Chico’s FAS, Inc. Reports Better-than-Expected First Quarter Results

Chico’s FAS, Inc. (NYSE: CHS) (the “Company” or “Chico’s FAS”) today announced its financial results for the thirteen weeks ended April 30, 2022 (the “first quarter”). The Company also provided fiscal 2022 second quarter outlook and raised its full year outlook.

Molly Langenstein, Chico’s FAS Chief Executive Officer and President, commented, “Fiscal 2022 is off to a great start as reflected by a strong first quarter sales beat driven by continued digital and store growth, meaningful gross margin rate expansion and substantially better than anticipated operating income. We continue to leverage our proven business model and execute against our strategic pillars and we are seeing the benefits in our results.

“Customers continued to respond enthusiastically to product innovation and our myriad of product solutions across Chico’s®, White House Black Market® and Soma®. Apparel was the standout for the first quarter, as evidenced by 65% year-over-year comparable sales growth at White House Black Market and 52% year-over-year comparable sales growth at Chico’s. Soma posted its highest first quarter sales in the brand’s history with a nearly 38% comparable sales increase over the first quarter of 2019. Across all three brands, we achieved higher average unit retail, better productivity and more full-priced sales than last year’s first quarter.”

“Our results and continued momentum demonstrate that our strategy is working,” concluded Langenstein. “We are a customer-led, product-obsessed, digital-first, operationally-excellentcompany with three powerful brands and tremendous market share opportunities. After achieving a successful turnaround, our team is now focused on delivering our three-year growth plan, and we are pleased with the great progress underway.”

For the first quarter, net sales were $540.9 million compared to $388.0 million in last year’s first quarter. This 39.4% improvement primarily reflects a comparable sales increase of 40.6%, partially offset by 29 permanent store closures since last year’s first quarter. The 40.6% comparable sales improvement was driven by an increase in transaction count and higher average dollar sale.

For the first quarter, gross margin was $216.6 million, or 40.0% of net sales, compared to $126.8 million, or 32.7% of net sales, in last year’s first quarter. The 730-basis point improvement in gross margin rate primarily reflects higher average unit retail and full price sales combined with occupancy leverage that offset elevated raw material and freight costs.

At the end of the first quarter, inventories totaled $325.6 million compared to $209.7 million at the end of last year’s first quarter. The $115.9 million, or 55.3%, increase from last year’s first quarter primarily reflects elevated on-hand inventories to align with higher consumer demand, an increase in in-transit inventories due to extended in-transit times in the global supply chain, strategic investments in basics and replenishment inventories, and higher average unit costs.
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