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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 29, 2022

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from   to
 Commission file number 001-16435
Chico's FAS, Inc.
(Exact name of registrant as specified in its charter)
 
Florida 59-2389435
(State or other jurisdiction of incorporation or organization) (I.R.S. 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)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, Par Value $0.01 Per ShareCHSNew York Stock Exchange
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   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes   No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer 
  Accelerated filer 
Non-accelerated filer   Smaller reporting company 
Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
At November 14, 2022, the registrant had 125,069,318 shares of Common Stock, $0.01 par value per share, outstanding.



1

CHICO'S FAS, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE
FISCAL THIRTEEN AND THIRTY-NINE WEEKS ENDED OCTOBER 29, 2022
TABLE OF CONTENTS
 
2

PART I – FINANCIAL INFORMATION 
ITEM 1.FINANCIAL STATEMENTS


CHICO'S FAS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 October 29, 2022October 30, 2021October 29, 2022October 30, 2021
 Amount% of
Sales
Amount% of
Sales
Amount% of
Sales
Amount% of
Sales
Net Sales$518,332 100.0 %$453,644 100.0 %$1,617,967 100.0 %$1,313,664 100.0 %
Cost of goods sold310,892 60.0 269,205 59.3 962,448 59.5 820,973 62.5 
Gross Margin207,440 40.0 184,439 40.7 655,519 40.5 492,691 37.5 
Selling, general and administrative expenses175,841 33.9 162,469 35.8 520,296 32.1 442,637 33.7 
Income from Operations31,599 6.1 21,970 4.9 135,223 8.4 50,054 3.8 
Interest expense, net(1,080)(0.2)(1,744)(0.4)(3,111)(0.2)(5,170)(0.4)
Income before Income Taxes30,519 5.9 20,226 4.5 132,112 8.2 44,884 3.4 
Income tax provision5,900 1.2 2,000 0.5 30,600 1.9 9,400 0.7 
Net Income$24,619 4.7 %$18,226 4.0 %$101,512 6.3 %$35,484 2.7 %
Per Share Data:
Net income per common share - basic$0.20 $0.15 $0.84 $0.30 
Net income per common and common equivalent share – diluted$0.20 $0.15 $0.82 $0.29 
Weighted average common shares outstanding – basic120,333 117,304 119,776 117,005 
Weighted average common and common equivalent shares outstanding – diluted124,887 123,166 124,016 121,897 
The accompanying notes are an integral part of these condensed consolidated statements.

3


CHICO'S FAS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
 
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 October 29, 2022October 30, 2021October 29, 2022October 30, 2021
Net income$24,619 $18,226 $101,512 $35,484 
Other comprehensive loss:
Unrealized losses on marketable securities, net of taxes(233)(10)(228)(64)
Comprehensive income$24,386 $18,216 $101,284 $35,420 
The accompanying notes are an integral part of these condensed consolidated statements.

4


CHICO'S FAS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)
 
October 29, 2022January 29, 2022October 30, 2021
ASSETS
Current Assets:
Cash and cash equivalents$117,726 $115,105 $134,458 
Marketable securities, at fair value23,017  3,006 
Inventories304,127 323,389 277,738 
Prepaid expenses and other current assets47,208 41,871 51,841 
Income tax receivable15,430 13,698 13,125 
Total Current Assets507,508 494,063 480,168 
Property and Equipment, net183,153 195,332 199,853 
Right of Use Assets432,018 463,077 494,808 
Other Assets:
Goodwill16,360 16,360 16,360 
Other intangible assets, net5,000 5,000 5,000 
Other assets, net18,890 23,005 25,413 
Total Other Assets40,250 44,365 46,773 
$1,162,929 $1,196,837 $1,221,602 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable$107,400 $180,828 $172,897 
Current lease liabilities157,687 172,506 177,563 
Other current and deferred liabilities155,133 134,051 140,982 
Total Current Liabilities420,220 487,385 491,442 
Noncurrent Liabilities:
Long-term debt69,000 99,000 99,000 
Long-term lease liabilities346,560 381,081 415,458 
Other noncurrent and deferred liabilities2,612 7,867 8,147 
Total Noncurrent Liabilities418,172 487,948 522,605 
Commitments and Contingencies (see Note 10)
Shareholders’ Equity:
Preferred stock, $0.01 par value; 2,500 shares authorized; no shares issued and outstanding
   
