0000897429chs:WhiteHouseBlackMarketMember2020-05-032020-08-01

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM			10-Q
~~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



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

11215 Metro Parkway,, Fort Myers,, Florida33966

(Address of principal executive offices)

~~239~~-~~277-6200~~239-277-6200

(Registrant's telephone number, including area code)

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



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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☑

Non-accelerated filer

☐

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 ☑

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

At August ~~17, 2020,~~23, 2021, the registrant had ~~119,891,735~~122,466,100 shares of Common Stock, $0.01 par value per share, outstanding.

Table of ~~Contents~~Content s

PART I – FINANCIAL INFORMATION



ITEM 1.			FINANCIAL STATEMENTS

CHICO'S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~LOSS~~INCOME (LOSS)

(Unaudited)

(Dollars in thousands, except per share amounts)


	Thirteen Weeks Ended								Twenty-Six Weeks Ended
	July 31, 2021				August 1, 2020				July 31, 2021				August 1, 2020

	Amount		% of Sales		Amount		% of Sales		Amount		% of Sales		Amount		% of Sales
Net Sales	$	472,059	100.0	%	$	306,174	100.0	%	$	860,020	100.0	%	$	586,438	100.0	%
Cost of goods sold	290,601		61.6		261,408		85.4		551,767		64.2		552,767		94.3
Gross Margin	181,458		38.4		44,766		14.6		308,253		35.8		33,671		5.7
Selling, general and administrative expenses	145,849		30.9		107,304		35.0		280,168		32.5		237,475		40.5
Goodwill and intangible impairment charges	—		0.0		—		0.0		—		0.0		113,180		19.3


Income (Loss) from Operations	35,609		7.5		(62,538)		(20.4)		28,085		3.3		(316,984)		(54.1)
Interest expense, net	(1,722)		(0.3)		(507)		(0.2)		(3,427)		(0.4)		(851)		(0.1)
Income (Loss) before Income Taxes	33,887		7.2		(63,045)		(20.6)		24,658		2.9		(317,835)		(54.2)
Income tax provision (benefit)	7,700		1.7		(16,200)		(5.3)		7,400		0.9		(92,700)		(15.8)
Net Income (Loss)	$	26,187	5.5	%	$	(46,845)	(15.3)	%	$	17,258	2.0	%	$	(225,135)	(38.4)	%
Per Share Data:
Net income (loss) per common share - basic	$	0.22			$	(0.40)			$	0.15			$	(1.95)
Net income (loss) per common and common equivalent share – diluted	$	0.21			$	(0.40)			$	0.14			$	(1.95)
Weighted average common shares outstanding – basic	117,021				115,912				116,855				115,743
Weighted average common and common equivalent shares outstanding – diluted	122,723				115,912				121,222				115,743

Thirteen Weeks Ended Twenty-Six Weeks Ended
August 1, 2020 August 3, 2019 August 1, 2020 August 3, 2019

Amount
% of
Sales
Amount
% of
Sales
Amount % of
Sales Amount % of
Sales
Net Sales $ 306,174
100.0 % $ 508,356
100.0 % $ 586,438
100.0 % $ 1,026,084
100.0 %
Cost of goods sold 261,408
85.4
339,734
66.8
552,767
94.3
666,631
65.0
Gross Margin 44,766
14.6
168,622
33.2
33,671
5.7
359,453
35.0
Selling, general and administrative expenses 107,304
35.0
170,983
33.7
237,475
40.5
356,391
34.7
Goodwill and intangible impairment —
0.0
—
0.0
113,180
19.3
—
0.0
(Loss) Income from Operations (62,538 ) (20.4 ) (2,361 ) (0.5 ) (316,984 ) (54.1 ) 3,062
0.3
Interest (expense) income, net (507 ) (0.2 ) 52
0.0
(851 ) (0.1 ) 54
0.0
(Loss) Income before Income Taxes (63,045 ) (20.6 ) (2,309 ) (0.5 ) (317,835 ) (54.2 ) 3,116
0.3
Income tax (benefit) provision (16,200 ) (5.3 ) —
0.0
(92,700 ) (15.8 ) 3,400
0.3
Net Loss $ (46,845 ) (15.3 )% $ (2,309 ) (0.5 )% $ (225,135 ) (38.4 )% $ (284 ) 0.0 %
Per Share Data:
Net loss per common share - basic $ (0.40 ) $ (0.02 ) $ (1.95 ) $ —

Net loss per common and common equivalent share – diluted $ (0.40 ) $ (0.02 ) $ (1.95 ) $ —

Weighted average common shares outstanding – basic 115,912
114,802
115,743
114,618

Weighted average common and common equivalent shares outstanding – diluted 115,912
114,802
115,743
114,618

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

Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~LOSS~~INCOME (LOSS)

(Unaudited)

(In thousands)


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Net income (loss)	$	26,187	$	(46,845)	$	17,258	$	(225,135)
Other comprehensive income (loss):
Unrealized (losses) gains on marketable securities, net of taxes	(20)		108		(54)		(29)
Foreign currency translation adjustment	—		712		—		580
Comprehensive income (loss)	$	26,167	$	(46,025)	$	17,204	$	(224,584)

Thirteen Weeks Ended Twenty-Six Weeks Ended
August 1, 2020 August 3, 2019 August 1, 2020 August 3, 2019
Net loss $ (46,845 ) $ (2,309 ) $ (225,135 ) $ (284 )
Other comprehensive loss:
Unrealized gains (losses) on marketable securities, net of taxes 108
131
(29 ) 194
Foreign currency translation adjustment 712
103
580
21
Comprehensive loss $ (46,025 ) $ (2,075 ) $ (224,584 ) $ (69 )

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

Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)


	July 31, 2021		January 30, 2021		August 1, 2020
ASSETS
Current Assets:
Cash and cash equivalents	$	126,298	$	90,791	$	103,765
Marketable securities, at fair value	10,891		18,559		20,742
Inventories	202,128		203,983		235,844
Prepaid expenses and other current assets	50,428		30,565		31,446
Income tax receivable	41,698		58,140		85,940

Total Current Assets	431,443		402,038		477,737
Property and Equipment, net	208,925		241,370		271,750
Right of Use Assets	529,945		586,061		571,992
Other Assets:
Goodwill	16,360		16,360		16,360
Other intangible assets, net	5,000		5,000		6,164
Other assets, net	21,394		24,049		28,931
Total Other Assets	42,754		45,409		51,455
	$	1,213,067	$	1,274,878	$	1,372,934
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	119,387	$	116,506	$	108,166
Current lease liabilities	163,376		194,551		218,691

