PR Newswire
FORT MYERS, Fla., Aug. 31, 2021
FORT MYERS, Fla., Aug. 31, 2021 /PRNewswire/ -- Chico's FAS, Inc. (NYSE: CHS) (the "Company" or "Chico's FAS") today announced its financial results for the fiscal 2021 thirteen weeks ended July 31, 2021 (the "second quarter").
"Our second quarter earnings performance was the best second quarter Chico's FAS has posted since 2013, and these results show the incredible progress we continue to make in our turnaround strategy, despite pandemic challenges. Our return to profitability in the quarter was driven by our strategic actions that grew sales, expanded gross margin, and diligently controlled our expenses," noted Molly Langenstein, Chico's FAS Chief Executive Officer and President.
Langenstein continued, "Our robust second quarter sales across all three brands were propelled by our meaningful enhancements in product and marketing, which continued to drive full-price selling, reduce markdowns and produce higher gross margin. Soma®, which posted a 53% sales increase over last year's second quarter, we believe is well positioned to become one of the largest intimate apparel brands in the U.S. Sales at both Chico's® and White House Black Market® were strong, with year-over-year second quarter growth of 59% and 48%, respectively. Customers enthusiastically responded to our elevated styling and quality in both apparel brands, which led to faster sell-through rates and higher inventory productivity. Strategically planned inventories, operating discipline and the ongoing benefit of our prior cost reductions further added to our return to profitable growth.
"We are a digital-first, customer-led company with a strong portfolio of three unique brands. We believe there are ample opportunities to further grow our customer bases, market share and sales in each of these amazing brands. We look forward to reporting our progress in the quarters ahead."
Business Highlights
The Company's second quarter highlights include:
Overview of Financial Results
For the second quarter, the Company reported net income of $26.2 million, or $0.21 per diluted share, compared to a net loss of $46.8 million, or $0.40 per diluted share, for last year's second quarter. Last year's second quarter net loss included $8.0 million, or $0.07 per share, in significant after-tax non-cash inventory write-offs as presented in the accompanying Summary of Significant Non-Cash Charges table.
For the twenty-six weeks ended July 31, 2021, the Company reported net income of $17.3 million, or $0.14 per diluted share, compared to a net loss of $225.1 million, or $1.95 per diluted share, for the twenty-six weeks ended August 1, 2020. Net loss for the twenty-six weeks ended August 1, 2020 included $148.4 million, or $1.27 per share, in significant after-tax non-cash charges as presented in the accompanying Summary of Significant Non-Cash Charges table.
Sales
For the second quarter, net sales were $472.1 million compared to $306.2 million in last year's second quarter. This 54.2% improvement primarily reflects the impact of temporary store closures or limited hours during last year's second quarter, partially offset by 29 net permanent store closures since last year's second quarter.
Total Company comparable sales for the second quarter compared to the second quarter of fiscal 2019 declined 1.6%, with Soma improving 38.1% and Chico's and WHBM decreasing 14.3% and 5.4%, respectively. Total Company on-hand inventories at the end of the second quarter compared to the second quarter of fiscal 2019 were down 19.6%, with Soma up 19.4% and Chico's and WHBM down 32.4% and 48.6%, respectively; correlating sales and on-hand inventory.
Gross Margin
For the second quarter, gross margin was $181.5 million, or 38.4% of net sales, compared to $44.8 million, or 14.6% of net sales, in last year's second quarter. The year-over-year improvement in gross margin rate primarily reflects margin expansion as a result of higher full price sales and less promotional activity, improved leverage of occupancy costs with rising sales, and the impact of inventory write-offs in last year's second quarter, as reflected in the accompanying Summary of Significant Non-Cash Charges table.
Selling, General and Administrative Expenses
For the second quarter, SG&A expenses were $145.8 million, or 30.9% of net sales, compared to $107.3 million, or 35.0% of net sales, for last year's second quarter, primarily reflecting the benefit of fiscal 2020 cost savings initiatives and sales leverage. The second quarter SG&A expense rate of 30.9% improved over the 33.7% rate in the second quarter of fiscal 2019.
