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


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

Commission file number 001-16435




Chico’s FAS, Inc.
(Exact name of registrant as specified in its charter)



Florida						59-2389435
(State or other jurisdiction of ~~Incorporation)~~incorporation or organization)						(I.R.S. Employer Identification No.)

11215 Metro Parkway, Fort Myers, Florida 33966

(Address of principal executive offices) (Zip Code)

(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

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 ý☑No ¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ý☑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~~” “accelerated filer,~~" "smaller~~” “smaller reporting company,” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

ý☐

Accelerated filer

¨☑

Non-accelerated filer

¨ ~~(do not check if a smaller reporting company)~~

☐

Smaller reporting company

¨☐

Emerging growth company

¨☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No ý☑

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

At November ~~13, 2017,~~21, 2023, the registrant had ~~127,804,649~~123,457,364 shares of Common Stock, $0.01 par value per share, outstanding.

CHICO’S FAS, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

FISCAL THIRTEEN AND THIRTY-NINE WEEKS ENDED OCTOBER 28, 2023

PART I – FINANCIAL INFORMATION



ITEM 1.			FINANCIAL STATEMENTS

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

CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Inin thousands, except per share amounts)


	Thirteen Weeks Ended								Thirty-Nine Weeks Ended
	October 28, 2023				October 29, 2022				October 28, 2023				October 29, 2022

	Amount		% of Sales		Amount		% of Sales		Amount		% of Sales		Amount		% of Sales
Net Sales	$	505,126	100.0	%	$	518,332	100.0	%	$	1,584,995	100.0	%	$	1,617,967	100.0	%
Cost of goods sold	308,677		61.1		310,892		60.0		946,637		59.7		962,448		59.5
Gross Profit	196,449		38.9		207,440		40.0		638,358		40.3		655,519		40.5
Selling, general, and administrative expenses	178,643		35.4		175,841		33.9		520,672		32.8		520,296		32.1
Merger-related costs	7,277		1.4		—		0.0		7,277		0.5		—		0.0


Income from Operations	10,529		2.1		31,599		6.1		110,409		7.0		135,223		8.4
Interest expense, net	(389)		(0.1)		(1,080)		(0.2)		(1,439)		(0.1)		(3,111)		(0.2)
Income before Income Taxes	10,140		2.0		30,519		5.9		108,970		6.9		132,112		8.2
Income tax provision	5,100		1.0		5,900		1.2		4,700		0.3		30,600		1.9
Net Income	$	5,040	1.0	%	$	24,619	4.7	%	$	104,270	6.6	%	$	101,512	6.3	%
Per Share Data:
Net income per common share – basic	$	0.04			$	0.20			$	0.87			$	0.84
Net income per common and common equivalent share – diluted	$	0.04			$	0.20			$	0.85			$	0.82
Weighted average common shares outstanding – basic	119,457				120,333				119,424				119,776
Weighted average common and common equivalent shares outstanding – diluted	122,735				124,887				122,500				124,016

Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 28, 2017 October 29, 2016 October 28, 2017 October 29, 2016

Amount
% of
Sales
Amount
% of
Sales
Amount % of
Sales Amount % of
Sales
Net sales $ 532,287
100.0 $ 596,912
100.0
$ 1,694,596
100.0
$ 1,875,621
100.0
Cost of goods sold 335,585
63.0 366,618
61.4
1,051,380
62.0
1,142,182
60.9
Gross margin 196,702
37.0 230,294
38.6
643,216
38.0
733,439
39.1
Selling, general and administrative expenses 171,424
32.3 188,350
31.6
527,605
31.2
583,117
31.1
Restructuring and strategic charges —
0.0 10,820
1.8
—
0.0
31,027
1.6
Income from operations 25,278
4.7 31,124
5.2
115,611
6.8
119,295
6.4
Interest expense, net (388 ) 0.0 (526 ) (0.1 ) (1,286 ) (0.1 ) (1,474 ) (0.1 )
Income before income taxes 24,890
4.7 30,598
5.1
114,325
6.7
117,821
6.3
Income tax provision 8,200
1.6 7,000
1.1
41,300
2.4
40,100
2.2
Net income $ 16,690
3.1 $ 23,598
4.0
$ 73,025
4.3
$ 77,721
4.1
Per share data:
Net income per common share-basic $ 0.13
$ 0.18
$ 0.57
$ 0.59

Net income per common and common equivalent share–diluted $ 0.13
$ 0.18
$ 0.57
$ 0.58

Weighted average common shares outstanding–basic 124,957
128,753
125,550
129,830

Weighted average common and common equivalent shares outstanding–diluted 124,989
128,996
125,591
129,999

Dividends declared per share $ —
$ —
$ 0.2475
$ 0.2400

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

CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Net income	$	5,040	$	24,619	$	104,270	$	101,512
Other comprehensive income:
Unrealized gains (losses) on marketable securities, net of taxes	35		(233)		72		(228)

Comprehensive income	$	5,075	$	24,386	$	104,342	$	101,284

Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 28, 2017 October 29, 2016 October 28, 2017 October 29, 2016
Net income $ 16,690
$ 23,598
$ 73,025
$ 77,721
Other comprehensive income:
Unrealized (losses) gains on marketable securities, net of taxes (47 ) (35 ) (15 ) 4
Foreign currency translation (losses) gains (60 ) (19 ) 49
(46 )
Comprehensive income $ 16,583
$ 23,544
$ 73,059
$ 77,679

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

CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(~~In thousands)~~in thousands, except per share amounts)


	October 28, 2023		January 28, 2023		October 29, 2022
ASSETS	(Unaudited)		(Audited)		(Unaudited)

Current Assets:
Cash and cash equivalents	$	101,944	$	153,377	$	117,726
Marketable securities, at fair value	24,702		24,677		23,017
Inventories	342,721		276,840		304,127
Prepaid expenses and other current assets	51,086		48,604		47,208
Income tax receivable	9,181		11,865		15,430

Total Current Assets	529,634		515,363		507,508
Property and Equipment, net	200,980		192,165		183,153
Right of Use Assets	466,888		435,321		432,018
Other Assets:
Goodwill	16,360		16,360		16,360
Other intangible assets, net	5,000		5,000		5,000
Other assets, net	45,853		23,632		18,890
Total Other Assets	67,213		44,992		40,250
	$	1,264,715	$	1,187,841	$	1,162,929
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	153,401	$	156,262	$	107,400
Current lease liabilities	150,053		153,202		157,687

Other current and deferred liabilities	138,887		141,698		155,133

Total Current Liabilities	442,341		451,162		420,220
Noncurrent Liabilities:
Long-term debt	24,000		49,000		69,000
Long-term lease liabilities	373,823		349,409		346,560
Other noncurrent and deferred liabilities	1,956		2,637		2,612

Total Noncurrent Liabilities	399,779		401,046		418,172
Commitments and Contingencies (see Note 12)
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; 167,994 and 166,320 and 166,326 shares issued respectively; and 123,447 and 125,023 and 125,029 shares outstanding, respectively	1,234		1,250		1,250
Additional paid-in capital	516,323		513,914		510,374
Treasury stock, at cost, 44,547 and 41,297 and 41,297 shares, respectively	(514,168)		(494,395)		(494,395)
Retained earnings	419,292		315,022		307,536
Accumulated other comprehensive loss	(86)		(158)		(228)
Total Shareholders’ Equity	422,595		335,633		324,537
	$	1,264,715	$	1,187,841	$	1,162,929

October 28, 2017 January 28, 2017 October 29, 2016

ASSETS
Current Assets:
Cash and cash equivalents $ 125,646
$ 142,135
$ 80,331
Marketable securities, at fair value 60,411
50,370
50,411
Inventories 265,023
232,363
261,341
Prepaid expenses and other current assets 48,876
52,758
68,557
Total Current Assets 499,956
477,626
460,640
Property and Equipment, net 424,961
477,185
495,587
Other Assets:
Goodwill 96,774
96,774
96,774
Other intangible assets, net 38,930
38,930
38,930
Other assets, net 16,581
18,479
18,382
Total Other Assets 152,285
154,183
154,086

$ 1,077,202
$ 1,108,994
$ 1,110,313
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable $ 135,004
$ 116,378
$ 125,532
Current debt 15,000
16,250
10,000
Other current and deferred liabilities 118,495
170,232
148,706
Total Current Liabilities 268,499
302,860
284,238
Noncurrent Liabilities:
Long-term debt 57,335
68,535
74,768
Deferred liabilities 108,000
118,543
122,848
Deferred taxes 7,961
9,883
9,320
Total Noncurrent Liabilities 173,296
196,961
206,936
Commitments and Contingencies

Shareholders’ Equity:
Preferred stock —
—
—
Common stock 1,278
1,288
1,301
Additional paid-in capital 463,502
452,756
445,787
Treasury stock, at cost (411,766 ) (386,094 ) (366,081 )
Retained earnings 582,387
541,251
538,134
Accumulated other comprehensive income (loss) 6
(28 ) (2 )
Total Shareholders’ Equity 635,407
609,173
619,139
$ 1,077,202
$ 1,108,994
$ 1,110,313

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

CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


	Thirteen Weeks Ended
	Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Gain (Loss)
	Shares	Par Value				Shares	Amount						Total
BALANCE, July 29, 2023	123,524	$	1,235	$	514,059	44,547	$	(514,168)	$	414,252	$	(121)	$	415,257


Net income	—	—		—		—	—		5,040		—		5,040
Unrealized gains on marketable securities, net of taxes	—	—		—		—	—		—		35		35

Issuance of common stock	44	—		111		—	—		—		—		111

Repurchase of common stock and tax withholdings related to share-based awards	(121)	(1)		(677)		—	—		—		—		(678)
Share-based compensation	—	—		2,830		—	—		—		—		2,830
BALANCE, October 28, 2023	123,447	$	1,234	$	516,323	44,547	$	(514,168)	$	419,292	$	(86)	$	422,595

BALANCE, July 30, 2022	125,184	$	1,252	$	508,105	41,297	$	(494,395)	$	282,910	$	5	$	297,877


Net income	—	—		—		—	—		24,619		—		24,619
Unrealized losses on marketable securities, net of taxes	—	—		—		—	—		—		(233)		(233)

Issuance of common stock	3	—		83		—	—		—		—		83
Dividends on common stock	—	—		—		—	—		7		—		7
Repurchase of common stock and tax withholdings related to share-based awards	(158)	(2)		(978)		—	—		—		—		(980)
Share-based compensation	—	—		3,164		—	—		—		—		3,164
BALANCE, October 29, 2022	125,029	$	1,250	$	510,374	41,297	$	(494,395)	$	307,536	$	(228)	$	324,537

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

CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except per share amounts)


	Thirty-Nine Weeks Ended
	Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Gain (Loss)
	Shares	Par Value				Shares	Amount						Total
BALANCE, January 28, 2023	125,023	$	1,250	$	513,914	41,297	$	(494,395)	$	315,022	$	(158)	$	335,633


Net income	—	—		—		—	—		104,270		—		104,270
Unrealized gains on marketable securities, net of taxes	—	—		—		—	—		—		72		72

Issuance of common stock	2,830	28		301		—	—		—		—		329

Repurchase of common stock and tax withholdings related to share-based awards	(4,406)	(44)		(7,028)		3,250	(19,773)		—		—		(26,845)
Share-based compensation	—	—		9,136		—	—		—		—		9,136
BALANCE, October 28, 2023	123,447	$	1,234	$	516,323	44,547	$	(514,168)	$	419,292	$	(86)	$	422,595

BALANCE, January 29, 2022	122,526	$	1,225	$	508,654	41,297	$	(494,395)	$	206,020	$	—	$	221,504


Net income	—	—		—		—	—		101,512		—		101,512
Unrealized losses on marketable securities, net of taxes	—	—		—		—	—		—		(228)		(228)

Issuance of common stock	4,258	43		196		—	—		—		—		239
Dividends on common stock	—	—		—		—	—		4		—		4
Repurchase of common stock and tax withholdings related to share-based awards	(1,755)	(18)		(8,797)		—	—		—		—		(8,815)
Share-based compensation	—	—		10,321		—	—		—		—		10,321
BALANCE, October 29, 2022	125,029	$	1,250	$	510,374	41,297	$	(494,395)	$	307,536	$	(228)	$	324,537

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

CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash and Cash Equivalents, Beginning of period

Cash and Cash Equivalents, End of period

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

CHICO’S FAS, INC. AND SUBSIDIARIES

~~Chico’s FAS, Inc.~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and ~~Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~October 28, 2017~~per share amounts and where otherwise indicated)

~~Note~~ 1. ~~Basis of Presentation~~BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements of Chico’s FAS, Inc., a Florida corporation, and its ~~wholly-owned~~wholly owned subsidiaries ~~(collectively, the “Company”~~(“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. The fiscal year ended January 28, 2023 balance sheet data was derived from audited consolidated financial statements. For further information, refer to the consolidated financial statements and notes thereto for the fiscal year ended January 28, ~~2017,~~2023, included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023, filed with the Securities and Exchange Commission (“SEC”) on March ~~7, 2017.~~14, 2023 (“2022 Annual Report on Form 10-K”).

