Chico's Fas (CHS) 8-K Results of Operations and Financial Condition

                    NEWSRELEASE

Chico’s FAS, Inc.• 11215 Metro Parkway• Fort Myers, Florida 33912• (239) 277-6200• Fax: (239) 277-5237

For Immediate Release

Executive Contacts:
Charles J. Kleman	F. Michael Smith
Chief Financial Officer	Vice President
Chico’s FAS, Inc.	Investor and Community Relations
(239) 274-4105	Chico’s FAS, Inc.
	(239) 274-4797

Chico’s FAS, Inc. Announces Record Fourth Quarter and
Year End Earnings

• Net sales rose 31.6% to a record $376 million for the fourth quarter

• Fourth quarter net income up 34.9% to a record $44 million

• Fiscal year net sales rose 31.7% to a record $1.4 billion

• Net income climbed 37.4% to a record $194 million for the fiscal year

• Operating margin of 21.2% is the highest ever

• Fiscal 2005 net selling square footage increased 22%; added 106 stores, net

     Fort Myers, FL- March 1, 2006- Chico’s FAS, Inc. (NYSE: CHS) today announced its financial results for the fourth quarter and fiscal year ended January 28, 2006.

     For the fiscal year ended January 28, 2006, which included fifty-two weeks, net income rose 37.4% to a record $194 million, or $1.06 per diluted share, compared to net income of $141 million, or $0.78 per diluted share, in the fifty-two week fiscal year ended January 29, 2005. Net sales for the fiscal year increased 31.7% to a record $1.4 billion from $1.1 billion in the prior fiscal year. Comparable store sales for the Company-owned stores increased 14.3% for the fifty-two week fiscal year compared to the same fifty-two week period last year.

     For the thirteen-week fourth quarter ended January 28, 2006, net income rose 34.9% to a record $44 million, or $0.24 per diluted share, compared to net income of $33 million, or $0.18 per diluted share, in the thirteen-week fourth quarter ended January 29, 2005. Net sales for the fourth quarter climbed 31.6% to a record $376 million from $286 million in the prior year’s comparable period. Comparable store sales for the Company-owned stores increased 14.6% for the thirteen-week period ended January 28, 2006, compared to the same thirteen-week period last year.

     Scott A. Edmonds, Chico’s President and CEO, commented, “Fiscal 2005 resulted in our highest operating margin ever as we improved from 21.0% last year to 21.2% this year. Both the Chico’s and White House | Black Market brands ended fiscal 2005 with over $1,000 per net selling square foot, while the initial 10 Soma stores exceeded $450 per net selling square foot on over $1 million in average sales per store in their first full year of operations. We ended the year with over $400 million in cash and marketable securities, no debt, and an inventory increase that was generally in line with our sales increases.”

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     Mr. Edmonds continued, “Considering the impact of the increase in fourth quarter marketing costs that we planned and implemented, we are pleased with the quarter’s consolidated profitability and with the quarter’s merchandise margins that improved in each of our brands over the fourth quarter margins last year. During the fourth quarter, Chico’s, White House | Black Market, and Soma all achieved their highest fourth quarter front-line merchandise margins ever as Chico’s quarter over quarter merchandise margins improved by 50 basis points, White House | Black Market improved by 90 basis points, and Soma improved by 490 basis points. In spite of these brand by brand improvements in merchandise margins, the overall gross margin in the fourth quarter showed a decline from the fourth quarter last year mostly due to a 40 basis point decline in the outlet gross margins, the larger relative growth of the lower margin White House | Black Market and Soma brands, and relatively small increases in other inventory clearance costs and freight costs.”

