FORT MYERS, Fla., Nov. 26, 2019 /PRNewswire/ --
- Third quarter GAAP loss of $0.07 per diluted share; Adjusted loss of
$0.04 per diluted share
- Sequential improvement in comparable sales for all
brands
- Executing on strategic priorities, investing in growth
areas, maintaining cost discipline
- Updates full-year fiscal 2019 outlook to reflect
improvements in the business and tariff impact
Chico's FAS, Inc. (NYSE: CHS) (the "Company") today announced
its financial results for the fiscal 2019 third quarter ended
November 2, 2019.
For the thirteen weeks ended November 2, 2019 (the "third
quarter"), the Company reported a net loss of $8.1 million, or $0.07 loss per diluted share, compared to net
income of $6.5 million, or
$0.05 earnings per diluted share, for
the thirteen weeks ended November 3, 2018 ("last year's third
quarter"). The Company reported third quarter adjusted net loss of
$4.6 million, or $0.04 loss per diluted share, as presented in the
related accompanying GAAP to non-GAAP reconciliation.
For the thirty-nine weeks ended November 2, 2019, the
Company reported a net loss of $8.4
million, or $0.07 loss per
diluted share, compared to net income of $52.3 million, or $0.41 earnings per diluted share, for the
thirty-nine weeks ended November 3, 2018. For the thirty-nine
weeks ended November 2, 2019, the Company reported adjusted
net income of $0.9 million, or
$0.01 earnings per diluted share, as
presented in the related accompanying GAAP to non-GAAP
reconciliation.
"Our third quarter results demonstrate that we are gaining
traction on our strategic priorities. Comparable sales improved
sequentially by 10.4 percentage points at White House Black Market
and by 2 points at Chico's, our largest brand. In addition, Soma's
comparable sales increased double-digits for the second consecutive
quarter. Each of these achievements indicate that the actions
being taken are positively impacting results," said Bonnie Brooks, CEO and President.
"Our customers are also responding to our brands' better
product, stronger marketing and changes to store presentation. I
firmly believe the Company's turnaround is on the right track, and
we have updated our full-year financial outlook to reflect the
positive momentum of our business," continued Ms. Brooks.
Fiscal 2019 Third Quarter Business Highlights
The following fiscal 2019 third quarter business highlights
reflect the Company's progress executing on its three strategic
priorities: (i) driving stronger sales through improved product and
marketing; (ii) optimizing the customer journey by simplifying,
digitizing and extending the Company's unique and personalized
service; and (iii) transforming sourcing and supply chain
operations to increase product speed to market and improve
quality.
- Chico's® reported sequential improvement in
comparable sales, reflecting a focus on key items and a more
balanced inventory position between basics and fashion.
- White House Black Market® ("WHBM") reported
sequential improvement in comparable sales enabled by changes made
in talent, merchandising and product design.
- Soma® reported double-digit positive comparable
sales growth for the second consecutive quarter, driven by product
innovation and inventory and marketing investments.
- In the third quarter, the Company strengthened its product
teams and made investments in growth areas, such as digital and
customer experience. The Company also repositioned some
departments, consolidated others, and reduced areas where the
Company can operate more efficiently with fewer resources.
- The Company completed the implementation of its Buy On-Line,
Pick-up In-Store (BOPIS) capability across all of its brands.
- The Company is actively diversifying its country of origin mix
and reducing manufacturing penetration in China, thereby mitigating the majority of
tariff increases.
Net Sales
For the third quarter, net sales were $484.7 million compared to $499.9 million in last year's third quarter. This
decrease of 3.0% reflects a comparable sales decline of 2.2% as
well as the impact of 58 net store closures since last year's third
quarter. The comparable sales decline was driven by lower average
dollar sale, partially offset by an increase in transaction count.
In the third quarter, comparable sales at Soma were up positive
double-digits for the second consecutive quarter while Chico's and
WHBM posted sequential quarter-over-quarter improvement by
adjusting product assortment and presentation.