As used in this report, all references to “we,” “us,” ~~“our”~~“our,” “Company,” and ~~“the Company,~~“Chico’s FAS,” refer to Chico’s FAS, Inc. and all of its ~~wholly-owned~~wholly owned subsidiaries.

Our fiscal years end on the Saturday closest to January 31 and are designated by the calendar year in which the fiscal year commences. Operating results for the thirteen and thirty-nine weeks ended October 28, ~~2017~~2023 are not necessarily indicative of the results that may be expected for the entire year.

Adoption of New Accounting Pronouncements

In ~~the first quarter of 2017, we adopted the guidance of Accounting Standard Update (“ASU”) 2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting~~, which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The provision of ASU 2016-09 related to the recognition of excess tax benefits and deficiencies in the income statement was adopted on a prospective basis whereas the provision related to the classification in the statement of cash flows was adopted retrospectively, and the prior periods were adjusted accordingly. The Company has elected to continue estimating forfeitures of share-based awards when determining compensation cost to be recognized each period. The adoption of ASU 2016-09 did not have a material impact on the accompanying condensed consolidated financial statements.

~~Note 2. New Accounting Pronouncements~~

~~In October 2016,~~September 2022, the Financial Accounting Standards Board, ~~("FASB"~~or FASB, issued Accounting Standards Update (“ASU”) ~~issued~~2022-04, entitled “Supplier Finance Programs: Disclosure of Supplier Finance Program Obligations,” to improve the disclosures of supplier finance programs. Specifically, the ASU ~~No. 2016-16,~~ ~~Accounting for Income Taxes: Intra-Entity Asset Transfers~~requires disclosure of ~~Assets Other than Inventory.~~key terms of the supplier finance programs and a roll-forward of the related obligations. The amendments in this ASU ~~2016-16~~do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs. The ASU is effective for the fiscal years, and the interim periods within those years, beginning after December 15, ~~2017. ASU 2016-16 requires companies to recognize~~2022, except for the income tax effects of intercompany sales or transfers of other assets in the income statement as income tax expense (benefit) in the period the sale or transfer occurs. Additionally, companies would evaluate whether the tax effects of the intercompany sales of transfers of non-inventory assets should be included in their estimates of annual effective tax rates by using today's interim guidanceamendment on ~~income tax accounting. ASU 2016-16 will require modified retrospective transition with a cumulative catch-up adjustment to opening retained earnings in the period of adoption,~~roll-forward information, which ~~we expect to implement in fiscal 2018. At October 28, 2017, the Company had $5.8 million in assets related to the transfer of intra–entity asset transfers.~~

~~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 and should be applied on a modified retrospective basis. 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. Upon2023. Early adoption ~~of the standard in fiscal 2019, we expect to record material right–of–use assets and lease liabilities on the balance sheet approximating the present value of future lease payments.~~

~~In January 2016, the FASB issued ASU No. 2016-01,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~, under which entities will no longer be able to recognize unrealized holding gains and losses on equity securities they classify as available-for-sale in other comprehensive income but instead recognize the change in fair value in net income. The standard is ~~effective for interim and annual reporting periods beginning after December 15, 2017. We do not anticipate adoption to have a material impact to our consolidated financial statements.~~

~~Table of Contents~~

~~Chico’s FAS, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~October 28, 2017~~

~~(Unaudited)~~

~~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. Through our evaluation of the impact of this ASU, we have identified certain changes that are expected to be made to our accounting policies, practices, systems and controls including: the timing of our recognition of advertising expenses, whereby certain expenses that are currently amortized over their expected period of future benefit will be expensed the first time the advertisement appears, and presentation of estimated merchandise returns as both an asset, equal to the inventory value net of processing costs, and a corresponding return liability, compared to the current practice of recording an estimated net return liability.permitted. The Company ~~is also evaluating and identifying appropriate changes to internal control over financial reporting~~entered into a supplier financing agreement administered by a third-party platform in connection with preparation for adoption of this ASU. We plan to adopt this ASU under the modified retrospective approach beginning in the first quarter of fiscal 2018 with a cumulative adjustment to opening retained earnings as opposed to retrospectively adjusting prior periods. We are continuing to evaluate the impact this ASU, and related amendments and interpretive guidance, will have on our consolidated financial statements.

~~Note 3. Restructuring and Strategic Charges~~

~~During~~ the fourth quarter of ~~fiscal 2014, we initiated a restructuring program, including the acceleration of domestic store closures and an organizational realignment,~~2022. Payments to ensure that resources align with long-term growth initiatives. In fiscal 2015, in connection with the restructuring program, we completed an evaluation of the Boston Proper brand, completed the sale of the Boston Proper direct-to-consumer business and closed its stores.

During the first quarter of fiscal 2016, we expanded our restructuring program to include components of our strategic initiatives that further align the organizational structure with long-term growth initiatives and to reduce cost of goods sold ("COGS") and selling, general and administrative expenses ("SG&A")suppliers through strategic initiatives. These strategic initiatives include realigning marketing and digital commerce, improving supply chain efficiency, reducing non-merchandise expenses, optimizing marketing spend and transition of executive leadership. In connection with this program during the third quarter of fiscal 2016, we recorded pre-tax restructuring and strategic charges of $10.8 million, primarily related to outside services and continuing employee-related costs, which are included in restructuring and strategic charges in the accompanying condensed statement of income. Effectivebegan in the third quarter of fiscal ~~2016, we substantially completed charges related~~2023. Refer to ~~our previously announced restructuring program. We have closed 132 stores~~Note 11 for additional information regarding the Company’s payment obligations to participating suppliers.

Entry into Merger Agreement

On September 27, 2023, the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) with Daphne Parent LLC, a Delaware limited liability company (“Parent”), and Daphne Merger Sub, Inc., a Florida corporation and wholly owned subsidiary of Parent (“Merger Sub” and together with Parent, “Buyer Parties”), providing for the merger of Merger Sub with and into the Company, with the Company continuing as the surviving corporation and becoming a wholly owned subsidiary of Parent (“Merger”).

Upon the consummation of the Merger, each share of the Company’s common stock outstanding as of immediately prior to the effective time of the Merger (other than shares of the Company’s common stock that are (i) held by the Company or any subsidiary of the Company, (ii) owned by the Buyer Parties, or (iii) owned by any direct or indirect wholly owned subsidiary of the Buyer Parties as of immediately prior to the effective time (“Owned Company Shares”)) will be cancelled and extinguished and automatically converted into the right to receive cash in ~~connection~~an amount equal to $7.60 per share, without interest thereon. Each Owned Company Share will be cancelled and extinguished without any conversion thereof or consideration paid therefor.

Consummation of the Merger is subject to certain conditions set forth in the Merger Agreement, including, but not limited to, the following: (i) the affirmative vote of the holders of a majority of all of the outstanding shares of the Company’s common stock to adopt the Merger Agreement; (ii) the absence of any law or order restraining, enjoining, or otherwise prohibiting the Merger; and (iii) the absence of a Company Material Adverse Effect (as defined in the Merger Agreement,

which is filed as Exhibit 2.1 to this Quarterly Report on Form 10-Q). The Go-Shop Period has ended, and the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has expired. In addition, the Company filed its Definitive Merger Proxy Statement on Schedule 14A with ~~this restructuring program through~~ the ~~third~~Securities and Exchange Commission on November 29, 2023. The transaction is not subject to a financing condition. The Merger Agreement includes customary representations, warranties, and covenants of the parties, including termination provisions for both the Company and the Buyer Parties. Under the Merger Agreement, the Company may be required to pay the Buyer Parties a termination fee of up to $29,956,324 if the Merger Agreement is terminated under certain specified circumstances. The Merger Agreement also places certain restrictions on the conduct of the Company’s business prior to the completion of the Merger, which could delay or prevent the Company from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of the Company absent these restrictions.

Parent and the Company expect to close the Merger by the end of the first calendar quarter of ~~fiscal 2017, including 20 Boston Proper stores.~~2024.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Company currently has no material recent accounting pronouncements yet to be adopted.

3. REVENUE RECOGNITION

Disaggregated Revenue

The table below disaggregates our operating segment revenue by brand, which we believe provides a meaningful depiction of the ~~pre-tax restructuring~~nature of our revenue. Amounts shown include licensing and ~~strategic charges~~wholesale revenue, which is ~~presented~~not a significant component of total revenue, and is aggregated within the respective brands.



	Thirteen Weeks Ended								Thirty-Nine Weeks Ended
	October 28, 2023				October 29, 2022				October 28, 2023				October 29, 2022
Chico’s	$	252,221	49.9	%	$	255,341	49.3	%	$	800,088	50.5	%	$	801,584	49.5	%
WHBM	147,498		29.2		157,451		30.4		451,016		28.4		485,061		30.0
Soma	105,407		20.9		105,540		20.3		333,891		21.1		331,322		20.5

Total Net Sales	$	505,126	100.0	%	$	518,332	100.0	%	$	1,584,995	100.0	%	$	1,617,967	100.0	%

Contract liabilities in the ~~table below:~~

Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 29, 2016 October 29, 2016

(in thousands)
Impairment charges $ —
$ 1,453
Continuing employee-related costs 781
1,796
Severance charges 65
9,485
Proxy solicitation costs 108
5,697
Lease termination charges 79
427
Outside Services 9,779
12,013
Other charges 8
156
Total restructuring and strategic charges, pre-tax $ 10,820
$ 31,027

~~Table~~unaudited condensed consolidated balance sheets are comprised of ~~Contents~~

~~Chico’s FAS, Inc.~~obligations associated with our gift card and ~~Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~October 28, 2017~~

~~(Unaudited)~~

customer rewards programs. As of October 28, ~~2017,~~2023, January 28, 2023, and October 29, 2022, contract liabilities primarily consisted of gift cards of $29.2 million, $42.6 million, and $31.9 million, respectively.

For the thirteen and thirty-nine weeks ended October 28, 2023, the Company recognized $6.2 million and $25.3 million, respectively, of revenue that was previously included in the gift card contract liability as of January 28, 2023. For the thirteen and thirty-nine weeks ended October 29, 2022, the Company recognized $7.0 million and $27.0 million, respectively, of revenue that was previously included in the gift card contract liability as of January 29, 2022.