Other current and deferred liabilities	126,254		120,729		111,318

Total Current Liabilities	409,017		431,786		438,175
Noncurrent Liabilities:
Long-term debt	149,000		149,000		149,000
Long-term lease liabilities	454,164		515,797		482,380
Other noncurrent and deferred liabilities	12,242		11,863		6,529
Deferred taxes	1,558		1,313		52
Total Noncurrent Liabilities	616,964		677,973		637,961
Commitments and Contingencies (see Note 13)	0		0		0
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; 163,862 and 161,032 and 161,188 shares issued respectively; and 122,565 and 119,735 and 119,891 shares outstanding, respectively	1,226		1,197		1,199
Additional paid-in capital	503,168		498,488		495,163
Treasury stock, at cost, 41,297 shares, respectively	(494,395)		(494,395)		(494,395)
Retained earnings	177,077		159,765		294,708
Accumulated other comprehensive gain	10		64		123
Total Shareholders’ Equity	187,086		165,119		296,798
	$	1,213,067	$	1,274,878	$	1,372,934

August 1, 2020 February 1, 2020 August 3, 2019
ASSETS
Current Assets:
Cash and cash equivalents $ 103,765
$ 63,972
$ 99,634
Marketable securities, at fair value 20,742
63,893
63,446
Inventories 235,844
246,737
227,736
Prepaid expenses and other current assets 31,446
41,069
41,469
Income tax receivable 85,940
7,131
6,450
Total Current Assets 477,737
422,802
438,735
Property and Equipment, net 271,750
315,382
337,049
Right of Use Assets 571,992
648,397
697,332
Other Assets:
Goodwill 16,360
96,774
96,774
Other intangible assets, net 6,164
38,930
38,930
Other assets, net 28,931
20,374
17,468
Total Other Assets 51,455
156,078
153,172

$ 1,372,934
$ 1,542,659
$ 1,626,288
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable $ 108,166
$ 134,204
$ 137,142
Current lease liabilities 218,691
157,043
158,866
Other current and deferred liabilities 111,318
114,498
108,861
Total Current Liabilities 438,175
405,745
404,869
Noncurrent Liabilities:
Long-term debt 149,000
42,500
50,000
Long-term lease liabilities 482,380
555,922
611,308
Other noncurrent and deferred liabilities 6,529
8,188
8,860
Deferred taxes 52
212
2,129
Total Noncurrent Liabilities 637,961
606,822
672,297
Commitments and Contingencies (see Note 14)

Shareholders’ Equity:
Preferred stock, $0.01 par value; 2,500 shares authorized; no shares issued and outstanding —
—
—
Common stock, $0.01 par value; 400,000 shares authorized; 161,188 and 159,715 and 159,297 shares issued respectively; and 119,891 and 118,418 and 118,000 shares outstanding, respectively 1,199
1,184
1,180
Additional paid-in capital 495,163
492,129
487,789
Treasury stock, at cost, 41,297 shares, respectively (494,395 ) (494,395 ) (494,395 )
Retained earnings 294,708
531,602
554,694
Accumulated other comprehensive gain (loss) 123
(428 ) (146 )
Total Shareholders’ Equity 296,798
530,092
549,122
$ 1,372,934
$ 1,542,659
$ 1,626,288

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

Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(In thousands, except per share amounts)


	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, May 1, 2021	122,566	$	1,226	$	500,453	41,297	$	(494,395)	$	150,968	$	30	$	158,282


Net income	—	—		—		—	—		26,187		—		26,187
Unrealized losses on marketable securities, net of taxes	—	—		—		—	—		—		(20)		(20)

Issuance of common stock	23	—		(1)		—	—		—		—		(1)
Dividends on common stock	—	—		—		—	—		(78)		—		(78)
Repurchase of common stock & tax withholdings related to share-based awards	(24)	—		(158)		—	—		—		—		(158)
Share-based compensation	—	—		2,874		—	—		—		—		2,874
BALANCE, July 31, 2021	122,565	$	1,226	$	503,168	41,297	$	(494,395)	$	177,077	$	10	$	187,086

BALANCE, May 2, 2020	119,586	$	1,196	$	493,140	41,297	$	(494,395)	$	341,563	$	(697)	$	340,807


Net loss	—	—		—		—	—		(46,845)		—		(46,845)
Unrealized gains on marketable securities, net of taxes	—	—		—		—	—		—		108		108
Foreign currency translation adjustment	—	—		—		—	—		—		712		712
Issuance of common stock	354	3		(4)		—	—		—		—		(1)
Dividends on common stock	—	—		—		—	—		(10)		—		(10)
Repurchase of common stock & tax withholdings related to share-based awards	(49)	—		(62)		—	—		—		—		(62)
Share-based compensation	—	—		2,089		—	—		—		—		2,089
BALANCE, August 1, 2020	119,891	$	1,199	$	495,163	41,297	$	(494,395)	$	294,708	$	123	$	296,798

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, May 2, 2020 119,586
$ 1,196
$ 493,140
41,297
$ (494,395 ) $ 341,563
$ (697 ) $ 340,807
Net loss —
—
—
—
—
(46,845 ) —
(46,845 )
Unrealized gains on marketable securities, net of taxes —
—
—
—
—
—
108
108
Foreign currency translation adjustment —
—
—
—
—
—
712
712
Issuance of common stock 354
3
(4 ) —
—
—
—
(1 )
Dividends on common stock —
—
—
—
—
(10 ) —
(10 )
Repurchase of common stock & tax withholdings related to share-based awards (49 ) —
(62 ) —
—
—
—
(62 )
Share-based compensation —
—
2,089
—
—
—
—
2,089
BALANCE, August 1, 2020 119,891
$ 1,199
$ 495,163
41,297
$ (494,395 ) $ 294,708
$ 123
$ 296,798

BALANCE, May 4, 2019 117,968
$ 1,180
$ 485,805
41,297
$ (494,395 ) $ 567,233
$ (380 ) $ 559,443
Net loss —
—
—
—
—
(2,309 ) —
(2,309 )
Unrealized gains on marketable securities, net of taxes —
—
—
—
—
—
131
131
Foreign currency translation adjustment —
—
—
—
—
—
103
103
Issuance of common stock 48
—
45
—
—
—
—
45
Dividends on common stock ($0.0875 per share) —
—
—
—
—
(10,230 ) —
(10,230 )
Repurchase of common stock & tax withholdings related to share-based awards (16 ) —
(55 ) —
—
—
—
(55 )
Share-based compensation —
—
1,994
—
—
—
—
1,994
BALANCE, August 3, 2019 118,000
$ 1,180
$ 487,789
41,297
$ (494,395 ) $ 554,694
$ (146 ) $ 549,122

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

Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(In thousands, except per share amounts)


	Twenty-Six 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 30, 2021	119,735	$	1,197	$	498,488	41,297	$	(494,395)	$	159,765	$	64	$	165,119


Net income	—	—		—		—	—		17,258		—		17,258
Unrealized losses on marketable securities, net of taxes	—	—		—		—	—		—		(54)		(54)

Issuance of common stock	3,148	32		(32)		—	—		—		—		—
Dividends on common stock	—	—		—		—	—		54		—		54
Repurchase of common stock & tax withholdings related to share-based awards	(318)	(3)		(977)		—	—		—		—		(980)
Share-based compensation	—	—		5,689		—	—		—		—		5,689
BALANCE, July 31, 2021	122,565	$	1,226	$	503,168	41,297	$	(494,395)	$	177,077	$	10	$	187,086

