10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended: July 31, 2010 Commission File Number: 001-16435

Chico’s FAS, Inc.

(Exact name of registrant as specified in charter)

Florida	59-2389435
(State of Incorporation)	(I.R.S. Employer Identification No.)

11215 Metro Parkway, Fort Myers, Florida 33966
(Address of principal executive offices)

239-277-6200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer, accelerated filer and smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

At August 20, 2010, there were 179,173,044 shares outstanding of Common Stock, $.01 par value per share.

Chico’s FAS, Inc. and Subsidiaries

Index

PART I – Financial Information
Item 1. Financial Statements:
Consolidated Statements of Income for the Twenty-Six and Thirteen Weeks Ended July 31, 2010 and August 1, 2009 (Unaudited)	3
Consolidated Balance Sheets – July 31, 2010 (Unaudited), January 30, 2010 and August 1, 2009 (Unaudited)	4
Consolidated Statements of Cash Flows for the Twenty-Six Weeks Ended July 31, 2010 and August 1, 2009 (Unaudited)	5
Notes to Consolidated Financial Statements (Unaudited)	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	24
Item 4. Controls and Procedures	25
PART II – Other Information
Item 1. Legal Proceedings	26
Item 1A. Risk Factors	26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 6. Exhibits	27
Signatures	28
EX-10.1
EX-10.2
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

2

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Chico’s FAS, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)

	Twenty-Six Weeks Ended								Thirteen Weeks Ended
	July 31, 2010				August 1, 2009				July 31, 2010				August 1, 2009
			% of				% of				% of					% of
	Amount		Sales		Amount		Sales		Amount		Sales		Amount			Sales
Net Sales:
Chico’s/Soma Intimates	$	656,360		69.3	$	582,524		70.1	$	319,660		68.7	$	294,602			70.2
White House | Black Market		290,599		30.7		248,033		29.9		145,711		31.3		125,313			29.8
Net sales		946,959		100.0		830,557		100.0		465,371		100.0		419,915			100.0
Cost of goods sold		406,173		42.9		366,128		44.1		206,164		44.3		188,874			45.0
Gross margin		540,786		57.1		464,429		55.9		259,207		55.7		231,041			55.0
Selling, general and administrative expenses:
Store and direct operating expenses		332,679		35.1		317,375		38.2		164,853		35.4		157,180			37.4
Marketing		47,091		5.0		34,002		4.1		18,011		3.9		16,168			3.9
National Store Support Center		57,782		6.1		54,235		6.5		28,982		6.2		28,701			6.8
Impairment charges		822		0.1		13,026		1.6		—		—		4,968			1.2
Total selling, general and administrative expenses		438,374		46.3		418,638		50.4		211,846		45.5		207,017			49.3
Income from operations		102,412		10.8		45,791		5.5		47,361		10.2		24,024			5.7
Interest income (expense), net		844		0.1		1,003		0.1		394		0.0		(19	)		0.0
Income before income taxes		103,256		10.9		46,794		5.6		47,755		10.2		24,005			5.7
Income tax provision		37,400		3.9		17,400		2.1		17,300		3.7		9,100			2.2
Net income	$	65,856		7.0	$	29,394		3.5	$	30,455		6.5	$	14,905			3.5
Per share data:
Net income per common share-basic	$	0.37			$	0.17			$	0.17			$	0.08
Net income per common & common equivalent share-diluted	$	0.37			$	0.17			$	0.17			$	0.08
Weighted average common shares outstanding-basic		177,417				177,192				177,499				177,228
Weighted average common & common equivalent shares outstanding-diluted		178,807				178,021				178,774				178,566
Dividends declared per share	$	0.12				—			$	0.04				—

See Accompanying Notes.

3

Chico’s FAS, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands)

	July 31,			January 30,			August 1,
	2010			2010			2009
	(Unaudited)						(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	17,559		$	37,043		$	44,143
Marketable securities, at fair value		469,829			386,500			333,367
Receivables		7,483			3,922			6,110
Income tax receivable		657			312			1,156
Inventories		146,899			138,516			130,238
Prepaid expenses		27,018			24,023			26,088
Deferred taxes		9,823			9,664			15,555
Total Current Assets		679,268			599,980			556,657
Property and Equipment:
Land and land improvements		42,080			21,978			20,293
Building and building improvements		85,628			82,169			83,600
Equipment, furniture and fixtures		406,682			388,392			385,503
Leasehold improvements		418,585			412,834			416,003
Total Property and Equipment		952,975			905,373			905,399
Less accumulated depreciation and amortization		(425,498	)		(383,844	)		(367,151	)
Property and Equipment, Net		527,477			521,529			538,248
Other Assets:
Goodwill		96,774			96,774			96,774
Other intangible assets		38,930			38,930			38,930
Deferred taxes		39,597			36,321			38,261
Other assets, net		4,940			25,269			27,131
Total Other Assets		180,241			197,294			201,096
	$	1,386,986		$	1,318,803		$	1,296,001
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	101,584		$	79,219		$	82,827
Accrued liabilities		93,603			95,862			108,719
Current portion of deferred liabilities		19,681			19,625			19,160
Total Current Liabilities		214,868			194,706			210,706
Noncurrent Liabilities:
Deferred liabilities		137,437			142,179			152,800
Stockholders’ Equity:
Preferred stock		—			—			—
Common stock		1,789			1,781			1,774
Additional paid-in capital		276,000			268,109			259,331
Retained earnings		756,043			711,624			671,372
Other accumulated comprehensive income		849			404			18
Total Stockholders’ Equity		1,034,681			981,918			932,495
	$	1,386,986		$	1,318,803		$	1,296,001

See Accompanying Notes.

4

Chico’s FAS, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Twenty-Six Weeks Ended
	July 31,			August 1,
	2010			2009
Cash Flows from Operating Activities:
Net income	$	65,856		$	29,394
Adjustments to reconcile net income to net cash provided by operating activities — Depreciation and amortization		46,636			48,630
Deferred tax (benefit) expense		(3,628	)		2,501
Stock-based compensation expense		5,950			4,177
Excess tax benefit from stock-based compensation		(1,011	)		(115	)
Impairment charges		822			13,026
Deferred rent expense, net		(4,361	)		(5,787	)
Loss on disposal of property and equipment		992			711
(Increase) decrease in assets — Receivables, net		(3,578	)		2,048
Income tax receivable		(346	)		10,550
Inventories		(8,382	)		2,175
Prepaid expenses and other		(2,666	)		(4,416	)
Increase (decrease) in liabilities — Accounts payable		15,210			26,285
Accrued and other deferred liabilities		(1,574	)		15,183
Total adjustments		44,064			114,968
Net cash provided by operating activities		109,920			144,362
Cash Flows from Investing Activities:
Purchases of marketable securities		(82,884	)		(91,331	)
Purchases of property and equipment		(34,380	)		(36,235	)
Net cash used in investing activities		(117,264	)		(127,566	)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock		1,378			773
Excess tax benefit from stock-based compensation		1,011			115
Dividends paid		(14,282	)		—
Repurchase of common stock		(247	)		(90	)
Net cash (used in) provided by financing activities		(12,140	)		798
Net (decrease) increase in cash and cash equivalents		(19,484	)		17,594
Cash and Cash Equivalents, Beginning of period		37,043			26,549
Cash and Cash Equivalents, End of period	$	17,559		$	44,143
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	142		$	260
Cash paid for income taxes, net	$	39,368		$	5,924
Non-Cash Investing and Financing Activities:
Repossession of land in satisfaction of note receivable	$	20,000		$	—

See Accompanying Notes.

5

Chico’s FAS, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

July 31, 2010

(Unaudited)

(in thousands, except share and per share amounts)

Note 1. Basis of Presentation

     The accompanying unaudited consolidated financial statements of Chico’s FAS, Inc. and its wholly-owned subsidiaries (collectively, the “Company”) have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by accounting principles generally accepted in the U.S. (“U.S. GAAP”) for complete financial statements. In the opinion of management, such interim financial statements reflect all normal adjustments considered necessary to present fairly the financial position and the results of operations and cash flows for the interim periods presented. All significant intercompany balances and transactions have been eliminated in consolidation. For further information, refer to the consolidated financial statements and notes thereto for the fiscal year ended January 30, 2010, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 24, 2010. The January 30, 2010 balance sheet amounts were derived from audited financial statements included in the Company’s Annual Report.

     As used in this report, all references to “we,” “us,” “our,” and “the Company,” refer to Chico’s FAS, Inc. and all of its wholly-owned subsidiaries.

     Our fiscal years end on the Saturday closest to January 31 and are designated by the calendar year in which the fiscal year commences. Operating results for the thirteen and twenty-six weeks ended July 31, 2010 are not necessarily indicative of the results that may be expected for the entire year.

     Certain prior year amounts have been reclassified in order to conform to the current year presentation.

Note 2. Impairment Charges

     Long-Lived Assets

     During the first quarter of fiscal 2010 and the second quarter of fiscal 2009, we completed evaluations of long-lived assets at certain underperforming stores for indicators of impairment and, as a result, determined that the carrying values of certain assets exceeded their future undiscounted cash flows. We then determined the fair value of these assets by discounting their future cash flows using a rate approximating our cost of capital, which resulted in an impairment charge of approximately $0.8 million and $1.1 million in the first quarter of fiscal 2010 and second quarter of fiscal 2009, respectively.

