UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SD
SPECIALIZED DISCLOSURE REPORT
Chico’s FAS, Inc.
(Exact name of the registrant as specified in its charter)
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Florida | | 001-16435 | | 59-2389435 |
(State or other jurisdiction of incorporation or organization) | | (Commission File Number) | | (IRS Employer Identification No) |
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11215 Metro Parkway, Fort Myers, FL | | 33966 |
(Address of principal executive offices) | | (Zip Code) |
Todd E. Vogensen
Executive Vice President-Chief Financial Officer and Corporate Secretary
239.277.6200
(Name and telephone number, including area code, of the
person to contact in connection with this report.)
Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:
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ý | Rule 13p-1 under the Securities Exchange Act of 1934 (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2014. |
Section 1 – Conflict Minerals Disclosure
Item 1.01 and 1.02 Conflict Minerals Disclosure and Report; Exhibit
In accordance with Rule 13p-1 promulgated under the Securities Exchange Act of 1934, as amended, the Conflicts Mineral Report for the calendar year ended December 31, 2014 filed herewith as Exhibit 1.01 is at Chico’s FAS, Inc.’s website: http://www.chicosfas.com.
Certain of the Company’s operations contract to manufacture products in which tin, tantalum, tungsten, and/or gold (“Conflict Minerals”) may be necessary to the functionality or production of those products. The Company, as a retailer, does not manufacture any of the products that it sells through its operations.
After exercising reasonable due diligence as required by Rule 13p-1, the Company was unable to determine whether any of the Conflict Minerals used in one or more of its products originated from the Democratic Republic of the Congo or an adjoining country that shares an internationally recognized border with the Democratic Republic of the Congo (the “Covered Region”). Accordingly, the Company declares itself to be “DRC conflict undeterminable” as defined by paragraph (d)(5) of the instructions to Item 1.01 for all products manufactured and/or contracted to be manufactured for the Company. As part of our review, no conflict minerals identified came from recycled or scrap sources.
Section 2 – Exhibits
Item 2.01 Exhibits
Exhibits filed as part of this report.
Exhibit 1.01 – Conflict Minerals Report required by Items 1.01 and 1.02 of this Form.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the duly authorized undersigned.
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Chico’s FAS, Inc. | | | | |
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/s/ Todd E. Vogensen, Executive Vice President-Chief Financial Officer and Corporate Secretary | | | | April 29, 2015 |
By (Signature and Title)* | | | | (Date) |
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Todd E. Vogensen, Executive Vice President-Chief Financial Officer and Corporate Secretary | | | | |
Name and Title (printed) | | | | |
Conflict Minerals Report of Chico’s FAS, Inc.
Introduction
This Conflict Minerals Report (Report) of the Company has been prepared pursuant to Rule 13p-1 and Form SD (the “Rules”) promulgated under the Securities Exchange Act of 1934 for the reporting period January 1, 2014 through December 31, 2014.
The Rules require disclosure of certain information when a company manufactures or contracts to manufacture products and the minerals specified in the Rules are necessary to the functionality or production of those products. The minerals covered by the Rules are gold, columboite-tantalite (coltan), cassiterite, and wolframite, including their derivatives consisting of tin, tungsten, and tantalum (collectively, Conflict Minerals) and the countries covered by this Report (collectively, Covered Countries) are the Democratic Republic of the Congo and all adjoining countries (consisting of Angola, the Republic of the Congo, Central African Republic, South Sudan, Uganda, Rwanda, Burundi, Tanzania, and Zambia).
Chico’s FAS, Inc. (the “Company”, “Chico’s”, “we”, “us” or “our”), through its brands – Chico’s, White House | Black Market, Soma Intimates, 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 January 31, 2015, the Company operated 1,547 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.
As described in this Report, certain of the Company’s operations contract to manufacture products in which Conflict Minerals may be necessary to the functionality or production of those products. The Company is a retailer and does not manufacture any of the products that it sells through its operations.
This Report is not audited, nor is an independent private sector audit required for this Report under the Rules and SEC guidance.