BALANCE, February 1, 2020	118,418	$	1,184	$	492,129	41,297	$	(494,395)	$	531,602	$	(428)	$	530,092
Cumulative effect of adoption of ASU 2016-13	—	—		—		—	—		(838)		—		(838)
BALANCE, February 1, 2020, as adjusted	118,418	1,184		492,129		41,297	(494,395)		530,764		(428)		529,254
Net loss	—	—		—		—	—		(225,135)		—		(225,135)
Unrealized losses on marketable securities, net of taxes	—	—		—		—	—		—		(29)		(29)
Foreign currency translation adjustment	—	—		—		—	—		—		580		580
Issuance of common stock	1,808	18		233		—	—		—		—		251
Dividends on common stock ($0.09 per share)	—	—		—		—	—		(10,921)		—		(10,921)
Repurchase of common stock & tax withholdings related to share-based awards	(335)	(3)		(992)		—	—		—		—		(995)
Share-based compensation	—	—		3,793		—	—		—		—		3,793
BALANCE, August 1, 2020	119,891	$	1,199	$	495,163	41,297	$	(494,395)	$	294,708	$	123	$	296,798

Twenty-Six Weeks Ended
Common Stock Additional Paid-in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Loss
Shares Par Value Shares Amount Total
BALANCE, February 1, 2020 118,418
$ 1,184
$ 492,129
41,297
$ (494,395 ) $ 531,602
$ (428 ) $ 530,092
Cumulative effect of adoption of ASU 2016-13 (see Note 1) —
—
—
—
—
(838 ) —
(838 )
BALANCE, February 1, 2020, as adjusted 118,418
1,184
492,129
41,297
(494,395 ) 530,764
(428 ) 529,254
Net loss —
—
—
—
—
(225,135 ) —
(225,135 )
Unrealized losses on marketable securities, net of taxes —
—
—
—
—
—
(29 ) (29 )
Foreign currency translation adjustment —
—
—
—
—
—
580
580
Issuance of common stock 1,808
18
233
—
—
—
—
251
Dividends on common stock ($0.0900 per share) —
—
—
—
—
(10,921 ) —
(10,921 )
Repurchase of common stock & tax withholdings related to share-based awards (335 ) (3 ) (992 ) —
—
—
—
(995 )
Share-based compensation —
—
3,793
—
—
—
—
3,793
BALANCE, August 1, 2020 119,891
$ 1,199
$ 495,163
41,297
$ (494,395 ) $ 294,708
$ 123
$ 296,798

BALANCE, February 2, 2019 116,949
$ 1,169
$ 486,406
41,297
$ (494,395 ) $ 587,145
$ (361 ) $ 579,964
Cumulative effect of adoption of ASU 2016-02 —
—
—
—
—
(1,287 ) —
(1,287 )
BALANCE, February 2, 2019, as adjusted 116,949
1,169
486,406
41,297
(494,395 ) 585,858
(361 ) 578,677
Net loss —
—
—
—
—
(284 ) —
(284 )
Unrealized gains on marketable securities, net of taxes —
—
—
—
—
—
194
194
Foreign currency translation adjustment —
—
—
—
—
—
21
21
Issuance of common stock 1,490
15
377
—
—
—
—
392
Dividends on common stock ($0.2625 per share) —
—
—
—
—
(30,880 ) —
(30,880 )
Repurchase of common stock & tax withholdings related to share-based awards (439 ) (4 ) (2,480 ) —
—
—
—
(2,484 )
Share-based compensation —
—
3,486
—
—
—
—
3,486
BALANCE, August 3, 2019 118,000
$ 1,180
$ 487,789
41,297
$ (494,395 ) $ 554,694
$ (146 ) $ 549,122

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

Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Twenty-Six Weeks Ended							Twenty-Six Weeks Ended
	August 1, 2020			August 3, 2019				July 31, 2021		August 1, 2020
Cash Flows from Operating Activities:							Cash Flows from Operating Activities:
Net loss	$	(225,135	)	$	(284	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Goodwill and intangible impairment	113,180			—
Net income (loss)							Net income (loss)	$	17,258	$	(225,135)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:							Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Goodwill and intangible impairment charges							Goodwill and intangible impairment charges	—		113,180
Inventory write-offs	54,308			6,232			Inventory write-offs	374		54,308
Depreciation and amortization	33,613			46,826			Depreciation and amortization	27,348		33,613
Non-cash lease expense	100,710			106,961			Non-cash lease expense	95,317		100,710
Exit of frontline Canada operations	498			—			Exit of frontline Canada operations	—		498
Right of use asset impairment	3,236			—			Right of use asset impairment	—		3,236
Loss on disposal and impairment of property and equipment, net	18,637			196			Loss on disposal and impairment of property and equipment, net	1,335		18,637
Deferred tax benefit	(6,756		)	(2,639		)	Deferred tax benefit	250		(6,756)
Share-based compensation expense	3,793			3,486			Share-based compensation expense	5,689		3,793

Changes in assets and liabilities:							Changes in assets and liabilities:
Inventories	(44,926		)	1,250			Inventories	1,481		(44,926)
Prepaid expenses and other assets	2,743			(9,897		)	Prepaid expenses and other assets	(8,165)		2,743
Income tax receivable	(78,809		)	5,465			Income tax receivable	16,442		(78,809)
Accounts payable	(26,300		)	(16,509		)	Accounts payable	2,991		(26,300)
Accrued and other liabilities	(338		)	(5,884		)	Accrued and other liabilities	6,259		(338)
Lease liability	(38,673		)	(114,186		)	Lease liability	(132,549)		(38,673)
Net cash (used in) provided by operating activities	(90,219		)	21,017
Net cash provided by (used in) operating activities							Net cash provided by (used in) operating activities	34,030		(90,219)
Cash Flows from Investing Activities:							Cash Flows from Investing Activities:
Purchases of marketable securities	(5,212		)	(25,615		)	Purchases of marketable securities	(219)		(5,212)
Proceeds from sale of marketable securities	48,326			24,384			Proceeds from sale of marketable securities	7,826		48,326
Purchases of property and equipment	(8,151		)	(14,076		)	Purchases of property and equipment	(5,150)		(8,151)
Net cash provided by (used in) investing activities	34,963			(15,307		)

Net cash provided by investing activities							Net cash provided by investing activities	2,457		34,963
Cash Flows from Financing Activities:							Cash Flows from Financing Activities:
Proceeds from borrowings	106,500			—			Proceeds from borrowings	—		106,500
Payments on borrowings	—			(7,500		)

Proceeds from issuance of common stock	251			392			Proceeds from issuance of common stock	—		251
Dividends paid	(10,701		)	(20,633		)	Dividends paid	—		(10,701)

Payments of tax withholdings related to share-based awards	(995		)	(2,484		)	Payments of tax withholdings related to share-based awards	(980)		(995)
Net cash provided by (used in) financing activities	95,055			(30,225		)
Net cash (used in) provided by financing activities							Net cash (used in) provided by financing activities	(980)		95,055
Effects of exchange rate changes on cash and cash equivalents	(6		)	21			Effects of exchange rate changes on cash and cash equivalents	—		(6)
Net increase (decrease) in cash and cash equivalents	39,793			(24,494		)
Net increase in cash and cash equivalents							Net increase in cash and cash equivalents	35,507		39,793
Cash and Cash Equivalents, Beginning of period	63,972			124,128			Cash and Cash Equivalents, Beginning of period	90,791		63,972
Cash and Cash Equivalents, End of period	$	103,765		$	99,634		Cash and Cash Equivalents, End of period	$	126,298	$	103,765