Comparable Sales
|
|
Thirteen Weeks
Ended
|
|
Thirty-Nine Weeks
Ended
|
|
|
November 2,
2019
|
|
November 3,
2018
|
|
November 2,
2019
|
|
November 3,
2018
|
Chico's
|
|
(3.6)
|
%
|
|
(10.2)
|
%
|
|
(5.8)
|
%
|
|
(6.4)
|
%
|
White House Black
Market
|
|
(5.7)
|
|
|
(5.1)
|
|
|
(10.6)
|
|
|
(5.1)
|
|
Soma
|
|
11.3
|
|
|
2.4
|
|
|
8.6
|
|
|
(1.6)
|
|
Total
Company
|
|
(2.2)
|
|
|
(6.8)
|
|
|
(5.2)
|
|
|
(5.3)
|
|
Gross Margin
For the third quarter, gross margin was $171.0 million, or 35.3% of net sales, compared
to $181.0 million, or 36.2% of net
sales, in last year's third quarter. This 90-basis point decrease
primarily reflects accelerated depreciation as a result of our
previously announced retail fleet optimization plan and the impact
of severance and other related net charges (collectively,
"Severance Charges") in connection with actions taken to reposition
our organizational structure.
Excluding the 60 basis-point impact of accelerated depreciation
and Severance Charges, gross margin decreased 30 basis points as a
result of the clearance of seasonal merchandise and the impact of
tariffs, partially offset by improvement in occupancy costs as a
percent of sales.
Selling, General and Administrative Expenses
For the third quarter, selling, general and administrative
("SG&A") expenses were $180.6
million, or 37.3% of net sales, compared to $178.4 million, or 35.7% of net sales, for last
year's third quarter. The $2.2
million increase primarily includes Severance Charges in
connection with our revised organizational structure.
Retail Fleet Optimization Plan
In the third quarter, the Company recorded pre-tax accelerated
depreciation charges of property and equipment within cost of goods
sold ("COGS") of $2.1 million, or 40
basis points, related to our retail fleet optimization plan. On an
after-tax basis, the third quarter impact of these charges was
$1.5 million, or $0.01 earnings per diluted share.
Severance Charges
In the third quarter, the Company recorded pre-tax Severance
Charges of $2.8 million. These
charges are reflected in the financial statements as $1.0 million, or 20 basis points, in COGS and
$1.8 million, or 40 basis points, in
SG&A. On an after-tax basis, the third quarter impact of these
charges was $2.1 million, or
$0.02 earnings per diluted share.
Income Taxes
For the third quarter, the effective tax rate
was 14.7% compared to (141.7)% for last year's
third quarter. The 14.7% effective tax rate was primarily the
result of an income tax benefit on the third quarter operating
loss, offset by an unfavorable fiscal 2018 provision-to-return
adjustment, and a valuation allowance on certain deferred tax
assets for charitable contributions with limitations. The favorable
prior year effective tax rate was primarily due to the Company's
ability to accelerate certain income tax deductions into the 2017
federal tax return as a result of the Tax Cuts and Jobs Act of
2017.
Cash, Marketable Securities and Debt
At the end of the third quarter, cash and marketable securities
totaled $127.4 million while debt
totaled $46.3 million.
Inventories
At the end of the third quarter, inventories totaled
$277.5 million compared to
$266.1 million at the end of last
year's third quarter. This $11.4
million, or 4.3%, increase primarily reflects continued
investment in Soma inventory to fund growth.
Fiscal 2019 Fourth Quarter and Full-Year Outlook
The Company is initiating outlook for the fourth quarter of
fiscal 2019 and is updating its previously provided full-year
fiscal 2019 outlook to reflect improvements in the business. The
outlook for both the fourth quarter and fiscal year now includes
the incremental impact of tariffs, while excluding expected net
charges related to the Company's retail fleet optimization plan and
Severance Charges.
The Company continues to manage through its turnaround and
anticipates continued improvement in net sales and comparable sales
trends as progress executing its strategic priorities
continues.
For the fiscal 2019 fourth quarter, compared to the fiscal 2018
fourth quarter:
- The Company anticipates a low single-digit decline in total net
sales and consolidated comparable sales.