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022


Beginning gift card liability	$	30,905	$	33,707	$	42,649	$	43,536
Issuances	7,602		7,878		26,585		28,218
Redemptions	(9,174)		(9,869)		(35,893)		(37,739)
Breakage adjustment	(162)		176		(4,170)		(2,123)
Ending gift card liability	$	29,171	$	31,892	$	29,171	$	31,892

The Company maintains customer rewards programs in which customers earn points toward rewards for qualifying purchases and other marketing activities. Upon reaching specified point values, customers are issued a ~~reserve~~reward, which they may redeem on merchandise purchases at the Company’s stores or on its website. Generally, rewards earned must be redeemed within 60 days from the date of ~~$0.6~~issuance. The Company defers a portion of the merchandise sales based on the estimated standalone selling price of the points earned. This deferred revenue is recognized as the rewards are redeemed or expire. While historically this points-based program was specific to Soma®, during the second quarter of fiscal year 2022, Chico’s FAS extended its points-based rewards program to Chico’s® and White House Black Market® (“WHBM”). As of October 28, 2023, January 28, 2023, and October 29, 2022, the rewards deferred revenue balance was $9.9 million, $7.4 million, and $4.5 million, respectively.


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022


Beginning balance rewards deferred revenue	$	9,233	$	3,236	$	7,441	$	626
Net reduction in revenue	653		1,288		2,445		3,898
Ending balance rewards deferred revenue	$	9,886	$	4,524	$	9,886	$	4,524

Performance Obligation

For the thirteen and thirty-nine weeks ended October 28, 2023 and October 29, 2022, revenue recognized from performance obligations related to ~~restructuring~~prior periods was not material. Revenue to be recognized in future periods related to performance obligations is not expected to be material.

The Company leases retail stores, a limited amount of office space, and ~~strategic activities was~~certain equipment under operating leases expiring in various years through the fiscal year ending 2033. All of our leases have been classified as operating leases and are recognized and measured as such.

Certain operating leases provide for renewal options that are at a pre-determined period and rental value. Furthermore, certain leases provide that we may cancel the lease if our retail sales at that location fall below an established level. In the normal course of business, operating leases are typically renewed or replaced by other leases.

Escalation of operating lease payments of certain leases depend on an existing index or rate, such as the consumer price index or the market interest rate. These are considered variable lease payments and are included in ~~other current~~lease payments when the escalation is known.

Operating lease expense was as follows:


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Operating lease cost (1)	$	58,132	$	55,608	$	169,916	$	163,271

(1) For the thirteen and ~~deferred liabilities~~thirty-nine weeks ended October 28, 2023, includes $14.3 million and $41.1 million, respectively, in variable lease costs. For the ~~accompanying condensed consolidated~~thirteen and thirty-nine weeks ended October 29, 2022, includes $9.7 million and $28.5 million, respectively, in variable lease costs.

Supplemental balance ~~sheets. A roll-forward~~sheet information related to operating leases was as follows:


	October 28, 2023			January 28, 2023			October 29, 2022
Right of use assets	$	466,888		$	435,321		$	432,018

Current lease liabilities	$	150,053		$	153,202		$	157,687
Long-term lease liabilities	373,823			349,409			346,560
Total operating lease liabilities	$	523,876		$	502,611		$	504,247

Weighted Average Remaining Lease Term (years)	4.4			4.2			4.1

Weighted Average Discount Rate (1)	5.9		%	5.3		%	5.0		%

(1) The incremental borrowing rate used by the Company is based on the rate at which the Company could borrow funds using its credit rating for a collateralized loan of similar term to the lease. The weighted average discount rate represents a weighted average of the ~~reserve is presented~~incremental borrowing rate for each lease, weighted based on the remaining fixed lease obligations.

Supplemental cash flow information related to operating leases was as follows:


	Thirty-Nine Weeks Ended
	October 28, 2023		October 29, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows	$	145,729	$	155,561
Right of use assets obtained in exchange for lease obligations, non-cash	145,342		88,484

Maturities of operating lease liabilities as of October 28, 2023 were as follows:


Fiscal Year Ending:
February 3, 2024	$	48,986
February 1, 2025	171,076
January 31, 2026	129,459
January 30, 2027	95,434
January 29, 2028	66,278
Thereafter	92,906
Total future minimum lease payments	$	604,139
Less imputed interest	(80,263)
Total	$	523,876

Continuing Employee-related Costs Severance Charges Lease Termination Charges Outside Services
& Other Total

(in thousands)
Beginning Balance, January 28, 2017 $ 671
$ 2,413
$ 846
$ 7,299
$ 11,229
Payments (671 ) (2,413 ) (292 ) (7,299 ) (10,675 )
Ending Balance, October 28, 2017 $ —
$ —
$ 554
$ —
$ 554

~~Note 4. Stock-Based Compensation~~5. SHARE-BASED COMPENSATION

For the thirty-nine weeks ended October 28, ~~2017~~2023 and October 29, ~~2016, stock-based~~2022, share-based compensation expense was ~~$14.7~~$9.1 million and ~~$15.5~~$10.3 million, respectively. As of October 28, ~~2017,~~2023, approximately ~~9.3~~10.4 million shares remain available for future grants of equity awards under our ~~Amended and Restated 2012~~2020 Omnibus Stock and Incentive ~~Plan, which was amended and restated effective June 22, 2017.~~Plan.

Restricted Stock Awards

Restricted stock awards vest in equal annual installments over a three-year period from the date of grant, except for a (i) restricted stock award granted to our then Chief Executive Officer in fiscal 2019, which vests over a four-year period from the date of grant, and (ii) restricted stock awards granted in March 2021, which vest 50% one year from the date of grant, 30% two years from the date of grant, and 20% three years from the date of grant.

Restricted stock award activity for the thirty-nine weeks ended October 28, ~~2017~~2023 was as follows:


	Number of Shares	Weighted Average Grant Date Fair Value
Unvested, beginning of period	4,611,801	$	4.02
Granted	2,146,506	5.85
Vested	(2,399,562)	3.77
Forfeited	(418,664)	5.02
Unvested, end of period	3,940,081	5.06

Number of
Shares Weighted
Average
Grant Date
Fair Value
Unvested, beginning of period 2,463,186
$ 13.87
Granted 1,396,680
13.39
Vested (1,029,675 ) 14.48
Forfeited (272,547 ) 14.53
Unvested, end of period 2,557,644
13.29

~~Performance-based~~Restricted Stock Units

~~For~~Restricted stock units vest 100% one year from the date of grant with certain rights to defer settlement in shares of our common stock, except for (i) restricted stock units granted in March 2021, which vest 50% one year from the date of grant, 30% two years from the date of grant, and 20% three years from the date of grant, and (ii) restricted stock units granted in March 2022, which vest in equal annual installments over a three-year period from the date of grant.

Restricted stock unit activity for the thirty-nine weeks ended October 28, ~~2017,~~2023 was as follows:


	Number of Shares	Weighted Average Grant Date Fair Value
Unvested, beginning of period	406,218	$	2.46
Granted	27,462	5.28
Vested	(274,573)	2.17

Unvested, end of period	159,107	3.46

Performance-based Restricted Stock Units

During the thirty-nine weeks ended October 28, 2023, we granted performance-based restricted stock units (“PSUs”), contingent upon the achievement of a Company-specific performance ~~goal~~goals during the three fiscal ~~2017.~~years 2023 through 2025. Any units earned as a result of the achievement of ~~this goal~~the performance goals of the PSUs will vest three years from the date of grant and will be settled in ~~unvested~~ shares of our common ~~stock on the first anniversary of the grant date. Such unvested shares will then vest on the second and third anniversary dates.~~stock.

~~Performance-based restricted stock unit~~PSU activity for the thirty-nine weeks ended October 28, ~~2017~~2023 was as follows:


	Number of Units/ Shares	Weighted Average Grant Date Fair Value
Unvested, beginning of period	2,696,449	$	3.48
Granted	1,239,354	5.70
Vested	(753,078)	3.17
Forfeited	(193,703)	5.45
Unvested, end of period	2,989,022	4.35

Number of
Shares Weighted
Average
Grant Date
Fair Value
Unvested, beginning of period 652,248
$ 13.28
Granted 601,137
13.93
Vested (279,375 ) 13.54
Forfeited (112,046 ) 13.22
Unvested, end of period 861,964
13.66

~~Table of Contents~~

~~Chico’s FAS, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~October 28, 2017~~

~~(Unaudited)~~

~~Stock Option Awards~~

~~For the thirty-nine weeks ended October 28, 2017 and October 29, 2016, we did not grant any stock options.~~

~~Stock option activity for the thirty-nine weeks ended October 28, 2017 was as follows:~~

Number of
Shares Weighted
Average
Exercise Price
Outstanding, beginning of period 577,246
$ 13.58
Granted —
—
Exercised (8,000 ) 10.15
Forfeited or expired (144,334 ) 17.21
Outstanding and exercisable at October 28, 2017 424,912
12.42

~~Note 5. Income Taxes~~6. INCOME TAXES

The provision for income taxes is based on a current estimate of the annual effective tax rate and is adjusted as necessary for quarterly events. Our effective income tax rate may fluctuate from quarter to quarter as a result of a variety of factors, including changes in our assessment of certain tax contingencies, valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items, and the mix of ~~earnings.~~earnings across jurisdictions.

For the thirteen weeks ended October 28, ~~2017~~2023 and October 29, ~~2016,~~2022, the Company’s effective tax rate was ~~32.9%~~50.3% and ~~22.9%~~19.3%, respectively. ~~For~~The effective tax rate of 50.3% for the thirteen weeks ended October 28, ~~2017,~~2023 primarily reflects the impact of certain incurred and anticipated nondeductible Merger-related costs, and the Company’s projected annual pre-tax income, partially offset by a fiscal 2022 provision-to-return benefit related to federal tax ~~provision was $8.2 million compared to the income~~credits. The 19.3% effective tax ~~provision of $7.0 million~~rate for the thirteen weeks ended October 29, ~~2016. The current quarter effective tax rate~~2022 primarily reflects the impact of ~~32.9% includes~~ a ~~430 basis point tax~~fiscal 2021 provision-to-return benefit due to the reversal of a valuation allowance related to income tax credits. 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 recognition of income tax credits in 2016.temporary differences.

For the thirty-nine weeks ended October 28, ~~2017~~2023 and October 29, ~~2016,~~2022, the Company’s effective tax rate was ~~36.1%~~4.3% and ~~34.0%~~23.2%, respectively. ~~For~~The effective tax rate of 4.3% for the thirty-nine weeks ended October 28, ~~2017,~~2023 primarily reflects the ~~income tax provision was $41.3 million compared to the income tax provision of $40.1 million~~non-cash benefit for the ~~thirty-nine weeks ended October 29, 2016. The current year-to-date effective~~partial reversal of the valuation allowance on deferred tax ~~rate of 36.1% includes~~assets, favorable share-based compensation benefit, and a ~~140 basis point tax~~fiscal 2022 provision-to-return benefit related to ~~income tax~~federal credits, offset by the impact of certain incurred and ~~favorable tax settlements.~~anticipated nondeductible Merger-related costs and the Company’s projected annual pre-tax income. The ~~favorability in the~~23.2% effective tax rate for the thirty-nine weeks ended October 29, ~~2016~~2022 primarily reflects ~~an additional~~a provision to return benefit due to the reversal of a valuation allowance related to 2021 temporary differences and favorable share-based compensation benefit.

As of October 28, 2023, our unaudited condensed consolidated balance sheet reflected a $7.9 millionincome tax ~~benefit~~receivable related to the ~~disposition~~recovery of ~~Boston Proper's stock~~federal income taxes paid in prior years and other tax law changes as a result of the ~~recognition of income tax credits in 2016.~~Coronavirus Aid, Relief, and Economic Security Act, or CARES Act.

