Chico's reports 39% increase in Q3 earnings

For the third quarter, selling, general and administrative expenses ("SG&A") were $297.2 million, an increase of 16.8% compared to $254.5 million in last year's third quarter.  As a percentage of net sales, SG&A was 46.7%, a 60 basis point improvement from last year's third quarter, primarily reflecting the sales leverage impact on store expenses, partially offset by higher marketing expenses and incentive compensation.

Inventories

At the end of the third quarter, total inventories were $234.2 million compared to $247.5 million at the end of the third quarter last year. Inventories decreased by $13.3 million, or 5.4%, primarily reflecting planned inventory reductions.  

Share Repurchase Program

During the third quarter of fiscal 2012, the Company repurchased 0.6 million shares for $11.7 million under its $200 million share repurchase program announced in November 2011. During the thirty-nine weeks ended October 27, 2012, the Company repurchased a total of 2.5 million shares for $37.4 million, with $137.7 million remaining under the program at the end of the third quarter.          

Outlook

The Company's planning assumptions for fiscal 2012 are:

• Net sales of approximately $2.55 to $2.6 billion, which includes comparable sales growth at a mid-single digit percent;
• Gross margin rate up approximately 25 to 50 basis points to 2011;
• SG&A expense, as a percentage of net sales, down approximately 50 basis points to 2011;
• One-time acquisition and integration costs for Boston Proper of approximately $4 million pre-tax;
• Effective tax rate of approximately 38%;
• Weighted average diluted shares of approximately 165 million, excluding the impact of any future share repurchases;
• Inventories increasing in-line with sales growth; and,
• Capital expenditures of approximately $155 million.

The Company, through its brands – Chico's, White House | Black Market, Soma Intimates, and Boston Proper, is a women's specialty retailer of private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing items.

Chico's FAS Inc