Supplemental Disclosures of Cash Flow Information:							Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	1,277		$	1,149		Cash paid for interest	$	3,053	$	1,277
Cash received for income taxes, net	$	7,541		$	1,449		Cash received for income taxes, net	$	15,976	$	7,541

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

Table of ~~Contents~~Content s

CHICO'S FAS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and where otherwise indicated)

(Unaudited)

1. 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 subsidiaries ~~(collectively, the~~(the "Company") have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by accounting principles generally accepted in the U.S. 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 30, 2021 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 ~~February 1, 2020,~~January 30, 2021, included in the Company's Annual Report on Form 10-K for the fiscal year ended ~~February 1, 2020~~January 30, 2021 filed with the Securities and Exchange Commission ("SEC") on March ~~16,~~ 9, 2021 ("2020 ~~("2019~~ Annual Report on Form 10-K").

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

Our fiscal years end on the Saturday closest to January 31 and are designated by the calendar year in which the fiscal year commences. Operating results for the thirteen and twenty-six weeks ended ~~August 1, 2020~~July 31, 2021 are not necessarily indicative of the results that may be expected for the entire year.

COVID-19 Pandemic Update

The COVID-19 pandemic (the "pandemic") has resulted in significant challenges across our business since March 2020. Many markets imposed limitations, varying by market and in frequency, on the access to the Company's store fleet, including temporary store closures and/or a reduction in hours, staffing and capacity. We continue to focus on evolving consumer demand emerging from the pandemic and have accelerated our transformation to a digital-first company, fast-tracking numerous innovation and technology investments across all three of our brands. Even as governmental restrictions have relaxed and markets are currently reopened, we expect continued uncertainty and volatility on our business operations, operating results and operating cash flows as the ongoing economic impacts and health concerns associated with the pandemic continue to affect consumer behavior, spending levels and shopping preferences. Due to the above circumstance, the Company’s results of operations for the thirteen and twenty-six weeks ended July 31, 2021 are not necessarily indicative of the results to be expected for the full fiscal year.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The pandemic has had a significant material adverse impact on our business operations, operating results and operating cash flows starting in March 2020 and is expected to continue to disrupt our business operations for the balance of fiscal 2021. The Company assessed the impact that the pandemic has had on our estimates, assumptions and accounting policies and made additional disclosures, if and as necessary.

Exit of Canada Frontline Operations

On July 30, 2020, Chico’s FAS Canada, Co., an immaterial subsidiary of the Company, filed for bankruptcy with the Ontario, Canada office of the Superintendent in Bankruptcy. This action resulted in the permanent closure of 4 Chico’s and 6 White House Black Market ("WHBM") boutiques in Ontario, Canada. The permanent closure of the Canadian boutiques, which ~~constitute~~constituted all of the Company’s Canadian boutiques, iswas part of the Company’s ~~ongoing~~ cost-savings measures taken to mitigate the impact of the ~~novel strain of coronavirus ("COVID-19")~~ pandemic during fiscal 2020 and address the operational and financial challenges associated with operating in Canada. In connection with this effort, in the second quarter of fiscal 2020, we exited our Canada frontline operations and recorded on a net basis a non-material charge, including the realization of a cumulative foreign currency translation adjustment.

~~Reclassifications~~

Certain reclassifications have been made to the prior period's financial statements to enhance the comparability with the current year's financial statements. As a result, certain line items have been amended in the unaudited condensed consolidated balance sheets and unaudited condensed consolidated statements of cash flows to conform to the current period's presentation.

~~Use of Estimates~~

The preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The COVID-19 pandemic (the "pandemic") has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business disruptions and adversely impact our results of operations. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our actual results could materially differ from those estimates in future periods.

~~COVID-19 Pandemic~~

During the thirteen and twenty-six weeks ended August 1, 2020, the Company experienced varying degrees of business disruptions and periods of store closures or reduced operating hours as a result of the pandemic which had a material adverse impact on our business operations and operating results, and operating cash flows. Throughout the first half of the fiscal year, the Company was able to navigate a rapidly changing retail landscape by leveraging its omni-channel capabilities and reopening of most of its stores in accordance with local, state and federal and safety guidelines and regulations. As of August 1, 2020, we were operating with approximately 96% of our store base opened to the public under reduced hours and enhanced safety protocols that limit capacity, follow strict social distancing practices and the use of proper protective equipment such as rigorous cleaning routines and hand sanitizer stations to ensure the safety of employees and customers. While the length and

severity and impact of the pandemic is uncertain, we expect that our business and results of operations, including our net sales, earnings and cash flows, will be materially adversely impacted through the remainder of fiscal 2020.

In response to the pandemic, the Company has taken actions to reinforce its financial position and liquidity. Specific actions include: significantly reducing its expense structure, centralizing key functions to create a nimbler organization to better align costs with expected sales; suspending its quarterly dividend commencing April 2020; aligning inventory receipts with expected demand; partnering with suppliers and vendors to reduce operating costs and extend payment terms; and reviewing real estate and actively negotiating with landlords to deliver rent relief in the form of reductions, abatements and other concessions. Furthermore, our financial position and liquidity are being meaningfully bolstered by strong digital performance across all brands and sales from reopened retail stores. As discussed in more detail in Item 1A "Risk Factors" of our Form 10-K and Quarterly Report on Form 10-Q for the quarter ended May 2, 2020, the Company is subject to certain risks and uncertainties. There can be no assurance that the actual future results, performance, benefits, or achievements that we expect from our strategies, systems, initiatives, or products, including our measures to mitigate the operating and financial impact of the pandemic, will occur. Although the pandemic has had a material adverse impact on our business operations and operating results and cash flows, we believe we have sufficient liquidity from operations and capacity within our credit facility and other liquidity options to repay our obligations for the foreseeable future.

Adoption of New Accounting Pronouncements

In April 2020, the Financial Accounting Standards Board (“FASB”) issued a Staff Question-and-Answer (“Q&A”) (hereinafter, the practical expedient) to clarify whether lease concessions related to the effects of the pandemic require the application of the lease modification guidance under the new lease standard, which the Company adopted on February 3, 2019. The Company has elected to apply the temporary practical expedient and not treat changes to certain leases due to the effects of the pandemic as modifications. See Note 8 for the effect the adoption of this practical expedient had on our unaudited condensed consolidated financial statements.

~~Effective February 2, 2020, the Company adopted Accounting Standards Update ("ASU") 2018-13,~~ ~~Fair Value Measurement (Topic~~ ~~820):~~ ~~Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement~~, which modifies the disclosure requirements on fair value measurements. The amendments related to the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty were applied prospectively. All other amendments were applied retrospectively. Adoption of this pronouncement did not have a material effect on our unaudited condensed consolidated financial statements.