     During the first quarter of fiscal 2009, we incurred non-cash impairment charges totaling approximately $8.1 million which are included in our consolidated statements of income within selling, general and administrative expenses. The impairments were related to the write-off of development costs for software applications that reflected our decision to deploy alternative inventory planning and allocation software.

6

Chico’s FAS, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
July 31, 2010
(Unaudited)
(in thousands, except share and per share amounts)

Note 2. Impairment Charges (continued)

     Note Receivable

     In fiscal 2007, we sold a parcel of land for $39.7 million consisting of approximately $13.4 million in cash proceeds, net of closing costs, and a note receivable with a principal amount of approximately $25.8 million due on August 1, 2009 which was secured by a purchase money mortgage. During the second quarter of fiscal 2009, we determined, based on an independent evaluation of the fair value of the underlying collateral and coupled with the debtor’s apparent inability to pay the note in full, that the loan was impaired. As a result, we recorded a non-cash impairment charge of approximately $3.8 million, which was determined based on the difference between the book value of the note and the independent evaluation of the fair value of the land. During the fourth quarter of fiscal 2009, based on an updated third-party valuation of the land, we determined that the fair value of the land had declined further and an additional $2.0 million impairment charge was necessary to adjust the note to its current fair value, less estimated costs to sell. Additionally, upon determining the note was impaired, we ceased recognizing any further interest income and also reversed year-to-date interest income of approximately $0.8 million. On May 4, 2010, we took possession of the land in satisfaction of the note receivable and classified the land within property, plant and equipment on our balance sheet.

Note 3. Restructuring Charges

     During the fourth quarter of fiscal 2008, in an effort to reduce costs and enhance efficiencies, we announced a workforce reduction that included the elimination of approximately 180 positions, or approximately 11% of the National Store Support Center (“NSSC”) employee base. In addition, we incurred charges related to the separation agreement with our former Chief Executive Officer. In connection with these actions, we recorded approximately $10.0 million of personnel separation costs within selling, general and administrative expenses on the income statement. The following table summarizes the severance and workforce reduction liability for each period as indicated (amounts in thousands):

	Twenty-Six Weeks Ended						Thirteen Weeks Ended
	July 31, 2010			August 1, 2009			July 31, 2010		August 1, 2009
Beginning balance	$	116		$	8,698		$	—	$	6,078
Payments	$	(116	)	$	(7,510	)	$	—	$	(4,890	)
Ending balance	$	—		$	1,188		$	—	$	1,188

Note 4. Income Taxes

     Our uncertain tax positions were $6.6 million and $6.9 million at July 31, 2010 and January 30, 2010, respectively. As of July 31, 2010, we do not believe that our estimates, as otherwise provided for, on such tax positions will significantly increase or decrease within the next twelve months. We are currently subject to income tax examinations by various states, but do not expect the resolution of the examinations will have a material impact on our financial position, results of operations, or liquidity.

     Our effective tax rate decreased for the current quarter to 36.2% compared to 37.9% in the second quarter of last year due primarily to favorable state audit settlements and state refund claims. In addition, our effective tax rate in the second quarter of last year was higher due to a true up of the estimated annual effective tax rate as calculated in accordance with U.S. GAAP.

7

Chico’s FAS, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
July 31, 2010
(Unaudited)
(in thousands, except share and per share amounts)

Note 4. Income Taxes (continued)

     Our effective tax rate for the twenty-six weeks ended July 31, 2010 is 36.2% compared to an effective tax rate of 37.2% for the twenty-six weeks ended August 1, 2009. Our effective tax rate was lower in the current twenty-six week period compared to last year due primarily to favorable state audit settlements, state refund claims and the restoration of a state tax receivable due to a favorable ruling.

Note 5. Stock-Based Compensation

General

     Stock-based compensation awards recognized during the thirteen and twenty-six weeks ended July 31, 2010 and August 1, 2009 consists of compensation expense for all share-based awards granted and is based on the grant date fair value estimated in accordance with the relevant accounting guidance.

     For the twenty-six weeks ended July 31, 2010 and August 1, 2009, stock-based compensation expense was $6.0 million and $4.2 million, respectively, and for the thirteen weeks ended July 31, 2010 and August 1, 2009, stock-based compensation was $3.1 million and $2.0 million, respectively. The total tax benefit associated with stock-based compensation for the twenty-six weeks ended July 31, 2010 and August 1, 2009 was $2.3 million and $1.6 million, respectively, and for the thirteen weeks ended July 31, 2010 and August 1, 2009, the total tax benefit associated with stock-based compensation was $1.2 million and $0.8 million, respectively. We recognize stock-based compensation costs net of a forfeiture rate for only those shares expected to vest and on a straight-line basis over the requisite service period of the award.

Methodology Assumptions

     We use the Black-Scholes option-pricing model to value our stock options. Using this option-pricing model, the fair value of each stock option award is estimated on the date of grant. The fair value of our stock option awards, which are subject to pro-rata vesting generally over 3 years, is expensed on a straight-line basis over the vesting period of the stock options. The expected volatility assumption inherent in the pricing model is based on the historical volatility of our stock over a term equal to the expected term of the option granted. The expected term of stock option awards granted is derived from historical exercise experience under our stock option plans and represents the period of time that stock option awards granted are expected to be outstanding.

     The expected term assumption incorporates the contractual term of an option grant, which is generally ten years, as well as the vesting period of an award, which is generally pro-rata vesting over 3 years. The risk-free interest rate is based on the implied yield on a U.S. Treasury constant maturity with a remaining term equal to the expected term of the option granted. The expected dividend yield is based on the expected annual dividend divided by the market price of our common stock at the time of declaration.

8

Chico’s FAS, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
July 31, 2010
(Unaudited)
(in thousands, except share and per share amounts)

Note 5. Stock-Based Compensation (continued)

     The weighted average assumptions relating to the valuation of our stock options for the twenty-six and thirteen weeks ended July 31, 2010 and August 1, 2009 were as follows:

	Twenty-Six Weeks Ended						Thirteen Weeks Ended
	July 31, 2010			August 1, 2009			July 31, 2010			August 1, 2009
Weighted average fair value of grants	$	6.89		$	2.15		$	5.91		$	4.98
Expected volatility		66	%		62	%		66	%		65	%
Expected term (years)		4.5			4.5			4.5			4.5
Risk-free interest rate		2.1	%		1.8	%		1.8	%		2.2	%
Expected dividend yield		1.0	%		N/A			1.3	%		N/A

Performance-based Awards

     In fiscal 2009, we granted David F. Dyer, our President and Chief Executive Officer, a performance award under which he was eligible to receive up to 133,333 shares, contingent upon the achievement of certain Company-specific performance goals in fiscal 2009. At the time of the grant, 100,000 shares, which represented the targeted number of shares under the grant, were issued to Mr. Dyer as restricted shares. The grant provided for vesting of all performance shares issued (whether issued at the time of grant or as additional shares earned at the end of the performance measurement period) three years from the date of grant. After the end of fiscal 2009, our Board’s Compensation and Benefits Committee determined that the Company had achieved the performance goals and that Mr. Dyer earned 133,333 shares. Accordingly, in the first quarter of fiscal 2010, we issued Mr. Dyer 33,333 restricted shares, which were in addition to the 100,000 restricted shares issued to him at the time of the fiscal 2009 grant. We account for the award by recording compensation expense, based on the 133,333 shares earned, on a straight-line basis over the 3-year service period.

     In the first quarter of fiscal 2010, a new performance-based stock award was granted to Mr. Dyer. Similar to the 2009 grant, under this performance award, Mr. Dyer is eligible to receive up to 133,333 shares, contingent upon the achievement of certain Company-specific performance goals during fiscal 2010. At the time of the grant, 100,000 shares, which represented the targeted number of shares under the grant, were issued to Mr. Dyer as restricted shares. Any shares earned as a result of the achievement of such goals (whether issued at the time of grant or as additional shares earned at the end of the performance measurement period) will vest two years from the date of grant. We are recording compensation expense, based on the number of shares ultimately expected to vest, recognized on a straight-line basis over the 2-year service period. Additionally, we reevaluate the amount of compensation expected to be earned at the end of each reporting period and record an adjustment, if necessary.

     Also, in the first quarter of fiscal 2010, certain of our executive officers were granted Performance Stock Units (“PSU”). Each PSU award has the ability to be converted into shares on the second anniversary of the grant date upon the achievement of certain Company-specific performance goals for fiscal 2011. Based on the level of achievement of the performance goals, the participants in this award may earn up to 100% of the units awarded. Similar to the performance awards granted to Mr. Dyer, compensation cost is recognized on a straight-line basis over the vesting period, based on the number of shares ultimately expected to vest and depending on the level and likelihood of the performance condition being met. Additionally, we reevaluate the amount of compensation expected to be earned at the end of each reporting period and record an adjustment, if necessary.