Common stock, $0.01 par value; 400,000 shares authorized; 166,326 and 163,823 and 163,806 shares issued respectively; and 125,029 and 122,526 and 122,509 shares outstanding, respectively
1,250 1,225 1,225 
Additional paid-in capital510,374 508,654 505,419 
Treasury stock, at cost, 41,297 shares, respectively
(494,395)(494,395)(494,395)
Retained earnings307,536 206,020 195,306 
Accumulated other comprehensive loss(228)  
Total Shareholders’ Equity324,537 221,504 207,555 
$1,162,929 $1,196,837 $1,221,602 

The accompanying notes are an integral part of these condensed consolidated statements.

5


CHICO'S FAS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(In thousands, except per share amounts)
Thirteen Weeks Ended
 Common StockAdditional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Gain (Loss) 
SharesPar ValueSharesAmountTotal
BALANCE, July 30, 2022125,184 $1,252 $508,105 41,297 $(494,395)$282,910 $5 $297,877 
Net income— — — — — 24,619 — 24,619 
Unrealized losses on marketable securities, net of taxes— — — — — — (233)(233)
Issuance of common stock3 — 83 — — — — 83 
Dividends on common stock— — — — — 7 — 7 
Repurchase of common stock & tax withholdings related to share-based awards(158)(2)(978)— — — — (980)
Share-based compensation— — 3,164 — — — — 3,164 
BALANCE, October 29, 2022125,029 $1,250 $510,374 41,297 $(494,395)$307,536 $(228)$324,537 
BALANCE, July 31, 2021122,565 $1,226 $503,168 41,297 $(494,395)$177,077 $10 $187,086 
Net income— — — — — 18,226 — 18,226 
Unrealized losses on marketable securities, net of taxes— — — — — — (10)(10)
Issuance of common stock94 — (1)— — — — (1)
Dividends on common stock— — — — — 3 — 3 
Repurchase of common stock & tax withholdings related to share-based awards(150)(1)(895)— — — — (896)
Share-based compensation— — 3,147 — — — — 3,147 
BALANCE, October 30, 2021122,509 $1,225 $505,419 41,297 $(494,395)$195,306 $ $207,555 


The accompanying notes are an integral part of these condensed consolidated statements.

6


CHICO'S FAS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(In thousands, except per share amounts)
Thirty-Nine Weeks Ended
Common StockAdditional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Gain (Loss) 
 SharesPar ValueSharesAmountTotal
BALANCE, January 29, 2022122,526 $1,225 $508,654 41,297 $(494,395)$206,020 $ $221,504 
Net income— — — — — 101,512 — 101,512 
Unrealized losses on marketable securities, net of taxes— — — — — — (228)(228)
Issuance of common stock4,258 43 196 — — — — 239 
Dividends on common stock— — — — — 4 — 4 
Repurchase of common stock & tax withholdings related to share-based awards(1,755)(18)(8,797)— — — — (8,815)
Share-based compensation— — 10,321 — — — — 10,321 
BALANCE, October 29, 2022125,029 $1,250 $510,374 41,297 $(494,395)$307,536 $(228)$324,537 
BALANCE, January 30, 2021119,735 $1,197 $498,488 41,297 $(494,395)$159,765 $64 $165,119 
Net income— — — — — 35,484 — 35,484 
Unrealized losses on marketable securities, net of taxes— — — — — — (64)(64)
Issuance of common stock3,242 33 (33)— — — —  
Dividends on common stock— — — — — 57 — 57 
Repurchase of common stock & tax withholdings related to share-based awards(468)(5)(1,872)— — — — (1,877)
Share-based compensation— — 8,836 — — — — 8,836 
BALANCE, October 30, 2021122,509 $1,225 $505,419 41,297 $(494,395)$195,306 $ $207,555 

The accompanying notes are an integral part of these condensed consolidated statements.