- The Company expects gross margin as a percent of net sales to
be down approximately 100 to 150 basis points, due primarily to
incremental costs from tariffs.
- SG&A expenses are expected to be down approximately
$5 to $7
million, reflecting ongoing cost management.
For full year fiscal 2019, compared to full year fiscal
2018:
- The Company anticipates a mid single-digit decline in total net
sales and consolidated comparable sales.
- The Company expects gross margin as a percent of net sales to
be down 150 to 200 basis points consistent with previous guidance,
which now includes our consideration of incremental costs in the
second half of fiscal 2019 associated with tariffs.
- The Company anticipates SG&A expenses to be down
approximately $10 million, reflecting
ongoing cost management, consistent with previous guidance.
- The Company expects capital expenditures to be approximately
$40 million to $45 million, primarily driven by store
reinvestments and technology enhancements.
- The Company estimates a full year income tax provision of
approximately $2 to $3 million, which excludes accelerated
depreciation related to our fleet optimization plan and Severance
Charges in connection with our revised organizational
structure.
Conference Call Information
The Company is hosting a live conference call on Tuesday,
November 26, 2019 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, 5296467, 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.
The Company, through its brands – Chico's, White House Black
Market, Soma and TellTale™ is a leading omnichannel
specialty retailer of women's private branded, sophisticated,
casual-to-dressy clothing, intimates and complementary
accessories.
As of November 2, 2019, the Company operated 1,373 stores
in the U.S. and Canada and sold
merchandise through 89 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,
www.soma.com and www.mytelltale.com as well as through
third-party channels. For more detailed information on the Company,
please go to 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
"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. These statements,
including without limitation statements made in Ms. Brooks' quotes
and in the section entitled "Fiscal 2019 Fourth Quarter and
Full-Year Outlook," 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,"
"intends," "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, including
the extent of the market demand and overall level of spending for
women's private branded clothing and related accessories; the
availability of quality store sites; the effectiveness of our brand
strategies, awareness and marketing programs; the ability to
successfully execute and achieve the expected results of our
business strategies and particular strategic initiatives
(including, but not limited to, the Company's revised
organizational structure, retail fleet optimization plan and three
operating priorities which are driving stronger sales through
improved product and marketing; optimizing the customer journey by
simplifying, digitizing and extending the Company's unique and
personalized service; and transforming sourcing and supply chain
operations to increase product speed to market and improve
quality), sales initiatives and multi-channel strategies; customer
traffic; our ability to appropriately manage our inventory and
allocation processes; our ability to leverage inventory management
and targeted promotions; the successful recruitment of leadership
and the successful integration of new members of our senior
management team; uncertainties regarding future unsolicited offers
to buy the Company and our ability to respond effectively to them
as well as to actions of activist shareholders and others; changes
in the political environment that create consumer uncertainty; the