~~Note 6. Earnings Per Share~~7. INCOME PER SHARE

In accordance with relevant accounting guidance, unvested share-based payment awards that include non-forfeitable rights to dividends, whether paid or unpaid, are considered participating securities. As a result, such awards are required to be included in the calculation of ~~earnings~~income per common share pursuant to the “two-class” method. For the Company, participating securities are comprised entirely of unvested restricted stock awards ~~and performance-based restricted stock units (“PSUs”) that have met their relevant performance criteria.~~granted prior to fiscal 2020.

~~Earnings~~Net income 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~~net income per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period, including participating securities. Diluted ~~EPS~~net income per share reflects the dilutive effect of potential common shares from non-participating securities, such as restricted stock awards granted after fiscal 2019, stock options, PSUs, and restricted stock units.

~~Table of Contents~~

~~Chico’s FAS, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~October 28, 2017~~

~~(Unaudited)~~

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

For the thirteen weeks ended October 28, ~~2017~~2023 and October 29, ~~2016, 0.7~~2022, 0.0 million and ~~0.7~~0.1 million potential shares of common stock, respectively, were excluded from the income per diluted ~~per~~common share calculation relating to non-participating securities, ~~because~~due to the antidilutive effect of including these ~~potential shares was antidilutive.~~shares.

For the thirty-nine weeks ended October 28, ~~2017~~2023 and October 29, ~~2016, 0.7~~2022, 0.1 million and ~~0.9~~0.1 million potential shares of common stock, respectively, were excluded from the income per diluted ~~per~~common share calculation relating to non-participating securities, ~~because~~due to the antidilutive effect of including these ~~potential shares was antidilutive.~~shares.

~~Note 7. Fair Value Measurements~~8. FAIR VALUE MEASUREMENTS

Our financial instruments generally consist of cash, money market accounts, marketable securities, assets held in our non-qualified deferred compensation plan, accounts receivable and payable, and debt. Cash, accounts receivable, and accounts payable are carried at cost, less reserves for credit losses, as applicable, which approximates their fair value due to the short-term nature of the instruments.

Marketable securities are classified as available-for-sale, and as of October 28, ~~2017 generally consist~~2023, consisted of~~corporate bonds,~~ U.S. government agencies, ~~municipal securities,~~corporate bonds, and commercial paper, with ~~$35.7~~$22.2 million of securities with maturity dates within one year or less, and ~~$24.7~~$2.5 million with maturity dates over one ~~year and less than two years.~~year.

We consider all marketable securities available-for-sale, including those with maturity dates beyond 12 months, and therefore classify these securities within current assets on the unaudited condensed consolidated balance sheets, as applicable, as they ~~are~~were available to support current operational liquidity needs. Marketable securities are carried at fair value, with the unrealized holding gains and losses, net of income taxes, reflected in accumulated other comprehensive gain (loss) until realized, and any credit risk-related losses recognized in net income ~~until realized.~~during the period incurred. For the purposes of computing realized and unrealized gains and losses, cost is determined on a specific identification basis.

Fair value is defined as the price that would be received to sell an 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.

~~Table of Contents~~

~~Chico’s FAS, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~October 28, 2017~~

~~(Unaudited)~~

The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:



Level 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~~liabilities; or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not ~~active, or; Inputs~~active; or inputs other than quoted prices that are observable for the asset or liability

Level 3	—	Unobservable inputs for the asset or liability

Assets Measured on a Recurring Basis

We measure certain financial assets at fair value on a recurring basis, including our marketable securities, as applicable, which are classified as available-for-sale securities, certain cash equivalents, specifically our money market accounts and assets held in our non-qualified deferred compensation ~~plan.~~plan, as applicable. The money market accounts are valued based on quoted market prices in active markets. Our marketable securities are generally valued based on other observable inputs for those securities (including market corroborated pricing or other models that utilize observable inputs, such as interest rates and yield curves) based on information provided by independent ~~third party~~third-party pricing entities, except for U.S. government securities, which are valued based on quoted market prices in active markets. The investments in our non-qualified deferred compensation plan are valued using quoted market prices and are included in other assets on our unaudited condensed consolidated balance sheets.

Assets Measured on a Nonrecurring Basis

From time to time, we measure certain assets at fair value on a ~~non-recurring~~nonrecurring basis ~~including~~when carrying value exceeds fair value. This measurement includes the evaluation of long-lived assets, goodwill, and other intangible assets for impairment using Company-specific assumptions ~~which~~that would fall within Level 3 of the fair-value hierarchy. Assets that are measured at fair value ~~hierarchy.~~ on a nonrecurring basis are remeasured when carrying value exceeds fair value. Carrying value after impairment approximates fair value.

We ~~estimate~~assess the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses market participant rents and a market participant discount rate to calculate the fair value of right of use assets. The Company uses discounted future cash flows of the asset or asset group using a discount rate that approximates the cost of capital of a market participant to quantify fair value for other long-lived assets ~~held~~within the asset group, which are primarily leasehold improvements. The asset group is defined as the lowest level for ~~sale using market values for similar~~which identifiable cash flows are available and is largely independent of the cash flows of other groups of assets, which ~~would fall within Level 2 of~~for our retail stores, is primarily at the ~~fair value hierarchy.~~store level.

To assess the fair value of ~~long-term debt,~~goodwill, we have historically utilized both an income approach and a market approach. Inputs used to calculate the fair value based on the income approach primarily include estimated future cash flows, discounted at a rate that approximates the cost of capital of a market participant. Inputs used to calculate the fair value based on the market approach include identifying sales and EBITDA multiples based on guidelines for similar publicly traded companies and recent transactions.

To assess the fair value of trademarks, we utilize a relief from royalty approach. Inputs used to calculate the fair value of the trademarks primarily include future sales projections, discounted ~~future cash flow model using~~at a rate that approximates the cost of capital of a market participant, and an estimated royalty rate.

As of October 28, 2023, January 28, 2023, and October 29, 2022, our revolving loan and letter of credit facility approximates fair value, as this instrument has a variable interest rate that approximates current ~~borrowing~~market rates ~~for similar types of debt of comparable maturities.~~(Level 2 criteria).

Fair value calculations contain significant judgments and estimates, which may differ from actual results due to, among other things, economic conditions, changes to the business model, or changes in operating performance.

During the quarter ended October 28, 2017, we did not make any transfers between Level 1 and Level 2 financial instruments. Furthermore, as of October 28, 2017, January 28, 2017 and October 29, 2016, 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.

~~Table of Contents~~

~~Chico’s FAS, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~October 28, 2017~~

~~(Unaudited)~~

In accordance with the provisions of the guidance, we categorized our financial ~~instruments,~~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 Reporting Date Using
Balance as of October 28, 2017 Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3)
(in thousands)
Financial Assets:
Current Assets
Cash equivalents:
Money market accounts $ 861
$ 861
$ —
$ —
Marketable securities:
Municipal securities 6,637
—
6,637
—
U.S. government agencies 16,756
—
16,756
—
Corporate bonds 30,901
—
30,901
—
Commercial paper 6,117
—
6,117
—
Non Current Assets
Deferred compensation plan 6,925
6,925
—
—
Total $ 68,197
$ 7,786
$ 60,411
$ —

Financial Liabilities:
Long-term debt¹
$ 72,335
$ —
$ 72,786
$ —

Balance as of January 28, 2017
Financial Assets:
Current Assets
Cash equivalents:
Money market accounts $ 471
$ 471
$ —
$ —
Marketable securities:
Municipal securities 5,634
—
5,634
—
U.S. government agencies 23,071
—
23,071
—
Corporate bonds 15,799
—
15,799
—
Commercial paper 5,866
—
5,866
—
Non Current Assets
Deferred compensation plan 7,523
7,523
—
—
Total $ 58,364
$ 7,994
$ 50,370
$ —

Financial Liabilities:
Long-term debt¹
$ 84,785
$ —
$ 85,139
$ —

Balance as of October 29, 2016
Financial Assets:
Current Assets
Cash equivalents:
Money market accounts $ 365
$ 365
$ —
$ —
Marketable securities:
Municipal securities 3,193
—
3,193
—
U.S. government agencies 23,113
—
23,113
—
Corporate bonds 18,253
—
18,253
—
Commercial paper 5,852
—
5,852
—
Non Current Assets
Deferred compensation plan 7,291
7,291
—
—
Total $ 58,067
$ 7,656
$ 50,411
$ —

Financial Liabilities:
Long-term debt¹
$ 84,768
$ —
$ 85,207
$ —

¹ ~~The carrying value of long-term debt includes the current and long-term portions and the remaining unamortized debt issuance costs.~~


			Fair Value Measurements at the End of the Reporting Date Using
	Balance as of October 28, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts	$	18,255	$	18,255	$	—	$	—
Marketable securities:
U.S. government agencies	5,531		—		5,531		—
Corporate bonds	11,767		—		11,767		—
Commercial paper	7,404		—		7,404		—



Total recurring fair value measurements	$	42,957	$	18,255	$	24,702	$	—









			Fair Value Measurements at the End of the Reporting Date Using
	Balance as of January 28, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts	$	41,642	$	41,642	$	—	$	—
Marketable securities:


U.S. government agencies	5,506		—		5,506		—
Corporate bonds	12,802		—		12,802		—
Commercial paper	6,369		—		6,369		—



Total recurring fair value measurements	$	66,319	$	41,642	$	24,677	$	—








			Fair Value Measurements at the End of the Reporting Date Using
	Balance as of October 29, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts	$	42,596	$	42,596	$	—	$	—
Marketable securities:


U.S. government agencies	3,479		—		3,479		—
Corporate bonds	10,709		—		10,709		—
Commercial paper	8,829		—		8,829		—

Noncurrent Assets
Deferred compensation plan	4,776		4,776		—		—
Total recurring fair value measurements	$	70,389	$	47,372	$	23,017	$	—

~~Table of Contents~~

~~Chico’s FAS, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~October 28, 2017~~

~~(Unaudited)~~

~~Note 8. Debt~~9. DEBT

~~In fiscal 2015, we~~On February 2, 2022, the Company and certain material domestic subsidiaries entered into aAmendment No. 2 (“Amendment”) to its credit agreement ~~(the "Agreement"~~(as amended, “Credit Agreement”) ~~providing~~, originally entered into on August 2, 2018 and amended October 30, 2020, by and among the Company, certain material domestic subsidiaries as co-borrowers and guarantors, Wells Fargo Bank, National Association (“Wells Fargo Bank”), as Agent, letter of credit issuer, and swing line lender, and certain lenders party thereto. Our obligations under the Credit Agreement are guaranteed by the guarantors and are secured by a first-priority lien on certain assets of the Company and certain material domestic subsidiaries, including inventory, accounts receivable, cash deposits, certain insurance proceeds, real estate, fixtures, and certain intellectual property. The Credit Agreement provides for a ~~term~~five-year Asset-Based Lending senior secured revolving loan ~~of $100.0 million~~(“ABL”) and ~~a revolving~~letter of credit facility of ~~$100.0 million.~~up to $285.0 million, maturing February 2, 2027. 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~~applicable to ~~LIBOR~~Term Secured Overnight Financing Rate (“SOFR”) loans drawn under the ABL is equal to Term SOFR plus 1.60% (subject to a further decrease to Term SOFR plus 1.35% or an ~~Alternate Base Rate~~increase to Term SOFR plus an1.85% based upon average quarterly excess availability under the ABL). The Credit Agreement also provides for a $15.0 million first-in last-out (“FILO”) loan. The interest rate ~~margin, as defined in~~applicable to the ~~Agreement.~~ FILO is equal to Term SOFR plus 3.60% (subject to a further decrease to Term SOFR plus 3.35% or an increase to Term SOFR plus 3.85% based on average quarterly excess availability under the FILO). However, for any ABL or FILO with a SOFR interest rate period of six months, the interest rate applicable to the ABL and FILO is increased by 30 basis points.

