8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report: (Date of earliest event reported): November 25, 2008

Chico’s FAS, Inc.

(Exact Name of Registrant as Specified in its Charter)

Florida
(State or Other Jurisdiction of Incorporation)

0-21258	59-2389435
(Commission File Number)	(IRS Employer Identification No.)

11215 Metro Parkway, Fort Myers, Florida	33966
(Address of Principal Executive Offices)	(Zip code)

(239) 277-6200
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02. Results of Operations and Financial Condition
	Item 9.01. Financial Statements and Exhibits
SIGNATURES
INDEX TO EXHIBITS
EX-99.1

Item 2.02. Results of Operations and Financial Condition

     On November 25, 2008, Chico’s FAS, Inc. issued a press release announcing its third quarter and year-to-date earnings. A copy of the release issued on November 25, 2008 is attached to this Report as Exhibit 99.1 and is incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits:

Exhibit 99.1 Chico’s FAS, Inc. Press Release dated November 25, 2008

2

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 hereunto duly authorized.

	CHICO’S FAS, INC.
Date: November 25, 2008	By:	/s/ Michael J. Kincaid
		Michael J. Kincaid, Senior Vice President — Finance,
		Chief Accounting Officer and Assistant Secretary

3

INDEX TO EXHIBITS

Exhibit Number	Description
Exhibit 99.1	Press Release of Chico’s FAS, Inc. dated November 25, 2008

4

EX-99.1

Exhibit 99.1

For Immediate Release

Executive Contact:
Robert C. Atkinson
Vice President-Investor Relations
Chico’s FAS, Inc.
(239) 274-4199

Chico’s FAS, Inc. Announces Third Quarter and
Nine Month Net Sales and Earnings

• Third quarter net sales decreased 5.2% to $394.2 million

• Third quarter net income was $2.0 million, or $0.01 per diluted share

• Company opened 8 net new stores and relocated/expanded 6 existing stores during quarter

• Company secures new $55 million senior revolving credit facility

     Fort Myers, FL - November 25, 2008 - Chico’s FAS, Inc. (NYSE: CHS) today announced its financial results for the fiscal 2008 third quarter and nine months ended November 1, 2008.

     Net sales for the third quarter ended November 1, 2008 decreased 5.2% to $394.2 million from $415.9 million for the fiscal 2007 third quarter ended November 3, 2007. Net income for the fiscal 2008 third quarter was $2.0 million, or $0.01 per diluted share, compared to net income of $23.6 million, or $0.13 per diluted share, in the prior year’s third quarter. As previously reported, comparable store sales decreased 13.4% for the thirteen-week period ended November 1, 2008, compared to the comparable thirteen-week period last year ended November 3, 2007, as same store sales decreased approximately 17% for the Chico’s brand and approximately 5% for the WH|BM brand.

     Net sales for the nine months ended November 1, 2008 decreased 7.4% to $1.209 billion from $1.305 billion for the prior year’s nine months ended November 3, 2007. Net income for the nine months was $21.4 million, or $0.12 per diluted share, compared to $109.4 million, or $0.62 per diluted share, in the first nine months of the prior year. As previously reported, comparable store sales decreased 15.7% for the thirty-nine week period ended November 1, 2008, compared to the comparable thirty-nine week period last year ended November 3, 2007, as same store sales decreased approximately 19% for the Chico’s brand and approximately 9% for the WH|BM brand.

     Gross margin for the third quarter decreased 12.8% to $211.4 million from $242.5 million in the prior year’s third quarter. Gross margin as a percentage of sales for the current quarter decreased 470 basis points to 53.6%, from 58.3% in the prior year’s third quarter. Chico’s brand merchandise margins in the third quarter decreased approximately 430 basis points compared to the prior year’s third quarter primarily due to lower initial markups as well as higher markdowns in order to liquidate inventory and bring levels in line with the current sales trend. The gross margin percentage at the Chico’s brand was also negatively impacted by continued investment in the Company’s product development and merchandising functions, coupled with the deleverage of these costs attributable to the negative same store sales. These decreases in gross margin at the Chico’s brand were further exacerbated by a 450 basis point decline in the brand merchandise margins at

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WH|BM, also due primarily to lower initial markups and higher markdowns, which resulted in overall Company gross margins deteriorating further due to the impact of the mix effect resulting from WH|BM sales becoming a larger portion of the Company’s overall net sales.