Income Taxes
For the second quarter, the effective tax rate was 22.7% compared to 25.7% for last year's second quarter. The 22.7% effective tax rate primarily reflects a change in estimate from the first quarter of fiscal 2021 due to an increase in the Company's projected annual pre-tax income and an increase in annual projected deferred tax assets on which a full valuation allowance exists, partially offset by the impact of the annual loss projected during the first quarter of fiscal 2021. The 25.7% effective tax rate for last year's second quarter includes the annual benefit of the fiscal 2020 pre-tax loss due the Coronavirus Aid, Relief, and Economic Security Act, partially offset by the impact of nondeductible book goodwill impairment charges.
Cash, Marketable Securities and Debt
At the end of the second quarter, cash and marketable securities totaled $137.2 million compared to $124.5 million at the end of last year's second quarter. Debt at the end of the second quarter totaled $149.0 million, remaining unchanged from the end of last year's second quarter.
At the end of the first quarter of fiscal 2021, cash and marketable securities totaled $102.4 million. The $34.8 million increase in second quarter cash and marketable securities compared to the first quarter primarily reflects cash flow from operating activities.
Inventories
At the end of the second quarter, inventories totaled $202.1 million compared to $235.8 million at the end of last year's second quarter. This $33.7 million, or 14.3%, decrease primarily reflects conservative inventory management to better align inventory and assortments with consumer demand.
Fiscal 2021 Outlook
During the balance of fiscal 2021, we expect improving year-over-year demand, but recognize that there is economic uncertainty as we continue to manage through the COVID-19 pandemic (the "pandemic"). In addition, we are facing macro supply chain headwinds in the back half of the fiscal year that we expect will impact sales and gross margin, including higher freight costs, extended inbound transit times and product supplier handover delays driven by the pandemic.
Accordingly, given the uncertainty caused by the pandemic, the Company is not providing specific fiscal 2021 third quarter and full year guidance at this time. The Company is, however, providing high-level outlook expectations for the third quarter and full fiscal year 2021. The ongoing financial impact of the pandemic is not estimable with precision and may vary significantly from estimates reflected in our high-level outlook expectations below.
For the fiscal 2021 third quarter compared to the fiscal 2020 third quarter, the Company currently expects:
For the fiscal 2021 full year compared to the fiscal 2020 full year, the Company currently expects:
Conference Call Information
The Company is hosting a live conference call on Tuesday, August 31, 2021 beginning at 8:00 a.m. ET to review the operating results for the second 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, 5110261, 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.
Chico's FAS is a Florida-based fashion company founded in 1983 on Sanibel Island, Fla. The Company reinvented the fashion retail experience by creating fashion communities anchored by service, which put the customer at the center of everything we do. As one of the leading fashion retailers in North America, Chico's FAS is a company of three unique brands - Chico's, WHBM and Soma - each thriving in their own white space, founded by women, led by women, providing solutions that millions of women say give them confidence and joy.
Our Company has a passion for fashion, and each day, we provide clothing, shoes and accessories, intimate apparel and expert styling in our brick-and-mortar boutiques, digital online boutiques and through StyleConnect™, the Company's proprietary digital styling tool that enables customers to conveniently shop wherever, whenever and however they prefer.
As of July 31, 2021, the Company operated 1,284 stores in the U.S. and sold merchandise through 66 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 and www.soma.com as well as through third-party channels.
