The accompanying unaudited condensed 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, 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. For further information, refer to the consolidated financial statements and notes thereto for the fiscal year ended January 30, 2016, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 8, 2016.

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-sixthirty-nine weeks ended July 30,October 29, 2016 are not necessarily indicative of the results that may be expected for the entire year.

Reclassifications of certain prior year balances were made in order to conform to the current year presentation.

Effective January 31, 2016, the Company made a voluntary change in accounting principle related to our classification of shipping expenses. Historically, we have presented shipping expenses within selling, general and administrative expenses ("SG&A"). Under the new policy, the Company is presenting these expenses within cost of good sold ("COGS") in the unaudited Condensed Consolidated Statements of Income. The Company believes that this change is preferable as the shipping expenses represent direct costs associated with the sale of our merchandise and improves comparability with the Company's peers. The accounting policy change was applied retrospectively to all periods presented. There was no change to consolidated net income, however, cost of sales increased by $9.5$8.8 million and SG&A decreased by the same amount for the thirteen weeks ended August 1,October 31, 2015. The Company recorded $8.5$8.6 million in shipping expense as a component of COGS during the thirteen weeks ended July 30,October 29, 2016. For the year-to-date period ended August 1,October 31, 2015, cost of sales increased by $18.8$27.6 million and SG&A decreased by the same amount. The Company recorded $16.8$25.5 million in shipping expense as a component of COGS during the twenty-sixthirty-nine weeks ended July 30,October 29, 2016.

Footnotes to the unaudited Condensed Consolidated Financial Statements herein have been adjusted to reflect the impact of these changes accordingly.

In March 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-09, Compensation - Stock Compensation. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. ASU 2016-09 requires entities to recognize the income tax effects of awards in the income statement when the awards vest or are settled. The standard also permits an employer to repurchase more of an employee's shares for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. This standard will be effective and adopted for our first quarter 2017. We are currently assessing the new standard and its impact to our consolidated results of operations, financial position and cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which replaces the existing guidance in Accounting Standard Codification 840, Leases. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. ASU 2016-02 requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset and for operating leases, the lessee would recognize straight-line total rent expense. We are currently assessing the new standard and its impact to our consolidated results of operations, financial position and cash flows.

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which modifies the presentation of noncurrent and current deferred taxes. ASU 2015-17 requires that all deferred tax assets and liabilities be classified as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The standard is effective for interim and annual reporting periods beginning after December 15, 2016. Early adoption is permitted. We early adopted this standard in the fourth quarter of 2015, with retrospective presentation, as shown in our consolidated balance sheets. Our retrospective presentation resulted in a $7.3$26.9 million reclassification from current assets to other assets, net for the period ending August 1,October 31, 2015.

In July 2015, the Financial Accounting Standards Board ("FASB") issued ASU No. 2015-11, Simplifying the Measurement of Inventory (Topic 330). The amendments, which apply to inventory that is measured using any method other than the last-in, first-out (LIFO) or retail inventory method, require that entities measure inventory at the lower of cost or net realizable value. ASU 2015-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and should be applied on a prospective basis. We are currently assessing the potential impact of adopting this ASU, but do not, at this time, anticipate a material impact to our consolidated results of operations, financial position or cash flows.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The update outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. In August 2015, the FASB approved a one year deferral of the effective date, to make it effective for annual and interim reporting periods beginning after December 15, 2017. The standard allows for either a full retrospective or a modified retrospective transition method. The FASB has issued subsequent ASUs related to ASU No. 2014-09, which detail amendments to the ASU, implementation considerations, narrow-scope improvements and practical expedients. We are currently assessing the new standard and all related ASUs and its impact to our consolidated results of operations, financial position and cash flows.

For the twenty-sixthirty-nine weeks ended July 30,October 29, 2016 and August 1,October 31, 2015, stock-based compensation expense was $9.6$15.5 million and $13.7$20.7 million, respectively. As of July 30,October 29, 2016, approximately 5.35.8 million shares remain available for future grants of equity awards under our 2012 Omnibus Stock and Incentive Plan.