~~Effective February 2, 2020, the Company adopted ASU 2016-13,~~ ~~Financial Instruments — Credit Losses (Topic 326)~~, ~~Measurement of Credit Losses on Financial Instruments~~ ("ASU 2016-13"). The update and additional changes, modifications, clarifications, or interpretations related to this guidance thereafter, changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The Company has developed processes for assessment and documentation, model development and validation. The implementation of ASU 2016-13 and related increase to the allowance for credit losses did not have a material impact on our unaudited condensed consolidated financial statements. The guidance is to be applied using the modified-retrospective approach. As a result of the adoption of ASU 2016-13, the Company recorded a cumulative effect adjustment of $0.8 million as a decrease to opening retained earnings on February 2, 2020.

~~2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS~~

In December 2019, the Financial Accounting Standards Board (the "FASB") issued ~~ASU~~Accounting Standards Update ("ASU") 2019-12, Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company ~~is currently evaluating~~adopted this new guidance in the ~~impact the~~first quarter of fiscal 2021. The adoption of ASU 2019-12 ~~will~~did not have a material impact on ~~its~~our unaudited condensed consolidated financial statements.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”). The amendments in ASU 2021-01 provide optional expedients and exceptions for applying Generally Accepted Accounting Principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of the reference rate reform. This guidance is effective upon issuance (January 7, 2021). The Company adopted this new guidance in the first quarter of fiscal 2021. The adoption of ASU 2021-01 did not have a material impact on our unaudited condensed consolidated financial statements.

~~Table of Contents~~2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

3. GOODWILL AND INTANGIBLE IMPAIRMENT CHARGES

~~Fiscal 2020 Interim Impairment Assessment~~

Goodwill and other indefinite-lived intangible assets are assessed for impairment at least annually. We perform our annual impairment test during the fourth quarter, or more frequently when circumstances indicate carrying values may not be recoverable. In assessing the possibility that a reporting unit’s fair value has been reduced below its carrying amount due to the occurrence of events or circumstances between annual impairment testing dates, we consider various macroeconomic, industry-specific and Company-specific factors, including: (i) severe adverse industry or economic trends; (ii) significant Company-specific actions; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization. During the thirteen weeks ended May 2, 2020 ("last year's first ~~quarter of fiscal 2020,~~quarter"), the Company experienced a significant decline in its market capitalization and disruptions to its operations as a result of the pandemic. ~~As a result,~~Consequently, the Company reduced its level of forecasted earnings for fiscal 2020 and future periods across all of its brands. In light of the decline in the Company's stock price and market capitalization, the Company concluded that these factors, among other factors, represented impairment indicators which required the Company to test its goodwill and indefinite-lived intangible assets for impairment during ~~the~~last year's first ~~quarter of fiscal 2020.~~quarter.

The Company performed its valuation of its goodwill and indefinite-lived intangible assets using a quantitative approach as of April 4, 2020 (the "interim test"), which was the last day in the second month of ~~the~~last year's first ~~fiscal~~ quarter. The valuation of the Company's goodwill and indefinite-lived intangible assets was determined with the assistance of an independent valuation firm using the income approach (discounted cash flow ("DCF") method) and relief from royalty method, respectively. We applied a 100% weighting to the income approach as we were able to provide detailed forecasts for the foreseeable future to perform a DCF analysis. We did not utilize a market approach in the fair value assessment of the reporting units as the implied EBITDA multiples from the market approach did not yield reasonable fair values given the volatile market conditions at the time of the assessment. Furthermore, the Company’s publicly traded market capitalization was reconciled to the sum of the fair values of the reporting units estimated using the income approach described above. The fair value of our trademark was determined using an approach that values the Company’s cash savings from having a royalty-free license compared to the market rate it would pay for access to use the trademark.

Changes in key assumptions and the resulting reduction in projected future cash flows included in the interim test resulted in a decrease in the fair values of our Chico's and ~~White House Black Market ("WHBM")~~WHBM reporting units such that their fair values were less than their carrying values. As a result, the Company recognized the following pre-tax goodwill impairment charges during the twenty-six weeks ended August 1, 2020: a charge of $20.0 million at the Chico's reporting unit ~~to write down the carrying value of the goodwill to $16.4 million~~ and a charge of $60.4 million at the WHBM reporting ~~unit, reducing the~~unit. The carrying ~~value~~values of goodwill ~~to 0.~~at the Chico's and WHBM reporting units were $16.4 million and zero, respectively, and are included in goodwill in the accompanying unaudited condensed consolidated balance sheet as of August 1, 2020. In addition, the Company recognized pre-tax impairment charges during the twenty-six weeks ended August 1, 2020 to write down the carrying values of its other indefinite-lived intangible assets to their fair values as follows: $28.0 million of our WHBM trademark and $4.8 million of our Chico's franchise rights. The carrying values of the trademark and franchise rights ~~was~~were $6.0 million and $0.2 million, respectively, and are included in other intangible assets, net, in the accompanying unaudited condensed consolidated balance sheet as of August 1, 2020. ~~These~~Collectively, these impairment charges are included in goodwill and intangible impairment charges in the accompanying unaudited condensed consolidated statements of ~~loss.~~income (loss).

The Company evaluated the need to perform an ~~additional~~ interim ~~quantitative~~ impairment test for its goodwill and indefinite-lived intangible assets during the thirteen and twenty-six weeks ended July 31, 2021 and during the thirteen weeks ended August 1, 2020. We considered macroeconomic, industry-specific and Company-specific factors in addition to the estimates and assumptions used in ~~our~~the most recently completed goodwill and indefinite-lived intangible assets analysis. Based on ~~the~~review of both quantitative and qualitative ~~analysis, among other~~ factors, we determined that we ~~currently do~~did not have a triggering event that would require ~~the additional testing~~an interim impairment test of goodwill and indefinite-lived intangible assets, ~~subsequent to the testing performed as of April 4, 2020,~~ and accordingly, we did not record any goodwill and ~~indefinite-lived~~ intangible ~~asset~~ impairment charges during the thirteen and twenty-six weeks ended July 31, 2021 and during the thirteen weeks ended August 1, 2020.

