Chico's FAS Q1'Fy14 Net Sales Were a Record $681.6 Million

For the thirteen weeks ended May 3, 2014 (the first quarter), the Company reported net income of $39.9 million compared to adjusted net income of $51.7 million for the thirteen weeks ended May 4, 2013, and first quarter 2014 earnings per diluted share of $0.26 compared to adjusted earnings per diluted share of $0.32 in last year's first quarter.

The adjusted first quarter fiscal 2013 results exclude the impact of non-recurring acquisition and integration costs, as presented in the accompanying GAAP to non-GAAP reconciliation. Including the first quarter 2013 impact of non-recurring acquisition and integration costs of $0.6 million after tax, or $0.01 per diluted share, the Company reported first quarter fiscal 2013 net income of $51.1 million, or $0.31 per diluted share.

Net Sales
For the first quarter, net sales were a record $681.6 million, an increase of 1.6% compared to $670.7 million in last year's first quarter, primarily reflecting 99 net new stores for a square footage increase of 6.9%, offset by a decrease in comparable sales. Comparable sales for the first quarter decreased 2.6% following flat comparable sales in last year's first quarter, reflecting lower average dollar sale as a result of the impact of a highly promotional environment in response to lower traffic due in part to inclement weather.

For the first quarter, the Chico's/Soma Intimates brands' comparable sales increased 0.4% following a 2.8% decrease in last year's first quarter. The Chico's brand experienced a decrease of less than 1% in comparable sales in the first quarter compared to a mid-single digit decrease in last year's first quarter, and the Soma Intimates brand experienced a high-single digit comparable sales increase in the first quarter compared to a mid-single digit increase in last year's first quarter. The White House | Black Market brand's comparable sales decreased 8.6% following a 6.4% increase in last year's first quarter.

Gross Margin
For the first quarter, gross margin was $382.9 million compared to $386.8 million in last year's first quarter. Gross margin was 56.2% of net sales, a 150 basis point decrease from last year's first quarter, primarily reflecting increased promotional activity in response to lower traffic, partially offset by lower incentive compensation as a percent of net sales.

Selling, General and Administrative Expenses
For the first quarter, selling, general and administrative expenses ("SG&A") were $319.0 million compared to $304.9 million in last year's first quarter. SG&A was 46.8% of net sales, a 130 basis point increase from last year's first quarter, primarily reflecting sales deleverage of store expenses and the impact of approximately $4 million in investment spending on strategic initiatives, partially offset by lower incentive compensation as a percent of net sales.