7


CHICO'S FAS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
 Thirty-Nine Weeks Ended
 October 29, 2022October 30, 2021
Cash Flows from Operating Activities:
Net income$101,512 $35,484 
Adjustments to reconcile net income to net cash provided by operating activities:
Inventory write-offs826 374 
Depreciation and amortization33,350 39,662 
Non-cash lease expense137,184 139,116 
Loss on disposal and impairment of property and equipment, net1,804 1,432 
Deferred tax benefit(381)190 
Share-based compensation expense10,321 8,836 
Changes in assets and liabilities:
Inventories18,436 (74,129)
Prepaid expenses and other assets(2,591)(13,830)
Income tax receivable(1,732)45,015 
Accounts payable(73,120)56,503 
Accrued and other liabilities13,583 16,643 
Lease liability(155,561)(166,990)
Net cash provided by operating activities83,631 88,306 
Cash Flows from Investing Activities:
Purchases of marketable securities(26,376)(269)
Proceeds from sale of marketable securities3,083 15,753 
Purchases of property and equipment(21,207)(8,246)
Proceeds from sale of assets2,772  
Net cash (used in) provided by investing activities(41,728)7,238 
Cash Flows from Financing Activities:
Payments on borrowings(30,000)(50,000)
Payments of debt issuance costs(706) 
Proceeds from issuance of common stock239  
Payments of tax withholdings related to share-based awards(8,815)(1,877)
Net cash used in financing activities(39,282)(51,877)
Net increase in cash and cash equivalents2,621 43,667 
Cash and Cash Equivalents, Beginning of period
115,105 90,791 
Cash and Cash Equivalents, End of period
$117,726 $134,458 
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest$3,686 $4,590 
Cash (paid) received for income taxes, net$(26,426)$42,084 
The accompanying notes are an integral part of these condensed consolidated statements.

8


CHICO'S FAS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts and where otherwise indicated)
(Unaudited)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements of Chico's FAS, Inc., a Florida corporation, and its wholly-owned subsidiaries (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. for complete financial statements. In the opinion of management, such interim financial statements reflect all normal, recurring adjustments considered necessary to present fairly the condensed consolidated financial position, the results of operations and cash flows for the interim periods presented. All significant intercompany balances and transactions have been eliminated in consolidation. The fiscal year ended January 29, 2022 balance sheet data was derived from audited consolidated financial statements. For further information, refer to the consolidated financial statements and notes thereto for the fiscal year ended January 29, 2022, included in the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 2022 filed with the Securities and Exchange Commission ("SEC") on March 15, 2022 ("2021 Annual Report on Form 10-K").
As used in this report, all references to "we," "us," "our", "the Company" and "Chico's FAS," 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 thirty-nine weeks ended October 29, 2022 are not necessarily indicative of the results that may be expected for the entire year.
COVID-19 Pandemic Update
The novel strain of coronavirus (‘‘COVID-19’’) pandemic (the ‘‘COVID-19 pandemic’’ or the ‘‘pandemic’’) resulted in significant challenges across our business since March 2020 and is expected to continue to impact our business operations for the remainder of fiscal 2022 to varying degrees. In response to the pandemic, many of our markets imposed limitations, varying by market and in frequency, on the access to the Company’s store fleet, including temporary store closures and/or a reduction in hours, staffing and capacity. We continue to focus on evolving consumer demand emerging from the pandemic and have accelerated our transformation to a digital-first company, fast-tracking numerous innovation and technology investments across all three of our brands. Even as governmental restrictions have relaxed and markets are primarily open, we expect continued uncertainty and volatility on our business operations, operating results and operating cash flows as the ongoing economic impacts and health concerns associated with the pandemic continue to affect consumer behavior, spending levels and shopping preferences and cause disruptions to the supply chain and increase our raw materials and freight costs. Due to the uncertainty over the duration and severity of the economic and operational impacts of the pandemic, the adverse impacts of the pandemic may continue throughout our fiscal year 2022.
Reclassifications
Certain reclassifications have been made to the prior period's financial statements to enhance the comparability with the current year's financial statements. As a result, certain line items have been amended in the unaudited condensed consolidated balance sheets to conform to the current period's presentation.
Adoption of New Accounting Pronouncements
There were no new accounting pronouncements adopted by the Company during the thirteen and thirty-nine weeks ended October 29, 2022.
2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
    The Company currently has no material recent accounting pronouncements yet to be adopted.

