UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




FORM	10-Q



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

For the quarterly period ended ~~November~~May 2, ~~2019~~2020



☐	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 charter)



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

11215 Metro Parkway, Fort Myers, Florida 33966

(Address of principal executive offices)

239-277-6200

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.01 Per Share	CHS	New York Stock Exchange
Series A Junior Participating Preferred Stock Purchase Rights		New 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):

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 ☑

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

At ~~November 18, 2019,~~June 1, 2020, the registrant had ~~118,620,321~~119,566,151 shares of Common Stock, $0.01 par value per share, outstanding.

Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

FOR THE

FISCAL THIRTEEN ~~AND THIRTY-NINE~~ WEEKS ENDED ~~NOVEMBER~~MAY 2, ~~2019~~2020

TABLE OF CONTENTS



PART I – Financial Information

Item 1.	Financial Statements:

	Condensed Consolidated Statements of (Loss) Income for the Thirteen Weeks ~~and Thirty-Nine Weeks~~ Ended ~~November~~May 2, ~~2019~~2020 (Unaudited) and ~~November 3, 2018~~May 4, 2019 (Unaudited)	3

	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Thirteen Weeks ~~and Thirty-Nine Weeks~~ Ended ~~November~~May 2, ~~2019~~2020 (Unaudited) and ~~November 3, 2018~~May 4, 2019 (Unaudited)	4

	Condensed Consolidated Balance Sheets – ~~November~~May 2, ~~2019~~2020 (Unaudited), February ~~2, 2019~~1, 2020 (Unaudited), and ~~November 3, 2018~~May 4, 2019 (Unaudited)	5

	Condensed Consolidated Statements of Shareholders’ Equity for the Thirteen Weeks ~~and Thirty-Nine Weeks~~ Ended ~~November~~May 2, ~~2019~~2020 (Unaudited) and ~~November 3, 2018~~May 4, 2019 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the ~~Thirty-Nine~~Thirteen Weeks Ended ~~November~~May 2, ~~2019~~2020 (Unaudited) and ~~November 3, 2018~~May 4, 2019 (Unaudited)	87

	Notes to Condensed Consolidated Financial Statements (Unaudited)	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2224

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3234

Item 4.	Controls and Procedures	3234

PART II – Other Information

Item 1.	Legal Proceedings	3335

Item 1A.	Risk Factors	33

~~Item 1B.~~	~~Unresolved Staff Comments~~	3335

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

~~Item 5.~~	~~Other Information~~	3437

Item 6.	Exhibits	3538

Signatures		3639

Table of Contents

PART I – FINANCIAL INFORMATION



ITEM 1.	FINANCIAL STATEMENTS

CHICO'S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)


	Thirteen Weeks Ended										Thirty-Nine Weeks Ended										Thirteen Weeks Ended
	November 2, 2019					November 3, 2018					November 2, 2019					November 3, 2018					May 2, 2020					May 4, 2019

	Amount			% of Sales		Amount			% of Sales		Amount			% of Sales		Amount			% of Sales		Amount			% of Sales		Amount		% of Sales
Net Sales	$	484,706		100.0	%	$	499,877		100.0	%	$	1,510,790		100.0	%	$	1,606,412		100.0	%	$	280,264		100.0	%	$	517,728	100.0	%
Cost of goods sold	313,668			64.7		318,899			63.8		980,299			64.9		1,001,699			62.4		291,359			104.0		326,897		63.1
Gross Margin	171,038			35.3		180,978			36.2		530,491			35.1		604,713			37.6		(11,095		)	(4.0	)	190,831		36.9
Selling, general and administrative expenses	180,586			37.3		178,394			35.7		536,977			35.5		538,902			33.5		130,171			46.4		185,408		35.9
Goodwill and intangible impairment																					113,180			40.4		—		0.0
(Loss) Income from Operations	(9,548		)	(2.0	)	2,584			0.5		(6,486		)	(0.4	)	65,811			4.1		(254,446		)	(90.8	)	5,423		1.0
Interest income (expense), net	25			0.0		97			0.0		79			0.0		(458		)	0.0
Interest (expense) income, net																					(344		)	(0.1	)	2		0.0
(Loss) Income before Income Taxes	(9,523		)	(2.0	)	2,681			0.5		(6,407		)	(0.4	)	65,353			4.1		(254,790		)	(90.9	)	5,425		1.0
Income tax (benefit) provision	(1,400		)	(0.3	)	(3,800		)	(0.8	)	2,000			0.2		13,100			0.8		(76,500		)	(27.3	)	3,400		0.6
Net (Loss) Income	$	(8,123	)	(1.7	)%	$	6,481		1.3	%	$	(8,407	)	(0.6	)%	$	52,253		3.3	%	$	(178,290	)	(63.6	)%	$	2,025	0.4	%
Per Share Data:
Net (loss) income per common share - basic	$	(0.07	)			$	0.05				$	(0.07	)			$	0.41				$	(1.55	)			$	0.02
Net (loss) income per common and common equivalent share – diluted	$	(0.07	)			$	0.05				$	(0.07	)			$	0.41				$	(1.55	)			$	0.02
Weighted average common shares outstanding – basic	114,997					122,201					114,744					124,069					115,574					114,434
Weighted average common and common equivalent shares outstanding – diluted	114,997					122,273					114,744					124,120					115,574					114,787