9

Chico’s FAS, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
July 31, 2010
(Unaudited)
(in thousands, except share and per share amounts)

Note 5. Stock-Based Compensation (continued)

Stock-Based Compensation Activity

     As of July 31, 2010, 6,854,491 nonqualified options are outstanding at a weighted average exercise price of $13.02 per share. The following table presents a summary of our stock options activity for the twenty-six weeks ended July 31, 2010:

				Weighted Average
	Number of Shares			Exercise Price
Outstanding, beginning of period		6,288,358		$	12.54
Granted		1,042,800			13.69
Exercised		(224,816	)		4.55
Canceled or expired		(251,851	)		11.26
Outstanding, end of period		6,854,491			13.02
Exercisable at July 31, 2010		3,758,509			17.26

     The following table presents a summary of our restricted stock activity for the twenty-six weeks ended July 31, 2010:

				Weighted Average
				Grant Date Fair
	Number of Shares			Value
Nonvested, beginning of period		816,677		$	6.76
Granted		414,169			13.19
Vested		(173,057	)		9.78
Canceled		(86,749	)		10.02
Nonvested, end of period		971,040			8.67

     Approximately 7.3 million shares remain available under our Omnibus Stock and Incentive Plan for future grants of either stock options, restricted stock or restricted stock units, stock appreciation rights (“SARs”) or performance shares.

Note 6. Net Income Per Share

     In June 2008, accounting guidance was issued related to share-based awards that qualify as participating securities. In accordance with this guidance, unvested share-based payment awards that include non-forfeitable rights to dividends, whether paid or unpaid, are considered participating securities. As a result, such awards are required to be included in the calculation of basic earnings per common share pursuant to the “two-class” method. For us, participating securities are generally comprised of unvested restricted stock awards.

     Basic EPS is determined using the two-class method and is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the dilutive effect of potential common shares from securities such as stock options.

10

Chico’s FAS, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
July 31, 2010
(Unaudited)
(in thousands, except share and per share amounts)

Note 6. Net Income Per Share (continued)

     The following table sets forth the computation of basic and diluted EPS shown on the face of the accompanying consolidated statements of income:

	Twenty-Six Weeks Ended					Thirteen Weeks Ended
	July 31, 2010			August 1, 2009		July 31, 2010			August 1, 2009
Numerator
Net income	$	65,856		$	29,394	$	30,455		$	14,905
Net income allocated to participating securities		(440	)		—		(216	)		—
Net income available to common shareholders	$	65,416		$	29,394	$	30,239		$	14,905
Denominator
Weighted average common shares outstanding — basic		177,417,471			177,191,711		177,499,286			177,227,833
Dilutive effect of stock options outstanding		1,389,066			829,169		1,275,130			1,337,891
Weighted average common and common equivalent shares outstanding — diluted		178,806,537			178,020,880		178,774,416			178,565,724
Net income per common share:
Basic	$	0.37		$	0.17	$	0.17		$	0.08
Diluted	$	0.37		$	0.17	$	0.17		$	0.08

     For the thirteen weeks ended July 31, 2010 and August 1, 2009, 3,445,097 and 2,981,593 potential shares of common stock, respectively, were excluded from the computation of diluted EPS relating to stock option awards because the effect of including these potential shares would have been anti-dilutive.

     For the twenty-six weeks ended July 31, 2010 and August 1, 2009, 3,306,313 and 4,837,712 potential shares of common stock, respectively, were excluded from the computation of diluted EPS relating to stock option awards because the effect of including these potential shares would have been anti-dilutive.

Note 7. Fair Value Measurements

     Our financial instruments consist of cash and cash equivalents, marketable securities, trade receivables and payables. The carrying values of cash and cash equivalents, marketable securities, trade receivables and trade payables approximate current fair value due to the short-term nature of the instruments.

     Marketable securities are classified as available-for-sale and consist of variable rate demand notes, which are considered highly liquid, variable rate municipal debt securities, municipal bonds, asset-backed securities, corporate bonds and U.S. treasury securities. Although the variable rate demand notes, totaling $230.7 million as of July 31, 2010, have long-term nominal maturity dates ranging from 2011 to 2049, the interest rates generally reset weekly. Despite the long-term nature of the underlying securities of the variable rate demand notes, we believe we have the ability to quickly liquidate or put back these securities. The remainder of the portfolio, as of July 31, 2010, consisted of $115.0 million of securities with maturity dates less than one year and $124.1 million with maturity dates over one year and less than or equal to three years.

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Chico’s FAS, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
July 31, 2010
(Unaudited)
(in thousands, except share and per share amounts)

Note 7. Fair Value Measurements (continued)

     We consider all available-for-sale securities, including those with maturity dates beyond 12 months, as available to support current operational liquidity needs and therefore classify these securities as short-term investments within current assets on the consolidated balance sheets. Marketable securities are carried at market value, with the unrealized holding gains and losses, net of income taxes, reflected as a separate component of stockholders’ equity until realized. For the purposes of computing realized and unrealized gains and losses, cost is determined on a specific identification basis.

     Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Entities are required to use a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

     The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:

Level 1 —	Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2 —	Unadjusted quoted prices in active markets for similar assets or liabilities, or; Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or; Inputs other than quoted prices that are observable for the asset or liability
Level 3 —	Unobservable inputs for the asset or liability.

     We measure certain financial assets at fair value on a recurring basis, including our marketable securities, which are classified as available-for-sale securities, certain cash equivalents, specifically our money market accounts, and assets held in our non-qualified deferred compensation plan. The money market funds are valued based on quoted market prices in active markets. Our marketable securities are generally valued based on other observable inputs for those securities (including market corroborated pricing or other models that utilize observable inputs such as yield curves) except for U.S. treasury holdings which are valued based on quoted market prices in active markets. The investments in our non-qualified deferred compensation plan are valued using quoted market prices and are included in other assets on our consolidated balance sheets.

     From time to time, we measure certain assets at fair value on a non-recurring basis, specifically long-lived assets evaluated for impairment and previously, our note receivable. We estimate the fair value of our long-lived assets using company-specific assumptions which would fall within Level 3 of the fair value hierarchy. In prior periods, the note receivable’s value was based on the value of the underlying real estate collateral as determined by an independent third party using observable market data, which resulted in a Level 2 classification. During the second quarter of 2010, the underlying real estate collateral was repossessed by us in full satisfaction of the note receivable.

     New guidance on financial instruments measured at fair value requires additional disclosures regarding significant transfers into and out of Level 1 and Level 2 as well as more detailed discussions regarding Level 3 activity. We conduct reviews on a quarterly basis to verify pricing, assess liquidity, and determine if significant inputs have changed that would impact the fair value hierarchy disclosure. During fiscal 2010, we did not make significant transfers between Level 1 and Level 2 assets. Furthermore, as of July 31, 2010, January 30, 2010 and August 1, 2009, we did not have any Level 3 financial assets.

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Chico’s FAS, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
July 31, 2010
(Unaudited)
(in thousands, except share and per share amounts)

Note 7. Fair Value Measurements (continued)

     In accordance with the provisions of the guidance, we categorized our financial assets, whether valued on a recurring or non-recurring basis, based on the priority of the inputs to the valuation technique for the instruments, as follows (amounts in thousands):

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in
			Active Markets for		Significant Other		Significant
	Balance as of July		Identical Assets		Observable Inputs		Unobservable Inputs
	31, 2010		(Level 1)		(Level 2)		(Level 3)
Current Assets
Cash equivalents:
Money market account	$	1,467	$	1,467	$	—	$	—
Marketable securities:
Variable rate demand notes		230,728		—		230,728		—
Municipal securities		158,557		—		158,557		—
U.S. government securities		59,130		59,130		—		—
Corporate bonds		12,453		—		12,453		—
Asset-backed securities		8,961		—		8,961		—
Non Current Assets
Deferred compensation plan		3,815		3,815		—		—
Total	$	475,111	$	64,412	$	410,699	$	—
			Quoted Prices in
			Active Markets for		Significant Other		Significant
	Balance as of		Identical Assets		Observable Inputs		Unobservable Inputs
	January 30, 2010		(Level 1)		(Level 2)		(Level 3)
Current Assets
Cash equivalents:
Money market account	$	8,256	$	8,256	$	—	$	—
Marketable securities:
Variable rate demand notes		207,895		—		207,895		—
Municipal securities		111,153		—		111,153		—
U.S. government securities		33,383		33,383		—		—
Corporate bonds		12,826		—		12,826		—
Asset-backed securities		21,243		—		21,243		—
Non Current Assets
Note receivable		20,000		—		20,000		—
Deferred compensation plan		4,050		4,050		—		—
Total	$	418,806	$	45,689	$	373,117	$	—
			Quoted Prices in
			Active Markets for		Significant Other		Significant
	Balance as of		Identical Assets		Observable Inputs		Unobservable Inputs
	August 1, 2009		(Level 1)		(Level 2)		(Level 3)
Current Assets
Cash equivalents:
Money market account	$	5,024	$	5,024	$	—	$	—
Marketable securities:
Variable rate demand notes		308,457		—		308,457		—
Municipal securities		8,021		—		8,021		—
U.S. government securities		10,390		10,390		—		—
Asset-backed securities		6,499		—		6,499		—
Non Current Assets
Note receivable		22,000				22,000
Deferred compensation plan		3,798		3,798		—		—
Total	$	364,189	$	19,212	$	344,977	$	—

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the accompanying unaudited consolidated financial statements and notes thereto and our 2009 Annual Report to Stockholders.