Description of Products Covered By this Report
This report relates to Company products (Covered Products):
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• | for which Conflict Minerals may be necessary to the functionality or production of the products; |
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• | that were contracted to be manufactured by the Company; and |
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• | for which the manufacture was completed during the period from January 1, 2014 through December 31, 2014 (2014 Calendar Year). |
Covered Products include the following categories of the Company’s products:
Reasonable Country of Origin Inquiry
In accordance with the Rules, the Company has conducted a good faith reasonable country of origin inquiry (RCOI) regarding the use of the Conflict Minerals which was reasonably designed to determine whether any of the Conflict Minerals originated in the Covered Countries and whether any of the Conflict Minerals may be from
recycled or scrap sources. The Company also exercised due diligence on the source and chain of custody of the Conflict Minerals.
To conduct the RCOI, the Company evaluated all of its vendors and made the necessary inquiries regarding the presence and sourcing of Conflict Minerals and more specifically, Tin, Tantalum, Tungsten, and Gold (3TG) , used in the Company’s products. As described in greater detail below, within Step 2 of our Due Diligence procedures, the Company identified those vendors that were in-scope for Conflict Mineral regulatory purposes (In-Scope Vendors) and such vendors were asked to provide information relating thereto on a questionnaire furnished to them and, as a part of this process, the Company provided information and provided assistance to vendors about the specifics of the Rules and the information requested by the questionnaire. Through the questionnaires, the Company requested information about whether the Conflict Minerals used in its products are sourced from Covered Countries, and inquired as to whether they were sourced from recycled or scrap sources. Responses from vendors were evaluated for consistency, plausibility, and gaps on information (including both in terms of which products were stated to contain or not contain Conflict Minerals, as well as the origin of those minerals).
Due Diligence
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A) | Design of Due Diligence Framework |
The Company’s due diligence process is materially based on the Organization for Economic Cooperation and Development’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and accompanying supplements on gold, tin, tantalum, and tungsten (OECD Guidance).
The OECD Guidance identifies five due diligence steps:
Step 1: Establish Strong Company Management Systems;
Step 2: Identify and Assess Risks in the Supply Chain;
Step 3: Design and Implement a Strategy to Respond to Identified Risks;
Step 4: Carry out Independent Third-Party Audit of Smelter/Refiner’s Due Diligence;
Step 5: Report Annually on Supply Chain Due Diligence;
The Company has adopted a policy relating to Conflict Minerals which incorporates the standards set forth in the OECD Guidance and is available at http://www.chicosfas.com.
It is important to note that the OECD Guidance was written for both upstream and downstream companies in the supply chain. The Company’s supply chain with respect to the Covered Products is complex and, as a retailer, includes many third parties between the ultimate manufacturer of the Covered Products and the original sources of the Conflict Minerals. The Company does not purchase any of the Conflict Minerals from mines, smelters or refiners, nor does it manufacture any of the Covered Products. As a result, the Company must rely on its suppliers to provide information regarding the origin of the Conflict Minerals that are included in the Covered Products. Furthermore, the Company believes that the smelters and refiners of the Conflict Minerals are best situated to identify the sources of Conflict Minerals and, consistent with that belief, the Company has taken steps to try to identify the applicable smelters and refiners of Conflict Minerals in its supply chain. Because we are a retailer and therefore a downstream company in the supply chain, our due diligence practices were tailored according to our size, ability to impact the mineral supply chain, and industry guidance for the specialty apparel industry.