Thirty-Nine Weeks Ended
Common Stock Additional Paid-in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Loss
Shares Par Value Shares Amount Total
BALANCE, February 2, 2019 116,949
$ 1,169
$ 486,406
41,297
$ (494,395 ) $ 587,145
$ (361 ) $ 579,964
Cumulative effect of adoption of ASU 2016-02 (see Note 1) —
—
—
—
—
(1,287 ) —
(1,287 )
BALANCE, February 2, 2019, as adjusted 116,949
1,169
486,406
41,297
(494,395 ) 585,858
(361 ) 578,677
Net loss —
—
—
—
—
(8,407 ) —
(8,407 )
Unrealized gains on marketable securities, net of taxes —
—
—
—
—
—
208
208
Foreign currency translation adjustment —
—
—
—
—
—
(265 ) (265 )
Issuance of common stock 2,129
21
1,067
—
—
—
—
1,088
Dividends on common stock ($0.2625 per share) —
—
—
—
—
(30,990 ) —
(30,990 )
Repurchase of common stock & tax withholdings related to share-based awards (457 ) (4 ) (2,545 ) —
—
—
—
(2,549 )
Share-based compensation —
—
5,353
—
—
—
—
5,353
BALANCE, November 2, 2019 118,621
$ 1,186
$ 490,281
41,297
$ (494,395 ) $ 546,461
$ (418 ) $ 543,115

BALANCE, February 3, 2018 127,471
$ 1,275
$ 468,806
29,114
$ (413,465 ) $ 599,810
$ (44 ) $ 656,382
Cumulative effect of adoption of ASU 2018-02, ASU 2016-16 and ASU 2014-09 —
—
—
—
—
(5,015 ) (39 ) (5,054 )
BALANCE, February 3, 2018, as adjusted 127,471
1,275
468,806
29,114
(413,465 ) 594,795
(83 ) 651,328
Net income —
—
—
—
—
52,253
—
52,253
Unrealized gains on marketable securities, net of taxes —
—
—
—
—
—
54
54
Foreign currency translation adjustment —
—
—
—
—
—
(475 ) (475 )
Issuance of common stock 2,179
21
1,427
—
—
—
—
1,448
Dividends on common stock ($0.255 per share) —
—
—
—
—
(32,699 ) —
(32,699 )
Repurchase of common stock & tax withholdings related to share-based awards (3,907 ) (39 ) (3,416 ) 3,550
(30,844 ) —
—
(34,299 )
Share-based compensation —
—
15,523
—
—
—
—
15,523
BALANCE, November 3, 2018 125,743
$ 1,257
$ 482,340
32,664
$ (444,309 ) $ 614,349
$ (504 ) $ 653,133

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:


											Fair Value Measurements at the End of the Reporting Date Using						Thirteen Weeks Ended May 2, 2020
									Balance as of May 2, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairment
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts									$	27,320	$	27,320	$	—	$	—
Marketable securities:
Corporate bonds									27,755		—		27,755		—
Noncurrent Assets
Deferred compensation plan									6,983		6,983		—		—
Total recurring fair value measurements									$	62,058	$	34,303	$	27,755	$	—
Nonrecurring fair value measurements:
Noncurrent Assets
Goodwill									$	16,360	$	—	$	—	$	16,360	$	(80,414	)
Trademark									6,000		—		—		6,000		(28,000		)
Long-lived assets at retail stores ⁽¹⁾									1,232		—		—		1,232		(18,493		)
Total nonrecurring fair value measurements									$	23,592	$	—	$	—	$	23,592	$	(126,907	)

									Balance as of February 1, 2020
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts									$	621	$	621	$	—	$	—
Marketable securities:
Corporate bonds									62,645		—		62,645		—
Commercial paper									1,248		—		1,248		—
Noncurrent Assets
Deferred compensation plan									7,464		7,464		—		—
Total recurring fair value measurements									$	71,978	$	8,085	$	63,893	$	—
			Fair Value Measurements at Reporting Date Using
	Balance as of November 2, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of May 4, 2019
Financial Assets:
Current Assets
Cash equivalents:
Money market accounts	$	6,898	$	6,898	$	—	$	—	$	328	$	328	$	—	$	—
Marketable securities:
Corporate bonds	54,264		—		54,264		—		59,893		—		59,893		—
Commercial paper	2,989		—		2,989		—		2,943		—		2,943		—
Noncurrent Assets
Deferred compensation plan	7,168		7,168		—		—		6,872		6,872		—		—
Total	$	71,319	$	14,066	$	57,253	$	—
Financial Liabilities:
Long-term debt	$	46,250	$	—	$	46,250	$	—

	Balance as of February 2, 2019
Financial Assets:
Current Assets
Cash equivalents:
Money market accounts	$	711	$	711	$	—	$	—
Marketable securities:
Corporate bonds	60,281		—		60,281		—
Commercial paper	1,706		—		1,706		—
Noncurrent Assets
Deferred compensation plan	6,644		6,644		—		—
Total	$	69,342	$	7,355	$	61,987	$	—
Financial Liabilities:
Long-term debt	$	57,500	$	—	$	57,500	$	—

