filings on Form 10-Q, managements discussion and analysis in the Companys latest annual report to stockholders, the Companys filings on Form 8-K, and other federal securities law filings for a description of other important factors that may affect the Companys business, results of operations and financial condition. 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.
For more detailed information on Chicos FAS, Inc., please go to our corporate website, www.chicosfas.com.
(Financial Tables Follow)
Page 3 of 8
Chicos FAS, Inc.
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share amounts)
Twenty-Six Weeks Ended | Thirteen Weeks Ended | |||||||||||||||||||||||||||||||
July 28, 2012 | July 30, 2011 | July 28, 2012 | July 30, 2011 | |||||||||||||||||||||||||||||
Amount | % of Sales |
Amount | % of Sales |
Amount | % of Sales |
Amount | % of Sales |
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Net Sales: |
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Chicos/Soma Intimates |
$ | 839,960 | 65.0 | $ | 749,258 | 68.8 | $ | 414,618 | 64.6 | $ | 374,324 | 67.9 | ||||||||||||||||||||
White House | Black Market |
386,225 | 29.9 | 339,349 | 31.2 | 194,498 | 30.3 | 177,125 | 32.1 | ||||||||||||||||||||||||
Boston Proper |
66,354 | 5.1 | | | 32,606 | 5.1 | | | ||||||||||||||||||||||||
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Net sales |
1,292,539 | 100.0 | 1,088,607 | 100.0 | 641,722 | 100.0 | 551,449 | 100.0 | ||||||||||||||||||||||||
Cost of goods sold |
551,763 | 42.7 | 461,617 | 42.4 | 279,542 | 43.6 | 242,122 | 43.9 | ||||||||||||||||||||||||
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Gross margin |
740,776 | 57.3 | 626,990 | 57.6 | 362,180 | 56.4 | 309,327 | 56.1 | ||||||||||||||||||||||||
Selling, general and administrative expenses |
567,797 | 43.9 | 485,201 | 44.6 | 276,121 | 43.0 | 240,356 | 43.6 | ||||||||||||||||||||||||
Acquisition and integration costs |
841 | 0.1 | | | 283 | 0.0 | | | ||||||||||||||||||||||||
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Income from operations |
172,138 | 13.3 | 141,789 | 13.0 | 85,776 | 13.4 | 68,971 | 12.5 | ||||||||||||||||||||||||
Interest income, net |
402 | 0.0 | 820 | 0.1 | 219 | 0.0 | 420 | 0.1 | ||||||||||||||||||||||||
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Income before income taxes |
172,540 | 13.3 | 142,609 | 13.1 | 85,995 | 13.4 | 69,391 | 12.6 | ||||||||||||||||||||||||
Income tax provision |
65,500 | 5.0 | 53,300 | 4.9 | 32,600 | 5.1 | 26,000 | 4.7 | ||||||||||||||||||||||||
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Net income |
$ | 107,040 | 8.3 | $ | 89,309 | 8.2 | $ | 53,395 | 8.3 | $ | 43,391 | 7.9 | ||||||||||||||||||||
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Per share data: |
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Net income per common share-basic |
$ | 0.64 | $ | 0.51 | $ | 0.32 | $ | 0.25 | ||||||||||||||||||||||||
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Net income per common and common equivalent sharediluted |
$ | 0.64 | $ | 0.51 | $ | 0.32 | $ | 0.25 | ||||||||||||||||||||||||
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Weighted average common shares outstandingbasic |
163,898 | 173,082 | 163,822 | 171,282 | ||||||||||||||||||||||||||||
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Weighted average common and common equivalent shares outstandingdiluted |
164,834 | 174,298 | 164,732 | 172,495 | ||||||||||||||||||||||||||||
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Dividends declared per share |
$ | 0.1575 | $ | 0.15 | $ | 0.0525 | $ | 0.05 | ||||||||||||||||||||||||
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Page 4 of 8
Chicos FAS, Inc.
Consolidated Balance Sheets
(in thousands)
July 28, | January 28, | July 30, | ||||||||||
2012 | 2012 | 2011 | ||||||||||
(Unaudited) | (Unaudited) | |||||||||||
ASSETS | ||||||||||||
Current Assets: |
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Cash and cash equivalents |
$ | 109,466 | $ | 58,919 | $ | 56,109 | ||||||
Marketable securities, at fair value |
248,480 | 188,934 | 448,211 | |||||||||
Inventories |
191,694 | 194,469 | 190,745 | |||||||||
Prepaid expenses and other current assets |
52,642 | 55,104 | 57,190 | |||||||||
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Total Current Assets |
602,282 | 497,426 | 752,255 | |||||||||
Property and Equipment, net |
576,788 | 550,230 | 524,782 | |||||||||
Other Assets: |
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Goodwill |
238,693 | 238,693 | 96,774 | |||||||||
Other intangible assets, net |
129,933 | 132,112 | 38,930 | |||||||||
Other assets, net |
6,628 | 6,691 | 5,532 | |||||||||
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Total Other Assets |
375,254 | 377,496 | 141,236 | |||||||||
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$ | 1,554,324 | $ | 1,425,152 | $ | 1,418,273 | |||||||
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LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||||||
Current Liabilities: |
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Accounts payable |
$ | 139,800 | $ | 100,395 | $ | 132,703 | ||||||
Other current liabilities |
151,936 | 137,714 | 113,035 | |||||||||
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Total Current Liabilities |
291,736 | 238,109 | 245,738 | |||||||||
Noncurrent Liabilities: |
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Deferred liabilities |
129,782 | 125,690 | 127,227 | |||||||||
Deferred taxes |
50,840 | 52,125 | 2,969 | |||||||||
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Total Noncurrent Liabilities |
180,622 | 177,815 | 130,196 | |||||||||
Stockholders Equity: |
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Preferred stock |
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Common stock |
1,660 | 1,657 | 1,722 | |||||||||
Additional paid-in capital |
320,161 | 302,612 | 293,881 | |||||||||
Retained earnings |
759,838 | 704,631 | 746,006 | |||||||||
Accumulated other comprehensive income |
307 | 328 | 730 | |||||||||
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Total Stockholders Equity |
1,081,966 | 1,009,228 | 1,042,339 | |||||||||
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$ | 1,554,324 | $ | 1,425,152 | $ | 1,418,273 | |||||||
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Page 5 of 8
Chicos FAS, Inc.
Consolidated Cash Flow Statements
(Unaudited)
(in thousands)
Twenty-Six Weeks Ended | ||||||||
July 28, 2012 |
July 30, 2011 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
$ | 107,040 | $ | 89,309 | ||||
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Adjustments to reconcile net income to net cash provided by operating activities |
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Depreciation and amortization |
52,655 | 48,353 | ||||||
Deferred tax (benefit) expense |
(4,490 | ) | 4,845 | |||||
Stock-based compensation expense |
11,005 | 8,365 | ||||||
Excess tax benefit from stock-based compensation |
(3,367 | ) | (1,642 | ) | ||||
Deferred rent and lease credits |
(8,082 | ) | (9,167 | ) | ||||
Loss on disposal and impairment of property and equipment |
1,759 | 1,756 | ||||||
Decrease (increase) in assets |
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Inventories |
2,775 | (30,931 | ) | |||||
Prepaid expenses and other assets |
5,519 | (12,416 | ) | |||||
Increase in liabilities |
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Accounts payable |
30,689 | 17,417 | ||||||
Accrued and other deferred liabilities |
30,032 | 6,637 | ||||||
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Total adjustments |
118,495 | 33,217 | ||||||
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Net cash provided by operating activities |
225,535 | 122,526 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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(Increase) decrease in marketable securities |
(59,568 | ) | 86,150 | |||||
Purchases of property and equipment |
(78,755 | ) | (56,265 | ) | ||||
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Net cash (used in) provided by investing activities |
(138,323 | ) | 29,885 | |||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from issuance of common stock |
6,524 | 2,762 | ||||||
Excess tax benefit from stock-based compensation |
3,367 | 1,642 | ||||||
Dividends paid |
(17,530 | ) | (17,521 | ) | ||||
Repurchase of common stock |
(29,026 | ) | (97,880 | ) | ||||
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Net cash used in financing activities |
(36,665 | ) | (110,997 | ) | ||||
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Net increase in cash and cash equivalents |
50,547 | 41,414 | ||||||
CASH AND CASH EQUIVALENTS, Beginning of period |
58,919 | 14,695 | ||||||
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CASH AND CASH EQUIVALENTS, End of period |
$ | 109,466 | $ | 56,109 | ||||
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Page 6 of 8
Supplemental Detail on Earnings 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 basic earnings per common share pursuant to the two-class method. For the Company, participating securities are comprised of unvested restricted stock awards.