The Credit Agreement contains customary representations, warranties, and affirmative covenants, as well as customary negative covenants, that, among other things restrict, subject to certain exceptions, the ability of the Company and certain of its domestic subsidiaries to (i) incur liens, (ii) make investments, (iii) issue or incur additional indebtedness, (iv) undergo significant corporate changes, including ~~the requirement to maintain~~mergers and acquisitions, (v) make dispositions, (vi) make restricted payments, (vii) prepay other indebtedness, and (viii) enter into certain ~~financial ratios.~~other restrictive agreements. The Company ~~was in compliance with~~may pay cash dividends and repurchase shares under its share buyback program, subject to certain thresholds of available borrowings, based upon the ~~applicable ratio requirements~~lesser of the aggregate amount of commitments under the Credit Agreement and ~~other covenants at October 28, 2017.~~ the borrowing base, determined after giving effect to any such transaction or payment, on a pro forma basis. In addition, the Company must pay a commitment fee per annum on the unused portion of the commitments under the Credit Agreement.

As of October 28, ~~2017, we had total~~2023, $24.0 million in net borrowings were outstanding under the Credit Agreement. Availability under the Credit Agreement is determined based upon a monthly borrowing base calculation, which includes eligible credit card receivables, real estate, and inventory, less outstanding borrowings, letters of credit, and certain designated reserves. As of October 28, 2023, the available additional borrowing capacity under the Credit Agreement was approximately $265.1 million,inclusive of ~~$100.0~~the current loan cap of $30.0 million.

As of October 28, 2023, deferred financing costs of $2.7 million ~~under our revolving credit facility.~~were outstanding related to the Credit Agreement and are presented in other current assets in the accompanying unaudited condensed consolidated balance sheet.

~~The following table provides additional detail on our outstanding debt:~~

October 28, 2017 January 28, 2017 October 29, 2016
(in thousands)
Credit Agreement, net $ 72,335
$ 84,785
$ 84,768
Less: current portion (15,000 ) (16,250 ) (10,000 )
Total long-term debt $ 57,335
$ 68,535
$ 74,768

~~Note 9. Share Repurchases~~10. SHARE REPURCHASES

During the thirty-nine weeks ended October 28, ~~2017,~~2023, under our ~~$300~~$300.0 million share repurchase program announced in November 2015 (“Prior Share Repurchase Program”), we repurchased ~~2.5~~3.25 million shares at a total cost of approximately ~~$25.7~~$19.8 million, at ~~a weighted~~an average price of ~~$10.28~~$6.09 per share. In June 2023, the Company authorized a new share repurchase program (“New Share Repurchase Program”) of up to $100.0 million of the Company’s common stock and cancelled the remaining $35.4 million available under the Prior Share Repurchase Program. As of October 28, ~~2017,~~2023, the Company ~~has $137.9~~had $100.0 million remaining for future repurchases under the ~~program.~~New Share Repurchase Program. However, we have no continuing obligation to repurchase shares under this authorization, and the timing, actual number, and ~~value~~purchase price of any ~~additional~~ shares ~~to be~~ purchased under the New Share Repurchase Program will depend on a variety of factors, including, but not limited to, the ~~performance~~pending Merger, the market price of ~~our~~the Company’s common stock, ~~price,~~general business and market conditions, other investment opportunities, and applicable legal and regulatory requirements.

11. SUPPLIER FINANCE PROGRAM

In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which enhances the transparency about the use of supplier finance programs for investors and other ~~considerations.~~

~~Note 10. Commitments and Contingencies~~

In July 2015, White House Black Market, Inc. (WHBM) was named as a defendant in Altman v. White House Black Market, Inc., a putative class action filed in the United States District Court for the Northern Districtallocators of ~~Georgia.~~capital. The complaint alleges that WHBM, in violation of federal law, willfully published more than the last five digits of a credit or debit card number on customers' point-of-sale receipts. Plaintiff seeks an award of statutory damages of $100 to $1,000 for each alleged willful violation of the law, as well as attorneys’ fees, costs and punitive damages. The Company denies the material allegations of the complaint and believes the case is without merit. The Court denied the Company’s motion to dismiss on July 13, 2016, and the parties have engaged in extensive discovery since then. On October 25, 2017, the magistrate in the matter recommended that the class be certified. On November 8, 2017, WHBM filed objections to such recommendation. The Company will continue to vigorously defend the matter, including a planned motion for summary judgment to dismiss all claims. At this time, the Company is unable to reasonably estimate the potential loss or range of loss, if any, related to the lawsuit because there are a number of unknown facts and unresolved legal issues that may impact the amount of any potential liability, including, without limitation, (a) whether the action will ultimately be permitted to proceed as a class, (b) if a class is certified, the resolution of certain disputed statutory interpretation issues that may impact the size of the putative class and (c) whether or not the plaintiff is entitled to statutory damages. No assurance can be given that these issues will be resolved in the Company’s favor or that the Company will be successful in its defense on the merits or otherwise. If the case were to proceed as a class action and the Company were to be unsuccessful in its defense on the merits, the ultimate resolution of the case could have a material adverse effect on the Company’s consolidated financial condition or results of operations.

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 alleged 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. The parties entered into a ~~settlement~~supplier financing agreement administered by a third-party platform in the fourth quarter of 2022. Payments to suppliers through this program began in the third quarter of fiscal 2023. Inclusion in the supplier financing program is by sole discretion of the Company, offering participating suppliers early payment of invoices through a third-party financial institution. The Company negotiates payment terms with each supplier separately, and inclusion in the financing program does not impact amounts due. One supplier is currently participating in the program with 90-day payment terms. The Company may on occasion submit debit memos to the third-party financial institution, and the ~~Court issued final approval and entry~~financial institution agrees to work with the Company in applying these credits to future payments to suppliers. During the thirteen weeks ended October 28, 2023, no payments were made for invoices submitted through the supplier financing program. The outstanding payment obligation to the financial institution under this program was $2.2 million as of ~~judgment on June 5, 2017. The settlement did not have a material adverse effect on the Company’s consolidated financial condition or results~~October 28, 2023, which is 1.7% of ~~operations.~~

total trade payables obligations to suppliers.

~~Table of Contents~~

~~Chico’s FAS, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~October 28, 2017~~

~~(Unaudited)~~

12. COMMITMENTS AND CONTINGENCIES

In July 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 alleged 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. Following voluntary mediation of the matter in November of 2016, the parties entered into a settlement agreement, which was approved by the court on July 25, 2017. The settlement will not have a material adverse effect on the Company’s consolidated financial condition or results of operations.

~~Other than as noted above, we~~We are not currently a party to any material legal proceedings other than claims and lawsuits arising in the normal course of our business. All such matters are subject to uncertainties, and outcomes may not be predictable. Consequently, as of October 28, 2023, the ultimate aggregate amounts of monetary liability or financial impact with respect to ~~these~~such matters ~~as of October 28, 2017~~ 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.

~~Table of Contents~~

~~Chico’s FAS, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~October 28, 2017~~

~~(Unaudited)~~

~~Note 11. Subsequent Events~~

On November 14, 2017, the Board of Directors declared a quarterly dividend of $0.0825 per share on our common stock. The dividend will be payable on December 18, 2017 to shareholders of record at the close of business on December 4, 2017. Although it is our Company’s intention to continue to pay a quarterly cash dividend in the future, any decision to pay future cash dividends will be made by the Board of Directors and will depend on future earnings, financial condition and other factors.

~~Table of Contents~~



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

Management’s Discussion and Analysis of Financial Condition and Results of Operations, (“or MD~~&A”)~~&A, should be read in conjunction with the ~~accompanying~~ unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q (“this Form 10-Q”) and in our ~~2016~~ Annual Report ~~to Shareholders.~~on Form 10-K for the fiscal year ended January 28, 2023, filed with the Securities and Exchange Commission (“SEC”) on March 14, 2023 (“2022 Annual Report on Form 10-K”).

Executive Overview

~~We are~~Chico’s FAS, Inc. (“Company,” “we,” “us,” or “our”) is a Florida-based fashion company founded in 1983 on Sanibel Island, Florida. The Company reinvented the fashion retail experience by creating fashion communities anchored by service, which put the customer at the center of everything we do. As one of the leading ~~omni-channel specialty retailer~~fashion retailers in North America, Chico’s FAS is a company of ~~women’s private branded, sophisticated, casual-to-dressy clothing, intimates and complementary accessories, operating under the~~three unique brands – Chico’s®, White House Black Market® (“WHBM”), and Soma ~~brand names.~~® – each operating in their own white space, founded by women, led by women, providing solutions that millions of women say give them confidence and joy. We sometimes refer to our Chico’s and WHBM brands collectively as our “Apparel Group.” Our distinct lifestyle brands serve the needs of fashion-savvy women with household incomes in the moderate-to-high income level. We earn ~~revenues~~revenue and generate cash through the sale of merchandise in our domestic ~~and international~~ retail stores, our various Company-operated e-commerce websites, ~~and~~social commerce, our call center ~~which~~(which takes orders for all of our ~~brands,~~brands), and through an unaffiliated franchise ~~partner in Mexico.~~partners.

We utilize an integrated, ~~omni-channel~~omnichannel approach to managing our business. We want our customers to experience our brands holistically and to view ~~our~~the various ~~retail~~commerce channels we operate as a single, integrated experience rather than as separate sales channels operating independently. This approach allows our customers to browse, purchase, return, or exchange our merchandise through whatever sales channel, and at whatever time, is most convenient. As a result, we track total sales and comparable sales on a combined basis.

Our growth strategy is supported by the “power of three” unique brands and the “power of three” commerce channels. Our physical stores serve as community centers for entertainment and self-discovery, where our stylists and bra experts showcase our products and share their knowledge and enthusiasm for our brands. Our digital stores serve as a first impression of our brands and an efficient platform to teach and inspire our customers about our merchandise. Our social stylists – who are a combination of store associates, social media platform hosts and hyperlocal social stylists who arrange events within their communities – are an additional connection between our physical stores and digital.

~~Third Quarter of Fiscal 2017 Financial~~Business Highlights

Ÿ ~~Delivered third quarter EPS of $0.13 despite the unfavorable impact of hurricanes~~

Ÿ ~~Maintained strong cash position and value-focused capital allocation~~

~~Income from Operations~~The Company’s third quarter highlights include:

•Consistent profitability: For the third quarter, the Company reported net income per diluted share of $0.04.

•Solid balance sheet: The Company ended the third quarter with $126.6 million in cash and marketable securities and total liquidity of $361.7 million, with $24.0 million in long-term debt.

•Pending Merger: On September 27, 2023, the Company entered into a definitive agreement (“Merger Agreement”), which is filed as Exhibit 2.1 to this Form 10-Q, to be acquired by Sycamore Partners, a private equity firm specializing in retail, consumer, and distribution-related investments, pursuant to which the Company’s shareholders would receive $7.60 per share in cash (“Merger”). If the Merger is successful, Chico’s FAS will become a privately held company. The Merger is expected to close by the end of the first calendar quarter of 2024, subject to both the approval by the Company’s shareholders and customary closing conditions. The Go-Shop Period has ended, and the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has expired. In addition, the Company filed its Definitive Merger Proxy Statement on Schedule 14A with the Securities and Exchange Commission on November 29, 2023. The transaction is not subject to a financing condition.

