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Net sales up at women's clothes retailer Chico's FAS
24
Nov '11
Chico's FAS Inc. announced its financial results for the fiscal 2011 third quarter and nine months ended October 29, 2011, which includes the results of Boston Proper subsequent to the closing of the acquisition on September 19, 2011.

Net Income and Earnings per Share
The Company reported net income totaling $26.5 million, or $0.16 per diluted share, for the third quarter compared to net income of $28.8 million, or $0.16 per diluted share, for the same period last year.

The third quarter 2011 results include non-recurring acquisition and integration costs related to the Boston Proper acquisition totaling approximately $3.5 million, net of tax, or $0.02 per diluted share. Excluding these costs, the Company's third quarter net income was $30.0 million, or $0.18 per diluted share, an earnings per share increase of 13%, compared to net income of $28.8 million, or $0.16 per diluted share for the same period last year.

For the nine months ended October 29, 2011, the Company reported net income totaling $115.8 million or $0.66 per diluted share, compared to net income of $94.7 million, or $0.53 per diluted share, reported for the same period last year.

Excluding the non-recurring acquisition and integration costs in the third quarter of fiscal 2011, the Company's net income for the nine months ended October 29, 2011 was $119.3 million, or $0.68 per diluted share, an increase of 28%, compared to net income of $94.7 million, or $0.53 per diluted share, for the same period last year.

Net Sales
Net sales for the quarter increased 11.5% to $538.5 million from $483.0 million in last year's third quarter. Consolidated comparable sales increased 3.7% for the quarter following a 5.5% increase for the same period last year reflecting increases in average dollar sale and transaction count.

The Chico's/Soma Intimates brands' comparable sales increased 0.6% following a 3.6% increase for the same period last year and the White House | Black Market ("WH|BM") brand's comparable sales increased 11.0% following a 10.2% increase for the same period last year. Boston Proper's sales are excluded from the comparable sales calculation until twelve full months after the acquisition.

Gross Margin
Gross margin for the third quarter of $301.5 million, or 56.0% of net sales, represents a 100 basis point decrease from last year's third quarter attributable to higher discounting for the Chico's brand as a result of a soft sales environment partially offset by higher margins at the WH|BM and Soma Intimates brands due to increased full-price selling and effective promotional activities.

Selling, General and Administrative Expenses
Selling, general and administrative expenses (SG&A) for the third quarter were $259.5 million, or 48.2% of net sales. Excluding $5.0 million of non-recurring acquisition and integration costs consisting of professional service fees and employee benefit related costs, SG&A expenses were $254.5 million, or 47.3% of net sales, a 50 basis point improvement from 47.8% of net sales for last year's third quarter primarily attributable to the sales leverage impact on occupancy costs as well as lower performance based compensation, partially offset by increased marketing expenses.

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