Chico's FAS, Inc. Reports Fourth Quarter and Fiscal Year 2016 Results

For fiscal 2016, net sales were $2.5 billion compared to $2.7 billion in fiscal 2015. This decrease of 6.9% included $87.0 million related to Boston Proper last year. When excluding Boston Proper from fiscal 2015, net sales decreased 3.8%, primarily reflecting a decline in comparable sales of 3.7%, comprised of reduced transaction count and lower average dollar sale.

Comparable Sales

Gross Margin

For the fourth quarter, gross margin was $213.4 million, or 35.5%, compared to $217.4 million, or 34.4%, in last year's fourth quarter. When excluding Boston Proper from fiscal 2015, gross margin increased 80 basis points in fiscal 2016 compared to gross margin of $213.3 million, or 34.7%, last year. This 80 basis point increase from the 2015 adjusted gross margin rate primarily reflects reduced promotional activity, partially offset by an increase in incentive compensation.

Selling, General and Administrative Expenses

For the fourth quarter, selling, general and administrative expenses ("SG&A") were $192.0 million, or 31.9%, compared to $217.2 million, or 34.4% last year. When excluding Boston Proper from fiscal 2015, SG&A decreased $13.6 million, or 150 basis points, compared to $205.6 million, or 33.4%, last year. This $13.6 million decrease is primarily due to a reduction in unproductive marketing spend and improvements in store labor productivity, partially offset by an increase in incentive compensation.

Income Tax Expense

The fourth quarter fiscal 2016 effective tax rate was 35.4%. In the fourth quarter of fiscal 2015, the Company recorded a tax benefit as a result of the impact of restructuring and strategic charges.

Inventories

At the end of the fourth quarter of 2016, inventories totaled $232.4 million compared to $233.8 million last year. The decrease of 0.6% primarily reflected a 4% decrease in on-hand inventory as a result of improved inventory management, partially offset by an increase in in-transit inventory primarily due to product launches scheduled in the first quarter of 2017 and the timing of the Chinese New Year.

Share Repurchase Program

During the fourth quarter of 2016, the Company repurchased 1.6 million shares for $20.0 million, at an average of $12.81 per share, under its $300.0 million share repurchase program announced in November 2015, with $163.6 million remaining under the program. During fiscal 2016, the Company repurchased a total of 8.1 million shares for $96.4 million, at an average of $11.88 per share.

Changes in Presentation

Commencing in the first quarter of fiscal 2016, store occupancy expenses and shipping expenses, historically presented in SG&A, are being presented in Cost of Goods Sold. The Company believes that these costs represent direct costs associated with the sale of its merchandise, and these changes better align the Company with its peers and better reflect how the business operates. Additionally, shipping revenue, historically presented in SG&A, is being presented in Net Sales. These adjustments were made retrospectively and all periods presented conform with this presentation.

2017 Full-Year Outlook

For fiscal 2017, the Company is anticipating a low single-digit percentage decline in comparable sales as the Company continues to rationalize its promotional activity. The Company expects to achieve gross margin leverage for the year, primarily due to reduced promotional activity and savings from the supply chain initiative launched last year. The Company is planning modest SG&A leverage. Overall, the Company is anticipating steady improvement in operating margin that will advance its progress toward its target of double digit operating margin in 2019.

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 January 28, 2017, the Company operated 1,501 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 plans and objectives, and the success of our organizational redesign and other strategic initiatives aimed at increasing sales volume and profitability through our four established focus areas. These statements may address items such as expectations for future sales, gross margin, SG&A (particularly estimated expected savings), operating margin, inventory levels, and comparable store sales and cash needs. These statements relate to expectations concerning matters that are not historical fact and may include the words or phrases such as "expects," "believes," "anticipates," "plans," "estimates," "approximately," "our planning assumptions," "future outlook," and similar expressions. Except for historical information, matters discussed in such oral and written 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 new or increased taxes or tariffs, unexpected consolidation in the freight carrier industry, and unexpected costs and exposure associated with our shift to a predominantly FOB shipping structure rather than a mix of FOB and DDP); 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 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, 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. All written or oral 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 (Loss)

(Unaudited)

(in thousands, except per share amounts)

Thirteen Weeks Ended

Fifty-Two Weeks Ended

January 28, 2017

January 30, 2016

January 28, 2017

January 30, 2016

Amount

% of Sales

Amount

% of Sales

Amount

% of Sales

Amount

% of Sales

Net sales:

Chico's

$

290,763

48.4

$

305,094

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