The following table details the changes in goodwill ~~for each reportable segment, as applicable:~~

Chico's
Reporting Unit

WHBM
Reporting Unit

Total ⁽¹⁾

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

⁽¹⁾~~There is 0 goodwill associated with the Intimates Group reporting unit~~ and ~~therefore, no analysis has been performed.~~

~~The following table details the changes in~~ other indefinite-lived intangible assets, net:


	July 31, 2021
	Gross Carrying Amount		Accumulated Impairment Charge		Net Carrying Amount

Goodwill:
Chico's reporting unit	$	36,403	$	(20,043)	$	16,360
WHBM reporting unit	60,371		(60,371)		—
	$	96,774	$	(80,414)	$	16,360

Other intangible assets:
WHBM trademark	$	34,000	$	(29,000)	$	5,000
Chico's franchise rights	4,930		(4,930)		—
	$	38,930	$	(33,930)	$	5,000

	January 30, 2021
	Gross Carrying Amount		Accumulated Impairment Charge		Net Carrying Amount

Goodwill:
Chico's reporting unit	$	36,403	$	(20,043)	$	16,360
WHBM reporting unit	60,371		(60,371)		—
	$	96,774	$	(80,414)	$	16,360

Other intangible assets:
WHBM trademark	$	34,000	$	(29,000)	$	5,000
Chico's franchise rights	4,930		(4,930)		—
	$	38,930	$	(33,930)	$	5,000

	August 1, 2020
	Gross Carrying Amount		Accumulated Impairment Charge		Net Carrying Amount

Goodwill:
Chico's reporting unit	$	36,403	$	(20,043)	$	16,360
WHBM reporting unit	60,371		(60,371)		—
	$	96,774	$	(80,414)	$	16,360

Other intangible assets:
WHBM trademark	$	34,000	$	(28,000)	$	6,000
Chico's franchise rights	4,930		(4,766)		164
	$	38,930	$	(32,766)	$	6,164

WHBM
Trademark
Chico's Franchise Rights Total

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

4. LONG-LIVED ASSET IMPAIRMENT CHARGES ~~RELATED TO THE COVID-19 PANDEMIC~~

Long-lived assets, including definite-lived intangibles, are reviewed periodically for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company uses market participant rent assumptions to calculate the fair value of right of use ("ROU") assets and discounted future cash flows of the asset or asset group using projected financial information and a discount rate that approximates the cost of capital of a market participant to quantify fair value for other long-lived assets. The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets, which for our retail stores, is primarily at the store level.

Fiscal 2021 Long-Lived Asset Impairment Charges

During the thirteen and twenty-six weeks ended ~~August 1,~~July 31, 2021, the Company considered whether events or changes in circumstances existed that would indicate the carrying amount of long-lived assets at retail stores may not be recoverable. Based on a review of both quantitative and qualitative factors, only a small number of underperforming stores had triggering events and were assessed for impairment during the thirteen and twenty-six weeks ended July 31, 2021. Pre-tax impairment charges for long-lived assets at retail stores during the thirteen and twenty-six weeks ended July 31, 2021 were immaterial.

We recorded $1.2 million in impairment expense during the thirteen and twenty-six weeks ended July 31, 2021 related to certain Company-owned real estate which is included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of income (loss).

We did not record impairment charges related to our operating lease assets during the thirteen and twenty-six weeks ended July 31, 2021.

Fiscal 2020 Long-Lived Asset Impairment Charges Related to the Pandemic

The Company experienced varying degrees of business disruptions and periods of store closures or reduced operating hours as a result of the ~~pandemic.~~pandemic during the thirteen and twenty-six weeks ended August 1, 2020. In light ~~of the impact~~ of the pandemic and lower-than-expected earnings for fiscal 2020 and future periods, the Company concluded that these factors, among other factors, represented impairment indicators which required the Company to test certain of its long-lived assets and operating lease assets for impairment during the thirteen and twenty-six weeks ended August 1, 2020.

~~During~~As a result of the impact of the pandemic during the twenty-six weeks ended August 1, 2020, we completed an evaluation of ~~our~~certain long-lived assets, which primarily consisted of leasehold improvements at certain underperforming stores, for indicators of impairment ~~as a result of the impact of the pandemic,~~ and, consequently, recorded pre-tax impairment charges of approximately $18.5 ~~million.~~million during the twenty-six weeks ended August 1, 2020. These charges are primarily included in cost of goods sold ("COGS") in the accompanying unaudited condensed consolidated statements of ~~loss. Pre-tax impairment~~income (loss). These charges reduced the net carrying value of certain long-lived assets ~~at retail stores~~ to their estimated fair value, as determined using a discounted cash flow model. Pre-tax long-lived asset impairment charges ~~for~~during the thirteen weeks ended August 1, 2020 ~~and~~were immaterial.

As a result of the impact of the pandemic during the thirteen and twenty-six weeks ~~ended May 4, 2019 were immaterial.~~

~~During the thirteen and twenty-six~~ ended August 1, 2020, we completed an evaluation of our operating lease assets for indicators of impairment, ~~as a result of the impact of the pandemic,~~ and consequently, recorded pre-tax impairment charges of approximately $0.8 million and $3.2 million, respectively, which is included in ~~cost of goods sold within~~COGS in the accompanying unaudited condensed consolidated statements of ~~loss.~~income (loss).

We use the moving average cost method to determine the cost of merchandise inventories. We identify potentially excess and slow-moving inventories by evaluating inventory aging, turn rates and inventory levels in conjunction with our overall sales trend. Further, inventory realization exposure is identified through analysis of gross margins and markdowns in combination with changes in current business trends. We record excess and slow-moving inventories at net realizable value.

~~Primarily as a~~Inventory write-offs for the thirteen and twenty-six weeks ended August 1, 2020 were $12.3 million and $55.4 million, respectively, which was primarily the result of changes in the market for ~~certain Company products~~those inventories and the resulting slowdown in sell through rates due to the impact of the pandemic ~~carrying amounts for those inventories were reduced by $12.3 million and $55.4 million for~~during the thirteen and twenty-six weeks ended August 1, ~~2020, respectively.~~2020. These inventory write-offs are included in ~~cost of goods sold~~COGS in the accompanying unaudited condensed consolidated statements of ~~loss. Inventory~~income (loss).

We recorded $0.4 million in inventory write-offs for the thirteen and twenty-six weeks ended ~~August 3, 2019 were $1.3 million and $6.2 million, respectively.~~ July 31, 2021, which is included in COGS in the accompanying unaudited condensed consolidated statements of income (loss). Inventory adjustments made in ordinary course are presented in inventories in the accompanying unaudited condensed consolidated statements of cash flows.

6. REVENUE RECOGNITION

Disaggregated Revenue

The following table disaggregates our operating segment revenue by brand, which we believe provides a meaningful depiction of the nature of our revenue. Amounts shown include licensing and wholesale revenue, which is not a significant component of total revenue, and is aggregated within the respective brands in the table below.

Thirteen Weeks Ended Twenty-Six Weeks Ended
August 1, 2020 August 3, 2019 August 1, 2020 August 3, 2019
Chico's $ 139,584
45.6 % $ 268,924
52.9 % $ 271,021
46.3 % $ 545,626
53.2 %
WHBM 82,253
26.9
139,809
27.5
166,173
28.3
300,754
29.3
Soma 84,337
27.5
99,623
19.6
149,244
25.4
179,704
17.5
Total Net Sales $ 306,174
100.0 % $ 508,356
100.0 % $ 586,438
100.0 % $ 1,026,084
100.0 %

~~Accounting Policies~~

~~The Company recognizes revenue pursuant to Accounting Standard Codification ("ASC") 606,~~ ~~Revenue Recognition~~ ~~("ASC 606")~~, ~~as established by ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~. Retail sales by our stores are recorded at the point of sale and are net of estimated customer returns, sales discounts under rewards programs and Company issued coupons, promotional discounts and employee discounts. Sales from our websites and catalogs are recognized at the time of shipment. Amounts related to shipping and handling costs billed to customers are recorded in net sales and the related shipping and handling costs are recorded in cost of goods sold in the accompanying unaudited condensed consolidated statements of loss. Amounts paid by customers to cover shipping and handling costs are immaterial. Our policy towards taxes assessed by a government authority directly imposed on revenue producing transactions between a seller and a customer is, and has been, to exclude all such taxes from revenue. Licensing and wholesale revenue, which is not a significant component of total revenue, is recognized based on the contractual royalty rate on franchisee revenue, or based upon delivery of products, except when the customer has a contractual right of return, respectively.