	Balance as of November 3, 2018
Financial Assets:
Current Assets
Cash equivalents:
Money market accounts	$	2,691	$	2,691	$	—	$	—
Marketable securities:
Municipal securities	2,306		—		2,306		—
Corporate bonds	57,178		—		57,178		—
Noncurrent Assets
Deferred compensation plan	6,966		6,966		—		—
Total	$	69,141	$	9,657	$	59,484	$	—
Financial Liabilities:
Long-term debt	$	61,250	$	—	$	61,529	$	—
Total recurring fair value measurements									$	70,036	$	7,200	$	62,836	$	—

WeAs part of the actions we have taken, and are continuing to take, relating to the COVID-19 pandemic, the Company temporarily furloughed the majority of its employees, reduced a majority of non-furloughed associates’ salary or hours, including the Company’s executive officers' and the Board's annual cash retainers, canceled merchandise receipts to better align inventory with expected market demand and suspended its quarterly dividend beginning in the second quarter of fiscal 2020. The Company also significantly reduced SG&A expenses to better align operating costs with expected sales and reduced planned capital expenditures to be primarily maintenance and business essential expenses. The Company suspended rent payments commencing in April and is in active discussions with landlords to find a mutually beneficial and agreeable path forward, and is partnering with suppliers and vendors to materially reduce operating costs and extend payment terms. Subject to certain assumptions regarding the duration and severity of the COVID-19 pandemic, and our responses thereto (including such actions we have taken or may take in the future as disclosed elsewhere in this Form 10-Q), we believe that cash flows from operating activities, our ~~existing~~ cash and marketable securities ~~balances, cash generated from operations, available~~on hand, capacity within our credit ~~facilities~~facility and ~~potential future borrowings~~other liquidity options will be sufficient to ~~fund capital expenditures, working capital needs, dividend payments, potential share repurchases, commitments and other liquidity requirements associated with~~repay our ~~operations~~obligations for the foreseeable future. Furthermore, while it is our intention to repurchase our stock and pay a quarterly cash dividend in the future, any determination to repurchase additional shares of our stock or pay future dividends will be made by the Board of Directors and will depend on our stock price, future earnings, financial condition and other factors considered by the Board.

The financial strength of retailing in particular and the economy in general; the extent of financial difficulties or economic uncertainty that may be experienced by customers; the effects of the COVID-19 pandemic, including uncertainties about its depth and duration (including any resurgence), as well as the impacts to economic conditions and consumer behavior (during and after the COVID-19 pandemic) and the effectiveness of store reopenings, cost reduction initiatives and other actions taken in response to the COVID-19 pandemic, and the financial impact of certain provisions of the CARES Act, changes in the general or specialty or apparel industries; significant shifts in consumer behavior; our ability to secure and maintain customer acceptance of styles and in-store and online concepts; the ability to leverage inventory management and targeted promotions; the ability to effectively manage our inventory and allocation processes; the extent and nature of competition in the markets in which we operate; the ability to remain competitive with customer shipping terms and costs pertaining to product deliveries and returns; the extent of the market demand and overall level of spending for women's private branded clothing and related accessories; the effectiveness of our brand strategies, awareness and marketing programs; the ability to coordinate product development with buying and planning; the quality and timeliness of merchandise received from suppliers; changes in the costs of manufacturing, raw materials, transportation, distribution, labor and advertising; the availability of quality store sites; our ability to manage our store fleet and the risk that our investments in merchandise or marketing initiatives may not deliver the results we anticipate; our ability to successfully navigate the increasing use of on-line retailers for fashion purchases and the pressure that puts on traffic and transactions in our physical stores; the ability to operate our own retail websites in a manner that produces profitable sales; the ability to successfully identify and implement additional

unique and personalized service; and transforming sourcing and supply chain operations to increase product speed to market and improve quality), sales initiatives and multi-channel strategies, customer traffic; and to achieve the expected results from them; the continuing performance, implementation and integration of management information systems; the impact of any systems failures, cyber security or other data or security breaches, including any security breaches that result in theft, transfer, or unauthorized disclosure of customer, employee, or company information or our compliance with domestic and foreign information security and privacy laws and regulations in the event of such an incident; the ability to hire, train, motivate and retain qualified sales associates, managerial employees and other employees; the successful recruitment of leadership and the successful ~~integration~~transition of new members ofto our senior management team; uncertainties regarding future unsolicited offers to buy the Company and our ability to respond effectively to them as well as to actions of activist shareholders and others; changes in the political environment that create consumer uncertainty; significant changes to product import and distribution costs (such as unexpected consolidation in the freight carrier industry); the ability to utilize our distribution center and other support facilities in an efficient and effective manner; the ability to secure and protect trademarks and other intellectual property rights and to protect our reputation and brand images; the risk that natural disasters, public health crises, political uprisings, uncertainty or unrest, or other catastrophic events could adversely affect our operations and financial ~~results;~~results, including the impact of the coronavirus outbreak on manufacturing operations in China and our supply chain, customer traffic and our operations in general; the impact of unanticipated changes in legal, regulatory or tax laws; the risks and uncertainties that are related to our reliance on sourcing from foreign suppliers, including significant economic (including the impact of changes in tariffs, taxes or other import regulations, particularly with respect to China), labor, political or other shifts; and changes in governmental policies in or towards foreign countries; currency exchange rates and other similar factors.