Restricted stock award activity for the twenty-sixthirty-nine weeks ended July 30,October 29, 2016 was as follows:

For the twenty-sixthirty-nine weeks ended July 30,October 29, 2016, we granted performance-based restricted stock units (“PSUs”), contingent upon the achievement of a Company-specific performance goal during fiscal 2016. Any units earned as a result of the achievement of this goal will vest over 3 years from the date of grant and will be settled in shares of our common stock.

Performance-based restricted stock unit activity for the twenty-sixthirty-nine weeks ended July 30,October 29, 2016 was as follows:

For the twenty-sixthirty-nine weeks ended July 30,October 29, 2016 and August 1,October 31, 2015, we did not grant any stock options.

Stock option activity for the twenty-sixthirty-nine weeks ended July 30,October 29, 2016 was as follows:

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.

For the thirteen weeks ended July 30,October 29, 2016 and August 1,October 31, 2015, the effective tax rate was 38.0%22.9% and (108.1)(55.7)%, respectively. For the thirteen weeks ended July 30,October 29, 2016, the income tax provision was $14.1 million. The$7.0 million compared to the income tax benefit of $14.6 million for the second quarter of 2015 of $28.2 million andthirteen weeks ended October 31, 2015. The favorability in the effective tax rate for the third quarter of (108.1)%2016 primarily reflected thereflects an additional tax benefit related to the disposition of Boston Proper's stock and the impactrealization of the Boston Proper goodwill and trade name impairment on the annual effectiveincome tax rate.

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 earnings per common share pursuant to the “two-class” method. For us, participating securities are composed entirely of unvested restricted stock awards and PSUs that have met their relevant performance criteria.

Earnings per share (“EPS”) is determined using the two-class method when 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.

The following table sets forth the computation of basic and diluted EPS shown on the face of the accompanying condensed consolidated statements of operations (in thousands, except per share amounts):

For the thirteen weeks weeks ended July 30,October 29, 2016 and August 1,October 31, 2015, 0.80.7 million and 0.3 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 twenty-sixthirty-nine weeks ended July 30,October 29, 2016 and August 1,October 31, 2015, 0.9 million and 0.81.3 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.

Our financial instruments 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, 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 July 30,October 29, 2016 generally consist of corporate bonds, U.S. government agencies, municipal securities, and commercial paper with $31.5$25.4 million of securities with maturity dates within one year or less and $19.1$25.0 million with maturity dates over one year and less than two years.

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. We estimate the fair value of assets held for sale using market values for similar assets which would fall within Level 2 of the fair value hierarchy.

To assess the fair value of long-term debt, we utilize a discounted future cash flow model using current borrowing rates for similar types of debt of comparable maturities.

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 July 30,October 29, 2016, we did not make any transfers between Level 1 and Level 2 financial instruments. Furthermore, as of July 30,October 29, 2016, January 30, 2016 and August 1,October 31, 2015, we did not have any Level 3 financial instruments. 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 fiscal 2015, we entered into a credit agreement (the "Agreement) providing for a term loan of $100.0 million and a revolving credit facility of $100.0 million. The term loan and revolving credit facility mature on May 4, 2020 and 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. The Agreement contains customary representations, warranties, and affirmative covenants, including the requirement to maintain certain financial ratios. The Company was in compliance with the applicable ratio requirements and other covenants at July 30,October 29, 2016. As of July 30,October 29, 2016, we had total available borrowing capacity of $100.0 million under our revolving credit facility.

The following table provides details on our debt outstanding as of July 30,October 29, 2016, January 30, 2016 and August 1,October 31, 2015:

During the twenty-sixthirty-nine weeks ended July 30,October 29, 2016, we repurchased 4.96.5 million shares, under our share repurchase program announced in November 2015 at a total cost of approximately $56.3$76.3 million. As of July 30,October 29, 2016, the Company has $203.7$183.7 million remaining under the share repurchase program. However, we have no continuing obligation to repurchase shares under this authorization, and the timing, actual number and value of any additional shares to be purchased will depend on the performance of our stock price, market conditions and other considerations.