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B) | Description of Due Diligence Measures Performed |
The Company’s due diligence review consisted of the following activities undertaken by our Company in order to meet its obligations under Rule 13p-1 requirements:
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Step | OECD Guidance | Due diligence activities performed materially based on guidance |
1 | Establish Strong Company Management Systems | • Adopted and published a Conflict Minerals Policy which is available at http://www.chicosfas.com • Adopted definitions of “grey areas” to guide compliance and risk assessment • Utilized internal team to support compliance and the communication process. This team is composed of representatives from the risk management, sourcing operations, raw materials, legal, global compliance, and internal audit departments • Continued to operate a process to provide transparency over the mineral supply chain • Monitored mechanisms for company / vendor level grievance • Maintained communication cadence for internal and external stakeholders |
2 | Identify and Assess Risks in the Supply Chain | • Identified product categories that may contain the conflict minerals • Identified raw material parts in those product categories that may contain the conflict minerals • Identified vendors / agents who supplied those parts • Validated vendor information with our sourcing team • Communicated RCOI inquiry survey to vendors • Reviewed responses for inconsistencies, red flags, and follow up |
3 | Design and Implement a Strategy to Respond to Identified Risks | • Maintained and enhanced a risk management plan • Continued to implement the risk management plan, where necessary, and monitored and tracked any applicable risk mitigation • Where necessary, use of escalation protocol to the Company’s vendor management team • Undertaken additional fact and risk assessments for risks requiring mitigation or after a change of circumstances |
4 | Carry out Independent Third-Party Audit of Smelter/Refiner’s Due Diligence | • This step does not require or define audit protocols for downstream companies; however downstream companies can support these audits by supporting or joining industry organizations. The Company is currently a member of the American Apparel and Footwear Association (AAFA) and National Retail Federation (NRF), both of whom are active in providing audit information or industry guidance |
5 | Report Annually on Supply Chain Due Diligence | • The Form SD and Conflict Minerals Report contained herein and publicly available on our website meet the OECD Guidance to report annually on supply chain due diligence |
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C) | Due Diligence Determination |
The information set forth below identifies the extent of 3TG in our product lines by product categories and identifies the results of our due diligence.
A total of 50 out of 370 vendors were identified as In-Scope Vendors for Conflict Mineral regulatory purposes and contacted as part of the RCOI process. The survey response rate among these vendors was 100%. Of these responding vendors, 26% responded yes as to having one or more of the regulated metals that may be necessary to the functionality or production of the products they supply to the Company. For vendors indicating use of 3TG, 77% provided smelter information for one or more applicable metal. Below is a summary of the information collected from the latter group of supply chain survey respondents:
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Conflict Mineral | Country of Origin may include the following |
Tantalum | Not Applicable |
Tin | China, Malaysia |
Tungsten | Not Applicable |
Gold | China, Japan |
Risk Assessment (as of February 2015)
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Product Category | 3TG Present | Vendors In Scope | Total Vendor Participation | # Vendors Containing 3TG | # Vendors Providing Smelter Information 1 or More Metal | # Vendors w/ No Response to Smelter Information |
Jewelry | Tin, Gold | 9 | 9 | 7 | 7 | |
Fashion Accessories | Tin, Gold | 19 | 19 | 4 | 2 | 2 |
Denim | Tin | 6 | 6 | 0 | 0 | 0 |
Pants | Tin, Gold | 8 | 8 | 1 | 1 | 0 |
Foundations | Tin, Gold | 8 | 8 | 1 | 0 | 1 |
# Vendors Not Participating | | N/A | N/A | N/A | N/A | 3 |
2014 Totals | | 50 | 50 | 13 | 10 | 3 |
The Company did not have any direct engagement with, or conduct any on-site visits of any mines, smelters, or refiners and has not developed any action plans with respect to any mines, smelters, or refiners.
Steps to be taken to Mitigate Risk
The Company intends to take the following measures to further mitigate any risk that the necessary Conflict Minerals in the Company’s products could benefit the Covered Countries:
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• | Survey our In-Scope Vendors annually and follow-up when questionnaires warrant further investigation; |
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• | Encourage the In-Scope Vendors to provide us with names of smelters and refiners that process the Conflict Materials used in the Company’s products and to continue to encourage our vendors to obtain detailed information from their suppliers; and |
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• | Continue to work with and to partner with trade organizations and encourage our vendor / suppliers to implement reasonable sourcing practices utilizing “DRC conflict free” supply chains. |
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