~~ITEM 1B.~~32. The ongoing COVID-19 pandemic	~~UNRESOLVED STAFF COMMENTS~~ The COVID-19 outbreak has had, and will likely continue to have, a negative impact on our business, financial condition, results of operations and liquidity. In December 2019, COVID-19 emerged and subsequently spread worldwide. The World Health Organization has declared COVID-19 a pandemic, resulting in local and state governments and private entities mandating various restrictions, including travel restrictions, restrictions on public gatherings, stay-at-home orders and advisories and quarantining of people who may have been exposed to the virus. After closely monitoring and taking into consideration the guidance from federal, state and local governments, on March 17, 2020, the Company temporarily closed all of its retail stores. The Company also temporarily furloughed the majority of its employees, while providing continued employee benefits for eligible associates during the furlough. On April 27, 2020, the Company announced a store reopening plan across North America, which began on May 4, 2020 in accordance with local, state and federal health and safety guidelines. The Company continues to monitor developments, including government requirements and recommendations at the federate, state and local level to evaluate store closures. The temporary closure of our stores has had and, as some stores remain closed or may close in the future, will likely continue to have, an adverse impact on our results of operations, financial position and liquidity. The store closures have led to a significant reduction in customer traffic and demand and we have incurred and may continue to incur labor and other operating costs during these closures, which have negatively impacted our results of operations. As our stores reopen, new practices or protocols could impact our business and may continue and/or increase, such as, for example, occupancy limitations. In addition, as our stores reopen, any significant reduction in our customers’ willingness to shop our stores, the levels of our customers’ spending at our stores or our employees’ willingness to staff our stores, as a result of health concerns related to the COVID-19 pandemic or its impact on the economy and consumer discretionary spending, and any increase in the cost of operating our stores due to additional health and safety precautions, may adversely impact our business operations, financial performance and liquidity. In response to the COVID-19 pandemic and uncertain economic conditions and customer traffic and demand, we have suspended rent payments for our leased stores and have initiated negotiations to modify lease terms. However, there can be no assurances that we will be able to negotiate rent deferrals or rent abatements, or terminate the leases, on commercially reasonable terms or at all. Failure to obtain rent relief may adversely impact our business operations, financial performance and liquidity. Moreover, if we are unable to renegotiate the leases and continue to suspend rent payments, the landlords under the store leases for our stores could attempt to accelerate our future rent payments due thereunder. Any dispute regarding our leases may result in litigation with the respective landlord, and any such dispute could be costly and have an uncertain outcome. We are in discussions with, and in some cases, we have reached agreements with, suppliers and vendors to cancel merchandise orders, extend payment terms or otherwise reduce operating costs. We have significantly reduced planned capital expenditures and other general and administrative costs. Although these expense and liquidity management initiatives may incrementally benefit our results of operations during the COVID-19 pandemic, they may adversely impact our business in future periods by negatively impacting relationships with contractual counterparties and reducing longer-term investments in our business and properties. The COVID-19 pandemic has also resulted in periods of significant disruption and volatility in the global capital markets, which could adversely affect our ability to access the capital or financing markets, if needed, and our ability to meet our liquidity needs all of which cannot be predicted. The full extent of the impact that the COVID-19 pandemic will have on our business is highly uncertain and difficult to predict, as the pandemic and associated containment and remediation efforts continue to rapidly evolve, and such impact will depend on many factors including the duration of any store closures, the duration of any quarantines, shelter-in-place orders or other travel restrictions, the duration and severity of the pandemic, the impact of the pandemic on consumer spending, and how quickly and to what extent normal economic and operating conditions resume. If the COVID-19 pandemic is prolonged or severe, it could amplify the negative impacts on our business, financial condition, results of operations and liquidity of, and may also heighten, many of the other risks described in Part I, Item 1A. “Risk Factors” in our 2019 Annual Report on Form 10-K.

~~The Company is preparing to respond to the comment letter to the SEC and will submit its response within the requested time frame.~~

Table of Contents



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

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

Period Total
Number of
Shares
Purchased (a) Average Price
Paid per Share Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans (b) Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under
the Publicly
Announced Plans
August 4, 2019 - August 31, 2019 —
$ —
—
$ 55,192
September 1, 2019 - October 5, 2019 7,951
3.71
—
55,192
October 6, 2019 - November 2, 2019 10,175
3.52
—
55,192
Total 18,126
3.60
—



Period	Total Number of Shares Purchased (a)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans (b)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Publicly Announced Plans
February 2, 2020 - February 29, 2020	—	$	—	—	$	55,192
March 1, 2020 - April 4, 2020	241,214		3.65	—		55,192
April 5, 2020 - May 2, 2020	43,882		1.05	—		55,192
Total	285,096		3.25	—

(a) Total number of shares purchased consists of ~~18,126~~285,096 shares of restricted stock repurchased in connection with employee tax withholding obligations under employee compensation plans, which are not purchases under any publicly announced plan.

(b) In November 2015, we announced a $300 million share repurchase plan. There was approximately $55.2 million remaining under the program as of the end of the ~~third~~first quarter. The repurchase program has no specific termination date and will expire when we have repurchased all securities authorized for repurchase thereunder, unless terminated earlier by our Board of Directors. The Company has 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.