In June 2015, the Company was named as a defendant in Ackerman v. Chico’s FAS, Inc., a putative representative Private Attorney General action filed in the Superior Court of California, County of Los Angeles. The Complaint alleges numerous violations of California law related to wages, meal periods, rest periods, wage statements, and failure to reimburse business expenses, among other things. Plaintiff subsequently amended her complaint to make the same allegations on a class action basis. In June 2016, the parties submitted a proposed settlement of the matter to the court, and the court granted preliminary approval on August 26, 2016.2016, and settlement notices have been distributed. If finally approved, the proposed settlement will not have a material adverse effect on the Company’s consolidated financial condition or results of operations.

In March 2016, the Company was named as a defendant in Cunningham v. Chico’s FAS, Inc., a putative class action filed in the Superior Court of California, County of San Diego. Plaintiff seeks to represent current and former nonexempt employees of Soma IntimatesGiven the overlap with the claims alleged in California. The Complaint alleges many of the same Labor Code violations as Ackerman case, described above. The court hasabove, the Court initially stayed the Cunningham case pending final approval of the Ackerman settlement. In October 2016, the parties agreed to lift the stay and to resolve the matter as an individual action. The Court has since dismissed the case. The settlement in lightamount was immaterial.

In June 2016, the Company was named as a defendant in Rodems v. Chico’s FAS, Inc., a putative class action filed in the Superior Court of California, County of Fresno. Plaintiff seekssought to represent current and former nonexempt employees of Chico’s stores in California. The Complaint allegesalleged many of the same Labor Code violations as Ackerman, described above. TheAs a result, the court has stayed the matter pending final approval of the Ackerman settlementproposed settlement. The Company and the plaintiff subsequently agreed to a lifting of the stay and a filing of an amended complaint in early November, and the Company removed the case to the United State District Court for the same reasons described inEastern District of California on November 9, 2016. In the Cunningham case discussion above. Asproposed First Amended Complaint, the plaintiff makes similar claims of Labor Code violations against the Company but does not seek to represent a result,putative class or make class action allegations. The Company disputes the allegations of the First Amended Complaint and, at this time, the Company does not expect that the Rodemsthis case will have a material adverse effect on the Company’s consolidated financial condition or results of operations.

On July 28, 2016, the Company was named as a defendant in Calleros v. Chico’s FAS, Inc., a putative class action filed in the Superior Court of California, County of Santa Barbara. Plaintiff alleges that the Company failed to comply with California law requiring it to provide consumers cash for gift cards with a stored value of less than $10.00. The Company is reviewing the factual allegations in the Complaint and is not yet able to ascertain the merit or the value of the claims asserted. On initial review, the Company believes that the matter is not appropriate for class treatment; however, it is not possible to predict whether it will be permitted to proceed as a class or the size of the putative class, and no assurance can be given that the Company will be successful in its defense of this action on the merits or otherwise. Because the case is in the very early stage and class determinations have not been made, the Company is unable to estimate any potential loss or range of loss.loss were it to lose on the merits of the case. However, the case is scheduled for voluntary mediation on November 28, 2016, and, at this time, the Company does not expect that the case will have a material adverse effect on the Company’s consolidated financial conditions or results of operation.

Other than as noted above, we are not currently a party to any legal proceedings other than claims and lawsuits arising in the normal course of business. All such matters are subject to uncertainties and outcomes may not be predictable. Consequently, the ultimate aggregate amount of monetary liability or financial impact with respect to these matters as of July 30,October 29, 2016 are not estimable. However, while such matters could affect our consolidated operating results when resolved in future periods, management believes that upon final disposition, any monetary liability or financial impact to us would not be material to our annual consolidated financial statements.