risk that our investments in merchandise or marketing initiatives
may not deliver the results we anticipate; significant changes to
product import and distribution costs (such as unexpected
consolidation in the freight carrier industry, and the ability to
remain competitive with customer shipping terms and costs
pertaining to product deliveries and returns); new or increased
taxes or tariffs (particularly with respect to China) that could impact, among other things,
our sourcing from foreign suppliers; 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 and
in Part II, Item 1A, "Risk Factors" and the "Forward-Looking
Statements" disclosure in Part I, Item 2. "Management's Discussion
and Analysis of Financial Condition and Results of Operation" of
our quarterly reports on Form 10-Q and in other reports we file
with or furnish to the Securities and Exchange Commission. There
can be no assurance that the actual future results, performance, or
achievements expressed or implied by such forward-looking
statements will occur. 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)
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 (Loss) Income
(Unaudited)
(in thousands, except
per share amounts)
|
|
|
Thirteen Weeks
Ended
|
|
Thirty-Nine Weeks
Ended
|
|
November 2,
2019
|
|
November 3,
2018
|
|
November 2,
2019
|
|
November 3,
2018
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
|
Amount
|
|
% of
Sales
|
Net
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chico's
|
$
|
249,973
|
|
|
51.5
|
%
|
|
$
|
259,503
|
|
|
51.9
|
%
|
|
$
|
795,599
|
|
|
52.6
|
%
|
|
$
|
847,247
|
|
|
52.8
|
%
|
White House Black
Market
|
154,941
|
|
|
32.0
|
|
|
167,805
|
|
|
33.6
|
|
|
455,695
|
|
|
30.2
|
|
|
519,391
|
|
|
32.3
|
|
Soma
(1)
|
79,792
|
|
|
16.5
|
|
|
72,569
|
|
|
14.5
|
|
|
259,496
|
|
|
17.2
|
|
|
239,774
|
|
|
14.9
|
|
Total Net
Sales
|
484,706
|
|
|
100.0
|
|
|
499,877
|
|
|
100.0
|
|
|
1,510,790
|
|
|
100.0
|
|
|
1,606,412
|
|
|
100.0
|
|
Cost of goods
sold
|
313,668
|
|
|
64.7
|
|
|
318,899
|
|
|
63.8
|
|
|
980,299
|
|
|
64.9
|
|
|
1,001,699
|
|
|
62.4
|
|
Gross
Margin
|
171,038
|
|
|
35.3
|
|
|
180,978
|
|
|
36.2
|
|
|
530,491
|
|
|
35.1
|
|
|
604,713
|
|
|
37.6
|
|
Selling, general and
administrative
expenses
|
180,586
|
|
|
37.3
|
|
|
178,394
|
|
|
35.7
|
|
|
536,977
|
|
|
35.5
|
|
|
538,902
|
|
|
33.5
|
|
(Loss) Income from
Operations
|
(9,548)
|
|
|
(2.0)
|
|
|
2,584
|
|
|
0.5
|
|
|
(6,486)
|
|
|
(0.4)
|
|
|
65,811
|
|
|
4.1
|
|
Interest income
(expense), net
|
25
|
|
|
0.0
|
|
|
97
|
|
|
0.0
|
|
|
79
|
|
|
0.0
|
|
|
(458)
|
|
|
0.0
|
|
(Loss) Income
before Income
Taxes
|
(9,523)
|
|
|
(2.0)
|
|
|
2,681
|
|
|
0.5
|
|
|
(6,407)
|
|
|
(0.4)
|
|
|
65,353
|
|
|
4.1
|
|
Income tax (benefit)
provision
|
(1,400)
|
|
|
(0.3)
|
|
|
(3,800)
|
|
|
(0.8)
|
|
|
2,000
|
|
|
0.2
|
|
|
13,100
|
|
|
0.8
|
|
Net (Loss)
Income
|
$
|
(8,123)
|
|
|
(1.7)
|
%
|
|
$
|
6,481
|
|
|
1.3
|
%
|
|
$
|
(8,407)
|
|
|
(0.6)
|
%
|
|
$
|
52,253
|
|
|
3.3
|
%
|
Per Share
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
common share -
basic
|
$
|
(0.07)
|
|
|
|
|
$
|
0.05
|
|
|
|
|
$
|
(0.07)
|
|
|
|
|
$
|
0.41
|
|
|
|
Net (loss) income per
common and
common equivalent share – diluted
|
$
|
(0.07)
|
|
|
|
|
$
|
0.05
|
|
|
|
|
$
|
(0.07)
|
|
|
|
|
$
|
0.41
|
|
|
|
Weighted average
common shares
outstanding – basic
|
114,997
|
|
|
|
|
122,201
|
|
|
|
|
114,744
|
|
|
|
|
124,069
|
|
|
|
Weighted average
common and common
equivalent shares outstanding – diluted
|
114,997
|
|
|
|
|
122,273
|
|
|
|
|
114,744
|
|
|
|
|
124,120
|
|
|
|
Dividends declared
per share
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
0.2625
|
|
|
|
|
$
|
0.255
|
|
|
|
|
(1)
Includes TellTale net sales, which is not a significant
component of Soma revenue.