We sell gift cards in stores, on our e-commerce website and through third parties. Our gift cards do not have expiration dates. We account for gift cards by recognizing a liability at the time the gift card is sold. The liability is relieved and revenue is recognized, net of third party sales commissions, for gift cards upon redemption. In addition, we recognize revenue for the amount of gift cards expected to go unredeemed (commonly referred to as gift card breakage) under the redemption recognition method. This method records gift card breakage as revenue on a proportional basis over the redemption period based on our historical gift card breakage rate. We determine the gift card breakage rate based on our historical redemption patterns. We recognize revenue on the remaining unredeemed gift cards based on determining that the likelihood of the gift card being redeemed is remote and that there is no legal obligation to remit the unredeemed gift cards to relevant jurisdictions.

Soma offers a points-based loyalty program in which customers earn points based on purchases. Attaining specified loyalty point levels results in the issuance of reward coupons to discount future purchases. As program members accumulate points, we accrue the estimated future liability, adjusted for expected redemption rates and expirations. The liability is relieved and revenue is recognized for loyalty point reward coupons upon redemption. In addition, we recognize revenue on unredeemed points when it can be determined that the likelihood of the point being redeemed is remote and there is no legal obligation to remit the point value. We determine the loyalty point breakage rate based on historical and redemption patterns.

As part of the normal sales cycle, we receive customer merchandise returns related to store, website and catalog sales. To account for the financial impact of potential customer merchandise returns, we estimate future returns on previously sold merchandise. Reductions in sales and gross margin are recorded for estimated merchandise returns based on return history, current sales levels and projected future return levels.

The Company's accounting policies and treatment over revenue recognition are consistent with the provisions of ASC 606 and represent a faithful depiction of the transfer of promised goods or services to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.


	Thirteen Weeks Ended								Twenty-Six Weeks Ended
	July 31, 2021				August 1, 2020				July 31, 2021				August 1, 2020
Chico's	$	221,389	46.9	%	$	139,584	45.6	%	$	398,410	46.3	%	$	271,021	46.3	%
WHBM	122,043		25.9		82,253		26.9		226,090		26.3		166,173		28.3
Soma	128,627		27.2		84,337		27.5		235,520		27.4		149,244		25.4

Total Net Sales	$	472,059	100.0	%	$	306,174	100.0	%	$	860,020	100.0	%	$	586,438	100.0	%

Contract liabilities in the unaudited condensed consolidated balance sheets are comprised of obligations associated with our gift card and customer loyalty programs. As of July 31, 2021, January 30, 2021 and August 1, 2020, ~~February 1, 2020 and August 3, 2019,~~ contract liabilities primarily consisted of gift cards of $33.8 million, ~~$40.1~~$40.4 million and ~~$30.6~~$33.8 million, respectively.

For the thirteen and twenty-six weeks ended July 31, 2021, the Company recognized $5.7 million and $15.7 million, respectively, of revenue that was previously included in the gift card contract liability as of January 30, 2021. For the thirteen and twenty-six weeks ended August 1, 2020, the Company recognized $4.8 million and $12.8 million, respectively, of revenue that was previously included in the gift card contract liability as of February 1, 2020. For the thirteen and twenty-six weeks ended August 3, 2019, the Company recognized $7.6 million and $19.5 million, respectively, of revenue that was previously included in the gift card contract liability as of February 2, 2019. The contract liability for our loyalty program was not material as of July 31, 2021, January 30, 2021 or August 1, ~~2020, February 1, 2020 or August 3, 2019.~~

Performance Obligation

For the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020, ~~and August 3, 2019,~~ revenue recognized from performance obligations related to prior periods was not material. Revenue recognized in future periods related to performance obligations is not expected to be material.

7. ~~RETAIL FLEET OPTIMIZATION PLAN~~

In the fourth quarter of fiscal 2018, the Company announced a three-year retail fleet optimization plan to rebalance the mix between our physical store presence and our digital network. This initiative is part of the Company's efforts to better capitalize on its omnichannel platform, reduce costs, and improve our profitability and return on invested capital. For the thirteen and twenty-six weeks ended August 3, 2019, the Company recorded $3.0 million and $7.9 million, respectively, in pre-tax accelerated depreciation of property and equipment within cost of goods sold in the accompanying unaudited condensed consolidated statements of loss associated with this retail fleet optimization plan. Accelerated depreciation on property and equipment reflects the impact of a change in the useful life of store assets for store closures added as a result of the Company's retail fleet optimization plan. Accelerated depreciation of property and equipment associated with this retail fleet optimization plan for the thirteen and twenty-six weeks ended August 1, 2020 was immaterial.

We lease retail stores, a limited amount of office space and certain equipment under operating leases expiring in various years through the fiscal year ending ~~2030.~~2031. 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. Within the first few years of the initial lease term, a majority of our store operating leases contain cancellation clauses that allow the leases to be terminated at our discretion, if certain minimum sales levels are not met. 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 lease payments when the escalation is known.

The Company deferred substantially all rent payments due in the months of April, May and June 2020 and otherwise made reduced rent payments ~~in July 2020. The Company has not recorded any provision for interest or penalties which may arise~~where and when applicable during fiscal 2020 as a result of ~~these deferrals, as management does not believe payment for any potential amounts to be probable.~~the impact of the pandemic. In April 2020, the FASB granted a practical expedient permitting an entity to choose to forgo the evaluation of the enforceable rights and obligations of the original lease contract, specifically in situations where rent concessions have been agreed to with landlords as a result of the pandemic. Instead, the entity may account for pandemic-related rent concessions, whatever their form (e.g. rent deferral, abatement or other) either: a) as if they were part of the enforceable rights and obligations of the parties under the existing lease contract; or b) as lease modifications. The Company has elected to account for the concessions agreed to by landlords that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee as though enforceable rights and obligations for those concessions existed in the original lease agreements and the Company has elected to not remeasure the related lease liabilities and right-of-use assets. During the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020, we ~~have~~ received concessions from certain landlords in the form of rent deferrals, rent abatements and other lease or rent ~~modifications. Where the lease concessions negotiated did not substantially increase the rights~~modifications as a result of the ~~lessor or the obligations~~impact of the pandemic. In accordance with the practical expedient allowed by the FASB, the Company ~~under the lease, we have~~has elected to ~~account for these~~treat all pandemic-related rent concessions ~~as though enforceable rights~~ and ~~obligations for those concessions existed in the original~~related amendments, including pandemic-related lease ~~agreements and have recorded a non-interest bearing payable for the deferred rent payments. Executed leases~~ amendments that extended the lease term, ~~were treated~~ as lease modifications under ASC 842, Leases. In addition, the Company continued recording lease expense during deferral periods, as applicable, in accordance with its existing policies.~~Leases~~. The ~~recognition of~~Company made rent ~~concessions that were not~~payments in ~~the form of~~accordance with its lease ~~extensions did not have a material impact on our unaudited condensed consolidated statement of loss for~~terms during the thirteen and twenty-six weeks ended ~~August 1, 2020. In addition, the Company has continued recording lease expense during the deferral period in accordance with its existing policies.~~July 31, 2021.