~~Table of Contents~~

On August 20, 2019, the Company granted to Bonnie Brooks an award of performance share units with a target of 700,000 units (100% payout) and a maximum of 1,050,000 units (150% payout), with each unit representing one share of the Company’s common stock (the “PSU Inducement Award”). The PSU Inducement Award is earned based on achievement of performance objectives relating to comparable sales improvement and the Company’s stock price. The PSU Inducement Award was granted outside of the 2012 Plan in connection with Ms. Brooks’ employment as President and Chief Executive Officer of the Company pursuant to Section 4(a)(2) of the Securities Act and the employment inducement award exemption in New York Stock Exchange Rule 303A.08.



~~ITEM 5.~~	~~OTHER INFORMATION~~

The Company’s Corporate Governance Guidelines require non-management directors who will reach the age of 75 prior to the next annual meeting of shareholders to submit a letter of resignation from the Board, subject to Board acceptance, to be considered at the first Corporate Governance and Nominating Committee (the “Committee”) meeting following the immediately preceding annual meeting. The Committee is then required to make a recommendation to the Board as to whether to accept or reject the director’s resignation offer. In accordance with this requirement, director Stephen E. Watson, who will turn 75 in January 2020, provided to the Board Chair written notice of his offer, subject to Board acceptance, to resign from the Board, effective as of the Company’s 2020 Annual Meeting of Shareholders. In the Committee’s deliberations with respect to Mr. Watson’s offer to resign, the Committee considered a number of factors, including the fact that Mr. Watson’s continued service would contribute to the right mix of tenured and newer directors, the desire for Mr. Watson’s expertise on the Board to navigate various strategic matters, as well as the importance of having Board continuity as the new executive leadership transitions into their new roles and Mr. Watson’s expertise in continuing to drive shareholder value during the Company’s turn-around. Based on the foregoing, on September 17, 2019, the Committee recommended to the Board that it reject Mr. Watson’s offer to resign from the Board, which the Board approved. Pursuant to the Company’s Corporate Governance Guidelines, the Committee and the Board will reconsider the issue after the 2020 Annual Meeting of Shareholders, if Mr. Watson is reelected.

3437

Table of Contents



ITEM 6.	EXHIBITS


(a)	The following documents are filed as exhibits to this Quarterly Report on Form 10-Q:



	Exhibit ~~3.2~~3.1		~~Restated~~Articles of Amendment to Articles of Incorporation of Chico’s FAS, Inc. ~~(effective October 8, 2019)~~Designating Series A Junior Participating Preferred Stock, dated as of April 2, 2020 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K, as filed with the Commission on April 3, 2020)

	Exhibit ~~10.61~~4.1		~~Compensation adjustment letter agreement between the Company and Todd Vogensen,~~Rights Agreement, dated as of ~~September 23, 2019~~April 2, 2020, between Chico’s FAS, Inc. and American Stock Transfer & Trust Company, LLC, as Rights Agent (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K, as filed with the Commission on April 3, 2020)

	Exhibit ~~10.62~~10.1		Compensation adjustment letter agreement between the Company and ~~Molly Langenstein,~~David M. Oliver, dated as of ~~September 23, 2019~~February 13, 2020 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K, as filed with the Commission on February 13, 2020)

	Exhibit ~~10.63~~10.2		~~Compensation adjustment letter agreement between~~Form of consent to temporary 50% reduction in pay, effective April 5, 2020 (entered into with each of the ~~Company~~following: Bonnie Brooks, Molly Langenstein, David Oliver, Greg Baker, Kristin Gwinner, Mary van Praag and Ann Joyce ~~dated as of September 23, 2019~~

	Exhibit ~~10.64~~10.3		~~Compensation adjustment letter agreement between the Company~~First Amendment to Chico’s FAS, Inc. Officer Severance Plan and ~~Mary van Praag, dated as of September 23, 2019~~Summary Plan Description (as amended and restated effective January 1, 2020), effective March 31, 2020

	Exhibit ~~10.65~~10.4		~~Form of Amended~~Second Amendment to Chico’s FAS, Inc. Deferred Compensation Plan (as amended and ~~Restated 2012 Omnibus Stock and Incentive Plan Special Performance Award Agreement for Performance Share Units for Employees (for awards~~restated on ~~October~~January 1, ~~2019)~~2019 ), effective April 4, 2020

	Exhibit ~~10.66~~10.5		~~Chico’s FAS, Inc. Officer Severance Plan~~Employment letter agreement between the Company and ~~Summary Plan Description effective January 1,~~Molly Langenstein, dated as of April 27, 2020 (incorporated by reference to Exhibit 10.1 to the ~~Company’s~~Company's Form 8-K, as filed with the Commission on ~~November 22, 2019)~~April 30, 2020)

	Exhibit 10.6		Employment letter agreement between the Company and Bonnie R. Brooks, dated as of April 27, 2020 (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K, as filed with the Commission on April 30, 2020)

	Exhibit 31.1		Chico’s FAS, Inc. and Subsidiaries Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer

	Exhibit 31.2		Chico’s FAS, Inc. and Subsidiaries Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer

	Exhibit 32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	Exhibit 32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	Exhibit 101		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~November~~May 2, ~~2019,~~2020, formatted in Inline XBRL: (i) Condensed Consolidated Statements of (Loss) Income, (ii) Condensed Consolidated Statements of Comprehensive (Loss) Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Shareholders' Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

	Exhibit 104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~November~~May 2, ~~2019,~~2020, formatted in Inline XBRL (included within Exhibit 101).