|
Chico's FAS, Inc.
and Subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited)
(in
thousands)
|
|
|
November 2,
2019
|
|
February 2,
2019
|
|
November 3,
2018
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
70,188
|
|
|
$
|
124,128
|
|
|
$
|
169,380
|
|
Marketable
securities, at fair value
|
57,253
|
|
|
61,987
|
|
|
59,484
|
|
Inventories
|
277,473
|
|
|
235,218
|
|
|
266,100
|
|
Prepaid expenses and
other current assets
|
53,598
|
|
|
63,845
|
|
|
62,167
|
|
Total Current
Assets
|
458,512
|
|
|
485,178
|
|
|
557,131
|
|
Property and
Equipment, net
|
323,591
|
|
|
370,932
|
|
|
385,387
|
|
Right of Use
Assets
|
664,052
|
|
|
—
|
|
|
—
|
|
Other
Assets:
|
|
|
|
|
|
Goodwill
|
96,774
|
|
|
96,774
|
|
|
96,774
|
|
Other intangible
assets, net
|
38,930
|
|
|
38,930
|
|
|
38,930
|
|
Other assets,
net
|
18,511
|
|
|
15,220
|
|
|
13,929
|
|
Total Other
Assets
|
154,215
|
|
|
150,924
|
|
|
149,633
|
|
|
$
|
1,600,370
|
|
|
$
|
1,007,034
|
|
|
$
|
1,092,151
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
151,664
|
|
|
$
|
143,404
|
|
|
$
|
150,224
|
|
Current lease
liabilities
|
155,403
|
|
|
—
|
|
|
—
|
|
Other current and
deferred liabilities
|
112,456
|
|
|
131,820
|
|
|
126,337
|
|
Total Current
Liabilities
|
419,523
|
|
|
275,224
|
|
|
276,561
|
|
Noncurrent
Liabilities:
|
|
|
|
|
|
Long-term
debt
|
46,250
|
|
|
57,500
|
|
|
61,250
|
|
Long-term lease
liabilities
|
578,971
|
|
|
—
|
|
|
—
|
|
Other noncurrent and
deferred liabilities
|
8,512
|
|
|
89,109
|
|
|
93,323
|
|
Deferred
taxes
|
3,999
|
|
|
5,237
|
|
|
7,884
|
|
Total Noncurrent
Liabilities
|
637,732
|
|
|
151,846
|
|
|
162,457
|
|
Commitments and
Contingencies
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
Preferred
stock
|
—
|
|
|
—
|
|
|
—
|
|
Common
stock
|
1,186
|
|
|
1,169
|
|
|
1,257
|
|
Additional paid-in
capital
|
490,281
|
|
|
486,406
|
|
|
482,340
|
|
Treasury stock, at
cost
|
(494,395)
|
|
|
(494,395)
|
|
|
(444,309)
|
|
Retained
earnings
|
546,461
|
|
|
587,145
|
|
|
614,349
|
|
Accumulated other
comprehensive loss
|
(418)
|
|
|
(361)
|
|
|
(504)
|
|
Total
Shareholders' Equity
|
543,115
|
|
|
579,964
|
|
|
653,133
|
|
|
$
|
1,600,370
|
|
|
$
|
1,007,034
|
|
|
$
|
1,092,151
|
|
|
|
The Company
adopted Accounting Standard Update ("ASU") 2016-02, Leases,
and related amendments as of February 3, 2019 under the modified
retrospective approach and, therefore, has not revised comparative
periods.
|
Chico's FAS, Inc.
