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 weeks and thirty-nine weeks ended November 1, 2014October 31, 2015 are not necessarily indicative of the results that may be expected for the entire year.

Performance-based restricted stock unit activity for the thirty-nine weeks ended November 1, 2014October 31, 2015 was as follows:

Earnings per share (“EPS”) is determined using the two-class method, as it is more dilutive than the treasury stock method. Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period, including participating securities. Diluted EPS reflects the dilutive effect of potential common shares from non-participating securities such as stock options and PSUs.

For the thirty-nine weeks ended October 31, 2015 and November 1, 2014, and November 2, 2013, 0.61.3 million and 1.00.6 million potential shares of common stock, respectively, were excluded from the diluted per share calculation relating to non-participating securities, because the effect of including these potential shares was antidilutive.

For the thirteen weeks ended October 31, 2015 and November 1, 2014, and November 2, 2013, 0.50.3 million and 0.80.5 million potential shares of common stock, respectively, were excluded from the diluted per share calculation relating to non-participating securities, because the effect of including these potential shares was antidilutive.

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 condensed consolidated balance sheets as they are 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 income 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: 

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 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 condensed consolidated balance sheets.

From time to time, we measure certain assets at fair value on a non-recurring basis, including 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. The carrying value of the current assets and liabilities held for sale related to the the Boston Proper DTC business approximate their fair value due to their short-term nature. We estimate the fair value of other assets held for sale using market values for similar assets which would fall within Level 2 of the fair value hierarchy. During the third quarter of fiscal 2013,2015, we recorded a $72.5$128.1 million in pre-tax impairment chargecharges related to assets measured at fair value on a non-recurring basis, comprised of $67.3$48.9 million in Boston Proper goodwill impairment, and $5.2$39.4 million pre-tax in Boston Proper trade name impairment.impairment, $24.2 million in Boston Proper customer relationship intangible impairment, $13.9 million in property and equipment impairment charges related to Boston Proper and a $1.7 million loss recognized on Boston Proper DTC assets held for sale.

To assess the fair value of Boston Proper goodwill in the second quarter of fiscal 2015, we utilized both an income approach, and awhich incorporated market approach.assumptions. Inputs used to calculate the fair value based on the income approach primarily included estimated future cash flows for the catalogDTC business, discounted at a rate that approximates a rate that would be used by a market participant. Inputs used to calculate the fair value based on the market approach included identifying multiples of sales and earnings based on guidelines for publicly traded companies and recent transactions.

To assess the fair value of the Boston Proper trade name in the second quarter of fiscal 2015, we utilized a relief from royalty approach. Inputs used to calculate the fair value of the trade name utilizing the relief from royalty approach, in the second quarter of fiscal 2015, primarily included future sales projections for the catalogDTC business, discounted at a rate that approximates a rate that would be used by a market participant and estimated royalty rate.

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.

During the quarter ended November 1, 2014,October 31, 2015, we did not make any transfers between Level 1 and Level 2 financial assets. Furthermore, as of October 31, 2015, January 31, 2015 and November 1, 2014, February 1, 2014 and November 2, 2013, we did not have any Level 3 cash equivalents or marketable securities. 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, which are valued on a recurring basis, based on the priority of the inputs to the valuation technique for the instruments, as follows:

We utilize an integrated omni-channel approach to managing our business. We want our customers to experience our brands, not a channel within our brands, and view our various sales channels as a single, integrated process rather than as separate sales channels operating independently. This approach allows our customers to browse, purchase, return, or exchange our merchandise through whatever sales channel and at whatever time is most convenient for her. As a result, we track total sales and comparable sales on a combined basis.

Net sales for the third quarter of fiscal 20142015 were $665.6$641.2 million, an increasea decrease of 1.5%3.7% compared to $655.6$665.6 million in last year's third quarter. The increasedecrease reflected 87 net new stores for a 5.4% square footage increase since last year’s third quarter, partially offset by a 1.6%3.3% decrease in comparable sales.sales and a 0.8% net decrease in selling square footage. The 1.6%3.3% decrease in comparable sales for the third quarter was following a 1.4%1.6% decrease in last year’s third quarter, reflecting a decrease in average dollar sale partially offset by an increase inand transaction count.

The Company’s goals remain to increaseOur overall business strategy is focused on building and cultivating a portfolio of high-performing retail brands serving the fashion needs of women 35 years and older. In the near term, we are focused on increasing the sales volume and profitability of our existing brands. Over the long term, we may build our brand portfolio by a low double-digit percentageconsidering the organic development or acquisition of other specialty retail concepts when our research indicates that the opportunity complements our current brands and diluted earnings per shareis appropriate and in the best interest of the shareholders.

We pursue the growth of the brands in our portfolio by a mid-teen percentage; financial targets that we believe are both sustainable and reflect strong growth metrics. The Company believes that by delivering on these financial objectives over the long-term, the Company will provide its shareholders with substantial value despite periods where we do not meet these objectives.