Select ~~Charges~~Financial Results

The following table depicts ~~on a pre-tax basis, income from operations~~select financial results for the thirteen and ~~restructuring~~thirty-nine weeks ended October 28, 2023 and ~~strategic charges for~~October 29, 2022:


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
	(in millions, except per share amounts)
Net sales	$	505	$	518	$	1,585	$	1,618

Income from operations (1)	11		32		110		135
Net income (2)	5		25		104		102
Net income per common and common equivalent share – diluted	$	0.04	$	0.20	$	0.85	$	0.82

(1) Includes $7.3 million in Merger-related costs during the third quarter of ~~fiscal 2017~~2023.

(2) Includes a $25.6 million non-cash favorable impact of the tax valuation allowance reversal during the second quarter of 2023 and ~~2016:~~

Thirteen Weeks Ended
October 28, 2017 October 29, 2016

(dollars in millions)
Income from operations $ 25
$ 31
Restructuring and strategic charges —
11

~~Earnings per diluted share for~~$8.0 million in Merger-related costs, after taxes, during the third quarter of 2023.

Current Trends

Our financial results, we believe, demonstrate that we are successfully executing on our four strategic pillars of customer led, product obsessed, digital first, and operationally excellent.

We offer our customers the ability to shop through three powerful platforms – digital, stores, and our social stylists. Our customers have proven to be resilient, and our multi-channel customers are especially valuable to us, spending three times more than single-channel customers. We continually work to assure we are meeting our customers’ demands with the right balance and styles of inventory and accommodating their evolving shopping preferences. We are constantly innovating and introducing new fashion, trends, and fabrications to our assortments. Over the last several years, we have made meaningful investments to transform our Company into a digital-first enterprise, fast-tracking numerous innovation and technology investments across all three brands to improve service, engagement, and decision making. In addition, we are disciplined in the way we manage our inventories, costs, real estate, and cash.

Our cash position, total liquidity, and operating cash flow remain strong, providing us with flexibility to manage the business, make investments to further propel our growth, and return excess cash to shareholders, as deemed appropriate. In addition to funding strategic investments, we believe our cash flow will allow us to navigate any economic developments that may arise over the coming quarters.

Looking ahead, we are well-positioned to react in this dynamic environment, further supported by a strong balance sheet. We are managing lean inventories; making prudent investments in digital, technology, and stores; and progressing on our key strategic initiatives that we expect will deliver both top- and bottom-line growth over the long term.

Outlook

Given the pending acquisition by Sycamore Partners, the Company is not providing a financial outlook and is withdrawing its previously issued outlook for fiscal ~~2017 was $0.13 compared~~2023.

Key Performance Indicators

We consider a variety of key performance and financial measures to ~~$0.18~~evaluate our business, develop financial forecasts, and make strategic decisions. These key measures include liquidity, comparable sales, gross margin, income per diluted share, and return on net assets (“RONA”). We remain focused on effectively managing our liquidity position, including aligning our operating cost structure with expected sales. We will continue to evaluate our key performance and financial measures, which are described below.

Liquidity

Liquidity is measured through cash flow, which is the measure of cash provided by, or used in, ~~last year's third quarter. Results~~operating, investing, and financing activities. We believe we are able to effectively manage our liquidity position.

Comparable Sales

Comparable sales is an omnichannel measure of the amount of sales generated from products the Company sells directly to the consumer, relative to the amount of sales generated in the comparable prior-year period. Comparable sales is defined as sales from stores open for the ~~third quarter include~~preceding twelve months, including stores that have been expanded, remodeled, or relocated within the ~~unfavorable~~same general market, and also includes online and catalog sales. The comparable sales calculation excludes the negative impact of ~~hurricanes Harvey, Irma~~stores closed for four or more days.

Gross Margin

Gross margin is computed as gross profit divided by net sales. We believe gross margin is a primary metric to measure the performance of our business, as gross margin is used to determine the value of incremental sales, and ~~Maria (collectively,~~to guide pricing and promotion decisions.

Income per Diluted Share

Income per share is determined using the ~~"Hurricanes")~~two-class method when it is more dilutive than the treasury stock method. Income per basic share is computed by dividing net income available to common shareholders by the weighted-average number of ~~approximately $5 million after-tax. Results for~~common shares outstanding during the ~~third quarter of fiscal 2016 include the impact of restructuring and strategic charges and Boston Proper of $3 million after-tax. The Company's earnings~~period, including participating securities. Income per diluted share reflects the ~~benefit~~dilutive effect of ~~approximately 4 million~~potential common shares ~~repurchased since the end~~from non-participating securities, such as stock options, performance stock units, and restricted stock units. While income per basic share serves as an indicator of the ~~third~~Company’s profitability, we believe income per diluted share is a key performance measure because it gauges the Company’s quality of income per share, assuming all potential common shares from non-participating securities are exercised.

Return on Net Assets

RONA is defined as (i) net income divided by (ii) the “five-point average” (based on balances at the beginning of the first quarter ~~last year, partially offset by~~plus the final balances for each quarter of the fiscal year) of net working capital less cash and marketable securities plus fixed assets. We believe RONA is a ~~decrease in net income.~~

~~Hurricane Impact~~

~~In the third quarter,~~primary metric, as it helps to determine how well the Company ~~was impacted by~~is utilizing its assets. As such, a higher RONA could indicate that the Hurricanes, resulting in reduced operating hours or the temporary closure of more than 300 stores as well as a decline in direct to consumer sales. The business interruption of the Hurricanes had a significant impact on the Company’s operations. The impact to income from operations due to lower net sales, impairment chargesCompany is using its assets and ~~other incremental Hurricane related expenses was approximately $10 million. On an after-tax basis, the Hurricane related impact to net income was $5 million.~~working capital efficiently and effectively.

Our Business Strategy

~~Our overall business strategy is~~We are focused on building a collection of distinct, high-performing retail brands primarily serving the fashion needs of women ~~ages 35~~with moderate-to-high household income levels.

The primary function of the Company is the production, procurement, and ~~older. We seek to accomplish this strategy through~~sale of beautiful merchandise that delivers the promise and positioning of each of our ~~four focus areas: (1) evolving the customer experience, (2)~~brands and that resonates with customers. To that end, we are continually strengthening our ~~brands' positions, (3) leveraging actionable retail science,~~merchandise and ~~(4) sharpening~~design capabilities, and enhancing our ~~financial principles.~~ sourcing and supply chain to deliver product in a timely manner to our customers, while also focusing on improving the quality and aesthetic of our merchandise.

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 is in the best interest of ~~the~~our shareholders.

We pursue improving the performance of our brands by building our ~~omni-channel~~omnichannel capabilities, ~~which includes~~growing our online presence, managing our store base, ~~and growing our online presence, by~~ executing marketing plans, byleveraging expenses effectively, ~~leveraging~~considering additional sales channels and ~~expense initiatives~~markets, and by optimizing the merchandise offerings of each of our ~~three~~ brands. We continue to invest heavily in our ~~omni-channel~~omnichannel capabilities ~~in order to allow~~so that our customers tocan fully experience our brands ~~through more than one channel. In essence, we~~in the manner they choose.

We view our ~~various sales channels~~stores and Company-operated e-commerce websites as a single, integrated ~~process~~sales function rather than as separate, independently operated sales ~~channels operating independently. To that end, we often refer to our brands' respective websites as "our largest store" within the brand.~~

Under this integrated, omni-channel approach, we encourage our customers to take advantage of each of our sales channels in whatever way best fits their needs. Customers may shop our products through one channel and consummate the purchase through a different channel. Our domestic customers have the option of returning merchandise to a store or to our distribution center, regardless of the channel used for purchase. We believe this omni-channel approach meets our customers’ expectations, enhances the customer experience, contributes to the overall success of our brands, reflects that our customers do not differentiate between channels and is consistent with how we plan and manage our business.channels. As a result, we maintain a shared inventory platform for our primary operations, allowing us to fulfill orders for all channels from our distribution center (“DC”) in Winder, Georgia. ~~We also fulfill~~Our domestic customers can return merchandise to a store or to our DC, regardless of the original purchase location. Using our enhanced “Locate” tool, we ship in-store orders ~~directly~~ from other ~~stores~~locations directly to the customer, expediting delivery times while reducing our shipping costs. In addition, our shared inventory system enables customers to make purchases online that ship either from our DC or a store. Our mobile apps launched in 2022, following our ~~distribution center.~~previously introduced customized, branded, digital styling software tools, StyleConnect® and MY CLOSETSM, and Buy On-Line, Pick-up In-Store. We believe all of these digital tools are driving customer engagement, loyalty and cross-channel shopping.

We seek to acquire new customers and retain ~~omni-channel~~existing customers by leveraging existing customer-specific data and through targeted marketing, including ~~e-marketing,~~digital marketing, social media, television, catalogs, and mailers. We seek to optimize the potential of our brands with ~~improved~~innovative product offerings, ~~which includes~~ potential new merchandise opportunities, and brand extensions that enhance the current offerings, as well as ~~our~~through continued emphasis on our “Most Amazing Personal Service” standard. We will also continue to consider potential alternative sales channels for our brands, including international franchise, wholesale, licensing, and other opportunities.

~~In 2016,~~We are focused on driving profitable growth through four strategic pillars: customer led, product obsessed, digital first, and operationally excellent.

•By being customer-led, we ~~announced~~are focused on building community engagement, creating exceptional customer experiences, and ~~began implementing~~increasing customer lifetime value.

•We are product-obsessed, delivering best-in-class merchandise to our Chico’s, WHBM, and Soma customers, offering a continual pipeline of innovation and beautiful solutions that inspire confidence and joy. With each brand, we are focused on elevating average unit retail and driving full-priced sales growth.

•Being digital-first means we want to strengthen our core platform, data-driven insights, and decision-making. We are leveraging technology to engage and deliver to our customers across channels and brands.

•To be operationally excellent, we are continually focusing on diligently managing our inventory, cost ~~reduction and operating efficiency initiatives, including realigning marketing and digital commerce, improving~~of sales, supply chain, ~~efficiency, reducing non-merchandise~~ expenses, and ~~optimizing marketing spend. Actions taken as part~~real estate, while generating healthy cash flow and delivering a strong bottom line.

Results of ~~these initiatives are expected to continue to reduce expenses and complexity, standardize processes and improve the Company's ability to respond to changes in customer demand for merchandise.~~Operations

~~Table of Contents~~

~~RESULTS OF OPERATIONS~~

Thirteen Weeks Ended October 28, ~~2017~~2023 Compared to the Thirteen Weeks Ended October 29, ~~2016~~2022

Net Income and Income per Diluted Share

For the third quarter, the Company reported net income of $5.0 million, or $0.04 per diluted share, compared to net income of $24.6 million, or $0.20 per diluted share, in last year’s third quarter. This year’s net income and earnings per diluted share include the impact of $8.0 million in Merger-related costs, after taxes.