     Mr. Edmonds further stated, “The success in our Chico’s stores over the years has been phenomenal and we see opportunities for further expansion in the Chico’s brand. We are making important investments in our other brands as we transition to a future of multiple platforms for growth. Our recent investment in the Fitigues brand, our accelerated rollout of the Soma brand and the continued emphasis on store growth for our particularly successful White House | Black Market brand, are positioning the Company for what we envision to be sustained long term growth for our shareholders. Earlier this year, we stepped up the rollout plans in fiscal 2006 with the goal of moving more quickly to profitability in the Soma brand and to take advantage of the momentum of the White House | Black Market brand, which has consistently added increasing levels of earnings per share to our overall results. Each of these growth strategies is likely to have some short-term downward impact on both our gross margins and our operating margins. With these continuing long term investments, we expect there will be continued pressure on the overall gross margin for each quarter of fiscal 2006, and we anticipate a decline of between 10 and 50 basis points quarter over quarter, with the first half of the year likely to be less impacted than the second half. Further, these investments, including certain longer term initiatives in the MIS and store payroll areas, can be expected to require a slightly higher level of selling, general and administrative costs as a percentage of sales. We are optimistic that we will be able to manage these costs so as to mitigate the extent of any negative impact on the percentage. Like many other companies, we will be affected by FAS 123R and we anticipate that these new expensing requirements will reduce annual earnings in fiscal 2006 by between eight and nine cents a share. Excluding the impact of the initial adoption of FAS 123R, we anticipate our earnings to grow in the neighborhood of 25% in fiscal 2006.”

     The Company is a specialty retailer of private label, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing gift items. The Company operates 780 women’s specialty stores, including stores in 47 states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico operating under the Chico’s, White House | Black Market, Soma by Chico’s and Fitigues names. The Company owns 501 Chico’s front-line stores, 31 Chico’s outlet stores, 198 White House | Black Market front-line stores, 8 White House | Black Market outlet stores, 16 Soma by Chico’s stores, 11 Fitigues front-line stores and 1 Fitigues outlet store; franchisees own and operate 14 Chico’s stores.

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

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

A copy of a slide show addressing Chico’s recent financial results and current plans
for expansion is available on the Chico’s website at http://www.chicos.comin the investor
relations section

Additional investor information on Chico’s FAS, Inc. is available free of charge on the Chico’s
website at http://www.chicos.comin the investor relations section

(Financial Tables Follow)

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Chico’sFAS, Inc.
Consolidated Balance Sheets
(In thousands)

	January 28,			January 29,
	2006			2005
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	3,035		$	14,426
Marketable securities, at market		401,445			251,199
Receivables		7,240			5,106
Income taxes receivable		5,013			—
Inventories		95,421			73,223
Prepaid expenses		13,497			9,429
Deferred taxes		12,327			11,184
Total Current Assets		537,978			364,567
Property and Equipment:
Land and land improvements		44,893			6,055
Building and building improvements		35,573			29,286
Equipment, furniture and fixtures		187,970			140,360
Leasehold improvements		209,342			166,096
Total Property and Equipment		477,778			341,797
Less accumulated depreciation and amortization		(131,846	)		(93,834	)
Property and Equipment, Net		345,932			247,963
Other Assets:
Goodwill		61,796			61,796
Other intangible assets		34,041			34,042
Other assets, net		19,666			7,361
Total Other Assets		115,503			103,199
	$	999,413		$	715,729
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	47,434		$	36,725
Accrued liabilities		74,586			58,258
Current portion of deferred liabilities		648			332
Total Current Liabilities		122,668			95,315
Noncurrent Liabilities:
Deferred liabilities		65,189			47,149
Deferred taxes		5,129			12,397
Total Noncurrent Liabilities		70,318			59,546
Stockholders’ Equity:
Common stock		1,817			1,790
Additional paid-in capital		202,878			147,652
Unearned compensation		(3,710	)		—
Retained earnings		605,537			411,556
Accumulated other comprehensive loss		(95	)		(130	)
Total Stockholders’ Equity		806,427			560,868
	$	999,413		$	715,729

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Chico’sFAS, Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)