3538

Table of Contents

SIGNATURES

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



			CHICO'S FAS, INC.

Date:	~~November 27, 2019~~June 11, 2020	By:	/s/ Bonnie R. Brooks
			Bonnie R. Brooks
			~~President,~~ Chief Executive Officer, President and Director

Date:	~~November 27, 2019~~	~~By:~~	~~/s/ Todd E. Vogensen~~
			~~Todd E. Vogensen~~
			~~Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary~~

~~Date:~~	~~November 27, 2019~~June 11, 2020	By:	/s/ David M. Oliver
			David M. Oliver
			Interim Chief Financial Officer and Senior Vice President, ~~- Finance,~~ Controller ~~and Chief Accounting Officer~~

3639


	November 2, 2019			February 2, 2019			November 3, 2018			May 2, 2020			February 1, 2020			May 4, 2019
ASSETS
Current Assets:
Cash and cash equivalents	$	70,188		$	124,128		$	169,380		$	89,841		$	63,972		$	105,141
Marketable securities, at fair value	57,253			61,987			59,484			27,755			63,893			62,836
Inventories	277,473			235,218			266,100			273,126			246,737			242,402
Prepaid expenses and other current assets	53,598			63,845			62,167			102,682			48,200			45,900
Total Current Assets	458,512			485,178			557,131			493,404			422,802			456,279
Property and Equipment, net	323,591			370,932			385,387			285,714			315,382			353,183
Right of Use Assets	664,052			—			—			612,161			648,397			729,950
Other Assets:
Goodwill	96,774			96,774			96,774			16,360			96,774			96,774
Other intangible assets, net	38,930			38,930			38,930			6,164			38,930			38,930
Other assets, net	18,511			15,220			13,929			42,901			20,374			16,099
Total Other Assets	154,215			150,924			149,633			65,425			156,078			151,803
	$	1,600,370		$	1,007,034		$	1,092,151		$	1,456,704		$	1,542,659		$	1,691,215
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	151,664		$	143,404		$	150,224		$	140,396		$	134,204		$	135,964
Current lease liabilities	155,403			—			—			190,811			157,043			160,731
Other current and deferred liabilities	112,456			131,820			126,337			108,707			114,498			120,919
Total Current Liabilities	419,523			275,224			276,561			439,914			405,745			417,614
Noncurrent Liabilities:
Long-term debt	46,250			57,500			61,250			149,000			42,500			53,750
Long-term lease liabilities	578,971			—			—			520,323			555,922			645,796
Other noncurrent and deferred liabilities	8,512			89,109			93,323			6,630			8,188			10,719
Deferred taxes	3,999			5,237			7,884			30			212			3,893
Total Noncurrent Liabilities	637,732			151,846			162,457			675,983			606,822			714,158
Commitments and Contingencies (see Note 11)
Commitments and Contingencies (see Note 14)
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; 159,918 and 158,246 and 158,407 shares issued respectively; and 118,621 and 116,949 and 125,743 shares outstanding, respectively	1,186			1,169			1,257
Common stock, $0.01 par value; 400,000 shares authorized; 160,883 and 159,715 and 159,265 shares issued respectively; and 119,586 and 118,418 and 117,698 shares outstanding, respectively										1,196			1,184			1,180
Additional paid-in capital	490,281			486,406			482,340			493,140			492,129			485,805
Treasury stock, at cost, 41,297 and 41,297 and 32,664 shares, respectively	(494,395		)	(494,395		)	(444,309		)
Treasury stock, at cost, 41,297 shares, respectively										(494,395		)	(494,395		)	(494,395		)
Retained earnings	546,461			587,145			614,349			341,563			531,602			567,233
Accumulated other comprehensive loss	(418		)	(361		)	(504		)	(697		)	(428		)	(380		)
Total Shareholders’ Equity	543,115			579,964			653,133			340,807			530,092			559,443
	$	1,600,370		$	1,007,034		$	1,092,151		$	1,456,704		$	1,542,659		$	1,691,215