Net Sales

The following table depicts net sales by Chico’s, WHBM, and Soma in dollars and as a percentage of total net sales for the thirteen weeks ended October 28, ~~2017~~2023 and October 29, ~~2016:~~2022:


										Thirteen Weeks Ended
	Thirteen Weeks Ended									October 28, 2023				October 29, 2022
	October 28, 2017				October 29, 2016
										(dollars in millions)
	(dollars in millions)
Chico's	$	285	53.5	%	$	312	52.3	%
Chico’s									Chico’s	$	252	49.9	%	$	255	49.3	%
WHBM	175		32.9		210		35.2		WHBM	148		29.2		157		30.4
Soma	72		13.6		74		12.5		Soma	105		20.9		106		20.3
Total net sales	$	532	100.0	%	$	597	100.0	%

Total Net Sales									Total Net Sales	$	505	100.0	%	$	518	100.0	%

For the third quarter, ~~of fiscal 2017,~~ net sales were ~~$532~~$505.1 million compared to ~~$597~~$518.3 million in last year’s third quarter. This decrease of ~~10.8%~~2.5% primarily reflects a comparable sales decrease of 2.7% since last year’s third quarter. The 2.7% comparable sales decline ~~of 8.2%,~~was driven by ~~lower~~a decrease in transaction count, partially offset by an increase in average dollar sales and a decline in transaction count. The comparable sales calculation excludes the negative impact of stores closed four or more days. Net sales also reflects 36 net store closures, or a 2.4% net decrease in selling square footage, since last year's third quarter.sale.

The following table depicts comparable sales percentages by ~~Chico's,~~Chico’s, WHBM, and Soma for the thirteen weeks ended October 28, ~~2017~~2023 and October 29, ~~2016:~~2022:


	Thirteen Weeks Ended
	October 28, 2023		October 29, 2022
	Compared to Fiscal 2022		Compared to Fiscal 2021
Chico’s	0.0	%	28.8	%
WHBM	(6.7)		17.0
Soma	(3.1)		(6.1)
Total Company	(2.7)		16.5

Thirteen Weeks Ended
October 28, 2017 October 29, 2016
Chico's (5.8 )% (5.6 )%
WHBM (14.1 ) (5.5 )
Soma (1.7 ) 0.4
Total Company (8.2 )% (4.9 )%

Cost of Goods ~~Sold/~~Sold / Gross Margin

The following table depicts ~~COGS~~cost of goods sold and gross ~~margin~~profit in dollars, and gross margin as a percentage of total net sales for the thirteen weeks ended October 28, ~~2017~~2023 and October 29, ~~2016:~~2022:

For the third quarter, ~~of fiscal 2017,~~ gross ~~margin~~profit was ~~$197~~$196.4 million, or ~~37.0%~~38.9% of net sales, compared to ~~$230~~$207.4 million, or ~~38.6%~~40.0% of net sales, in last year’s third quarter. This ~~160 basis point~~110-basis-point decrease in gross margin primarily reflects ~~deleverage of store~~higher occupancy costs, as ~~a percent of sales and store impairment charges related to the Hurricanes, partially offset by an improvement in merchandise margin.~~

well as deleverage on lower net sales.

Selling, General, and Administrative Expenses

The following table depicts selling, general, and administrative expenses (“SG~~&A,~~&A”), which includes store and 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 October 28, ~~2017~~2023 and October 29, ~~2016:~~2022:

For the third quarter, ~~of fiscal 2017,~~ SG&A was ~~$171~~$178.6 million, or ~~32.3%~~35.4% of net sales, compared to ~~$188~~$175.8 million, or ~~31.6%~~33.9% of net sales, infor last ~~year's~~year’s third quarter. The 150 basis points of deleverage primarily reflects increased marketing and store operating expenses to support our long-term growth strategies.

Merger-Related Costs

Merger-related costs of $7.3 million were recognized during the period.


	Thirteen Weeks Ended
	October 28, 2023			October 29, 2022

	(dollars in millions)
Merger-related costs	$	7		$	—
Percentage of total net sales	1.4		%	—		%

The third quarter effective tax rate was 50.3% compared to 19.3% for last year’s third quarter. This ~~decrease of $17 million, or 9.0%,~~year’s effective tax rate primarily reflects the impact of ~~a reduction in employee-related~~certain incurred and anticipated nondeductible Merger-related costs, and ~~marketing spend.~~

~~Restructuring and Strategic Charges~~

In the ~~fourth quarter of~~Company’s projected annual pre-tax income, partially offset by a fiscal 2014, we initiated a restructuring program, including the acceleration of domestic store closures and an organizational realignment, to ensure that resources align with long-term growth initiatives. During the third quarter of fiscal 2016, we recorded pre-tax restructuring and strategic charges of $11 million, primarily consisting of outside services2022 provision-to-return benefit related to ~~cost reduction and operating efficiency initiatives. The fiscal 2016 after-tax impact of the restructuring and strategic charges totaled $7 million, or $0.05 per diluted share. Effective in the~~federal tax credits. Last year’s third quarter of fiscal 2016, we substantially completed charges related to our previously announced restructuring program. We have closed 132 stores in connection with this restructuring program through the third quarter of fiscal 2017, including 20 Boston Proper stores.

~~Provision for Income Taxes~~

~~For the third quarter of fiscal 2017, the effective tax rate was 32.9% compared to 22.9% for last year's third quarter. The current~~ quarter effective tax rate primarily reflected the impact of ~~32.9% includes~~ a ~~430 basis point tax~~fiscal 2021 provision-to-return benefit due to the reversal of a valuation allowance related to ~~income tax credits. The favorability in the effective tax rate for the third quarter of 2016 primarily reflects an additional tax benefit related~~temporary differences.

Thirty-Nine Weeks Ended October 28, 2023 Compared to the ~~disposition of Boston Proper's stock and the recognition of income tax credits.~~Thirty-Nine Weeks Ended October 29, 2022

Net Income and ~~Earnings Per~~Income per Diluted Share

We For the thirty-nine weeks ended October 28, 2023, the Company reported net income ~~for the third quarter~~ of ~~fiscal 2017 of $17~~$104.3 million, or ~~$0.13~~$0.85 per diluted share, compared to net income of ~~$24~~$101.5 million, or ~~$0.18~~$0.82 per diluted share, ~~in last year’s third quarter. Results~~ for the ~~third quarter of fiscal 2017~~thirty-nine weeks ended October 29, 2022. This year’s net income and earnings per diluted share include the ~~unfavorable~~ impact of a $25.6 million non-cash tax benefit and the ~~Hurricanes of approximately $5~~$8.0 million ~~after-tax. Results for the third quarter of 2016 include the unfavorable impact of restructuring and strategic charges and Boston Proper of $3 million after-tax.~~

~~Thirty-Nine Weeks Ended October 28, 2017 Compared to the Thirty-Nine Weeks Ended October 29, 2016~~Merger-related costs, after taxes.

The following table depicts net sales by Chico’s, WHBM, and Soma in dollars and as a percentage of total net sales for the thirty-nine weeks ended October 28, ~~2017~~2023 and October 29, ~~2016:~~2022:

Thirty-Nine Weeks Ended
October 28, 2017 October 29, 2016

(dollars in millions)
Chico's $ 897
53.0 % $ 995
53.0 %
WHBM 553
32.6
633
33.8
Soma 245
14.4
247
13.2
Total net sales $ 1,695
100.0 % $ 1,876
100.0 %

~~Table of Contents~~

Net sales for the ~~year-to-date period~~thirty-nine weeks ended October 28, ~~2017~~2023 decreased to ~~$1,695~~$1,585 million from ~~$1,876~~$1,618 million ~~in last year’s year-to-date period.~~for the thirty-nine weeks ended October 29, 2022. This 2.0% decrease primarily reflects the comparable sales decrease of ~~9.7% primarily reflects a decline in comparable sales of 8.4%~~2.1% driven by ~~lower~~a decrease in transaction count and average dollar sales and a decline in transaction count. The comparable sales calculation excludes the negative impact of stores closed four or more days. Net sales also reflects 36 net store closures, or a 2.4% net decrease in selling square footage, since last year's third quarter.sale.

The following table depicts comparable sales percentages by ~~Chico's,~~Chico’s, WHBM, and Soma for the thirty-nine weeks ended October 28, ~~2017 and October 29, 2016:~~2023:


						Thirty-Nine Weeks Ended
	Thirty-Nine Weeks Ended					October 28, 2023		October 29, 2022
	October 28, 2017		October 29, 2016			Compared to Fiscal 2022		Compared to Fiscal 2021
Chico's	(8.3	)%	(5.4	)%	Chico's	0.7	%	36.0	%
WHBM	(11.5	)	(3.5	)	WHBM	(6.8)		35.6
Soma	(1.1	)	0.6		Soma	(2.0)		(5.8)
Total Company	(8.4	)%	(4.0	)%	Total Company	(2.1)	%	24.7	%

Cost of Goods ~~Sold/~~Sold / Gross Margin


~~For the Quarter Ended:~~				~~Commission File Number:~~
~~October 28, 2017~~				~~001-16435~~


PART I – Financial Information

~~PART I – Financial Information~~

Item 1.	Financial Statements:

		Condensed Consolidated Statements of Income for the Thirteen ~~Weeks~~ and ~~Thirty-Nine~~T hirty-Nine Weeks Ended October ~~28, 2017~~ 2 8 , 2023 (Unaudited) and October 29 ~~2016~~, 2022 (Unaudited)	34

		Condensed Consolidated Statements of Comprehensive Income for the Thirteen ~~Weeks~~ and Thirty-Nine Weeks Ended October 28, ~~2017~~2023 (Unaudited) and October 29, ~~2016~~2022 (Unaudited)	45

		Condensed Consolidated Balance Sheets – October 28 ~~2017~~, 2023 (Unaudited), January 28, ~~2017 (Unaudited)~~2023 (Audited), and October 29 ~~2016~~, 2022 (Unaudited)	56

		Condensed Consolidated Statements of Shareholders’ Equity for the Thirteen and T hirty-Nine Weeks Ended October 28 , 2023 (Unaudited) and October 29 , 2022 (Unaudited)	7

		Condensed Consolidated Statements of Cash Flows for the ~~Thirty-Nine~~ T hirty-Nine Weeks Ended October 28 ~~2017~~, 2023 (Unaudited) and October 29 ~~2016~~, 2022 (Unaudited)	69

		Notes to Condensed Consolidated Financial Statements (Unaudited)	710

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	1722

Item 3.		Quantitative and Qualitative Disclosures About Market Risk	2434

Item 4.		Controls and Procedures	2434

PART II – Other Information

Item 1.		Legal Proceedings	2535

Item 1A.		Risk Factors	2536



Item 2.		Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	2638

Item 5.		Other Information	39

Item 6.		Exhibits	2740

Signatures			2841


								Thirty-Nine Weeks Ended
	Thirty-Nine Weeks Ended							October 28, 2023		October 29, 2022
	October 28, 2017			October 29, 2016
Cash Flows From Operating Activities:
Cash Flows from Operating Activities:							Cash Flows from Operating Activities:
Net income	$	73,025		$	77,721		Net income	$	104,270	$	101,512
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:

Inventory write-offs							Inventory write-offs	—		826
Depreciation and amortization	73,968			82,585			Depreciation and amortization	31,283		33,350
Loss on disposal and impairment of property and equipment	5,204			6,434
Deferred income taxes	(1,483		)	(8,098		)
Stock-based compensation expense	14,739			15,483
Deferred rent and lease credits	(14,684		)	(14,264		)
Non-cash lease expense							Non-cash lease expense	135,679		137,184

Loss on disposal and impairment of property and equipment, net							Loss on disposal and impairment of property and equipment, net	83		1,804
Deferred tax benefit							Deferred tax benefit	(15,825)		(381)
Share-based compensation expense							Share-based compensation expense	9,136		10,321