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3. REVENUE RECOGNITION
Disaggregated Revenue
    The following table disaggregates our operating segment revenue by brand, which we believe provides a meaningful depiction of the nature of our revenue. Amounts shown include licensing and wholesale revenue, which is not a significant component of total revenue, and is aggregated within the respective brands in the table below.
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 October 29, 2022October 30, 2021October 29, 2022October 30, 2021
Chico's$255,341 49.3 %$203,505 44.9 %$801,584 49.5 %$601,914 45.8 %
WHBM157,451 30.4 138,159 30.4 485,061 30.0 364,250 27.7 
Soma105,540 20.3 111,980 24.7 331,322 20.5 347,501 26.5 
Total Net Sales$518,332 100.0 %$453,644 100.0 %$1,617,967 100.0 %$1,313,664 100.0 %
Contract Liability
    Contract liabilities in the unaudited condensed consolidated balance sheets are comprised of obligations associated with our gift card and customer loyalty programs. As of October 29, 2022, January 29, 2022 and October 30, 2021, contract liabilities primarily consisted of gift cards of $31.9 million, $43.5 million and $32.4 million, respectively.
    For the thirteen and thirty-nine weeks ended October 29, 2022, the Company recognized $7.0 million and $27.0 million, respectively, of revenue that was previously included in the gift card contract liability as of January 29, 2022. For the thirteen and thirty-nine weeks ended October 30, 2021, the Company recognized $3.0 million and $18.7 million, respectively, of revenue that was previously included in the gift card contract liability as of January 30, 2021. The contract liability for our loyalty program was not material as of October 29, 2022, January 29, 2022 or October 30, 2021.
Performance Obligation
    For the thirteen and thirty-nine weeks ended October 29, 2022 and October 30, 2021, revenue recognized from performance obligations related to prior periods were not material. Revenue to be recognized in future periods related to performance obligations is not expected to be material.

4. LEASES
We lease retail stores, a limited amount of office space and certain equipment under operating leases expiring in various years through the fiscal year ending 2033. All of our leases have been classified as operating leases and are recognized and measured as such.
Certain operating leases provide for renewal options that are at a pre-determined period and rental value. Furthermore, certain leases provide that we may cancel the lease if our retail sales at that location fall below an established level. Within the first few years of the initial lease term, a majority of our store operating leases contain cancellation clauses that allow the leases to be terminated at our discretion, if certain minimum sales levels are not met. In the normal course of business, operating leases are typically renewed or replaced by other leases.
Escalation of operating lease payments of certain leases depend on an existing index or rate, such as the consumer price index or the market interest rate. These are considered variable lease payments and are included in lease payments when the escalation is known.
In April 2020, the FASB granted a practical expedient permitting an entity to choose to forgo the evaluation of the enforceable rights and obligations of the original lease contract, specifically in situations where rent concessions have been agreed to with landlords as a result of the pandemic. Instead, the entity may account for pandemic-related rent concessions, whatever their form (e.g. rent deferral, abatement or other) either: a) as if they were part of the enforceable rights and obligations of the parties under the existing lease contract; or b) as lease modifications. During the thirteen and thirty-nine weeks ended October 30, 2021, we received concessions from certain landlords in the form of rent deferrals, rent abatements and other lease or rent modifications as a result of the ongoing impact of the pandemic. In accordance with the practical expedient allowed by the FASB, the Company elected to treat all pandemic-related rent concessions and related amendments, including pandemic-related lease amendments that extended the lease term, as lease modifications under ASC 842, Leases. In
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addition, the Company continued recording lease expense during deferral periods, as applicable, in accordance with its existing policies.
Operating lease expense was as follows:
Thirteen Weeks EndedThirty-Nine Weeks Ended
October 29, 2022October 30, 2021October 29, 2022October 30, 2021
Operating lease cost (1)
$55,608 $53,448 $163,271 $164,195 
(1) The thirteen and thirty-nine weeks ended October 29, 2022, includes $9.7 million and $28.5 million, respectively, in variable lease costs. The thirteen and thirty-nine weeks ended October 30, 2021, includes $9.5 million and $28.7 million, respectively, in variable lease costs.
Supplemental balance sheet information related to operating leases was as follows:
October 29, 2022January 29, 2022October 30, 2021
Right of use assets$432,018 $463,077 $494,808 
Current lease liabilities$157,687 $172,506 $177,563 
Long-term lease liabilities346,560 381,081 415,458 
Total operating lease liabilities$504,247 $553,587 $593,021 
Weighted Average Remaining Lease Term (years)4.14.04.1
Weighted Average Discount Rate (1)
5.0 %4.5 %4.5 %
(1) The incremental borrowing rate used by the Company is based on the rate at which the Company could borrow funds using its credit rating for a collateralized loan of similar term to the lease. The weighted average discount rate represents a weighted average of the incremental borrowing rate for each lease weighted based on the remaining fixed lease obligations. 
Supplemental cash flow information related to operating leases was as follows:
Thirty-Nine Weeks Ended
October 29, 2022October 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows$155,561 $166,990 
Right of use assets obtained in exchange for lease obligations, non-cash88,484 27,510 