     Selling, general and administrative expenses (“SG&A”) for the third quarter decreased 2.8% to $213.1 million from $219.2 million in the prior year’s third quarter mainly due to the on-going cost reduction initiatives implemented by the Company. As a percentage of sales, SG&A in the third quarter increased by approximately 130 basis points compared to the prior period primarily due to the deleverage associated with the Company’s negative same store sales.

     Store operating expenses as a percentage of sales in the third quarter increased by approximately 280 basis points compared to the prior period primarily due to increased occupancy costs and to a lesser extent, by increased personnel costs as a percentage of sales, as selling payroll did not flex in direct proportion to the decrease in comparable store sales. The percentage was further impacted by the deleverage associated with the Company’s negative same store sales, and to a lesser extent, the mix effect of the WH|BM and Soma Intimates stores, (which have a higher operating cost structure) becoming a larger portion of the Company’s store base.

     Marketing costs for the fiscal 2008 third quarter decreased by $6.9 million or approximately 130 basis points primarily due to the on-going cost reduction initiatives and increased efficiencies implemented by the Company.

     Shared services expenses (including headquarters and other non-brand specific expenses) for the fiscal 2008 third quarter decreased by $2.0 million or approximately 20 basis points as a percentage of sales mainly due to the on-going cost reduction initiatives implemented by the Company.

     The income tax benefit for the fiscal 2008 third quarter was $1.3 million compared to income tax expense of $9.6 million for the fiscal 2007 third quarter. The effective tax rate for the current quarter is unusual because of the impact of the Company significantly reducing its estimated annual pre-tax income for fiscal 2008, and to a lesser extent, the impact of favorable permanent differences mainly tax-free interest and charitable contributions.

     Commenting on the operating results for the third quarter, Scott A. Edmonds, Chairman, President, and CEO said, “We believe our third quarter operating results are reflective of the poor economy and consumers declining confidence. This is underscored by the approximate 10% decrease in Company-wide transactions experienced during the quarter, which contributed to the 13.4% decline in comparable store sales. Accordingly, the lower level of sales and transactions necessitated a greater-than-planned level of markdowns and, therefore, a lower gross margin.”

     Mr. Edmonds added, “We continue to strive to provide our customers with merchandise that is both compelling in fashion terms and affordable. While we are committed to keeping our balance sheet strong and preserving an appropriate amount of cash, it is vital that we continue to invest in our brands and position ourselves to recapture sales and gain market share once the economy improves.”

     Mr. Edmonds continued, “Given the expectation of continued economic challenges for the next several quarters, we remain focused on conserving cash through reducing costs, limiting our capital expenditures to what is necessary, and managing inventories. To date, we have identified and implemented over $50 million in annual expense savings while trimming 2008 capital expenditures to approximately $110 million compared to the $202 million expended last year.”

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     The Company’s capital position has been strengthened by its recent entry into a new credit facility with SunTrust Bank. This new $55 million facility has an increased aggregate principal amount of $10 million (above the prior $45 million facility), and also has a $45 million accordion feature providing additional debt capacity if and when needed. The new facility is secured by certain assets and contains terms and conditions common to facilities of this type. It will expire in November 2011.

     Commenting on the accomplishment of the new credit facility, Mr. Edmonds stated, “Securing this new facility in these uncertain economic times is a testament to our financial strength. Our strong balance sheet, which includes $256 million in cash and marketable securities and no debt, accompanied by no immediate plans to draw on the new facility, increases our financial flexibility and further reinforces our ability to successfully emerge from this economic crisis.”