On November 22, 2016, we announced that our Board of Directors has declared a quarterly dividend of $0.08 per share on our common stock. The Companydividend will be payable on December 19, 2016 to shareholders of record at the close of business on December 5, 2016. Although it is not aware of any material subsequent events which would require recognition or disclosureour Company’s intention to continue to pay a quarterly cash dividend in the condensed consolidatedfuture, any decision to pay future cash dividends will be made by the Board of Directors and will depend on future earnings, financial statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto and our 2015 Annual Report to Stockholders.

We are a leading omni-channel specialty retailer of women’s private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing items operating under the Chico’s, White House Black Market (“WHBM”) and Soma brand names. We earn revenues and generate cash through the sale of merchandise in our domestic and international retail stores, on our various websites, through our call center which takes orders for all of our brands, and through an unaffiliated franchise partner in Mexico.

We utilize an integrated omni-channel approach to managing our business. WeFor each of our brands, we want our customers to experience our brands, not limited to a channel within our brands, and view ourthe brand, through all of its various sales channels, as an integrated experience, rather than viewing it through a single integrated process rather thanchannel (such as separate sales channels operating independently.the store or the website). This approach allows our customers to browse, purchase, return, or exchange our merchandise through whatever sales channel and at whatever time is most convenient. As a result, we track total sales and comparable sales on a combined basis.

Net sales for the secondthird quarter of fiscal 2016 were $635.7$596.9 million compared to $685.8$645.4 million in last year's secondthird quarter. This decrease of 7.3%7.5% included $26.3$18.7 million related to Boston Proper. Excluding Boston Proper from fiscal 2015, net sales decreased 4.8% and primarily reflected a 3.1%4.9% decrease in comparable sales, and closed stores. The 3.1% decrease in comparable sales for the second quarter was following a 0.5% increase in last year’s second quarter, reflectingcomprised of a decrease in transaction count and slightly lower average dollar sale. Third quarter average unit retail increased with a decline in promotional activity.

We reported net income for the secondthird quarter of fiscal 2016 of $23.0$23.6 million, or $0.17$0.18 per diluted share, compared to a net incomeloss of $2.1$11.6 million, or $0.02$0.09 per diluted share, in last year’s secondthird quarter. Results for the secondthird quarter of fiscal 2016 include the impact of restructuring and strategic charges of $10.3$6.8 million after-tax, or $0.08$0.05 per diluted share, primarily consisting of severance, proxy solicitation costs, and consulting fees.outside services, partially offset by an additional tax benefit on the disposition of Boston Proper's stock of $4.0 million, or $0.03 per diluted share. Results for the secondthird quarter of fiscal 2015 include the impact of Boston Proper non-cash goodwill and trade name impairment charges of $47.1$23.9 million after-tax, or $0.33$0.18 per diluted share, restructuring and strategic charges of $10.1$1.9 million after-tax, or $0.07$0.01 per diluted share, primarily related to property and equipment impairment charges for the Boston Proper stores, a tax benefit related to the expected disposition of Boston Proper's stock of $23.8 million, or $0.17 per diluted share, and the operating loss related to Boston Proper of $2.0$3.5 million, or $0.01$0.03 per diluted share. The change in earnings per share also reflects the impact of approximately 10.2 million shares repurchased since the end of the third quarter last year.

Net sales for the year-to-date period of fiscal 2016 were $1.279$1.876 billion, a decrease of 7.6%7.5% compared to $1.384$2.029 billion in last year’s year-to-date period. Net income for the year-to-date period of fiscal 2016 was $54.1$77.7 million, or $0.41$0.58 per diluted share, compared to net income of $34.6$23.0 million, or $0.24$0.16 per diluted share in last year's year-to-date period.year. Results for the year-to-date period of fiscal 2016 include the impact of restructuring and strategic charges of $12.5$19.4 million after-tax, or $0.09$0.15 per diluted share, primarily consisting of severance, proxy solicitation costs, and consulting fees.outside services, partially offset by an additional tax benefit on the disposition of Boston Proper's stock of $4.0 million, or $0.03 per diluted share. Results for the year-to-date period of fiscal 2015 include the impact of Boston Proper non-cash goodwill and trade name impairment charges of $47.1$71.0 million after-tax, or $0.33$0.50 per diluted share, restructuring and strategic charges of $19.3$21.2 million after-tax, or $0.13$0.15 per diluted share, primarily related to property and equipment impairment charges, employee-related costs and lease termination charges, a tax benefit related to the disposition of Boston Proper's stock of $23.8 million, or $0.17 per diluted share, and the operating loss related to Boston Proper of $4.7$8.2 million, or $0.04$0.06 per diluted share. The change in earnings per share also reflects the impact of approximately 10.2 million shares repurchased since the end of the third quarter last year.

