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Chico's/Soma brands' comparable store sales soar
20
Aug '10
Chico's FAS, Inc. announced its financial results for the fiscal 2010 second quarter and six months ended July 31, 2010.

Net Income and Earnings per Share
The Company reported net income of $30.5 million, or $0.17 per diluted share for the second quarter compared to net income of $14.9 million, or $0.08 per diluted share for last year's second quarter. The second quarter 2009 results included non-cash impairment charges totaling approximately $3.1 million, net of tax. Excluding impairment charges, the Company's net income for the second quarter of 2009 would have been $18.0 million, or $0.10 per diluted share.

For the six months ended July 31, 2010, the Company reported net income of $65.9 million or $0.37 per diluted share, compared to net income of $29.4 million, or $0.17 per diluted share in the first six months of the prior year. Excluding impairment charges recorded in both years, the Company's net income would have been $66.4 million, or $0.37 per diluted share, for the first six months in 2010 compared to net income of $37.6 million, or $0.21 per diluted share for the comparable period last year.

Sales
Net sales for the quarter increased 10.8% to $465.4 million from $419.9 million in last year's second quarter. Consolidated comparable store sales increased 6.4% for the quarter compared to a 1.3% increase for the like period last year.

The Chico's/Soma Intimates brands' comparable store sales increased 4.3% compared to a 0.4% increase for the like period last year, and the White House | Black Market brand's comparable store sales increased 11.2% compared to a 3.7% increase for the same period last year. Direct-to-consumer sales, not included in comparable store sales, increased approximately 36%, to $27.6 million for the 2010 second quarter over last year's second quarter.

Gross Margin
Gross margin for the quarter increased 12.2% to $259.2 million from $231.0 million in last year's second quarter. Gross margin, expressed as a percentage of net sales, increased 70 basis points to 55.7% from 55.0% in the last year's second quarter. The gross margin rate improvement was primarily attributable to higher margins for the WH|BM brand and continued gross margin improvement at Chico's outlet stores resulting from increased penetration of made-for-outlet product. These improvements were partially offset by decreased merchandise margins at Chico's front-line stores primarily due to higher markdowns in the month of July.

Selling, General and Administrative Expenses
Selling, general and administrative expenses for the quarter increased to $211.8 million from $207.0 million in last year's second quarter. SG&A dollars increased primarily due to higher store and direct operating costs associated with approximately 50 net new stores opened since last year's second quarter and the planned increase in marketing expenses.

As a percentage of net sales, SG&A forthe quarter decreased 380 basis points compared to last year's second quarter. Excluding the impairment charges recognized in the second quarter of last year, the SG&A rate improved 260 basis points as a percentage of net sales due primarily to the leverage resulting from the comparable store sales increase.

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