Maturities of operating lease liabilities as of October 29, 2022 were as follows:
Fiscal Year Ending:
January 28, 2023$49,988 
February 4, 2024172,974 
February 1, 2025128,373 
January 31, 202685,693 
January 30, 202756,845 
Thereafter74,454 
Total future minimum lease payments$568,327 
Less imputed interest(64,080)
Total$504,247 
    
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5. SHARE-BASED COMPENSATION
For the thirty-nine weeks ended October 29, 2022 and October 30, 2021, share-based compensation expense was $10.3 million and $8.8 million, respectively. As of October 29, 2022, approximately 6.8 million shares remain available for future grants of equity awards under our 2020 Omnibus Stock and Incentive Plan.
Restricted Stock Awards
    Restricted stock awards vest in equal annual installments over a three-year period from the date of grant, except for a restricted stock award granted to our then Chief Executive Officer in fiscal 2019, which vests over a four-year period from the date of grant, and restricted stock awards granted in March 2021, which vest 50% one year from the date of grant, 30% two years from the date of grant and 20% three years from the date of grant.
Restricted stock award activity for the thirty-nine weeks ended October 29, 2022 was as follows:
Number of
Shares
Weighted
Average
Grant Date
Fair Value
Unvested, beginning of period5,140,240 $3.18 
Granted2,745,698 4.80 
Vested(2,709,403)3.29 
Forfeited(532,942)3.68 
Unvested, end of period4,643,593 4.01 
Restricted Stock Units
    Restricted stock units vest 100% one year from the date of grant with certain rights to defer settlement in shares of our common stock, except for restricted stock units granted in March 2021, which vest 50% one year from the date of grant, 30% two years from the date of grant and 20% three years from the date of grant, and restricted stock units granted in March 2022, which vest in equal annual installments over a three-year period from the date of grant.
Restricted stock unit activity for the thirty-nine weeks ended October 29, 2022 was as follows:
Number of
Shares
Weighted
Average
Grant Date
Fair Value
Unvested, beginning of period647,350 $2.38 
Granted47,468 4.74 
Vested(288,600)2.66 
Unvested, end of period406,218 2.46 
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Performance-based Restricted Stock Units
During the thirty-nine weeks ended October 29, 2022, we granted performance-based restricted stock units ("PSUs") contingent upon the achievement of Company-specific performance goals during the three fiscal years 2022 through 2024. Any units earned as a result of the achievement of the performance goals of the PSUs will vest three years from the date of grant and will be settled in shares of our common stock.
PSU activity for the thirty-nine weeks ended October 29, 2022 was as follows:
Number of Units/
Shares
Weighted
Average
Grant Date
Fair Value
Unvested, beginning of period3,734,207 $2.24 
Granted1,127,256 3.90 
Vested(1,697,130)1.16 
Forfeited(489,106)3.10 
Unvested, end of period2,675,227 3.46 