Changes in assets and liabilities:							Changes in assets and liabilities:
Inventories	(32,660		)	(27,506		)	Inventories	(65,881)		18,436
Prepaid expenses and other current assets	4,506			(6,237		)
Prepaid expenses and other assets							Prepaid expenses and other assets	(10,480)		(2,591)
Income tax receivable	1,050			25,755			Income tax receivable	2,684		(1,732)
Accounts payable	18,758			(3,789		)	Accounts payable	(2,778)		(73,120)
Accrued and other liabilities	(47,598		)	(3,391		)	Accrued and other liabilities	(6,924)		13,583
Lease liability							Lease liability	(145,729)		(155,561)
Net cash provided by operating activities	94,825			144,693			Net cash provided by operating activities	35,518		83,631
Cash Flows From Investing Activities:
Cash Flows from Investing Activities:							Cash Flows from Investing Activities:
Purchases of marketable securities	(29,097		)	(43,266		)	Purchases of marketable securities	(13,913)		(26,376)
Proceeds from sale of marketable securities	19,056			43,058			Proceeds from sale of marketable securities	13,938		3,083
Purchases of property and equipment, net	(27,128		)	(35,663		)
Purchases of property and equipment							Purchases of property and equipment	(35,460)		(21,207)
Proceeds from sale of assets							Proceeds from sale of assets	—		2,772
Net cash used in investing activities	(37,169		)	(35,871		)	Net cash used in investing activities	(35,435)		(41,728)
Cash Flows From Financing Activities:
Cash Flows from Financing Activities:							Cash Flows from Financing Activities:

Payments on borrowings	(12,500		)	(7,500		)	Payments on borrowings	(25,000)		(30,000)
Payments of debt issuance costs							Payments of debt issuance costs	—		(706)
Proceeds from issuance of common stock	2,058			2,363			Proceeds from issuance of common stock	329		239
Dividends paid	(32,021		)	(31,936		)
Repurchase of common stock	(25,697		)	(76,334		)
Payments of tax withholdings related to stock-based awards	(6,034		)	(4,990		)

Repurchase of treasury stock under repurchase program							Repurchase of treasury stock under repurchase program	(19,805)		—
Payments of tax withholdings related to share-based awards							Payments of tax withholdings related to share-based awards	(7,040)		(8,815)
Net cash used in financing activities	(74,194		)	(118,397		)	Net cash used in financing activities	(51,516)		(39,282)
Effects of exchange rate changes on cash and cash equivalents	49			(45		)
Net decrease in cash and cash equivalents	(16,489		)	(9,620		)

Net (decrease) increase in cash and cash equivalents							Net (decrease) increase in cash and cash equivalents	(51,433)		2,621
Cash and Cash Equivalents, Beginning of period	142,135			89,951			Cash and Cash Equivalents, Beginning of period	153,377		115,105
Cash and Cash Equivalents, End of period	$	125,646		$	80,331		Cash and Cash Equivalents, End of period	$	101,944	$	117,726

Supplemental Disclosures of Cash Flow Information:							Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	1,831		$	1,713		Cash paid for interest	$	2,409	$	3,686
Cash paid for income taxes, net	$	44,783		$	22,752		Cash paid for income taxes, net	$	(14,230)	$	(26,426)


	Thirty-Nine Weeks Ended
	October 28, 2023		October 29, 2022
	(in millions) (1)
Net cash provided by operating activities	$	36	$	84
Net cash used in investing activities	(35)		(42)
Net cash used in financing activities	(52)		(39)

Net (decrease) increase in cash and cash equivalents	$	(51)	$	3


Risk			Description

1. The pendency of the Merger could have a material adverse effect on our business, consolidated financial condition or results of operations, or the market price of our common stock.			On September 27, 2023, the Company entered into the Merger Agreement. During the period between the date of the signing of the Merger Agreement and the closing of the Merger, our business has been and is exposed to certain inherent risks due to the effect of the announcement and the pendency of the Merger, including the following: • difficulties maintaining relationships with customers and business partners, who may defer decisions about working with us, move to our competitors, or seek to delay or change existing business relationships with us; • uncertainties caused by negative sentiment in the marketplace with respect to the Merger, which could adversely impact investor confidence in our business; • our inability to retain and hire key personnel during the pendency of the Merger, as our personnel may experience uncertainty about their future roles following the Merger; • diversion of our management’s time and attention, as well as distraction of our key personnel, from the Company’s ordinary course of business operations; • the occurrence of any event, change, or other circumstance that could give rise to the termination of the Merger Agreement, including in circumstances requiring the Company to pay a termination fee; and • our inability to solicit other acquisition proposals, pursue alternative business opportunities, make strategic changes to our business, and other restrictions on our ability to conduct our business pursuant to the Merger Agreement.



	October 28, 2017			January 28, 2017			October 29, 2016

ASSETS
Current Assets:
Cash and cash equivalents	$	125,646		$	142,135		$	80,331
Marketable securities, at fair value	60,411			50,370			50,411
Inventories	265,023			232,363			261,341
Prepaid expenses and other current assets	48,876			52,758			68,557
Total Current Assets	499,956			477,626			460,640
Property and Equipment, net	424,961			477,185			495,587
Other Assets:
Goodwill	96,774			96,774			96,774
Other intangible assets, net	38,930			38,930			38,930
Other assets, net	16,581			18,479			18,382
Total Other Assets	152,285			154,183			154,086
	$	1,077,202		$	1,108,994		$	1,110,313
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	135,004		$	116,378		$	125,532
Current debt	15,000			16,250			10,000
Other current and deferred liabilities	118,495			170,232			148,706
Total Current Liabilities	268,499			302,860			284,238
Noncurrent Liabilities:
Long-term debt	57,335			68,535			74,768
Deferred liabilities	108,000			118,543			122,848
Deferred taxes	7,961			9,883			9,320
Total Noncurrent Liabilities	173,296			196,961			206,936
Commitments and Contingencies
Shareholders’ Equity:
Preferred stock	—			—			—
Common stock	1,278			1,288			1,301
Additional paid-in capital	463,502			452,756			445,787
Treasury stock, at cost	(411,766		)	(386,094		)	(366,081		)
Retained earnings	582,387			541,251			538,134
Accumulated other comprehensive income (loss)	6			(28		)	(2		)
Total Shareholders’ Equity	635,407			609,173			619,139
	$	1,077,202		$	1,108,994		$	1,110,313



	Continuing Employee-related Costs			Severance Charges			Lease Termination Charges			Outside Services & Other			Total

	(in thousands)
Beginning Balance, January 28, 2017	$	671		$	2,413		$	846		$	7,299		$	11,229
Payments	(671		)	(2,413		)	(292		)	(7,299		)	(10,675		)
Ending Balance, October 28, 2017	$	—		$	—		$	554		$	—		$	554



	Number of Shares		Weighted Average Exercise Price
Outstanding, beginning of period	577,246		$	13.58
Granted	—		—
Exercised	(8,000	)	10.15
Forfeited or expired	(144,334	)	17.21
Outstanding and exercisable at October 28, 2017	424,912		12.42



			Fair Value Measurements at Reporting Date Using
	Balance as of October 28, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Financial Assets:
Current Assets
Cash equivalents:
Money market accounts	$	861	$	861	$	—	$	—
Marketable securities:
Municipal securities	6,637		—		6,637		—
U.S. government agencies	16,756		—		16,756		—
Corporate bonds	30,901		—		30,901		—
Commercial paper	6,117		—		6,117		—
Non Current Assets
Deferred compensation plan	6,925		6,925		—		—
Total	$	68,197	$	7,786	$	60,411	$	—

Financial Liabilities:
Long-term debt¹	$	72,335	$	—	$	72,786	$	—

	Balance as of January 28, 2017
Financial Assets:
Current Assets
Cash equivalents:
Money market accounts	$	471	$	471	$	—	$	—
Marketable securities:
Municipal securities	5,634		—		5,634		—
U.S. government agencies	23,071		—		23,071		—
Corporate bonds	15,799		—		15,799		—
Commercial paper	5,866		—		5,866		—
Non Current Assets
Deferred compensation plan	7,523		7,523		—		—
Total	$	58,364	$	7,994	$	50,370	$	—

Financial Liabilities:
Long-term debt¹	$	84,785	$	—	$	85,139	$	—

	Balance as of October 29, 2016
Financial Assets:
Current Assets
Cash equivalents:
Money market accounts	$	365	$	365	$	—	$	—
Marketable securities:
Municipal securities	3,193		—		3,193		—
U.S. government agencies	23,113		—		23,113		—
Corporate bonds	18,253		—		18,253		—
Commercial paper	5,852		—		5,852		—
Non Current Assets
Deferred compensation plan	7,291		7,291		—		—
Total	$	58,067	$	7,656	$	50,411	$	—

Financial Liabilities:
Long-term debt¹	$	84,768	$	—	$	85,207	$	—


2. The Merger may not be completed within the expected timeframe, or at all, and any significant delay or the failure to completethe Merger could adversely affect our business, consolidated financial condition or results of operations, or the market price of our common stock.			There can be no assurance that the Merger will be completed within the intended timeframe, or at all. If the Merger is not completed within the intended timeframe or at all, or if the Merger is significantly delayed, we may be subject to a number of material risks, including the following: • to the extent that the current market price of our common stock reflects an assumption that the Merger will be completed, the market price may be negatively impacted because of a failure to complete the Merger within the expected timeframe, or at all; • we could be subject to litigation related to any failure to complete the Merger; • we have incurred, and expect to continue incurring, significant costs, expenses, and fees for professional services and other Merger-related costs, for which we may receive little or no benefit if the Merger is not completed, and many of these fees and costs will be payable by us even if the Merger is not completed; and • a significant delay in completing the Merger or the failure to complete the Merger may result in negative publicity, which, in turn, could negatively affect our relationships with business partners and could impact investor and consumer confidence in our business. The occurrence of any of these events individually or in combination could materially adversely affect our business, consolidated financial condition or results of operations, or the market price of our common stock.
3. Shareholder litigation could prevent or delay the closing of the Merger or otherwise negatively impact our business, consolidated financial condition or results of operations, or the market price of our common stock.			We may incur additional costs in connection with the defense or settlement of any future shareholder litigation related to the pending Merger. Such litigation may adversely affect our ability to complete the Merger. We could incur significant costs in connection with any such litigation, including costs associated with the indemnification of obligations to our directors, which could adversely affect our business, consolidated financial condition or results of operations, or the market price of our common stock.


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
July 30, 2023 - August 26, 2023	100,420	$	5.37	—	$	100,000
August 27, 2023 - September 30, 2023	5,845		5.04	—		100,000
October 1, 2023 - October 28, 2023	14,697		7.49	—		100,000
Total	120,962		5.61	—


~~(a)~~	~~The following documents are~~ Agreement and Plan of Merger, dated as of September 27, 2023, by and among Daphne Parent LLC, Daphne Merger Sub, Inc. and Chico’s FAS, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K, as filed ~~as exhibits to this Quarterly Report~~with the SEC on ~~Form 10-Q:~~



	Exhibit 10.1	~~Employment Letter Agreement between the Company and Mary van Praag, dated August 1, 2017~~First Amendment to Chico’s FAS, Inc.- 2021 Employee Stock Purchase Plan, effective September 27, 2023

	Exhibit 10.2	~~Restrictive Covenant Agreement between the Company and Mary van Praag, dated August 22, 2017~~

~~Exhibit 10.3~~	Indemnification Agreement with ~~Deborah L. Kerr,~~Wendy Hufford, dated ~~November 15, 2017~~as of July 26, 2023

	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.INS~~101	~~XBRL Instance Document~~The following financial statements from the Company’s Quarterly Report on Form 10-Q for the Quarter Ended October 28, 2023, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Income; (ii) Condensed Consolidated Statements of Comprehensive 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 ~~101.SCH~~104	The cover page from the Company’s Quarterly Report on Form 10-Q for the Quarter Ended October 28, 2023, formatted in Inline XBRL ~~Taxonomy Extension Schema Document~~

(included within Exhibit ~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~Exhibit 101.DEF~~	~~XBRL Taxonomy Definition Linkbase Document~~

~~Exhibit 101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~

~~Exhibit 101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~101)