Executive Overview

     We are a specialty retailer of private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing gift items operating under the Chico’s, White House | Black Market (“WH|BM”), and Soma Intimates (“Soma”) brand names. We earn revenues and generate cash through the sale of merchandise in our retail stores, on our various websites and through our call centers, which take orders for all of our brands.

     For fiscal 2010, we continue to focus on the initiatives that contributed to our success last year. These initiatives include: 1) rebuilding the Chico’s business into a high performance brand, 2) growing the WH|BM and Soma brands, 3) accelerating direct-to-consumer (“DTC”) sales growth, 4) improving our cost structure and inventory control, and 5) achieving a level of profitability in fiscal 2011 comparable to what we achieved in fiscal 2005, previously our highest earnings year.

     Our financial results in the second quarter of 2010 represent a significant improvement over last year’s second quarter as we remain focused on our key initiatives. Earnings per diluted share increased to $0.17 per diluted share in this year’s second quarter from $.08 per diluted share in last year’s second quarter.

     The Chico’s brand experienced improvement in its financial performance quarter over quarter, although this improvement was tempered somewhat by decelerating sales in July. The quarter’s improvement was achieved by continuing to provide our customers with amazing customer service and to focus on expanding its made-for-outlet product offerings.

     In the second quarter, the WH|BM brand posted its highest quarterly sales total in the brand’s history. We believe the WH|BM brand is positioned for continued growth and we remain focused on expanding this brand through enhanced product offerings and new store openings.

Financial Highlights for the Second Quarter of 2010

• Net sales for the thirteen-week period ended July 31, 2010 (“current period”) increased 10.8% to $465.4 million compared to $419.9 million for the thirteen-week period ended August 1, 2009 (“prior period”), driven by a consolidated comparable store sales increase of 6.4% compared to an increase of 1.3% in the prior period and a 36.0% increase in DTC sales in the current period to $27.6 million.

• The gross margin rate increased to 55.7% from 55.0% in the prior period, and operating income was $47.4 million compared to operating income in the prior period of $24.0 million.

• Selling, general and administrative expenses for the current period, as a percentage of total net sales, improved 380 basis points compared to last year’s second quarter mainly due to the leverage associated with the comparable store sales increase.

• Net income in the current period was $30.5 million compared to net income of $14.9 million in the prior period, and earnings per diluted share increased to $0.17 compared to $0.08 in the prior period. Net income for the prior period included $3.1 million, net of tax, non-cash impairment charges.

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• Cash and marketable securities at the end of the quarter were $487.4 million, an increase of $109.9 million over last year’s second quarter, after considering we paid $14.3 million of dividends so far this year.

• Our Board of Directors has authorized the repurchase of up to $200 million of our outstanding common stock through the end of fiscal 2012. Repurchases under the program will be made in open market or privately negotiated transactions in compliance SEC Rule 10b-18. We intend to fund the repurchase program from cash on hand and retire any shares repurchased.

Future Outlook

     Although the current environment makes it difficult to predict future results with any degree of certainty, we are currently forecasting a single digit increase in comparable store sales for the remainder of fiscal 2010. We also expect an increase in selling, general and administrative expenses in dollars as we plan to open 35 stores in the second half of the year as well as incur higher marketing costs in the range of $8-$10 million over the second half of last year.

Results of Operations – Thirteen Weeks Ended July 31, 2010 Compared to the Thirteen Weeks Ended August 1, 2009.

     Net Sales

     The following table depicts net sales for the Chico’s/Soma and WH|BM brands in dollars and as a percentage of total net sales for the thirteen weeks ended July 31, 2010 and August 1, 2009 (dollar amounts in thousands):

	Thirteen Weeks Ended
	July 31, 2010				August 1, 2009
Net Sales:
Chico’s/Soma Intimates	$	319,660	68.7	%	$	294,602	70.2	%
White House | Black Market		145,711	31.3			125,313	29.8
Total net sales	$	465,371	100.0	%	$	419,915	100.0	%

     Net sales by the Chico’s, WH|BM and Soma brands increased from the prior period primarily due to positive comparable store sales, new store openings, as well as increases in DTC sales for all brands. DTC sales are not included in comparable store sales. A summary of the factors impacting quarter-over-quarter sales increases is provided in the table below (dollar amounts in thousands):

	Thirteen Weeks Ended
	July 31, 2010			August 1, 2009
Comparable store sales increases	$	25,017		$	5,236
Comparable store sales %		6.4	%		1.3	%
New stores sales increase, net	$	13,136		$	3,045
Direct-to-consumer sales increases	$	7,303		$	6,416

     The consolidated comparable store sales increase of 6.4% in the current period was driven by an approximate 7% increase in transactions at Chico’s front-line stores, offset by a decrease in units per transaction. Comparable store sales results also benefited from an approximate 7% increase in transactions at WH|BM front-line stores together with a 4% increase in units per transaction compared to the prior period. The Chico’s/Soma brands’ comparable store sales increased by 4.3% and the WH|BM brand’s comparable store sales increased by 11.2% compared to the prior period.

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     Net sales for the DTC channel in the current period, which are included in each brand’s total net sales, increased by $7.3 million, or 36.0%, compared to net sales for the DTC channel in the prior period. All three brands generated increases above 30% for the quarter which we believe are attributable to enhanced website functionality and improved online product offerings.

     Cost of Goods Sold/Gross Margin

     The following table depicts cost of goods sold and gross margin in dollars and the related gross margin percentages for the thirteen weeks ended July 31, 2010 and August 1, 2009 (dollar amounts in thousands):

	Thirteen Weeks Ended
	July 31, 2010			August 1, 2009
Cost of goods sold	$	206,164		$	188,874
Gross margin	$	259,207		$	231,041
Gross margin percentage		55.7	%		55.0	%

     Gross margin as a percentage of net sales for the current quarter improved to 55.7% compared to 55.0% in the second quarter of fiscal 2009. The improvement in gross margin percentage is primarily due 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

     The following tables depict store and direct operating expenses, marketing, and National Store Support Center expenses in dollars and as a percentage of total net sales for the thirteen weeks ended July 31, 2010 and August 1, 2009 (dollar amounts in thousands):

	Thirteen Weeks Ended
	July 31, 2010			August 1, 2009
Store and direct operating expenses	$	164,853		$	157,180
Percentage of total net sales		35.4	%		37.4	%

     Store and direct operating expenses include store and DTC operational expenses, and reflect such items as personnel, occupancy, credit card fees, depreciation and supplies incurred to operate each of our stores and the DTC channel. In addition, store and direct operating expenses include support expenditures for district and regional management and other store support functions. Store and direct operating expenses increased in dollars in the current period primarily due to increased occupancy expense, store labor costs, and higher credit card fees associated with approximately 50 net new opened stores over last year and higher sales volume versus last year. Expressed as a percentage of net sales, store and direct operating expenses decreased by 200 basis points primarily due to leverage from a greater comparable store sale increase.

	Thirteen Weeks Ended
	July 31, 2010			August 1, 2009
Marketing	$	18,011		$	16,168
Percentage of total net sales		3.9	%		3.9	%

     Marketing expenses include marketing programs such as direct marketing efforts, national advertising expenses via various media and related support costs. Marketing expenses increased in dollars due to increased spending on television, online and print media campaigns; but when expressed as a percentage of net sales, marketing expenses were flat in the current period over the prior period due mainly to leverage from our greater comparable store sales increase.

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	Thirteen Weeks Ended
	July 31, 2010			August 1, 2009
National Store Support Center	$	28,982		$	28,701
Percentage of total net sales		6.2	%		6.8	%

     National Store Support Center (“NSSC”) expenses consist of the corporate level functions including executive management, human resources, management information systems and finance, among others. In dollars, NSSC expenses increased only slightly over the prior period. Expressed as a percentage of net sales, NSSC expenses decreased in the second quarter by approximately 60 basis points, primarily due to the leverage associated with improved comparable store sales.

     Impairment Charges

     The following table depicts impairment charges in dollars and as a percentage of total net sales for the thirteen weeks ended July 31, 2010 and August 1, 2009 (dollar amounts in thousands):

	Thirteen Weeks Ended
	July 31, 2010			August 1, 2009
Impairment charges	$	0		$	4,968
Percentage of total net sales		0.0	%		1.2	%

     The non-cash impairment charges recognized in the second quarter of fiscal 2009 totaled $5.0 million, or $3.1 million net of tax, and were related to the partial write-off of a note receivable which was determined to be impaired and the write-off of fixed assets at certain underperforming stores. No impairment charges were recorded in the second quarter of fiscal 2010.

     Provision for Income Taxes

     Our effective tax rate decreased for the current period to 36.2% compared to 37.9% in the prior period due primarily to favorable state audit settlements and state refund claims. In addition, our effective tax rate in the prior period was higher due to a true up of the estimated annual effective tax rate as calculated in accordance with generally accepted accounting principles.

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Results of Operations – Twenty-Six Weeks Ended July 31, 2010 Compared to the Twenty-Six Weeks Ended August 1, 2009.