Our 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.Weolder. We are focused on increasing the sales volume and profitability of our existing brands through our four focus areas: (1) evolving the customer experience, (2) strengthening our brands' positions, (3) leveraging actionable retail science, and (4) sharpening our financial principles. Over the long term, we may build our brand portfolio by organic development or acquisition of other specialty retail concepts if research indicates that the opportunity complements our current brands and is appropriate and in the best interest of the shareholders.

We pursue the growth of the brands in our portfolio by building our omni-channel capabilities, which includes managing our store base and our growing online presence, executing marketing plans, effectively leveraging expenses and optimizing the potential of each of our three brands. We have invested heavily in our omni-channel capabilities in order to allow customers to fully experience our brands, and not just a channel within our brands.through more than one channel. In essence, we view our various sales channels as a single, integrated process rather than as separate sales channels operating independently. To that end, we often refer to our brands' respective websites as "our largest store" within the brand.

The following table depicts net sales by Chico’s, WHBM, Soma and Boston Proper in dollars and as a percentage of total net sales for the thirteen weeks ended July 30,October 29, 2016 and August 1,October 31, 2015:

Net sales for the secondthird quarter decreased to $635.7$596.9 million from $685.8$645.4 million in last year’s secondthird quarter. This 7.3%7.5% decrease includes $26.3$18.7 million related to Boston Proper in last year’s secondthird quarter and primarily reflects a 3.1%4.9% decrease in comparable sales, comprised of reduced transaction count and closed stores.lower average dollar sale. For the third quarter, average unit retail increased with a decline in promotional activity. Net sales reflects 3136 net store closures, including 20 Boston Proper store closures, or a 1.4%1.7% net decrease in selling square footage since last year's secondthird quarter. The 3.1% decrease in comparable sales for the second quarter followed a 0.5% increase in last year’s second quarter, and reflected reduced transaction count and slightly lower average dollar sale.

The following table depicts comparable sales percentages by Chico's, WHBM and Soma for the thirteen weeks ended July 30,October 29, 2016 and August 1,October 31, 2015:

The following table depicts cost of goods sold and gross margin in dollars and gross margin as a percentage of total net sales for the thirteen weeks ended July 30,October 29, 2016 and August 1,October 31, 2015:

For the secondthird quarter of fiscal 2016, gross margin was $240.8$230.3 million, or 37.9%38.6%, compared to $264.7$249.2 million, or 38.6%, in last year’s secondthird quarter. When excluding Boston Proper from fiscal 2015, gross margin decreased 8040 basis points in fiscal 2016 compared to gross margin of $255.3$244.2 million, or 38.7%39.0% last year. This decrease in gross margin rate primarily reflects salesan improvement in merchandise margin, which was more than offset by deleverage of occupancy costs partially offset by a slightand an increase in merchandise margin rate.incentive compensation.

The following table depicts SG&A, which includes direct operating expenses, marketing expenses and National Store Support Center (“NSSC”) expenses, in dollars and as a percentage of total net sales for the thirteen weeks ended July 30,October 29, 2016 and August 1,October 31, 2015:

For the secondthird quarter of fiscal 2016, SG&A was $186.6$188.4 million compared to $207.2$226.3 million in last year's secondthird quarter. SG&A was 29.4%31.6% of net sales, an 80a 350 basis point decrease from last year's secondthird quarter, primarily due to $12.7a reduction in marketing spend in fiscal 2016, $11.5 million of SG&A related to Boston Proper in the second quarter of fiscal 2015, and lowersavings in store labor, stock-based compensation and marketing expenses, resultingpartially offset by an increase in a slight decline in SG&A rate.incentive compensation.