and Subsidiaries
Condensed
Consolidated Cash Flow Statements
(Unaudited)
(in
thousands)
|
|
|
Thirty-Nine Weeks
Ended
|
|
November 2,
2019
|
|
November 3,
2018
|
Cash Flows from
Operating Activities:
|
|
|
|
Net (loss)
income
|
$
|
(8,407)
|
|
|
$
|
52,253
|
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
67,876
|
|
|
69,290
|
|
Non-cash lease
expense
|
160,363
|
|
|
—
|
|
Loss on disposal and
impairment of property and equipment, net
|
225
|
|
|
3,592
|
|
Deferred tax
benefit
|
(778)
|
|
|
1,195
|
|
Share-based
compensation expense
|
5,353
|
|
|
15,523
|
|
Deferred rent and
lease credits
|
—
|
|
|
(14,868)
|
|
Changes in assets and
liabilities:
|
|
|
|
Inventories
|
(42,255)
|
|
|
(33,198)
|
|
Prepaid expenses and
other assets
|
(10,861)
|
|
|
(190)
|
|
Accounts
payable
|
8,261
|
|
|
31,947
|
|
Accrued and other
liabilities
|
(2,600)
|
|
|
(6,780)
|
|
Lease
liability
|
(169,970)
|
|
|
—
|
|
Net cash provided by
operating activities
|
7,207
|
|
|
118,764
|
|
Cash Flows from
Investing Activities:
|
|
|
|
Purchases of
marketable securities
|
(35,020)
|
|
|
(31,300)
|
|
Proceeds from sale of
marketable securities
|
39,967
|
|
|
31,946
|
|
Purchases of property
and equipment
|
(22,126)
|
|
|
(36,601)
|
|
Net cash used in
investing activities
|
(17,179)
|
|
|
(35,955)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
Proceeds from
borrowings
|
—
|
|
|
61,250
|
|
Payments on
borrowings
|
(11,250)
|
|
|
(68,750)
|
|
Proceeds from
issuance of common stock
|
1,088
|
|
|
1,448
|
|
Dividends
paid
|
(30,992)
|
|
|
(32,674)
|
|
Repurchase of common
stock
|
—
|
|
|
(30,879)
|
|
Payments of tax
withholdings related to share-based awards
|
(2,549)
|
|
|
(3,420)
|
|
Net cash used in
financing activities
|
(43,703)
|
|
|
(73,025)
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
(265)
|
|
|
(475)
|
|
Net (decrease)
increase in cash and cash equivalents
|
(53,940)
|
|
|
9,309
|
|
Cash and Cash
Equivalents, Beginning of period
|
124,128
|
|
|
160,071
|
|
Cash and Cash
Equivalents, End of period
|
$
|
70,188
|
|
|
$
|
169,380
|
|
|
|
The Company
adopted ASU 2016-02, Leases, and related amendments as of
February 3, 2019 under the modified retrospective approach and,
therefore, has not revised comparative periods.
|
Supplemental Detail on Net (Loss) Income 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 earnings per common share pursuant to the
"two-class" method. For the Company, participating securities are
comprised 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, including participating securities.
Diluted net income per share reflects the dilutive effect of
potential common shares from non-participating securities such as
stock options, PSUs and restricted stock units. For the thirteen
and thirty-nine weeks ended November 2, 2019 and
November 3, 2018, potential common shares were excluded from
the computation of diluted income per share to the extent they were
antidilutive.
The following unaudited table sets forth the computation of net
(loss) income per basic and diluted share shown on the face of the
accompanying condensed consolidated statements of (loss) income (in
thousands, except per share amounts):
|
|
Thirteen Weeks
Ended
|
|
Thirty-Nine Weeks
Ended
|
|
|
November 2,
2019
|
|
November 3,
2018
|
|
November 2,
2019
|
|
November 3,
2018
|
Numerator
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(8,123)
|
|
|
$
|
6,481
|
|
|
$
|
(8,407)
|
|
|
$
|
52,253
|
|
Net income and
dividends declared allocated to
participating securities
|
|
—
|
|
|
(182)
|
|
|
—
|
|
|
(1,365)
|
|
Net (loss) income
available to common
shareholders
|
|
$
|
(8,123)
|
|
|
$
|
6,299
|
|
|
$
|
(8,407)
|
|
|
$
|
50,888
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding –
basic
|
|
114,997
|
|
|
122,201
|
|
|
114,744
|
|
|
124,069
|
|
Dilutive effect of
non-participating securities
|
|
—
|
|
|
72
|
|
|
—
|
|
|
51
|
|
Weighted average
common and common
equivalent shares outstanding – diluted
|
|
114,997
|
|
|
122,273
|
|
|
114,744
|
|
|
124,120
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.07)
|
|
|
$
|
0.05
|
|
|
$
|
(0.07)
|
|
|
$
|
0.41
|
|
Diluted
|
|
$
|
(0.07)
|
|
|
$
|
0.05
|
|
|
$
|
(0.07)
|
|
|
$
|
0.41
|
|
GAAP to Non-GAAP Reconciliation of Net (Loss)
Income and (Loss) Income Per Diluted Common Share
The Company reports information in accordance with GAAP. 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 impact of the Company's
retail fleet optimization plan and Severance Charges as previously
defined.