6. INCOME TAXES
The provision for income taxes is based on a current estimate of the annual effective tax rate and is adjusted as necessary for quarterly events. Our effective income tax rate may fluctuate from quarter to quarter as a result of a variety of factors, including changes in our assessment of certain tax contingencies, valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix of earnings across jurisdictions.
For the thirteen weeks ended October 29, 2022 and October 30, 2021, the Company's effective tax rate was 19.3% and 9.9%, respectively. The effective tax rate of 19.3% for the thirteen weeks ended October 29, 2022 primarily reflects a fiscal 2021 provision to return benefit resulting from changes in estimates due to the reversal of a valuation allowance related to fiscal 2021 temporary differences. The 9.9% effective tax rate for the thirteen weeks ended October 30, 2021 primarily reflects a change in estimate from the second quarter of fiscal 2021 due to an increase in annual projected deferred tax assets on which a full valuation allowance existed, offset by a fiscal 2020 provision to return benefit resulting from changes in estimates due to the reversal of a valuation allowance related to fiscal 2020 temporary differences and the rate differential provided by the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.
For the thirty-nine weeks ended October 29, 2022 and October 30, 2021, the Company's effective tax rate was 23.2% and 20.9%, respectively. The effective tax rate of 23.2% for the thirty-nine weeks ended October 29, 2022 primarily reflects a fiscal 2021 provision to return benefit due to the reversal of a valuation allowance related to fiscal 2021 temporary differences and a favorable share-based compensation benefit. The 20.9% effective tax rate for the thirty-nine weeks ended October 30, 2021 primarily reflects an annual projected deferred tax assets on which a full valuation allowance existed, offset by a fiscal 2020 provision to return benefit due to the reversal of a valuation allowance related to fiscal 2020 temporary differences, the rate differential provided by the CARES Act and favorable state audit settlements.
As of October 29, 2022, our unaudited condensed consolidated balance sheet reflected an $11.4 million income tax receivable related to the recovery of Federal income taxes paid in prior years and other tax law changes as a result of the CARES Act.

7. INCOME PER SHARE
In accordance with relevant accounting 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 income per common share pursuant to the "two-class" method. For the Company, participating securities are comprised entirely of unvested restricted stock awards granted prior to fiscal 2020.
Net income per share is determined using the two-class method when it is more dilutive than the treasury stock method. Basic net income per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period, including participating securities. Diluted net income per share reflects the dilutive effect of potential common shares from non-participating securities such as restricted stock awards granted after fiscal 2019, stock options, PSUs and restricted stock units.
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The following table sets forth the computation of net income per basic and diluted share shown on the face of the accompanying condensed consolidated statements of income:
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 October 29, 2022October 30, 2021October 29, 2022October 30, 2021
Numerator
Net income$24,619 $18,226 $101,512 $35,484 
Net income allocated to participating securities(47)(123)(370)(313)
Net income available to common shareholders$24,572 $18,103 $101,142 $35,171 
Denominator (000's)
Weighted average common shares outstanding – basic120,333 117,304 119,776 117,005 
Dilutive effect of non-participating securities4,554 5,862 4,239 4,892 
Weighted average common and common equivalent shares outstanding – diluted124,887 123,166 124,016 121,897 
Net income per common share:
Basic$0.20 $0.15 $0.84 $0.30 
Diluted$0.20 $0.15 $0.82 $0.29 
For the thirteen weeks ended October 29, 2022 and October 30, 2021, 0.1 million and 0.1 million potential shares of common stock, respectively, were excluded from the diluted income per common share calculation relating to non-participating securities, because the effect of including these potential shares was antidilutive.
For the thirty-nine weeks ended October 29, 2022 and October 30, 2021, 0.1 million and 0.2 million potential shares of common stock, respectively, were excluded from the diluted income per common share calculation relating to non-participating securities, because the effect of including these potential shares was antidilutive.