     Additional information with respect to the third quarter results include the following:

• The Chico’s/Soma brand sales, excluding direct to consumer, decreased by 10.5% from $300.6 million in last year’s third quarter to $269.1 million in this year’s third quarter, while WH|BM brand sales increased by 9.8% from $97.3 million to $106.8 million quarter over quarter. The average transaction size for the Chico’s front-line stores during the fiscal 2008 third quarter decreased by approximately 7% while the average transaction size at WH|BM front-line stores increased by approximately 5% compared to last year’s third quarter. The average unit retail for the Chico’s front-line stores for the fiscal 2008 third quarter declined by 7% as compared to last year’s third quarter, while the WH|BM average unit retail decreased by 1% quarter over quarter. Transactions at the Chico’s and WH|BM front-line stores for the fiscal 2008 third quarter decreased by approximately 12% and 10%, respectively, as compared to last year’s third quarter.

• Net sales for the direct to consumer channel increased by 2.2% from $18.0 million in last year’s third quarter to $18.4 million in this year’s third quarter. This increase is attributable to higher sales for the Soma and WH|BM brands offset by decreased sales for the Chico’s brand. The Company believes its ability to achieve some level of overall increase in these challenging economic times is attributable to several factors: the continued growth in customer acceptance of the offerings at the Soma and WH|BM brands, increased traffic in the direct to consumer channel and the Company’s implementation of planned improvements in its website and call center infrastructure. The Company intends to continue making improvements to its direct to consumer infrastructure and merchandising approach in an effort to increase future sales through this channel.

• During the fiscal 2008 third quarter, the Company opened 13 new stores and closed 5 stores. Also, during this third quarter, the Company expanded/relocated 6 stores. During the fourth quarter, the Company expects net closings of between 5 and 7 stores bringing its fiscal 2008 store openings to approximately 38-40 net new stores. In addition, during the fourth quarter, the Company expects to expand or relocate between 1 and 3 stores.

• The Company’s consolidated inventory per selling square foot as of the end of the third quarter of fiscal 2008 decreased approximately 2% to $72 from $73 as of the end of the fiscal 2007 third quarter. Included in the comparisons is an approximate $5 million increase in in-transit inventory for the WH|BM brand over quarter end last year. In particular, end of quarter inventories for the Chico’s brand decreased by approximately 9% per square foot compared to the third quarter of fiscal 2007.

• On August 1, 2007, the Company consummated a transaction to sell a parcel of land which included a note receivable with a principal amount of approximately $25.8 million payable in a balloon payment in two years. As the balloon payment

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is due within one year of the most recently ended quarter, the Company has reclassified the $25.8 million note receivable from a long-term asset to a current asset and is included in the receivable line of the accompanying balance sheets.

• During the fiscal 2007 third quarter, the Company realized a gain on its investment in lucy activewear, inc. The transaction closed on August 24, 2007 and the Company recorded a gain of approximately $6.8 million, or $0.025 per diluted share, which is reflected as non-operating income in the accompanying statement of operations.

• On November 24, 2008, the Company entered into a $55 million senior secured revolving credit facility with SunTrust Bank. The credit facility provides for swing advances of up to $5 million and issuance of letters of credit up to $10 million and also provides the Company the ability, subject to satisfaction of certain conditions, to increase the commitments available under the credit facility to $100 million through additional syndication. This credit facility replaces the Company’s previous $45 million credit facility.

     The Company is a specialty retailer of private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing gift items. The Company operates 1,086 women’s specialty stores, including stores in 49 states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico operating under the Chico’s, White House | Black Market, and Soma Intimates names. The Company has 623 Chico’s front-line stores, 41 Chico’s outlet stores, 330 White House | Black Market front-line stores, 19 White House | Black Market outlet stores, 72 Soma Intimates front-line stores and 1 Soma Intimates outlet store.