A reconciliation of net loss and loss per diluted share on a
GAAP basis to net (loss) income and (loss) income per diluted share
on a non-GAAP basis for the thirteen and thirty-nine weeks ended
November 2, 2019 is presented in the table below:
Chico's FAS, Inc.
and Subsidiaries
|
GAAP to Non-GAAP
Reconciliation of Net (Loss) Income and (Loss) Income per Diluted
Share
|
(Unaudited)
|
(in thousands, except
per share amounts)
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
|
|
Thirty-Nine Weeks
Ended
|
|
|
November 2,
2019
|
Net (loss) income:
(1)
|
|
|
|
|
|
|
|
|
|
GAAP
basis
|
|
$
|
(8,123)
|
|
|
$
|
(8,407)
|
|
Accelerated
depreciation (2)
|
|
1,504
|
|
|
7,232
|
|
Severance Charges
(3)
|
|
2,063
|
|
|
2,072
|
|
Non-GAAP adjusted
basis
|
|
$
|
(4,556)
|
|
|
$
|
897
|
|
|
|
|
|
|
Net (loss) income
per common and common equivalent share–diluted:
(1)
|
|
|
|
|
|
|
|
|
|
GAAP
basis
|
|
$
|
(0.07)
|
|
|
$
|
(0.07)
|
|
Accelerated
depreciation (2)
|
|
0.01
|
|
|
0.06
|
|
Severance Charges
(3)
|
|
0.02
|
|
|
0.02
|
|
Non-GAAP adjusted
basis
|
|
$
|
(0.04)
|
|
|
$
|
0.01
|
|
|
(1)
All adjustments to net (loss) income are presented net of
tax.
|
(2)
Reflects the impact of accelerated depreciation on property and
equipment due to the change in the useful life of store assets for
store closures added as a result of the Company's retail fleet
optimization plan.
|
(3) Severance Charges as
defined in this release.
|
Chico's FAS, Inc.
and Subsidiaries
|
Store Count and
Square Footage
|
Thirteen Weeks Ended
November 2, 2019
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
August 3,
2019
|
|
New
Stores
|
|
Closures
|
|
November 2,
2019
|
|
|
Store
Count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
537
|
|
|
1
|
|
|
(2)
|
|
|
536
|
|
|
|
Chico's
outlets
|
124
|
|
|
1
|
|
|
(2)
|
|
|
123
|
|
|
|
Chico's
Canada
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
|
WHBM frontline
boutiques
|
380
|
|
|
1
|
|
|
(5)
|
|
|
376
|
|
|
|
WHBM
outlets
|
63
|
|
|
1
|
|
|
(1)
|
|
|
63
|
|
|
|
WHBM
Canada
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
|
Soma frontline
boutiques
|
254
|
|
|
—
|
|
|
(7)
|
|
|
247
|
|
|
|
Soma
outlets
|
19
|
|
|
—
|
|
|
(1)
|
|
|
18
|
|
|
|
Total Chico's FAS,
Inc.