	Thirty-Nine Weeks Ended						Thirteen Weeks Ended
	November 2, 2019			November 3, 2018			May 2, 2020			May 4, 2019
Cash Flows from Operating Activities:
Net (loss) income	$	(8,407	)	$	52,253		$	(178,290	)	$	2,025
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Goodwill and intangible impairment							113,180			—
Inventory write-offs							43,101			4,934
Depreciation and amortization	67,876			69,290			17,777			23,837
Non-cash lease expense	160,363			—			51,018			52,232
Right of use asset impairment							2,442			—
Loss on disposal and impairment of property and equipment, net	225			3,592			18,637			113
Deferred tax benefit	(778		)	1,195			(22,067		)	(732		)
Share-based compensation expense	5,353			15,523			1,704			1,494
Deferred rent and lease credits	—			(14,868		)
Changes in assets and liabilities:
Inventories	(42,255		)	(33,198		)	(69,490		)	(12,118		)
Prepaid expenses and other assets	(10,861		)	(190		)	(55,955		)	(1,138		)
Accounts payable	8,261			31,947			5,966			(17,745		)
Accrued and other liabilities	(2,600		)	(6,780		)	(7,537		)	9,685
Lease liability	(169,970		)	—			(19,119		)	(56,876		)
Net cash provided by operating activities	7,207			118,764
Net cash (used in) provided by operating activities							(98,633		)	5,711
Cash Flows from Investing Activities:
Purchases of marketable securities	(35,020		)	(31,300		)	(5,191		)	(15,084		)
Proceeds from sale of marketable securities	39,967			31,946			41,156			14,313
Purchases of property and equipment	(22,126		)	(36,601		)	(6,464		)	(7,666		)
Net cash used in investing activities	(17,179		)	(35,955		)
Net cash provided by (used in) investing activities							29,501			(8,437		)
Cash Flows from Financing Activities:
Proceeds from borrowings	—			61,250			106,500			—
Payments on borrowings	(11,250		)	(68,750		)	—			(3,750		)
Proceeds from issuance of common stock	1,088			1,448			252			346
Dividends paid	(30,992		)	(32,674		)	(10,686		)	(10,345		)
Repurchase of common stock	—			(30,879		)
Payments of tax withholdings related to share-based awards	(2,549		)	(3,420		)	(933		)	(2,430		)
Net cash used in financing activities	(43,703		)	(73,025		)
Net cash provided by (used in) financing activities							95,133			(16,179		)
Effects of exchange rate changes on cash and cash equivalents	(265		)	(475		)	(132		)	(82		)
Net (decrease) increase in cash and cash equivalents	(53,940		)	9,309
Net increase (decrease) in cash and cash equivalents							25,869			(18,987		)
Cash and Cash Equivalents, Beginning of period	124,128			160,071			63,972			124,128
Cash and Cash Equivalents, End of period	$	70,188		$	169,380		$	89,841		$	105,141

Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	1,654		$	2,678		$	676		$	576
Cash (received) paid for income taxes, net	$	(506	)	$	22,481
Cash received for income taxes, net							$	(166	)	$	(562	)



	Chico's Reporting Unit			WHBM Reporting Unit			Total ⁽¹⁾

	(in thousands)
Balance at February 1, 2020	$	36,403		$	60,371		$	96,774
Impairment charges	(20,043		)	(60,371		)	(80,414		)
Balance at May 2, 2020	$	16,360		$	—		$	16,360



	WHBM Trademark			Chico's Franchise Rights			Total

	(in thousands)
Balance at February 1, 2020	$	34,000		$	4,930		$	38,930
Impairment charges	(28,000		)	(4,766		)	(32,766		)
Balance at May 2, 2020	$	6,000		$	164		$	6,164



	Thirteen Weeks Ended
	May 2, 2020				May 4, 2019
Chico's	$	131,437	46.9	%	$	276,702	53.4	%
WHBM	83,920		29.9		160,945		31.1
Soma ⁽¹⁾	64,907		23.2		80,081		15.5
Total Net Sales	$	280,264	100.0	%	$	517,728	100.0	%


	Thirteen Weeks Ended																										Thirteen Weeks Ended
	Common Stock				Additional Paid-in Capital				Treasury Stock							Retained Earnings				Accumulated Other Comprehensive Loss							Common Stock						Additional Paid-in Capital				Treasury Stock				Retained Earnings			Accumulated Other Comprehensive Loss
	Shares		Par Value					Shares			Amount								Total				Shares			Par Value					Shares		Additional Paid-in Capital			Amount				Total				Accumulated Other Comprehensive Loss
BALANCE, August 3, 2019	118,000		$	1,180	Additional Paid-in Capital	$	487,789			41,297			$	(494,395	)	Retained Earnings		$	554,694	Accumulated Other Comprehensive Loss				$	(146	)		$	549,122
BALANCE, February 1, 2020																											118,418			$	1,184		$	492,129			41,297	$	(494,395	)	Retained Earnings	$	531,602		$	(428	)		$	530,092
Cumulative effect of adoption of ASU 2016-13 (see Note 1)																											—			—			—				—	—			(838		)	—				(838		)
BALANCE, February 1, 2020, as adjusted																											118,418			1,184			492,129				41,297	(494,395		)	530,764			(428		)		529,254
Net loss	—		—		—				—			—				(8,123		)		—				(8,123		)	—			—			—				—	—			(178,290		)	—				(178,290		)
Unrealized gains on marketable securities, net of taxes	—		—		—				—			—				—				14				14
Unrealized losses on marketable securities, net of taxes																											—			—			—				—	—			—			(137		)		(137		)
Foreign currency translation adjustment	—		—		—				—			—				—				(286		)		(286		)	—			—			—				—	—			—			(132		)		(132		)
Issuance of common stock	640		6		690				—			—				—				—				696			1,454			15			237				—	—			—			—				252
Dividends on common stock	—		—		—				—			—				(110		)		—				(110		)
Dividends on common stock ($0.09 per share)																											—			—			—				—	—			(10,911		)	—				(10,911		)
Repurchase of common stock and tax withholdings related to share-based awards	(19	)	—		(65		)		—			—				—				—				(65		)	(286	)		(3		)	(930		)		—	—			—			—				(933		)
Share-based compensation	—		—		1,867				—			—				—				—				1,867			—			—			1,704				—	—			—			—				1,704
BALANCE, November 2, 2019	118,621		$	1,186	$	490,281			41,297			$	(494,395	)		$	546,461			$	(418	)		$	543,115
BALANCE, May 2, 2020																											119,586			$	1,196		$	493,140			41,297	$	(494,395	)	$	341,563		$	(697	)		$	340,807