To learn more about Chico's FAS, please visit 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 statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements, including without limitation the quote from Ms. Langenstein and the sections captioned "Business Highlights" and "Fiscal 2021 Outlook," relate to expectations and projections regarding the Company's future performance and may include the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "will," "plan," "outlook," "project," "should," "strategy," "potential," "confident" and similar terms. 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 risks and uncertainties that could cause actual results to differ materially from historical results or those expressed or implied by such forward-looking statements. Although we believe our expectations are based on reasonable estimates and assumptions, 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 actual results to differ include, but are not limited to: the effects of the pandemic and uncertainties about its depth and duration, new variants of COVID-19 that have emerged, and the speed, efficacy and availability of vaccine and treatment developments, as well as the impacts to general economic conditions and the economic slowdown affecting consumer behavior and discretionary spending (during and after the pandemic) and any temporary store restrictions (including reduced hours or capacity) due to government mandates; the effectiveness of store reopenings, cost reduction initiatives, the extent, availability and effectiveness of any pandemic stimulus packages or loan programs, including the Coronavirus Aid, Relief, and Economic Security Act, the ability of our third-party business partners, including our suppliers, logistics providers, vendors and landlords, to meet their obligations to us in light of financial stress, staffing shortages, liquidity challenges, bankruptcy filings by other industry participants and other disruptions due to the pandemic, and the impact of the pandemic on our manufacturing operations in China; our ability to successfully implement any alternatives that we pursue including our ability to maintain the cost savings described in this release; government actions and policies; increases in unemployment rates and taxes; local, regional, national and international economic conditions; the risk that natural disasters, public health crises, political uprisings, uncertainty or unrest, or other catastrophic events could adversely affect our operations and financial results; 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; future permanent store closures; 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 turnaround strategy and five fiscal 2021 operating priorities which are: continuing our ongoing digital transformation; further refining product through fit, quality, fabric and innovation; driving increased customer engagement through marketing; maintaining our operating and cost discipline; and further enhancing the productivity of our real estate portfolio; cyber security or other data or security breaches; 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 transition of 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 increases in costs pertaining to product deliveries and returns, higher freight costs, product supplier handover delays and extended inbound transit times); the risks and uncertainties that are related to our reliance on sourcing from foreign suppliers, including significant economic labor, political or other shifts (including the impact of changes in tariffs, taxes or other import regulations, particularly with respect to China, or legislation prohibiting certain imports from China); the quality and timeliness of merchandise received from suppliers; changes in the costs of manufacturing, raw materials, transportation, distribution, labor and advertising; new or increased taxes or tariffs that could impact, among other things, our sourcing from foreign suppliers; the risk that future legislation may prohibit certain imports from China; and significant shifts in consumer behavior. Other risk factors are detailed in the Company's Annual Report on Form 10-K and, from time to time, the Company's Quarterly Reports on Form 10-Q and other reports filed with the Securities and Exchange Commission. These factors should be considered in evaluating forward-looking statements contained herein. There can be no assurance that the actual future results, performance, or achievements expressed or implied by such forward-looking statements will occur. 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. and Subsidiaries | |||||||||||||||||||||||||||
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| Thirteen Weeks Ended | | Twenty-Six Weeks Ended | ||||||||||||||||||||||||
| July 31, 2021 | | August 1, 2020 | | July 31, 2021 | | August 1, 2020 | ||||||||||||||||||||
| Amount | | % of Sales | | Amount | | % of Sales | | Amount | | % of Sales | | Amount | | % of Sales | ||||||||||||
Net Sales: | | | | | | | | | | | | | | | | ||||||||||||
Chico's | $ | 221,389 | | | 46.9 | % | | $ | 139,584 | | | 45.6 | % | | $ | 398,410 | | | 46.3 | % | | $ | 271,021 | | | 46.3 | % |
White House Black Market | 122,043 | | | 25.9 | | | 82,253 | | | 26.9 | | | 226,090 | | | 26.3 | | | 166,173 | | | 28.3 | | ||||
Soma | 128,627 | | | 27.2 | | | 84,337 | | | 27.5 | | | 235,520 | | | 27.4 Werbung Mehr Nachrichten zur Chico's FAS Aktie kostenlos abonnieren
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