|
1,387
|
|
|
4
|
|
|
(18)
|
|
|
1,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 3,
2019
|
|
New
Stores
|
|
Closures
|
|
Other Changes
in
SSF
|
|
November 2,
2019
|
Net Selling Square
Footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,462,833
|
|
|
2,335
|
|
|
(4,499)
|
|
|
(3,122)
|
|
|
1,457,547
|
|
Chico's
outlets
|
312,938
|
|
|
2,295
|
|
|
(4,991)
|
|
|
—
|
|
|
310,242
|
|
Chico's
Canada
|
9,695
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,695
|
|
WHBM frontline
boutiques
|
887,014
|
|
|
2,746
|
|
|
(11,495)
|
|
|
743
|
|
|
879,008
|
|
WHBM
outlets
|
131,523
|
|
|
3,299
|
|
|
(2,366)
|
|
|
—
|
|
|
132,456
|
|
WHBM
Canada
|
15,588
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,588
|
|
Soma frontline
boutiques
|
480,370
|
|
|
—
|
|
|
(12,285)
|
|
|
(715)
|
|
|
467,370
|
|
Soma
outlets
|
35,774
|
|
|
—
|
|
|
(1,445)
|
|
|
—
|
|
|
34,329
|
|
Total Chico's FAS,
Inc.
|
3,335,735
|
|
|
10,675
|
|
|
(37,081)
|
|
|
(3,094)
|
|
|
3,306,235
|
|
|
As of
November 2, 2019, the Company's franchise operations consisted
of 89 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 November 2, 2019
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
February 2,
2019
|
|
New
Stores
|
|
Closures
|
|
November 2,
2019
|
|
|
Store
count:
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
551
|
|
|
1
|
|
|
(16)
|
|
|
536
|
|
|
|
Chico's
outlets
|
125
|
|
|
1
|
|
|
(3)
|
|
|
123
|
|
|
|
Chico's
Canada
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
|
WHBM frontline
boutiques
|
390
|
|
|
1
|
|
|
(15)
|
|
|
376
|
|
|
|
WHBM
outlets
|
65
|
|
|
1
|
|
|
(3)
|
|
|
63
|
|
|
|
WHBM
Canada
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
|
Soma frontline
boutiques
|
258
|
|
|
—
|
|
|
(11)
|
|
|
247
|
|
|
|
Soma
outlets
|
19
|
|
|
—
|
|
|
(1)
|
|
|
18
|
|
|
|
Total Chico's FAS,
Inc.
|
1,418
|
|
|
4
|
|
|
(49)
|
|
|
1,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 2,
2019
|
|
New
Stores
|
|
Closures
|
|
Other Changes
in
SSF
|
|
November 2,
2019
|
Net Selling Square
Footage (SSF):
|
|
|
|
|
|
|
|
|
|
Chico's frontline
boutiques
|
1,502,688
|
|
|
2,335
|
|
|
(41,970)
|
|
|
(5,506)
|
|
|
1,457,547
|
|
Chico's
outlets
|
315,400
|
|
|
2,295
|
|
|
(7,453)
|
|
|
—
|
|
|
310,242
|
|
Chico's
Canada
|
9,695
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,695
|
|
WHBM frontline
boutiques
|
909,849
|
|
|
2,746
|
|
|
(33,753)
|
|
|
166
|
|
|
879,008
|
|
WHBM
outlets
|
135,863
|
|
|
3,299
|
|
|
(6,706)
|
|
|
—
|
|
|
132,456
|
|
WHBM
Canada
|
14,891
|
|
|
—
|
|
|
—
|
|
|
697
|
|
|
15,588
|
|
Soma frontline
boutiques
|
488,509
|
|
|
—
|
|
|
(20,424)
|
|
|
(715)
|
|
|
467,370
|
|
Soma
outlets
|
35,774
|
|
|
—
|
|
|
(1,445)
|
|
|
—
|
|
|
34,329
|
|
Total Chico's FAS,
Inc.
|
3,412,669
|
|
|
10,675
|
|
|
(111,751)
|
|
|
(5,358)
|
|
|
3,306,235
|
|
|
As of
November 2, 2019, the Company's franchise operations consisted
of 89 international retail locations in Mexico and 2 domestic
airport locations.
|
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SOURCE Chico's FAS, Inc.