chs-20230429

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM			10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 29, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-16435



Chico’s FAS, Inc.
(Exact name of registrant as specified in its charter)


Florida						59-2389435
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

11215 Metro Parkway, Fort Myers, Florida 33966

(Address of principal executive offices) (Zip Code)

239-277-6200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.01 Per Share	CHS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☑

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

At May 29, 2023, the registrant had 123,455,762 shares of Common Stock, $0.01 par value per share, outstanding.

Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

FOR THE

FISCAL THIRTEEN WEEKS ENDED APRIL 29, 2023

TABLE OF CONTENTS


PART I – Financial Information

Item 1.	Financial Statements:

	Condensed Consolidated Statements of Income for the Thirteen Weeks Ended April 29, 202 3 (Unaudited) and April 30, 202 2 (Unaudited)	3

	Condensed Consolidated Statements of Comprehensive Income for the Thirteen Weeks Ended April 29, 202 3 (Unaudited) and April 30, 202 2 (Unaudited)	4

	Condensed Consolidated Balance Sheets – April 29, 202 3 (Unaudited), January 29, 2022 (Audited), and April 30, 202 2 (Unaudited)	5

	Condensed Consolidated Statements of Shareholders’ Equity for the Thirteen Weeks Ended April 29, 202 3 (Unaudited) and April 30, 202 2 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the Thirt een Weeks Ended April 29, 202 3 (Unaudited) and April 30, 202 2 (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

PART II – Other Information

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30



Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30



Item 6.	Exhibits	31

Signatures		32

Table of Contents

PART I – FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS

CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands, except per share amounts)


	Thirteen Weeks Ended
	April 29, 2023				April 30, 2022

	Amount		% of Sales		Amount		% of Sales
Net Sales	$	534,743	100.0	%	$	540,915	100.0	%
Cost of goods sold	309,734		57.9		324,350		60.0
Gross Margin	225,009		42.1		216,565		40.0
Selling, general and administrative expenses	171,673		32.1		171,158		31.6



Income from Operations	53,336		10.0		45,407		8.4
Interest expense, net	(630)		(0.1)		(975)		(0.2)
Income before Income Taxes	52,706		9.9		44,432		8.2
Income tax provision	12,800		2.4		9,500		1.7
Net Income	$	39,906	7.5	%	$	34,932	6.5	%
Per Share Data:
Net income per common share - basic	$	0.33			$	0.29
Net income per common and common equivalent share – diluted	$	0.32			$	0.28
Weighted average common shares outstanding – basic	119,702				118,993
Weighted average common and common equivalent shares outstanding – diluted	123,375				123,311

The accompanying notes are an integral part of these condensed consolidated statements.

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CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)


	Thirteen Weeks Ended
	April 29, 2023		April 30, 2022
Net income	$	39,906	$	34,932
Other comprehensive income:
Unrealized gains on marketable securities, net of taxes	37		—

Comprehensive income	$	39,943	$	34,932

The accompanying notes are an integral part of these condensed consolidated statements.

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CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)


	April 29, 2023		January 28, 2023		April 30, 2022
ASSETS	(Unaudited)		(Audited)		(Unaudited)

Current Assets:
Cash and cash equivalents	$	107,734	$	153,377	$	104,131
Marketable securities, at fair value	23,314		24,677		—
Inventories	293,776		276,840		325,565
Prepaid expenses and other current assets	42,766		48,604		53,024
Income tax receivable	9,202		11,865		12,737

Total Current Assets	476,792		515,363		495,457
Property and Equipment, net	191,153		192,165		184,240
Right of Use Assets	457,695		435,321		439,896
Other Assets:
Goodwill	16,360		16,360		16,360
Other intangible assets, net	5,000		5,000		5,000
Other assets, net	27,078		23,632		19,648
Total Other Assets	48,438		44,992		41,008
	$	1,174,078	$	1,187,841	$	1,160,601
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	136,903	$	156,262	$	161,058
Current lease liabilities	156,494		153,202		150,476

Other current and deferred liabilities	135,562		141,698		139,148

Total Current Liabilities	428,959		451,162		450,682
Noncurrent Liabilities:
Long-term debt	24,000		49,000		99,000
Long-term lease liabilities	365,422		349,409		355,851
Other noncurrent and deferred liabilities	2,866		2,637		2,290

Total Noncurrent Liabilities	392,288		401,046		457,141
Commitments and Contingencies (see Note 11)
Shareholders’ Equity:
Preferred stock, $0.01 par value; 2,500 shares authorized; no shares issued and outstanding	—		—		—
Common stock, $0.01 par value; 400,000 shares authorized; 167,971 and 166,320 and 166,458 shares issued respectively; and 123,424 and 125,023 and 125,161 shares outstanding, respectively	1,234		1,250		1,251
Additional paid-in capital	510,958		513,914		504,977
Treasury stock, at cost, 44,547 and 41,297 and 41,297 shares, respectively	(514,168)		(494,395)		(494,395)
Retained earnings	354,928		315,022		240,945
Accumulated other comprehensive loss	(121)		(158)		—
Total Shareholders’ Equity	352,831		335,633		252,778
	$	1,174,078	$	1,187,841	$	1,160,601

The accompanying notes are an integral part of these condensed consolidated statements.