     Certain statements contained herein, including without limitation, statements addressing the beliefs, plans, objectives, estimates or expectations of the Company or future results or events constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements involve known or unknown risks, including, but not limited to, general economic and business conditions, and conditions in the specialty retail industry. There can be no assurance that the actual future results, performance, or achievements expressed or implied by such forward-looking statements will occur. Users of forward-looking statements are encouraged to review the Company’s latest annual report on Form 10-K, its filings on Form 10-Q, management’s discussion and analysis in the Company’s latest annual report to stockholders, the Company’s filings on Form 8-K, and other federal securities law filings for a description of other important factors that may affect the Company’s business, results of operations and financial condition. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that projected results expressed or implied in such statements will not be realized.

For more detailed information, please call (877) 424-4267 to listen to the Company’s monthly
sales information and investor relations line

Additional investor information on Chico’s FAS, Inc. including a presentation summarizing the
Company’s recent financial results is available on the Company’s website at
http://www.chicosfas.com

(Financial Tables Follow)

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Chico’s FAS, Inc.
Consolidated Balance Sheets
(in thousands)

	November 1,			February 2,
	2008			2008
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	50,233		$	13,801
Marketable securities, at market		206,105			260,469
Receivables		38,287			11,924
Income tax receivable		—			23,973
Inventories		187,271			144,261
Prepaid expenses		24,063			18,999
Deferred taxes		19,131			13,306
Total Current Assets		525,090			486,733
Property and Equipment:
Land and land improvements		18,225			17,867
Building and building improvements		74,542			62,877
Equipment, furniture and fixtures		381,812			347,937
Leasehold improvements		428,755			396,650
Total Property and Equipment		903,334			825,331
Less accumulated depreciation and amortization		(319,083	)		(257,378	)
Property and Equipment, Net		584,251			567,953
Other Assets:
Goodwill		96,774			96,774
Other intangible assets		38,930			38,930
Deferred taxes		29,406			22,503
Other assets, net		9,368			37,233
Total Other Assets		174,478			195,440
	$	1,283,819		$	1,250,126
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	81,948		$	88,134
Accrued liabilities		83,883			91,622
Current portion of deferred liabilities		1,528			1,437
Total Current Liabilities		167,359			181,193
Noncurrent Liabilities:
Deferred liabilities		174,307			156,417
Total Noncurrent Liabilities		174,307			156,417
Stockholders’ Equity:
Common stock		1,765			1,762
Additional paid-in capital		257,854			249,639
Retained earnings		682,522			661,115
Other accumulated comprehensive income		12			—
Total Stockholders’ Equity		942,153			912,516
	$	1,283,819		$	1,250,126

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Chico’s FAS, Inc.
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share amounts)