In fiscal 2014, we initiated a restructuring program, including the acceleration of domestic store closures and an organizational realignment, to ensure that resources are aligned with long-term growth initiatives, including omni-channel. During the first quarter of fiscal 2016, we announced an expansion of our restructuring program to further align the organizational structure with long-term growth initiatives, including transition of executive leadership, and to reduce COGS and SG&A through strategic initiatives. These strategic initiatives include realigning marketing and digital commerce, improving supply chain efficiency, and reducing non-merchandise and marketing expenses. During the second quarter of fiscal 2016, the CompanyWe have continued itsto execute on our cost reduction and operating efficiency initiatives, and subsequently announcedincluding an organizational redesign in the third quarter of fiscal 2016 which clarified roles, responsibilities and processes across our brands and shared service center.

In connection with this effort, in the secondthird quarter of fiscal 2016, we recorded pre-tax restructuring as well as otherand strategic charges totaling $16.6$10.8 million, primarily consisting of severance, proxy solicitation costs,outside services related to cost reduction and consulting fees.operating efficiency initiatives, compared to $3.1 million in the third quarter of fiscal 2015, primarily consisting of Boston Proper lease termination charges. The after-tax impact of the restructuring and strategic charges in the secondthird quarter totaled $10.3$6.8 million, or $0.08$0.05 per diluted share.share, compared to $1.9 million, or $0.01 per diluted share in fiscal 2015.

Our effective tax rate for the secondthird quarter of fiscal 2016 was 38.0%,22.9% compared to an effective tax rate of (108.1)(55.7)% in last year's secondthird quarter. The favorability in the effective tax rate for the third quarter of 2016 primarily reflects an additional tax benefit related to the disposition of Boston Proper's stock and the realization of income tax credits in 2016. The income tax benefit of $28.2$14.6 million for the secondthird quarter of fiscal 2015 and effective tax rate of (108.1)(55.7)% primarily reflected the tax benefit related to the disposition of Boston Proper's stock and the tax benefit of Boston Proper goodwill impairment on the annual effective tax rate.  Excluding the tax benefit related to the disposition of Boston Proper's stock and the impact of the Boston Proper goodwill and trade name impairment on the 2015 second quarterannual effective tax rate would have been 37.7% which is comparable torate. Excluding the 38.0%net after-tax impact of restructuring and strategic charges and the exit of Boston Proper, the effective tax rate for the thirteen weeks ended July 30, 2016.third quarter of 2016 would have been 36.2% compared to 37.0% in the same period last year.

We reported net income for the secondthird quarter of fiscal 2016 of $23.0$23.6 million, or $0.17$0.18 per diluted share, compared to net incomeloss of $2.1$11.6 million, or $0.02$0.09 per diluted share in last year’s secondthird quarter. Results for the secondthird quarter of fiscal 2016 include the impact of restructuring and strategic charges of $10.3$6.8 million after-tax, or $0.08$0.05 per diluted share, primarily related to severance, proxy solicitation costsoutside services related to cost reduction and consulting fees.operating efficiency initiatives, partially offset by an additional tax benefit related to the exit of Boston Proper of $4.0 million, or $0.03 per diluted share. Results for the secondthird quarter of fiscal 2015 include charges of $35.4$29.3 million after-tax, or $0.24$0.22 per diluted share, related to Boston Proper non-cash goodwill and trade name impairment charges, restructuring and strategic charges a tax benefit as a result of the disposition of Boston Proper's stock, and Boston Proper operating results. The change in earnings per share also reflects the impact of approximately 10.2 million shares repurchased since the end of the third quarter last year.

The following table depicts net sales by Chico’s, WHBM, Soma and Boston Proper in dollars and as a percentage of total net sales for the twenty-sixthirty-nine weeks ended July 30,October 29, 2016 and August 1,October 31, 2015: