FORT MYERS, Fla., May 27, 2015 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2015 first quarter.
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For the thirteen weeks ended May 2, 2015 ("the first quarter"), the Company reported adjusted net income of $41.8 million compared to net income of $39.9 million for the thirteen weeks ended May 3, 2014, and first quarter 2015 adjusted earnings per diluted share of $0.28 compared to earnings per diluted share of $0.26 in last year's first quarter. The first quarter adjusted results exclude EPS charges of $0.06 in 2015 related to restructuring and strategic charges (the "Charges"), as presented in the accompanying GAAP to Non-GAAP Reconciliation. Including the impact of the Charges, the Company reported first quarter 2015 net income of $32.5 million, or $0.22 per diluted share.
Net Sales
For the first quarter, net sales were $693.3 million, an increase of 1.7% compared to $681.6 million in last year's first quarter, primarily reflecting 56 net new stores for a square footage increase of 3.3%, partially offset by a 0.1% decrease in comparable sales. The 0.1% decrease in comparable sales for the first quarter was following a 2.6% decrease in last year's first quarter, and reflected approximately flat average dollar sale and transaction count.
Comparable Sales
Thirteen Weeks Ended -------------------- May 2, 2015 May 3, 2014 ----------- ----------- Chico's (2.3)% (0.9)% White House | Black Market 1.7% (8.6)% Soma 6.5% 9.3% Total Company (0.1)% (2.6)% ===== =====
Gross Margin
For the first quarter, gross margin was $395.8 million compared to $382.9 million in last year's first quarter. Gross margin was 57.1% of net sales, a 90 basis point increase from last year's first quarter, primarily reflecting a decrease in promotional activity in response to improved inventory management, partially offset by the impact of product delayed by port issues in 2015 and the return to accrued incentive compensation at a target level.
Selling, General and Administrative Expenses
For the first quarter, selling, general and administrative expenses ("SG&A") were $328.2 million compared to $319.0 million in last year's first quarter. SG&A was 47.4% of net sales, a 60 basis point increase from last year's first quarter, primarily reflecting sales deleverage of occupancy expenses and the return to accrued incentive compensation at a target level, partially offset by benefits from cost reduction efforts announced last quarter.
Restructuring and Strategic Charges
For the first quarter, the Company recorded pre-tax restructuring and strategic charges of $14.9 million primarily related to employee-related costs and property and equipment impairment charges. On an after-tax basis, the first quarter restructuring and strategic charges impact was $9.3 million, or $0.06 per diluted share.
Inventories
At the end of the first quarter of 2015, total inventories per selling square foot decreased 2.8%, primarily reflecting improved inventory management and lower average unit cost compared to the first quarter last year. Total inventories increased by less than one percent compared to the first quarter of last year.
Credit Facility
At the end of the first quarter of 2015, the Company had $124 million in borrowings outstanding under its revolving credit facility dated July 27, 2011 ("Existing Credit Facility"), which was used to fund a portion of the accelerated stock repurchase agreements ("ASR Agreements") entered into in the first quarter. On May 4, 2015, the Company executed a new $200 million credit agreement, with a term of five years, of which $124 million was drawn at closing and used to repay all borrowings outstanding under its Existing Credit Facility.
Accelerated Stock Repurchase Agreements
In March 2015, the Company entered into ASR Agreements with a group of banks to purchase $250 million in outstanding shares of the Company's common stock. The repurchase was funded through a combination of available cash on hand and $124 million in borrowings under our Existing Credit Facility. The Company received an initial delivery of approximately 10.7 million common shares, which represents approximately 75% of the shares expected to be repurchased based on the share price on the date of the agreement. The specific final number of shares to be repurchased will be based on the volume-weighted average share price of the Company's common stock during the calculation period of the ASR Agreements, which are scheduled to expire no later than October 2015.
ABOUT CHICO'S FAS, INC.
The Company, through its brands - Chico's, White House | Black Market, Soma, and Boston Proper, is a leading omni-channel specialty retailer of women's private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing items.
As of May 2, 2015, the Company operated 1,552 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, www.soma.com, and www.bostonproper.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 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 Company's latest annual report on Form 10-K, its filings on Form 10-Q, management's discussion and analysis in the Company's latest annual report to stockholders, 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. 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 Adkins
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 -------------------- May 2, 2015 May 3, 2014 ----------- ----------- Amount % of Amount % of Sales Sales ----- Net sales: Chico's $368,492 53.2% $372,288 54.6% White House | Black Market 224,520 32.4% 217,173 31.9% Soma 76,546 11.0% 67,833 10.0% Boston Proper 23,781 3.4% 24,311 3.5% ------ --- ------ --- Total net sales 693,339 100.0% 681,605 100.0% Cost of goods sold 297,569 42.9% 298,714 43.8% ------- ---- ------- ---- Gross margin 395,770 57.1% 382,891 56.2% Selling, general and administrative expenses 328,217 47.4% 319,049 46.8% Restructuring and strategic charges 14,875 2.1% - 0.0% Income from operations 52,678 7.6% 63,842 9.4% Interest (expense) income, net (453) (0.1)% 40 0.0% ---- ----- --- --- Income before income taxes 52,225 7.5% 63,882 9.4% Income tax provision 19,700 2.8% 24,000 3.5% ------ --- ------ --- Net income $32,525 4.7% $39,882 5.9% ======= === ======= === Per share data: Net income per common share-basic $0.22 $0.26 ===== ===== Net income per common and common equivalent share-diluted $0.22 $0.26 ===== ===== Weighted average common shares outstanding-basic 143,378 148,475 ======= ======= Weighted average common and common equivalent shares outstanding-diluted 143,771 149,044 ======= ======= Dividends declared per share $0.155 $0.150 ====== ======
Chico's FAS, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (in thousands) May 2, 2015 January 31, 2015 May 3, 2014 ----------- ---------------- ----------- ASSETS Current Assets: Cash and cash equivalents $97,651 $133,351 $80,529 Marketable securities, at fair value 48,447 126,561 90,984 Inventories 270,313 235,159 268,917 Prepaid expenses and other current assets 53,484 51,088 51,801 Assets held for sale 24,042 16,800 - ------ ------ --- Total Current Assets 493,937 562,959 492,231 Property and Equipment, net 584,616 606,147 636,614 Other Assets: Goodwill 145,627 145,627 171,427 Other intangible assets, net 108,449 109,538 117,107 Other assets, net 13,728 14,310 10,210 ------ ------ ------ Total Other Assets 267,804 269,475 298,744 ------- ------- ------- $1,346,357 $1,438,581 $1,427,589 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $147,323 $144,534 $148,858 Current debt 34,000 - - Other current and deferred liabilities 171,161 158,396 155,579 ------- ------- ------- Total Current Liabilities 352,484 302,930 304,437 Noncurrent Liabilities: Long-term debt 90,000 - - Deferred liabilities 142,185 142,371 143,789 Deferred taxes 49,273 49,659 49,694 ------ ------ ------ Total Noncurrent Liabilities 281,458 192,030 193,483 Stockholders' Equity: Preferred stock - - - Common stock 1,434 1,529 1,532 Additional paid-in capital 353,523 407,275 385,730 Treasury stock (187,393) - - Retained earnings 544,511 534,255 542,332 Accumulated other comprehensive income 340 562 75 --- --- --- Total Stockholders' Equity 712,415 943,621 929,669 ------- ------- ------- $1,346,357 $1,438,581 $1,427,589 ========== ========== ==========
Chico's FAS, Inc. and Subsidiaries Condensed Consolidated Cash Flow Statements (Unaudited) (in thousands) Thirteen Weeks Ended -------------------- May 2, 2015 May 3, 2014 ----------- ----------- Cash Flows From Operating Activities: Net income $32,525 $39,882 Adjustments to reconcile net income to net cash provided by operating activities - Depreciation and amortization 30,743 30,083 Loss on disposal and impairment of property and equipment 6,277 - Deferred tax benefit (425) (1,164) Stock-based compensation expense 7,631 6,474 Excess tax benefit from stock-based compensation (2,012) (925) Deferred rent and lease credits (4,283) (4,671) Changes in assets and liabilities: Inventories (35,154) (30,772) Prepaid expenses and other assets (3,468) (2,084) Accounts payable (8,979) 6,111 Accrued and other liabilities 18,884 24,534 ------ ------ Net cash provided by operating activities 41,739 67,468 ------ ------ Cash Flows From Investing Activities: Purchases of marketable securities (18,252) (15,053) Proceeds from sale of marketable securities 96,351 40,063 Purchases of property and equipment, net (19,839) (34,506) ------- ------- Net cash provided by (used in) investing activities 58,260 (9,496) ------ ------ Cash Flows From Financing Activities: Proceeds from borrowings 124,000 - Proceeds from issuance of common stock 8,025 2,945 Excess tax benefit from stock-based compensation 2,012 925 Dividends paid (11,076) (11,439) Repurchase of common stock (258,450) (6,309) -------- ------ Net cash used in financing activities (135,489) (13,878) -------- ------- Effects of exchange rate changes on cash and cash equivalents (210) (9) ---- --- Net (decrease) increase in cash and cash equivalents (35,700) 44,085 Cash and Cash Equivalents, Beginning of period 133,351 36,444 ------- ------ Cash and Cash Equivalents, End of period $97,651 $80,529 ======= =======
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 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.