     Net Sales

     The following table depicts net sales for the Chico’s/Soma and WH|BM brands in dollars and as a percentage of total net sales for the year-to-date period ended July 31, 2010 and August 1, 2009 (dollar amounts in thousands):

	Twenty-Six Weeks Ended
	July 31, 2010				August 1, 2009
Net Sales:
Chico’s/Soma Intimates	$	656,361	69.3	%	$	582,524	70.1	%
White House | Black Market		290,598	30.7			248,033	29.9
Total net sales	$	946,959	100.0	%	$	830,557	100.0	%

     Net sales by the Chico’s, WH|BM and Soma brands for the year-to-date period ended July 31, 2010 increased from the prior year’s comparable period primarily due to positive comparable store sales, new store openings, as well as increases in DTC sales for all brands. DTC sales are not included in comparable store sales. A summary of the factors impacting period-over-period sales increases is provided in the table below (dollar amounts in thousands):

	Twenty-Six Weeks Ended
	July 31, 2010			August 1, 2009
Comparable store sales increases (decreases)	$	82,953		$	(7,170	)
Comparable store sales %		10.6	%		(0.9	)%
New stores sales increase, net	$	19,252		$	10,579
Direct-to-consumer sales increases	$	14,197		$	12,365

     The consolidated comparable store sales increase of 10.6% in the year-to-date period was driven by an approximate 13% increase in transactions at Chico’s front-line stores, offset by a decrease in units per transaction. Comparable store sales results also benefited from an approximate 9% increase in transactions at the WH|BM brand coupled with an approximate 4% increase in units per transaction in the year-to-date period from the prior year’s comparable period. The Chico’s/Soma brands’ comparable store sales increased by 9.5% and the WH|BM brand’s comparable store sales increased by 13.3% for the year-to-date period compared to the prior period.

     Net sales for the DTC channel for the year-to-date period, which are included in each brand’s total net sales, increased by $14.2 million, or 33.6%, compared to net sales for the DTC channel in the prior year’s comparable period. This increase is primarily attributable to an approximate 37% increase for the Chico’s brand as well as similar increases in DTC sales for the WH|BM and Soma brands. We believe the increased sales from our DTC channel are due to our continued focus on this previously underinvested channel including enhanced website functionality and improved online product offerings.

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     Cost of Goods Sold/Gross Margin

     The following table depicts cost of goods sold and gross margin in dollars and the related gross margin percentages for the twenty-six weeks ended July 31, 2010 and August 1, 2009 (dollar amounts in thousands):

	Twenty-Six Weeks Ended
	July 31, 2010			August 1, 2009
Cost of goods sold	$	406,173		$	366,128
Gross margin	$	540,786		$	464,429
Gross margin percentage		57.1	%		55.9	%

     Gross margin as a percentage of sales for the year-to-date period improved to 57.1% compared to 55.9% for the comparable period last year. The improvement in gross margin percentage is primarily attributable to improved merchandise margins at WH|BM stores and an improvement in merchandise margins at the Chico’s outlet stores due to increased penetration of made-for-outlet product.

     Selling, General and Administrative Expenses

     The following tables depict store and direct operating expenses, marketing, and National Store Support Center expenses in dollars and as a percentage of total net sales for the twenty-six weeks ended July 31, 2010 and August 1, 2009 (dollar amounts in thousands):

	Twenty-Six Weeks Ended
	July 31, 2010			August 1, 2009
Store and direct operating expenses	$	332,679		$	317,375
Percentage of total net sales		35.1	%		38.2	%

     Store and direct operating expenses include store and DTC operational expenses, and reflect such items as personnel, occupancy, credit card fees, depreciation and supplies incurred to operate each of our stores and the DTC channel. In addition, store and direct operating expenses include support expenditures for district and regional management and other store support functions. Store and direct operating expenses increased in dollars for the year-to-date period primarily due to (i) increases in store personnel costs associated with higher sales, (ii) costs associated with approximately 50 net new store openings over last year and (iii) higher credit card fees associated with the increase in sales compared to the prior year-to-date period. Expressed as a percentage of net sales, store and direct operating expenses decreased by 310 basis points primarily due to the leverage from improved comparable store sales.

	Twenty-Six Weeks Ended
	July 31, 2010			August 1, 2009
Marketing	$	47,091		$	34,002
Percentage of total net sales		5.0	%		4.1	%

     Marketing expenses include marketing programs such as direct marketing efforts, national advertising expenses via various media and related support costs. Expressed as a percentage of net sales, marketing expenses increased by approximately 90 basis points in the year-to-date period over the prior year’s comparable period due mainly to planned increases related to television, online and print media campaigns.

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	Twenty-Six Weeks Ended
	July 31, 2010			August 1, 2009
National Store Support Center	$	57,782			$	54,235
Percentage of total net sales		6.1	%			6.5	%

     National Store Support Center (“NSSC”) expenses consist of the corporate level functions including executive management, human resources, management information systems and finance, among others. NSSC expenses increased in the current year-to-date period mainly due to increased recruiting and technology costs. Expressed as a percentage of net sales, NSSC expenses decreased in the year-to-date period by approximately 40 basis points, primarily due to the leverage associated with improved comparable store sales.

     Impairment Charges

     The following table depicts impairment charges in dollars and as a percentage of total net sales for the twenty-six weeks ended July 31, 2010 and August 1, 2009 (dollar amounts in thousands):

	Twenty-Six Weeks Ended
	July 31, 2010			August 1, 2009
Impairment charges	$	822		$	13,026
Percentage of total net sales		0.1	%		1.6	%

     The non-cash impairment charges recognized in the first twenty-six weeks of fiscal 2010 related to the write-off of fixed assets at certain underperforming stores.

     The impairment charges recognized in the twenty-six weeks of fiscal 2009 include the following: 1) the write-off of development costs for software applications totaling $8.1 million; 2) the partial write-off of a note receivable totaling $3.8 million; and 3) $1.1 million in impairment charges related to the write-off of fixed assets at certain underperforming stores.

     Provision for Income Taxes

     Our effective tax rate for the twenty-six weeks ended July 31, 2010 is 36.2% compared to an effective tax rate of 37.2% for the twenty-six weeks ended August 1, 2009. Our effective tax rate was lower in the current twenty-six week period compared to last year due primarily to favorable state audit settlements, state refund claims and the restoration of a state tax receivable due to a favorable ruling.

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Liquidity and Capital Resources

     Our ongoing capital requirements have been and are for funding capital expenditures for the continued improvement in information technology tools, for new, expanded, relocated and remodeled stores, for our distribution centers and other central support facilities, and for the planned expansion of our NSSC campus.

     The following table depicts our capital resources as of July 31, 2010 and August 1, 2009 (amounts in thousands):

	July 31, 2010		August 1, 2009
Cash and cash equivalents	$	17,559	$	44,143
Marketable securities	$	469,829	$	333,367
Working capital	$	464,400	$	345,951

     Working capital as of July 31, 2010 increased compared to August 1, 2009 resulting primarily from higher cash and marketable securities amounts attributable to our improved operating results. The significant components of working capital are cash and cash equivalents, marketable securities, receivables and inventories, reduced by current liabilities.

     Based on past performance and current expectations, we believe that our cash and cash equivalents, marketable securities and cash generated from operations will satisfy working capital needs, future capital expenditures (see “New Store Openings and Infrastructure Investments”), commitments, dividend payments, potential share repurchases and other liquidity requirements associated with our operations through at least the next 12 months. Furthermore, while it is our intention to continue to pay a quarterly cash dividend for the rest of the year and beyond, any determination to pay future dividends will be made by the Board of Directors and will depend on future earnings, financial condition and other factors.

     Operating Activities

     Net cash provided by operating activities was $109.9 million and $144.4 million for the twenty-six weeks ended July 31, 2010 and August 1, 2009, respectively. The $34.5 million decrease in cash flows from operating activities in the current period from the prior period resulted primarily due to changes in working capital offset by higher net income.

     Investing Activities

     Net cash used in investing activities was $117.3 million and $127.6 million for the twenty-six weeks ended July 31, 2010 and August 1, 2009, respectively.

     We had net purchases of $82.9 million of marketable securities in the current year-to-date period compared to net purchases of $91.3 million of marketable securities in last year’s comparable year-to-date period.

     Our approximate $1.9 million decrease in capital expenditures in the current year-to-date period when compared to last year’s year-to-date period was primarily related to decreased distribution center improvements. However, this decrease was almost entirely offset by higher capital investments associated with new, relocated, remodeled and expanded Chico’s/Soma and WH|BM stores, as well as improvements at our NSSC campus.

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     Financing Activities

     Net cash used in financing activities was $12.1 million during the twenty-six weeks ended July 31, 2010 compared to net cash provided by financing activities of $0.8 million for the twenty-six weeks ended August 1, 2009.

     Through the first six months of fiscal 2010, we made two quarterly $0.04 per share cash dividend payments on our common stock totaling $14.3 million. In the current and prior year-to-date periods, we received proceeds from both the issuance of common stock related to option exercises and employee participation in our employee stock purchase plan.

     New Store Openings and Infrastructure Investments

     During the first six months of fiscal 2010, we had 38 net store openings consisting of 25 Soma net openings, 8 Chico’s net openings and 5 WH|BM net openings. Currently, we expect our overall square footage in fiscal 2010 to increase approximately 6%, reflecting approximately 8-10 net openings of Chico’s stores, 13-15 net openings of WH|BM stores, approximately 40 net openings of Soma stores (which does not include Soma “sister stores”) and 14-16 relocations/expansions. We continuously evaluate the appropriate new store growth rate in light of economic conditions and may adjust the growth rate as conditions require or as opportunities arise.

     We believe that the liquidity needed for new stores (including the continued investment associated with the Soma brand), our continuing store remodel/expansion program, investments in improvements and expansions of our NSSC and distribution centers, continued installation and upgrading of new and existing software packages, and investment in inventory levels associated with this growth will be funded primarily from cash flow from operations and our existing cash and marketable securities balances, and, if necessary, the capacity included in our bank credit facility.

     At the beginning of fiscal 2010, we completed the second major phase of our multi-year, planned implementation of our ERP system. We are currently utilizing this system in all of our brands. The third major phase includes on-going enhancements and optimization of the new ERP across all three brands, as well as the deployment of additional functionality across various other functions.

     In fiscal 2009, we purchased JDA Enterprise Planning, JDA Assortment Planning and JDA Allocation software applications instead of previously planned implementations of related SAP applications and revised our roll out plan accordingly. We completed the implementation of the allocation functionality during fiscal 2009 and are currently working on implementing the remaining JDA planning applications. We expect to substantially complete installation of the remaining JDA applications by the end of fiscal 2010, with full utilization of such applications to occur over the next 18 months.

     Given our existing cash and marketable securities balances and the capacity included in our bank credit facility, we do not believe that we will need to seek other sources of financing to conduct our operations, pay future dividends, repurchase shares under our recently announced program or pursue our expansion plans even if cash flow from operations should prove to be less than anticipated or if there should arise a need for additional letter of credit capacity due to establishing new and expanded sources of supply, or if we were to increase the number of new stores planned to be opened in future periods.

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Critical Accounting Policies and Estimates

     The discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management has discussed the development and selection of these critical accounting policies and estimates with the Audit Committee of our Board of Directors, and believes the assumptions and estimates, as set forth in our Annual Report on Form 10-K for the fiscal year ended January 30, 2010, are significant to reporting our results of operations and financial position. There have been no material changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the fiscal year ended January 30, 2010.

Inflation

     Our operations are influenced by general economic conditions. Historically, inflation has not had a material effect on the results of operations.

Quarterly Results and Seasonality

     Our quarterly results may fluctuate significantly depending on a number of factors including timing of new store openings, adverse weather conditions, the spring and fall fashion lines and shifts in the timing of certain holidays. In addition, our periodic results can be directly and significantly impacted by the extent to which new merchandise offerings are accepted by customers and by the timing of the introduction of such merchandise.

Certain Factors That May Affect Future Results

     This Form 10-Q may contain certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect our current views with respect to certain events that could have an effect on our future financial performance, including but without limitation, statements regarding future growth rates of our store concepts. The statements may address items such as future sales, gross margin expectations, operating margin expectations, earnings per share expectations, planned store openings, closings and expansions, future comparable store sales, future product sourcing plans, inventory levels, planned marketing expenditures, planned capital expenditures and future cash needs. In addition, from time to time, we may issue press releases and other written communications, and our representatives may make oral statements, which contain forward-looking information.

     These statements, including those in this Form 10-Q and those in press releases or made orally, may include the words “expects,” “believes,” and similar expressions. Except for historical information, matters discussed in such oral and written statements, including this Form 10-Q, are forward-looking statements. These forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from historical results or those currently anticipated. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and in Item 1A, “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 24, 2010.

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     These potential risks and uncertainties include the financial strength of retailing in particular and the economy in general, the extent of financial difficulties that may be experienced by customers, our ability to secure and maintain customer acceptance of styles and store concepts, the propriety of inventory mix and sizing, the quality of merchandise received from suppliers, the extent and nature of competition in the markets in which we operate, the extent of the market demand and overall level of spending for women’s private branded clothing and related accessories, the adequacy and perception of customer service, the ability to coordinate product development with buying and planning, the ability of our suppliers to timely produce and deliver clothing and accessories, the changes in the costs of manufacturing, labor and advertising, the rate of new store openings, the buying public’s acceptance of any of our new store concepts, the performance, implementation and integration of management information systems, the ability to hire, train, energize and retain qualified sales associates and other employees, the availability of quality store sites, the ability to expand our NSSC, distribution centers and other support facilities in an efficient and effective manner, the ability to hire and train qualified managerial employees, the ability to effectively and efficiently establish and operate DTC sales operations, the ability to secure and protect trademarks and other intellectual property rights, the ability to effectively and efficiently operate the Chico’s, WH|BM, and Soma merchandise divisions, risks associated with terrorist activities, risks associated with natural disasters such as hurricanes and other risks. In addition, there are potential risks and uncertainties that are peculiar to our reliance on sourcing from foreign suppliers, including the impact of work stoppages, transportation delays and other interruptions, political or civil instability, imposition of and changes in tariffs and import and export controls such as import quotas, changes in governmental policies in or towards foreign countries, currency exchange rates and other similar factors.

     The forward-looking statements included herein are only made as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Litigation

     In the normal course of business, we are subject to proceedings, lawsuits and other claims including proceedings under laws and government regulations relating to labor, product, intellectual property and other matters. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Consequently, the ultimate aggregate amount of monetary liability or financial impact with respect to these matters at July 31, 2010, cannot be ascertained. Although these matters could affect the operating results of any one quarter when resolved in future periods, and although there can be no assurance with respect thereto, management believes that, after final disposition, any monetary liability or financial impact to us would not be material to the annual consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The market risk of our financial instruments as of July 31, 2010 has not significantly changed since January 30, 2010. We are exposed to market risk from changes in interest rates on any future indebtedness and our marketable securities.

     Our exposure to interest rate risk relates in part to our revolving line of credit with our bank. However, as of July 31, 2010, we did not have any outstanding borrowings on our line of credit and, given our current liquidity position, do not expect to utilize our line of credit in the foreseeable future except for the continuing use of the letter of credit facility portion thereof.

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     Our investment portfolio is maintained in accordance with our investment policy which identifies allowable investments, specifies credit quality standards and limits the credit exposure of any single issuer. Our investment portfolio consists of cash equivalents and marketable securities, including variable rate demand notes, which are considered highly liquid, variable rate municipal debt securities, municipal bonds, asset-backed securities, corporate bonds, and U.S. treasury securities. Although the variable rate demand notes, totaling $230.7 million as of July 31, 2010, have long-term nominal maturity dates ranging from 2011 to 2049, the interest rates generally reset weekly. Despite the long-term nature of the underlying securities of the variable rate demand notes, we have the ability to quickly liquidate or put back these securities. The remainder of the portfolio, as of July 31, 2010 consisted of $115.0 million of securities with maturity dates less than one year and $124.1 million with maturity dates over one year and less than or equal to three years. We consider all available-for-sale securities, including those with maturity dates beyond 12 months, as available to support current operational liquidity needs and therefore classify these securities as short-term investments within current assets on the consolidated balance sheets. As of July 31, 2010, an increase of 100 basis points in interest rates would reduce the fair value of our marketable securities portfolio by approximately $3.9 million. Conversely, a reduction of 100 basis points in interest rates would increase the fair value of our marketable securities portfolio by approximately $3.1 million.

ITEM 4. CONTROLS AND PROCEDURES

     Evaluation of Disclosure Controls and Procedures

     Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in our reports under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

     As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures were effective in providing reasonable assurance in timely alerting them to material information relating to us (including our consolidated subsidiaries) and that information required to be disclosed in our reports is recorded, processed, summarized, and reported as required to be included in our periodic SEC filings.

     Changes in Internal Controls

     There were no significant changes in our internal controls or in other factors that could significantly affect our disclosure controls and procedures subsequent to the date of the above referenced evaluation. Furthermore, there was no change in our internal control over financial reporting or in other factors during the quarterly period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     We are not currently a party to any legal proceedings, other than various claims and lawsuits arising in the normal course of business, none of which we believe should have a material adverse effect on our financial condition or results of operations.

ITEM 1A. RISK FACTORS

     In addition to the other information discussed in this report, the factors described in Part I, Item 1A., “Risk Factors” in our 2009 Annual Report on Form 10-K filed with the SEC on March 24, 2010 should be considered as they could materially affect our business, financial condition or future results. There have not been any significant changes with respect to the risks described in our 2009 Form 10-K, but these are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may adversely affect our business, financial condition or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     The following table sets forth information concerning our purchases of common stock for the periods indicated (dollar amounts in thousands, except per share amounts):

							Approximate Dollar
							Value of Shares
					Total Number of		that May Yet Be
					Shares Purchased as		Purchased Under the
	Total Number of		Average Price Paid		Part of Publicly		Publicly Announced
Period	Shares Purchased(a)		per Share		Announced Plans (b)		Plans (b)
May 2, 2010 to May 29, 2010		762	$	12.23		—	$	—
May 30, 2010 to July 3, 2010		1,482	$	11.03		—	$	—
July 4, 2010 to July 31, 2010		—	$	—		—	$	—
Total		2,244	$	11.44		—	$	—

(a)	Consists of 2,244 shares of restricted stock repurchased in connection with employee tax withholding obligations under employee compensation plans, which are not purchases under any publicly announced plan.
(b)	This table does not include any amounts related to the share repurchase program recently announced by the Company.

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ITEM 6. EXHIBITS

(a) The following documents are filed as exhibits to this Quarterly Report on Form 10-Q (exhibits marked with an asterisk have been previously filed with the Commission as indicated and are incorporated herein by this reference):

Exhibit 10.1	Employment letter agreement between the Company and Sara K. Stensrud, dated as of July 6, 2010
Exhibit 10.2	Amended and Restated Chico’s FAS, Inc. Cash Bonus Incentive Plan
Exhibit 31.1	Chico’s FAS, Inc. and Subsidiaries Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — Chief Executive Officer
Exhibit 31.2	Chico’s FAS, Inc. and Subsidiaries Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — Chief Financial Officer
Exhibit 32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101.INS	XBRL Instance Document
Exhibit 101.SCH	XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF	XBRL Taxonomy Definition Linkbase Document
Exhibit 101.LAB	XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CHICO’S FAS, INC.
Date: August 27, 2010	By:	/s/ David F. Dyer
		David F. Dyer
		President and Chief Executive Officer (Principal Executive Officer)
Date: August 27, 2010	By:	/s/ Kent A. Kleeberger
		Kent A. Kleeberger
		Executive Vice President Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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EX-10.1

Exhibit 10.1

July 6, 2010

VIA FEDERAL EXPRESS

Ms. Sara K. Stensrud
4319 Fox Hollow Court
Oneida, WI 54155

Dear Sara:

It is with great pleasure that we offer you the opportunity to join Chico’s FAS, Inc. as our Executive Vice President/Human Resources Officer. As you are aware. Chico’s is a fast-growing respected organization within which this position is a key driver of our success. As one of the top specialty retailers we offer tremendous opportunity for personal and professional growth. Please let this letter serve as an offer to join Chico’s FAS, Inc. and your acceptance of that offer. The following outlines the specifics:

Title:	EVP/Chief Human Resources Officer
Reporting to:	President & CEO
Base Salary:	$375,000.00 annually
Start Date:	TBD
Sign-On:	$75,000.00, payable within 30 days of start date, less applicable taxes (contingent upon receipt of signed repayment agreement).
Management Bonus Plan:	Target of 60% of base salary earned during the performance period, which is contingent upon the achievement of corporate financial objectives, The terms of the bonus, including eligibility, payouts and objectives. may be modified from time to time.
	You will be provided with a bonus guarantee of $105,000.00 which represents 50% of target bonus potential for the FY 10 plan year. At this time our Management Bonus Plan provides 0% to 175% of bonus target based on annual performance metrics.
Stock Options:	30,000 non-qualified stock options at Fair Market value to be issued during the first open window period for stock acquisition after your date of hire. These options will vest over a 3-year period, with one-third vesting each year on the anniversary of the grant date. You will be eligible for additional grants as determined by management.

Restricted Stock:	A one-time grant of 10,000 shares of restricted stock to be issued during the first open window period for stock acquisition after the grant date of hire. These shares will vest over a three-year period with one-third vesting each year on the anniversary of the grant date. You will be eligible for additional equity grants as determined by management.
	Additionally, as a member of our management executive committee, you will be eligible to receive 15,000 performance shares based on our company achieving $1.00/per share EPS in 2011.
Severance:	If we terminate your employment without cause. we will continue to pay you your base salary for a period of twelve months following the date of termination. In general terms, cause shall mean any action or inaction by you that causes the company substantial harm. Details regarding the Severance Plan are specified in the Summary Plan Description included in your benefits package.
Time Off:	You will be eligible for 20 days of Paid Time Off (PTO) for each full year of employment. This is an accrued benefit that you start to earn on your date of hire.
Annual Review:	Merit reviews and equity grants for officers are considered at the end of the fiscal year, and issues in March of each year.

You will also be eligible to participate in Chico’s FAS, Inc. comprehensive benefits program outlined below:

Group Insurance Plan:	Medical/Dental/Vision
	Eligibility Date: Effective your first day of active employment
Life Insurance:	Chico’s provides term insurance equal to 1X your base salary; in addition Chico’s provides accidental death and dismemberment insurance equal to 1X your base salary. Supplemental insurance is available for purchase.
	Eligibility Date: Effective your first day of active employment
401(k) Plan:	Eligible deferral of 1-100% of your compensation (subject to an IRS maximum), with a match of 50% of the first 6% of compensation you defer. You will be able to roll over existing qualified funds immediately.
	Eligibility Date: First quarter after 12 months of employment

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Deferred Compensation Plan:	As a highly compensated Associate of Chico’s, you will be immediately eligible to participate in the Chico’s Deferred Compensation Plan. You will have the opportunity to defer pre-tax compensation (less applicable FICA/Medicare tax withholding). You may defer up to 80% of your base salary payable during the current calendar year, and up to 100% of your bonus. If you have any questions on the Deferred Compensation Plan, please contact Karen Carlisle at (239) 938-8584.
Stock Purchase Plan:	Opportunity to purchase Chico’s stock directly from the company. two times a year, in March and September.
	Eligibility Date: First offering period following one year of employment.
Executive Benefits:	Disability Income Protection
	As a qualifying executive, you will be eligible for our Supplemental Disability Insurance program. This program provides an increased level of income protection should you become disabled. Full details of the program are available from the benefits group.
	Eligibility Date: Effective on your first day of active employment.
	Executive Physical
	As an executive, you are eligible to have one company-paid physical per year at a participating Mayo Clinic location as part of our Health and Wellness Benefits.
Relocation:	In order to ensure a successful relocation, Chico’s FAS, Inc. will provide the relocation assistance as detailed in the attached Tier I Relocation Program. In accordance with this relocation policy, you will receive a miscellaneous allowance of $10,000 less applicable taxes.
Relocation Educational Assistance:	You will be eligible to participate in the Relocation Educational Program, which provides educational assistance of $5,000.00 (less applicable withholding taxes and a taxable benefit) per eligible child to attend private school (K-12) for the First school year of employment. A private school is defined as any school that doesn’t fall under the public school system. This is a one time benefit per child

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We hope you view this opportunity as a chance to have a positive impact on Chico’s while enjoying a challenging and rewarding career. Nonetheless, please understand that Chico’s FAS, Inc. is an at-will employer. That means that either you or Chico’s are free to end the employment relationship at any time. with or without notice or cause. By accepting our offer of employment. you acknowledge the at-will nature of our relationship. This offer is continent upon the successful completion of a background check. Additionally, you represent that you are not a party to any agreement that would bar or limit the scope of your employment with us.

We are looking forward to having you on our Chico’s team. Let me be the first to welcome you aboard! We are sure you will find it a challenging and rewarding experience. If you have any questions. please feel free to contact me.

Regards.

David F. Dyer
President & CEO

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EX-10.2

Exhibit 10.2

CHICO’S FAS, INC.
CASH BONUS INCENTIVE PLAN

1. PURPOSE OF THE PLAN.

     The purpose of the Plan is to advance the interests of the Company and its stockholders by providing incentives in the form of cash bonus awards to certain executives and other key employees of the Company and its Subsidiaries. The Plan is intended to enable the Company to attract and retain appropriate executive and key employee talent and to motivate such officers and key employees to manage and grow the Company’s business and to attain the performance goals articulated under the Plan.

2. DEFINITIONS.

     The following capitalized terms used in the Plan have the respective meanings set forth in this Section:

     (a) “AWARD” means a cash bonus award granted pursuant to the Plan.

     (b) “BOARD” means the Board of Directors of the Company.

     (c) “CODE” means the Internal Revenue Code of 1986, as amended, or any successor thereto.

     (d) “COMMITTEE” means the Compensation and Benefits Committee of the Board, or any successor thereto or any other committee designated by the Board to assume the obligations of the Committee hereunder, which Committee shall be comprised solely of two or more outside directors of the Board.

     (e) “COMPANY” means Chico’s FAS, Inc., a Florida corporation, and its Subsidiaries.

     (f) “DISABLED” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

     (g) “EFFECTIVE DATE” means the date on which the Plan takes effect in accordance with Section 13 of the Plan.

     (h) “PARTICIPANT” means an employee of the Company or any of its Subsidiaries who is selected by the Committee to participate in the Plan pursuant to Section 4 of the Plan.

     (i) “PERFORMANCE-BASED EXCEPTION” means the performance-based exception from the tax deductibility limitation imposed by Section 162(m) of the Code, as set forth in Section 162(m)(4)(C) of the Code.

     (j) “PERFORMANCE GOALS” means one or more of the following, as selected by the Committee: net sales; revenue; revenue growth or product revenue growth; operating income (before or after taxes); pre- or after-tax income (before or after allocation of corporate overhead and bonus); net earnings; earnings per share; net income (before or after taxes); return on equity; total shareholder return; return on assets or net assets; appreciation in and/or maintenance of share price; gross profits; earnings (including earnings before taxes, earnings before interest and taxes or earnings before interest, taxes, depreciation and amortization); economic value-added models or equivalent metrics; comparisons with various stock market indices; reductions in costs; cash flow or cash flow per share (before or after dividends); return on capital (including return on total capital or return on invested capital); cash flow return on investment; improvement in or attainment of expense levels or working capital levels; operating margins, gross margins or cash margin; maintained margin; brand contribution; year-end cash; debt reductions; shareholder equity; market share; regulatory achievements; implementation, completion, or attainment of measurable objectives with respect to research, development, products or projects and recruiting and maintaining personnel.

     (k) “PERFORMANCE PERIOD” means the Company’s fiscal year or such other period as designated by the Committee.

     (l) “PLAN” means the Chico’s FAS, Inc. Cash Bonus Incentive Plan.

     (m) “QUALIFIED PERFORMANCE-BASED COMPENSATION AWARD” means an Award that is designated as such by the Committee that is (i) contingent on the achievement of one or more Performance Goals and (ii) intended to qualify for the Performance-Based Exception.

     (n) “SUBSIDIARY” means a subsidiary corporation, as defined in Section 424(f) of the Code (or any successor section thereto).

3. ADMINISTRATION.

     The Plan shall be administered by the Committee. The Committee shall have the authority to select the employees to be granted Awards under the Plan, to determine the size and terms of an Award (subject to the limitations imposed on Awards in Section 5 below), to modify the terms of any Award that has been granted, to determine the time when Awards will be made, the amount of any payments pursuant to such Awards, and the Performance Period to which they relate, to establish Performance Goals in respect of such Performance Periods and to determine whether such Performance Goals were attained. The Committee is authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make any other determinations that it deems necessary or desirable for the administration of the Plan. The Committee may correct any defect or omission or reconcile any inconsistency in the Plan in the manner and to the extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned. Determinations made by the Committee under the Plan need not be uniform and may be made selectively among Participants,

whether or not such Participants are similarly situated. The Committee shall have the right to deduct from any payment made under the Plan any federal, state, local or foreign income or other taxes required by law to be withheld with respect to such payment. The Committee may delegate to one or more employees of the Company or any of its Subsidiaries, including, but not limited to the Company’s Chief Executive Officer, the authority to take actions on its behalf pursuant to the Plan; provided, however, only the Committee may determine and certify Qualified Performance-Based Compensation Awards granted to executive officers of the Company.

4. ELIGIBILITY AND PARTICIPATION.

     The Committee shall determine the executive officers and such other employees who shall be Participants for the Performance Period. Only employees of the Company or any of its Subsidiaries shall be eligible for selection as Participants. The designation of Participants may be made individually or by groups or classifications of employees, as the Committee deems appropriate. Participants may be granted one or more Awards.

5. AWARDS.

     (a) Performance Goals. Awards under the Plan shall be conditioned on the attainment of one or more Performance Goals, which Performance Goals shall be determined and approved by the Committee, in its sole discretion. The Committee shall determine whether and to what extent each Performance Goal has been met. The Committee may designate whether an Award granted to a Participant who is an executive officer of the Company is intended to be a Qualified Performance-Based Compensation Award. Any such Qualified Performance-Based Compensation Award granted by the Committee shall be conditioned on the achievement of one or more Performance Goals and shall include at least a one (1) year Performance Period. The Performance Goals may be based solely by reference to the Company’s performance or the performance of a Subsidiary, division, business segment or business unit of the Company, or based upon the Company’s performance relative to the performance of one or more companies or an index covering multiple companies. The Committee may also exclude, if provided in the Award agreement, charges related to an event or occurrence which the Committee determines should appropriately be excluded, including (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (iii) the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles. With respect to a Qualified Performance-Based Compensation Award, the grant of such Award, the establishment of the related Performance Goals and the certification as to whether such Performance Goals have been satisfied shall be made by the Committee in a manner and during the period required under Section 162(m) of the Code.

     (b) Target Bonus. The Committee shall determine and specify a target bonus amount to be payable pursuant to each Award for each Participant. Notwithstanding any provision of the Plan to the contrary, with respect to Qualified Performance-Based Compensation Awards, the maximum dollar value payable to any one individual Participant during any one-calendar-year period is $5 million.

     (c) Amount Payable. Subject to the limitations set forth in Section 5(b) of the Plan, the amount payable pursuant to an Award shall be determined by the Committee in its sole discretion based on the applicable target bonus amount, any prescribed weighting of the Performance Goals if more than one, and the Committee’s determination of whether and to what extent each applicable Performance Goals have been met. No amounts shall be paid if the Performance Goal(s) upon which the Award is contingent have not been met.

     (d) Payment. The amount of the Award payable as determined by the Committee for the Performance Period shall be paid to the Participant in a cash lump sum within seventy (70) days following the end of the applicable Performance Period. The Committee shall have the discretion to decrease, but not increase, the amount of any payment otherwise payable pursuant to an Award based on such factors as it shall deem appropriate. The Committee shall also have the discretion to pay a portion of the Award prior to the end of the Performance Period provided that the Committee determines that the Performance Goal or Goals have been met prior to such payment and provided further that the payment conforms with Performance-Based Exception rules under Section 162(m) of the Code.

     (e) Termination of Employment. If a Participant dies, becomes Disabled, retires, is assigned to a different position that renders the Participant ineligible for the Award or is granted a leave of absence, or if the Participant’s employment is otherwise terminated for any reason prior to the last day of the Performance Period, the Employee shall forfeit any and all rights with respect to the Award. Notwithstanding the preceding to the contrary, and with respect only to either (1) a Participant who becomes Disabled prior to the end of a Performance Period, or (2) a Participant who is eligible to participate in the Company’s Vice President Severance Plan or Executive Severance Plan and who incurs a termination of employment with the Company prior to the end of a Performance Period, if the Performance Goals for the applicable Performance Period are satisfied and timely certified by the Committee, the Participant shall receive a pro rata amount of the Participant’s Award for the portion of the Performance Period during which the Participant actually participated in the Plan, such pro rata amount to be paid at the same time and in the same manner as set forth in Section 5(d) of the Plan. If the Performance Goals for the applicable Performance Period are not satisfied, no amount shall be paid.

6. AMENDMENTS OR TERMINATION.

     The Committee may amend, alter or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would impair any of the rights or obligations under any Award theretofore granted to a Participant under the Plan without such Participant’s consent; provided, however, that the Committee may amend the Plan in such manner as it deems necessary to permit the granting of Awards meeting the requirements of any applicable law, rule or regulation.

7. NO RIGHT TO EMPLOYMENT.

     Neither the Plan nor any action taken hereunder shall be construed as giving any Participant or other person any right to continue to be employed by or perform services

for the Company or any Subsidiary, and the right to terminate the employment of or performance of services by any Participant at any time and for any reason is specifically reserved to the Company and its Subsidiaries.

8. NONTRANSFERABILITY OF AWARDS.

     An Award shall not be transferable or assignable by the Participant other than by will or by the laws of descent and distribution.

9. OFFSET OF AWARDS.

     Notwithstanding anything to the contrary herein, the Committee, in its sole and absolute discretion, may reduce any amounts otherwise payable to any Participant hereunder in order to satisfy any liabilities owed to the Company or any of its Subsidiaries by the Participant.

10. ADJUSTMENTS UPON CERTAIN EVENTS.

     In the event of any material change in the business assets, liabilities or prospects of the Company, any division or any Subsidiary, the Committee in its sole and absolute discretion and without liability to any person may make such adjustment, if any, as it deems to be equitable as to any affected terms of outstanding Awards.

11. MISCELLANEOUS PROVISIONS.

     The Company is the sponsor and legal obligor under the Plan and shall make all payments hereunder, other than any payments to be made by any of the Subsidiaries (in which case payment shall be made by such Subsidiary, as appropriate). The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to ensure the payment of any amounts under the Plan, and the Participants’ rights to the payment hereunder shall be no greater than the rights of the Company’s (or Subsidiary’s) unsecured creditors. All expenses involved in administering the Plan shall be borne by the Company.

12. CHOICE OF LAW.

     The Plan shall be governed by and construed in accordance with the laws of the State of Florida applicable to contracts made and to be performed in the State of Florida.

13. EFFECTIVENESS OF THE PLAN.

     The Plan has been approved by the Board and shall be effective as of the date of its approval by the stockholders of the Company at the Company’s 2010 annual meeting and shall remain in effect until the Company’s annual meeting of stockholders in 2015.

EX-31.1

Exhibit 31.1

CHICO’S FAS, INC. AND SUBSIDIARIES CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, David F. Dyer, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Chico’s FAS, Inc. for the period ended July 31, 2010;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 27, 2010

/s/ David F. Dyer
Name:	David F. Dyer
Title:	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CHICO’S FAS, INC. AND SUBSIDIARIES CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Kent A. Kleeberger, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Chico’s FAS, Inc. for the period ended July 31, 2010;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 27, 2010

/s/ Kent A. Kleeberger
Name:	Kent A. Kleeberger
Title:	Executive Vice President – Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

Certification Pursuant To 18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 Of The Sarbanes-Oxley Act Of 2002

     I, David F. Dyer, President and Chief Executive Officer of Chico’s FAS, Inc. (the “Company”) certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)	The Quarterly Report of the Company on Form 10-Q for the period ended July 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David F. Dyer  

David F. Dyer
President and Chief Executive Officer
Date: August 27, 2010
 

EX-32.2

Exhibit 32.2

Certification Pursuant To 18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 Of The Sarbanes-Oxley Act Of 2002

     I, Kent A. Kleeberger, Executive Vice President – Chief Financial Officer and Treasurer of Chico’s FAS, Inc. (the “Company”) certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)	The Quarterly Report of the Company on Form 10-Q for the period ended July 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Kent A. Kleeberger  

Kent A. Kleeberger
Executive Vice President –
Chief Financial Officer and Treasurer
Date: August 27, 2010