Net sales for the third quarter increased 1.5%decreased 3.7% to $665.6$641.2 million from $655.6$665.6 million in last year’s third quarter, primarily reflecting 87a 3.3% decrease in comparable sales and a 0.8% net new stores for a 5.4%decrease in selling square footage increase since last year's third quarter, partially offset by a 1.6% decrease in comparable sales.quarter. The 1.6%3.3% decrease in comparable sales for the third quarter was following a 1.4%1.6% decrease in last year’s third quarter, reflecting a decrease in average dollar sale partially offset by an increase inand transaction count.

The Chico’s/Soma Intimates brands’following table depicts comparable sales decreased 1.6% following a 3.3% decrease in last year’s third quarter. The Chico’s brand experienced a low single digit decrease in comparable sales inpercentages by Chico's, WH|BM and Soma for the third quarter compared to a mid-single digit decrease in last year’s third quarter,thirteen weeks ended October 31, 2015 and the Soma Intimates brand experienced a mid-single digit comparable sales increase in the third quarter compared to a high-single digit increase in last year’s third quarter. The WH|BM brand’s comparable sales decreased 1.4% following a 2.5% increase in last year’s third quarter. Boston Proper net sales increased $1.2 million during the current third quarter as compared to last year, primarily due to additional new stores.November 1, 2014:

For the third quarter of fiscal 2014,2015, gross margin was $363.8$350.5 million compared to $364.0$363.8 million in last year’s third quarter. Gross margin was 54.7% of net sales, an 80 basis point decrease fromin line with the same period last year’s third quarter, primarily reflecting increased promotional activity to sell through seasonal merchandise.year.

The Chico’s/Soma Intimates brands’following table depicts comparable sales increased 0.1% following a 3.1% decrease in last year’s year-to-date period. The Chico’s brand experienced a decrease of slightly less than 1% in comparable sales compared to a mid-single digit decrease in last year’s year-to-date period,percentages by Chico's, WH|BM and Soma for the Soma Intimates brand experienced a mid-single digit comparable sales increase compared to a high-single digit increase in last year’s year-to-date period. The WH|BM brand’s comparable sales decreased 4.0% following a 2.5% increase in last year’s year-to-date period. Boston Proper net sales decreased $4.5 million, during the current year-to-date period as compared to last year, primarily reflecting decreased customer demand.thirty-nine weeks ended October 31, 2015 and November 1, 2014:

Gross margin for the year-to-date period was $1.098 billion$1,112.2 million compared to $1.107 billion$1,098.2 million in last year’s year-to-date period. Gross margin was 54.4%55.2% of net sales, a 160an 80 basis point decreaseincrease from fiscal 2013,2014, primarily reflecting increaseda decrease in promotional activity in response to sell through seasonal merchandise.improved inventory management.

On May 4, 2015, in connection with our entry into the Agreement, we repaid and terminated, with no prepayment penalties, the $124.0 million outstanding obligation under our 2011 revolving credit facility. We used the proceeds from the initial draw of upthe term loan and revolving credit facility of the Agreement to $5 million and issuance of letters of credit up to $40 million. The Credit Facility also contains a feature that provides us the ability, subject to satisfaction of certain conditions, to expand the commitments available under the Credit Facility from $70 million up to $125 million. repay such obligations.

These statements, including those in this Form 10-Q and those in press releases or made orally, relate to expectations concerning matters that are not historical fact and may include the words or phrases such as “expects,” “believes,” “anticipates,” “plans,” “estimates,” “approximately,” “our planning assumptions,” “future outlook,” 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 based largely on information currently available to our management and on our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry, and are subject to various risks and uncertainties that could cause actual results to differ materially from historical results or those currently anticipated. Although we believe our expectations are based on reasonable estimates and assumptions, they are not guarantees of performance and there are a number of known and unknown risks, uncertainties, contingencies, and other factors (many of which are outside our control) that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Accordingly, there is no assurance that our expectations will, in fact, occur or that our estimates or assumptions will be correct, and we caution investors and all others not to place undue reliance on such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described in Item 1A, “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 14, 20149, 2015 and the following:

These potential risks and uncertainties includeinclude: the financial strength of retailing in particular and the economy in general,general; the extent of financial difficulties that may be experienced by customers,customers; our ability to secure and maintain customer acceptance of styles and store concepts,concepts; the ability to maintain an appropriate level of inventory, the quality of merchandise received from suppliers,inventory; the extent and nature of competition in the markets in which we operate,operate; the extent of the market demand and overall level of spending for women’s private branded clothing and related accessories,accessories; the effectiveness of our brand awareness and marketing programs,programs; the adequacy and perception of customer service,service; the ability to respond to actions of activist shareholders and others; the ability to coordinate product development with buying and planning,planning; the quality of merchandise received from suppliers; the ability to efficiently, timely and successfully execute significant shifts in the countries from which merchandise is supplied,supplied; the ability of

All written or oral forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice. 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.

Our exposure to interest rate risk relates in part to our revolving line of credit with our bank. However,On May 4, 2015, we entered into a credit agreement, as further discussed in Note 11. The Agreement, which matures on May 4, 2020, has borrowing options which accrue interest by reference, at our election, at either an adjusted eurodollar rate tied to LIBOR or an Alternate Base Rate plus an interest rate margin, as defined in the Agreement. An increase or decrease in market interest rates of November 1, 2014, we did100 basis points would not have any outstanding borrowingsa material effect on our line of credit.annual interest expense.