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CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(in thousands)


	Thirteen Weeks Ended
	Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Gain (Loss)
	Shares	Par Value				Shares	Amount						Total
BALANCE, January 28, 2023	125,023	$	1,250	$	513,914	41,297	$	(494,395)	$	315,022	$	(158)	$	335,633


Net income	—	—		—		—	—		39,906		—		39,906
Unrealized gains on marketable securities, net of taxes	—	—		—		—	—		—		37		37

Issuance of common stock	2,651	27		93		—	—		—		—		120

Repurchase of common stock and tax withholdings related to share-based awards	(4,250)	(43)		(6,168)		3,250	(19,773)		—		—		(25,984)
Share-based compensation	—	—		3,119		—	—		—		—		3,119
BALANCE, April 29, 2023	123,424	$	1,234	$	510,958	44,547	$	(514,168)	$	354,928	$	(121)	$	352,831

BALANCE, January 29, 2022	122,526	$	1,225	$	508,654	41,297	$	(494,395)	$	206,020	$	—	$	221,504


Net income	—	—		—		—	—		34,932		—		34,932


Issuance of common stock	4,197	42		101		—	—		—		—		143
Dividends on common stock	—	—		—		—	—		(7)		—		(7)
Repurchase of common stock and tax withholdings related to share-based awards	(1,562)	(16)		(7,641)		—	—		—		—		(7,657)
Share-based compensation	—	—		3,863		—	—		—		—		3,863
BALANCE, April 30, 2022	125,161	$	1,251	$	504,977	41,297	$	(494,395)	$	240,945	$	—	$	252,778

The accompanying notes are an integral part of these condensed consolidated statements.

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CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Thirteen Weeks Ended
	April 29, 2023		April 30, 2022
Cash Flows from Operating Activities:
Net income	$	39,906	$	34,932
Adjustments to reconcile net income to net cash provided by (used in) operating activities:


Depreciation and amortization	9,940		11,590
Non-cash lease expense	46,058		44,131


Loss on disposal and impairment of property and equipment, net	30		1,968
Deferred tax benefit	132		(430)
Share-based compensation expense	3,119		3,863


Changes in assets and liabilities:
Inventories	(16,936)		(2,176)
Prepaid expenses and other assets	2,183		(6,449)
Income tax receivable	2,663		961
Accounts payable	(19,359)		(19,483)
Accrued and other liabilities	(6,865)		(1,182)
Lease liability	(49,230)		(67,908)
Net cash provided by (used in) operating activities	11,641		(183)
Cash Flows from Investing Activities:
Purchases of marketable securities	(271)		—
Proceeds from sale of marketable securities	1,640		—
Purchases of property and equipment	(7,789)		(2,571)

Net cash used in investing activities	(6,420)		(2,571)
Cash Flows from Financing Activities:

Payments on borrowings	(25,000)		—
Payments of debt issuance costs	—		(706)
Proceeds from issuance of common stock	120		143

Repurchase of treasury stock under repurchase program	(19,805)		—
Payments of tax withholdings related to share-based awards	(6,179)		(7,657)
Net cash used in financing activities	(50,864)		(8,220)

Net decrease in cash and cash equivalents	(45,643)		(10,974)
Cash and Cash Equivalents, Beginning of period	153,377		115,105
Cash and Cash Equivalents, End of period	$	107,734	$	104,131

Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	1,042	$	1,480
Cash (paid) received for income taxes, net	$	(92)	$	6

The accompanying notes are an integral part of these condensed consolidated statements.

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CHICO’S FAS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts and where otherwise indicated)

(Unaudited)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements of Chico’s FAS, Inc., a Florida corporation, and its wholly owned subsidiaries (the “Company”) have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by accounting principles generally accepted in the U.S. for complete financial statements. In the opinion of management, such interim financial statements reflect all normal, recurring adjustments considered necessary to present fairly the condensed consolidated financial position, the results of operations and cash flows for the interim periods presented. All significant intercompany balances and transactions have been eliminated in consolidation. The fiscal year ended January 28, 2023 balance sheet data was derived from audited consolidated financial statements. For further information, refer to the consolidated financial statements and notes thereto for the fiscal year ended January 28, 2023, included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023 filed with the Securities and Exchange Commission (“SEC”) on March 14, 2023 (“2022 Annual Report on Form 10-K”).

As used in this report, all references to “we,” “us,” “our”, “the Company” and “Chico’s FAS,” refer to Chico’s FAS, Inc. and all of its wholly owned subsidiaries.

Our fiscal years end on the Saturday closest to January 31 and are designated by the calendar year in which the fiscal year commences. Operating results for the thirteen weeks ended April 29, 2023 are not necessarily indicative of the results that may be expected for the entire year.

SEC Form 10-Q filed by Chico's FAS Inc.