BALANCE, August 4, 2018	125,710		$	1,257	$	476,480			32,658			$	(444,252	)		$	607,643			$	(115	)		$	641,013
BALANCE, February 2, 2019																											116,949			$	1,169		$	486,406			41,297	$	(494,395	)	$	587,145		$	(361	)		$	579,964
Cumulative effect of adoption of ASU 2016-02																											—			—			—				—	—			(1,287		)	—				(1,287		)
BALANCE, February 2, 2019, as adjusted																											116,949			1,169			486,406				41,297	(494,395		)	585,858			(361		)		578,677
Net income	—		—		—				—			—				6,481				—				6,481			—			—			—				—	—			2,025			—				2,025
Unrealized losses on marketable securities, net of taxes	—		—		—				—			—				—				(1		)		(1		)	—			—			—				—	—			—			63				63
Foreign currency translation adjustment	—		—		—				—			—				—				(388		)		(388		)	—			—			—				—	—			—			(82		)		(82		)
Issuance of common stock	63		—		768				—			—				—				—				768			1,441			15			331				—	—			—			—				346
Dividends on common stock	—		—		—				—			—				225				—				225
Dividends on common stock ($0.175 per share)																											—			—			—				—	—			(20,650		)	—				(20,650		)
Repurchase of common stock and tax withholdings related to share-based awards	(30	)	—		(193		)		6			(57		)		—				—				(250		)	(422	)		(4		)	(2,426		)		—	—			—			—				(2,430		)
Share-based compensation	—		—		5,285				—			—				—				—				5,285			—			—			1,494				—	—			—			—				1,494
BALANCE, November 3, 2018	125,743		$	1,257	$	482,340			32,664			$	(444,309	)		$	614,349			$	(504	)		$	653,133
BALANCE, May 4, 2019																											117,968			$	1,180		$	485,805			41,297	$	(494,395	)	$	567,233		$	(380	)		$	559,443



Fiscal Year Ending:
January 30, 2021	$	176,931
January 29, 2022	190,997
January 28, 2023	152,871
February 4, 2024	105,651
February 1, 2025	76,600
Thereafter	106,011
Total future minimum lease payments	$	809,061
Less imputed interest	(97,927		)
Total	$	711,134



	Thirty-Nine Weeks Ended
	November 2, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows	$	169,970
Right of use assets obtained in exchange for lease obligations, non-cash	22,346



Fiscal Year Ending:
February 1, 2020 ⁽¹⁾	$	36,572
January 30, 2021	209,945
January 29, 2022	185,251
January 28, 2023	147,479
February 4, 2024	100,312
Thereafter	168,708
Total future minimum lease payments	$	848,267
Less imputed interest	(113,893		)
Total	$	734,374


	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Unvested, beginning of period	2,715,466		$	10.92	3,180,016		$	5.47
Granted	3,563,105		4.22		2,266,375		3.75
Vested	(1,266,059	)	11.28		(795,741	)	7.88
Forfeited	(1,638,433	)	7.11		(914,021	)	4.81
Unvested, end of period	3,374,079		5.56		3,736,629		4.07



	Number of Units/ Shares		Weighted Average Grant Date Fair Value
Unvested, beginning of period	2,042,138		$	2.48
Granted	1,003,125		3.80
Vested	(29,320	)	14.22
Forfeited	(731,976	)	3.60
Unvested, end of period	2,283,967		2.60


	Number of Options		Weighted Average Exercise Price		Number of Options		Weighted Average Exercise Price
Outstanding, beginning of period	214,277		$	13.54	168,335		$	13.42
Granted	—		—		—		—
Exercised	—		—		—		—
Forfeited or expired	(2,000	)	13.26		(47,001	)	(13.78		)
Outstanding and exercisable, end of period	212,277		13.54		121,334		13.28



Level 1	—	Unadjusted quoted prices in active markets for identical assets or liabilities

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

Level 3	—	Unobservable inputs for the asset or liability



	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Average)

WHBM Trademark	$	6,000	Relief from royalty	Weighted-average cost of capital	11% to 13%
				Long-term revenue growth rate	-2.5% to 0%
Long-lived assets at retail stores	$	1,232	Discounted cash flow	Weighted-average cost of capital	9.5 % to 11.5 %
				Long-term revenue growth rate	-10% to 15%



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


◦	Engaged a third-party to assist in restructuring the lease portfolio and to seek rent relief in the form of rent reductions, rent abatements and other concessions;



Summary of Significant Charges
	Thirteen Weeks Ended
	May 2, 2020
	Amount ⁽¹⁾		% of Sales ⁽¹⁾
	(dollars in millions)

Gross margin:
Inventory write-offs	$	43	15.4	%
Long-lived store asset impairment	18		6.6
Right of use asset impairment	2		0.9
Total significant charges impacting gross margin	64		22.8
Goodwill and intangible impairment:
Goodwill impairment	80		28.7
Indefinite-lived asset impairment	33		11.7
Total goodwill and intangible impairment charges	113		40.4
Total	$	177	63.2	%

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company