	Thirty-Nine Weeks Ended									Thirteen Weeks Ended
	November 1, 2008				November 3, 2007					November 1, 2008						November 3, 2007
	Amount		% of Sales		Amount			% of Sales		Amount			% of Sales			Amount			% of Sales
Net sales by Chico’s/Soma stores	$	832,052		68.8	$	942,399			72.2	$	269,079			68.2		$	300,576			72.3
Net sales by White House | Black Market stores		328,696		27.2		310,928			23.8		106,751			27.1			97,337			23.4
Net sales by Direct to consumer		48,278		4.0		51,587			4.0		18,413			4.7			18,000			4.3
Other net sales		—		—		115			0.0		—			—			—			—
Net sales		1,209,026		100.0		1,305,029			100.0		394,243			100.0			415,913			100.0
Cost of goods sold		555,490		45.9		531,072			40.7		182,870			46.4			173,449			41.7
Gross margin		653,536		54.1		773,957			59.3		211,373			53.6			242,464			58.3
Selling, general and administrative expenses:
Store operating expenses		485,436		40.2		467,660			35.8		164,494			41.7			161,708			38.9
Marketing		61,673		5.1		64,648			5.0		22,043			5.6			28,919			6.9
Shared services		83,553		6.9		85,949			6.6		26,535			6.7			28,554			6.9
Total selling, general, and administrative expenses		630,662		52.2		618,257			47.4		213,072			54.0			219,181			52.7
Income (loss) from operations		22,874		1.9		155,700			11.9		(1,699	)		(0.4	)		23,283			5.6
Gain on sale of investment		—		—		6,833			0.6		—			—			6,833			1.6
Interest income, net		6,433		0.5		8,177			0.6		2,394			0.6			3,257			0.8
Income before taxes		29,307		2.4		170,710			13.1		695			0.2			33,373			8.0
Income tax provision (benefit)		7,900		0.6		59,065			4.5		(1,300	)		(0.3	)		9,637			2.3
Income from continuing operations		21,407		1.8		111,645			8.6		1,995			0.5			23,736			5.7
Loss on discontinued operations, net of tax		—		—		2,234			0.2		—			—			166			0.0
Net income	$	21,407		1.8	$	109,411			8.4	$	1,995			0.5		$	23,570			5.7
Per share data:
Income from continuing operations per common share-basic	$	0.12			$	0.63				$	0.01					$	0.13
Loss on discontinued operations per common share-basic	$	—			$	(0.01	)			$	—					$	(0.00	)
Net income per common share-basic	$	0.12			$	0.62				$	0.01					$	0.13
Income from continuing operations per common share-diluted	$	0.12			$	0.63				$	0.01					$	0.13
Loss on discontinued operations per common share-diluted	$	—			$	(0.01	)			$	—					$	(0.00	)
Net income per common & common equivalent share—diluted	$	0.12			$	0.62				$	0.01					$	0.13
Weighted average common shares outstanding—basic		175,836				175,511					175,876						175,557
Weighted average common & common equivalent shares outstanding—diluted		176,017				176,614					176,029						176,281

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Chico’s FAS, Inc.
Consolidated Cash Flow Statements
(Unaudited)
(in thousands)

	Thirty-Nine Weeks Ended
	November 1,			November 3,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	21,407		$	109,411
Adjustments to reconcile net income to net cash provided by operating activities —
Depreciation and amortization, cost of goods sold		7,122			7,718
Depreciation and amortization, other		68,190			59,526
Deferred tax benefit		(12,728	)		(9,743	)
Stock-based compensation expense, cost of goods sold		2,612			3,597
Stock-based compensation expense, other		6,822			9,131
(Excess) deficiency tax benefit of stock-based compensation		(100	)		259
Deferred rent expense, net		5,423			7,574
Gain on sale of investment		—			(6,833	)
Loss (gain) on disposal of property and equipment		711			(919	)
Increase (decrease) in assets —
Receivables, net		(528	)		(2,495	)
Income tax receivable		23,973			—
Inventories		(43,010	)		(56,285	)
Prepaid expenses and other		(3,035	)		(5,508	)
(Decrease) increase in liabilities —
Accounts payable		(6,186	)		41,069
Accrued and other deferred liabilities		3,492			25,635
Total adjustments		52,758			72,726
Net cash provided by operating activities		74,165			182,137
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales (purchases) of marketable securities, net		54,376			(39,177	)
Purchase of Minnesota franchise rights and stores		—			(32,896	)
Acquisition of other franchise stores		—			(6,361	)
Proceeds from sale of land		—			13,426
Proceeds from sale of investment		—			15,090
Purchases of property and equipment		(92,320	)		(160,452	)
Net cash used in investing activities		(37,944	)		(210,370	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		307			3,524
Excess (deficiency) tax benefit of stock-based compensation		100			(259	)
Repurchase of common stock		(196	)		(279	)
Net cash provided by financing activities		211			2,986
Net increase (decrease) in cash and cash equivalents		36,432			(25,247	)
CASH AND CASH EQUIVALENTS, Beginning of period		13,801			37,203
CASH AND CASH EQUIVALENTS, End of period	$	50,233		$	11,956

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