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 non-participating securities such as stock options and PSUs. For the thirteen weeks ended May 2, 2015 and May 3, 2014, 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 earnings per share shown on the face of the accompanying condensed consolidated statements of income (in thousands, except per share amounts):
Thirteen Weeks Ended -------------------- May 2, 2015 May 3, 2014 ----------- ----------- Numerator Net income $32,525 $39,882 Net income and dividends declared allocated to participating securities (786) (1,055) ---- ------ Net income available to common shareholders $31,739 $38,827 ======= ======= Denominator Weighted average common shares outstanding - basic 143,378 148,475 Dilutive effect of non- participating securities 393 569 --- --- Weighted average common and common equivalent shares outstanding - diluted 143,771 149,044 ======= ======= Net income per common share: Basic $0.22 $0.26 ===== ===== Diluted $0.22 $0.26 ===== =====
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, which exclude certain charges, may provide a more meaningful measure on which to compare the Company's results of operations between periods. The Company believes these non-GAAP results provide useful information to both management and investors by excluding certain expenses that impact the comparability of the results. A reconciliation of net income and earnings per diluted share on a GAAP basis to net income and earnings per diluted share on a non-GAAP basis 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 -------------------- May 2, 2015 May 3, 2014 ----------- ----------- Net income: ----------- GAAP basis $32,525 $39,882 Impact of restructuring and strategic charges, net of tax 9,264 - Non-GAAP adjusted basis $41,789 $39,882 ======= ======= Net income per diluted share: ------------ GAAP basis $0.22 $0.26 Impact of restructuring and strategic charges, net of tax 0.06 0.00 Non-GAAP adjusted basis $0.28 $0.26 ===== =====
Chico's FAS, Inc. and Subsidiaries Store Count and Square Footage Thirteen Weeks Ended May 2, 2015 (Unaudited) January 31, 2015 New Stores Closures May 2, 2015 ---------------- ---------- -------- ----------- Store count: Chico's frontline boutiques 613 3 (4) 612 Chico's outlets 118 1 (1) 118 Chico's Canada 3 1 - 4 WH|BM frontline boutiques 441 2 (3) 440 WH|BM outlets 68 1 - 69 WH|BM Canada 5 1 - 6 Soma frontline boutiques 263 3 - 266 Soma outlets 17 - - 17 Boston Proper frontline boutiques 19 1 - 20 Total Chico's FAS, Inc. 1,547 13 (8) 1,552 ===== === === ===== January 31, 2015 New Stores Closures Other changes in SSF May 2, 2015 ---------------- ---------- -------- -------------------- ----------- Net selling square footage (SSF): Chico's frontline boutiques 1,674,640 7,807 (9,709) 325 1,673,063 Chico's outlets 295,600 2,406 (2,406) - 295,600 Chico's Canada 7,313 2,382 - - 9,695 WH|BM frontline boutiques 1,010,242 4,837 (6,774) 1,087 1,009,392 WH|BM outlets 141,900 2,206 - - 144,106 WH|BM Canada 12,460 2,431 - - 14,891 Soma frontline boutiques 498,642 5,277 - (1,199) 502,720 Soma outlets 31,672 - - - 31,672 Boston Proper frontline boutiques 33,035 1,430 - - 34,465 Total Chico's FAS, Inc. 3,705,504 28,776 (18,889) 213 3,715,604 ========= ====== ======= === =========
As of May 2, 2015 the Company also sold merchandise through 33 international franchise locations.
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SOURCE Chico's FAS, Inc.