Earnings per share is determined using the two-class method, as it is more dilutive than the treasury stock method. Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects the dilutive effect of potential common shares from securities such as stock options and performance-based restricted stock units.
The following table sets forth the computation of basic and diluted earnings per share shown on the face of the accompanying consolidated statements of income (in thousands, except per share amounts):
Twenty-Six Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
July 28, 2012 |
July 30, 2011 |
July 28, 2012 |
July 30, 2011 |
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Net income |
$ | 107,040 | $ | 89,309 | $ | 53,395 | $ | 43,391 | ||||||||
Net income and dividends declared allocated to unvested restricted stock |
(1,941 | ) | (1,110 | ) | (1,006 | ) | (573 | ) | ||||||||
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Net income available to common stockholders |
$ | 105,099 | $ | 88,199 | $ | 52,389 | $ | 42,818 | ||||||||
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Weighted average common shares outstanding basic |
163,898 | 173,082 | 163,822 | 171,282 | ||||||||||||
Weighted average common and common equivalent shares outstanding diluted |
164,834 | 174,298 | 164,732 | 172,495 | ||||||||||||
Net income per common share: |
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Basic |
$ | 0.64 | $ | 0.51 | $ | 0.32 | $ | 0.25 | ||||||||
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Diluted |
$ | 0.64 | $ | 0.51 | $ | 0.32 | $ | 0.25 | ||||||||
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Page 7 of 8
Chicos FAS, Inc.
Boutique Count and Square Footage
As of July 28, 2012
As of 4/28/2012 |
New Stores |
Closures | As of 7/28/2012 |
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Store count: |
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Chicos frontline boutiques |
603 | 4 | (1 | ) | 606 | |||||||||||
Chicos outlets |
86 | 3 | | 89 | ||||||||||||
WH|BM frontline boutiques |
372 | 12 | (1 | ) | 383 | |||||||||||
WH|BM outlets |
30 | 7 | | 37 | ||||||||||||
Soma frontline boutiques |
177 | 10 | (2 | ) | 185 | |||||||||||
Soma outlets |
15 | | | 15 | ||||||||||||
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Total Chicos FAS, Inc. |
1,283 | 36 | (4 | ) | 1,315 | |||||||||||
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As of 4/28/2012 |
New Stores |
Closures | Remodels/ Relos and change in SSF |
As of 7/28/2012 |
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Net selling square footage (SSF): |
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Chicos frontline boutiques |
1,637,539 | 10,312 | (4,720 | ) | 2,312 | 1,645,443 | ||||||||||||||
Chicos outlets |
220,664 | 6,724 | | | 227,388 | |||||||||||||||
WH|BM frontline boutiques |
793,663 | 32,461 | (1,707 | ) | 1,329 | 825,746 | ||||||||||||||
WH|BM outlets |
59,775 | 14,427 | | | 74,202 | |||||||||||||||
Soma frontline boutiques |
346,356 | 19,490 | (2,938 | ) | (5,110 | ) | 357,798 | |||||||||||||
Soma outlets |
29,057 | | | | 29,057 | |||||||||||||||
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Total Chicos FAS, Inc. |
3,087,054 | 83,414 | (9,365 | ) | (1,469 | ) | 3,159,634 | |||||||||||||
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Executive Contact:
Todd Vogensen
Vice President-Investor Relations
Chicos FAS, Inc.
(239) 346-4199
Page 8 of 8