	Fifty-Two Weeks Ended								Thirteen Weeks Ended
	(Unaudited)								(Unaudited)				(Unaudited)
	January 28, 2006				January 29, 2005				January 28, 2006				January 29, 2005
	Amount		% of Sales		Amount		% of Sales		Amount		% of Sales		Amount		% of Sales
Net sales by Chico’s/Soma stores	$	1,095,938		78.0	$	889,429		83.4	$	279,266		74.3	$	230,958		80.9
Net sales by White House/Black Market stores		261,601		18.6		142,092		13.3		82,057		21.8		44,975		15.7
Net sales by catalog & Internet		36,151		2.6		26,831		2.5		11,624		3.1		7,429		2.6
Net sales to franchisees		10,885		0.8		8,530		0.8		2,783		0.8		2,189		0.8
Net sales		1,404,575		100.0		1,066,882		100.0		375,730		100.0		285,551		100.0
Cost of goods sold		547,532		39.0		411,908		38.6		152,597		40.6		115,304		40.4
Gross profit		857,043		61.0		654,974		61.4		223,133		59.4		170,247		59.6
General, administrative and store operating expenses		514,529		36.6		398,117		37.3		143,488		38.2		107,342		37.5
Depreciation and amortization		44,201		3.2		32,481		3.1		13,009		3.5		11,733		4.1
Income from operations		298,313		21.2		224,376		21.0		66,636		17.7		51,172		18.0
Interest income, net		8,236		0.6		2,327		0.2		2,578		0.7		955		0.3
Income before taxes		306,549		21.8		226,703		21.2		69,214		18.4		52,127		18.3
Income tax provision		112,568		8.0		85,497		8.0		24,754		6.6		19,159		6.7
Net income	$	193,981		13.8	$	141,206		13.2	$	44,460		11.8	$	32,968		11.6
Per share data:
Net income per common share—basic	$	1.07			$	0.79			$	0.25			$	0.18
Net income per common & common equivalent share—diluted	$	1.06			$	0.78			$	0.24			$	0.18
Weighted average common shares outstanding—basic		180,465				178,256				181,206				178,787
Weighted average common & common equivalent shares outstanding—diluted		182,408				180,149				183,184				180,518

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Chico’sFAS, Inc.
Consolidated Cash Flow Statements
(In thousands)

	January 28,			January 29,
	2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES:	(Unaudited)
Net income	$	193,981		$	141,206
Adjustments to reconcile net income to net cash provided by operating activities —
Depreciation and amortization, cost of goods sold		4,651			3,605
Depreciation and amortization, other		44,201			32,481
Deferred tax benefit		(8,411	)		(2,986	)
Stock-based compensation expense		1,614			-
Tax benefit of stock options exercised		21,461			27,297
Deferred rent expense, net		3,673			6,450
Loss on impairment and disposal of property and equipment		753			311
(Increase) decrease in assets —
Receivables, net		(7,147	)		1,069
Inventories		(22,198	)		(18,280	)
Prepaid expenses and other		(5,958	)		(2,734	)
Increase in liabilities —
Accounts payable		10,709			8,929
Accrued and other deferred liabilities		31,073			26,272
Total adjustments		74,421			82,414
Net cash provided by operating activities		268,402			223,620
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities		(357,237	)		(404,211	)
Proceeds from sale of marketable securities		207,026			257,299
Acquisition of equity investment		(10,418	)		—
Acquisition of franchise store		—			(1,307	)
Purchases of property and equipment		(147,635	)		(93,065	)
Net cash used in investing activities		(308,264	)		(241,284	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		28,471			22,684
Repurchase of common stock		—			(4,992	)
Payments on capital leases		—			(1,278	)
Net cash provided by financing activities		28,471			16,414
Net decrease in cash and cash equivalents		(11,391	)		(1,250	)
CASH AND CASH EQUIVALENTS,Beginning of period		14,426			15,676
CASH AND CASH EQUIVALENTS,End of period	$	3,035		$	14,426

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