8. FAIR VALUE MEASUREMENTS
Our financial instruments generally consist of cash, money market accounts, marketable securities, assets held in our non-qualified deferred compensation plan, accounts receivable and payable, and debt. Cash, accounts receivable and accounts payable are carried at cost, less reserves for credit losses as applicable, which approximates their fair value due to the short-term nature of the instruments.
Marketable securities are classified as available-for-sale and as of October 29, 2022, consisted of U.S. government agencies, corporate bonds and commercial paper, with $13.8 million of securities with maturity dates within one year or less and $9.2 million with maturity dates over one year.
We consider all marketable securities available-for-sale, including those with maturity dates beyond 12 months, and therefore classify these securities within current assets on the unaudited condensed consolidated balance sheets, as applicable, as they were available to support current operational liquidity needs. Marketable securities are carried at fair value, with the unrealized holding gains and losses, net of income taxes, reflected in accumulated other comprehensive gain until realized, and any credit risk related losses recognized in net income during the period incurred. 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 a set 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.
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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 1Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2Unadjusted 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 3Unobservable inputs for the asset or liability
Assets Measured on a Recurring Basis
    We measure certain financial assets at fair value on a recurring basis, including our marketable securities, as applicable, 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, as applicable. The money market accounts 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 interest rates and yield curves) based on information provided by independent third-party pricing entities, except for U.S. government securities 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 unaudited condensed consolidated balance sheets.
Assets Measured on a Nonrecurring Basis
From time to time, we measure certain assets at fair value on a nonrecurring basis when carrying value exceeds fair value. This includes the evaluation of long-lived assets, goodwill and other intangible assets for impairment using Company-specific assumptions which would fall within Level 3 of the fair value hierarchy. Assets that are measured at fair value on a nonrecurring basis are remeasured when carrying value exceeds fair value. Carrying value after impairment approximates fair value.
We assess the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses market participant rents and a market participant discount rate to calculate the fair value of ROU assets. The Company uses discounted future cash flows of the asset or asset group using a discount rate that approximates the cost of capital of a market participant to quantify fair value for other long-lived assets within the asset group, which are primarily leasehold improvements. The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets, which for our retail stores, is primarily at the store level.
To assess the fair value of goodwill, we have historically utilized both an income approach and a market approach. Inputs used to calculate the fair value based on the income approach primarily include estimated future cash flows, discounted at a rate that approximates the cost of capital of a market participant. Inputs used to calculate the fair value based on the market approach include identifying sales and EBITDA multiples based on guidelines for similar publicly traded companies and recent transactions.
To assess the fair value of trademarks, we utilize a relief from royalty approach. Inputs used to calculate the fair value of the trademarks primarily include future sales projections, discounted at a rate that approximates the cost of capital of a market participant and an estimated royalty rate.
As of October 29, 2022, January 29, 2022 and October 30, 2021, our revolving loan and letter of credit facility approximates fair value as this instrument has a variable interest rate which approximates current market rates (Level 2 criteria).
Fair value calculations contain significant judgments and estimates, which may differ from actual results due to, among other things, economic conditions, changes to the business model or changes in operating performance. The most sensitive assumptions in our estimates include short and long-term revenue recoverability rates as a result of the pandemic, which could impact future impairment charges.
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.
In accordance with the provisions of the guidance, we categorized our financial assets and liabilities which are valued on a recurring and nonrecurring basis, based on the priority of the inputs to the valuation technique for the instruments, as follows:
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  Fair Value Measurements at the End of the Reporting Date Using
 Balance as of October 29, 2022Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts$42,596 $42,596 $ $ 
Marketable securities:
U.S. government agencies3,479  3,479  
Corporate bonds10,709  10,709  
Commercial paper8,829  8,829  
Deferred compensation plan4,776 4,776   
Total recurring fair value measurements$70,389 $47,372 $23,017 $ 
Fair Value Measurements at the End of the Reporting Date Using
Balance as of January 29, 2022Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts$25,396 $25,396 $ $ 
Noncurrent Assets
Deferred compensation plan6,233 6,233   
Total recurring fair value measurements$31,629 $31,629 $ $ 
Fair Value Measurements at the End of the Reporting Date Using
 Balance as of October 30, 2021Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts$22,388 $22,388 $ $ 
Marketable securities:
Corporate bonds3,006  3,006  
Noncurrent Assets
Deferred compensation plan6,317 6,317   
Total recurring fair value measurements$31,711 $28,705 $3,006 $