Operating lease expense was as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended
August 1, 2020 August 3, 2019 August 1, 2020 August 3, 2019
Operating lease cost ⁽¹⁾
$ 59,558
$ 62,341
$ 120,562
$ 127,243


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Operating lease cost (1)	$	55,341	$	59,558	$	110,747	$	120,562

⁽¹⁾For the thirteen and twenty-six weeks ended ~~August 1, 2020,~~July 31, 2021, includes ~~approximately $7.7~~$9.3 million and ~~$16.1~~$19.2 million, respectively, in variable lease costs. For the thirteen and twenty-six weeks ended August ~~3, 2019,~~1, 2020, includes ~~approximately $5.0~~$7.7 million and ~~$13.0~~$16.1 million, respectively, in variable lease costs.

Supplemental balance sheet information related to operating leases was as follows:

August 1, 2020 February 1, 2020 August 3, 2019
Right of use assets ⁽¹⁾
$ 571,992
$ 648,397
$ 697,332

Current lease liabilities $ 218,691
$ 157,043
$ 158,866
Long-term lease liabilities 482,380
555,922
611,308
Total operating lease liabilities $ 701,071
$ 712,965
$ 770,174

Weighted Average Remaining Lease Term (years) 4.6
4.8
5.0

Weighted Average Discount Rate ⁽²⁾
5.5 % 5.6 % 5.7 %


	July 31, 2021			January 30, 2021			August 1, 2020
Right of use assets	$	529,945		$	586,061		$	571,992

Current lease liabilities	$	163,376		$	194,551		$	218,691
Long-term lease liabilities	454,164			515,797			482,380
Total operating lease liabilities	$	617,540		$	710,348		$	701,071

Weighted Average Remaining Lease Term (years)	4.2			4.5			4.6

Weighted Average Discount Rate (1)	4.6		%	4.9		%	5.5		%

⁽¹⁾ During the thirteen and twenty-six weeks ended August 1, 2020, we completed an evaluation of our operating lease assets for indicators of impairment as a result of the impact of the pandemic, and consequently, recorded pre-tax impairment charges of approximately $0.8 million and $3.2 million, respectively, which is included in cost of goods sold, pre-tax, in the accompanying unaudited condensed consolidated statements of loss.

⁽²⁾ 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 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:

Twenty-Six Weeks Ended
August 1, 2020 August 3, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows $ 38,673
⁽¹⁾
$ 114,186
Right of use assets obtained in exchange for lease obligations, non-cash 12,775
15,465


	Twenty-Six Weeks Ended
	July 31, 2021		August 1, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows	$	132,549	$	38,673	(1)
Right of use assets obtained in exchange for lease obligations, non-cash	24,297		12,775

⁽¹⁾The Company suspended or deferred ~~substantially all rent~~rental payments ~~due in~~when and where applicable as a result of the ~~months~~impact of ~~April, May~~the pandemic during the thirteen and ~~June 2020, and made reduced rent payments in July~~twenty-six weeks ended August 1, 2020. ~~We are in active discussions with landlords to find a mutually beneficial and agreeable path forward.~~

Maturities of operating lease liabilities as of ~~August 1, 2020~~July 31, 2021 were as follows:


Fiscal Year Ending:
January 29, 2022	$	89,370
January 28, 2023	192,195
February 4, 2024	148,613
February 1, 2025	106,797
January 31, 2026	68,718
Thereafter	77,332
Total future minimum lease payments	$	683,025
Less imputed interest	(65,485)
Total	$	617,540

Fiscal Year Ending:
January 30, 2021 $ 156,617
January 29, 2022 190,630
January 28, 2023 153,349
February 4, 2024 106,104
February 1, 2025 77,695
Thereafter 108,998
Total future minimum lease payments $ 793,393
Less imputed interest (92,322 )
Total $ 701,071

~~Accounting Policies~~

~~Beginning on February 3, 2019, the Company accounts for leases pursuant to ASC 842,~~ ~~Leases, as established by ASU 2016-02,~~ ~~Leases~~. We determine if an arrangement is a lease at inception. Operating leases are included in ROU assets, current lease liabilities and long-term lease liabilities in our unaudited condensed consolidated balance sheets. The Company does not have finance leases in the periods presented.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of fixed lease payments over the lease term. The operating lease ROU asset represents the net present value of fixed payments required under the lease, discounted at the Company's incremental borrowing rate, offset by impairments and lease incentives such as tenant improvements and deferred rent balances.

Our leases do not provide an implicit rate. Accordingly, we use the Company's incremental borrowing rate at commencement date in determining the present value of lease payments over the lease term. Furthermore, we elected to apply a portfolio approach, using the same discount rate applied to a portfolio of leases for similar asset types with a similar lease term.

Our lease terms may include options to extend or terminate the lease. When it is reasonably certain that we will exercise an option to extend or terminate a lease, the Company will adjust its ROU asset and lease liability. For leases with no impairment of the ROU asset, lease expense is recognized on a straight-line basis over the lease term. For stores with impairment of the ROU asset, lease expense consists of straight-line amortization of the ROU asset and the implicit interest expense on the lease liability.

We have lease agreements with lease and non-lease components. We have made a policy election to treat both lease and non-lease components as a single component and account for the full consideration as a single lease component. This policy election is applied to all asset classes for which the Company is a lessee.

We lease retail stores and a limited amount of office space under operating leases. The majority of our lease agreements provide for tenant improvement allowances, rent escalation clauses and/or contingent rent provisions. Tenant improvement allowances, fixed rent escalation clauses and impairments are included in the ROU asset computation.

Certain leases provide for contingent rents based on defined criteria, such as gross sales in excess of a specified level. We record a contingent rent liability in accrued liabilities on the consolidated balance sheets and the corresponding rent expense when the criteria has been achieved or is probable.

Additionally, we have a nominal number of leases that meet the standard's definition of a "short-term lease" (a lease that, at the commencement date, has a lease term of twelve months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise). We have made a policy election to recognize these leases as incurred and have not recognized a ROU asset or corresponding lease liability for them. The Company's short-term leases are not material.

Table of ~~Contents~~Content s

9.8. SHARE-BASED COMPENSATION

For the twenty-six weeks ended July 31, 2021 and August 1, 2020, ~~and August 3, 2019,~~ share-based compensation expense was ~~$3.8~~$5.7 million and ~~$3.5~~$3.8 million, respectively. As of ~~August 1, 2020,~~July 31, 2021, approximately ~~11.1~~7.7 million shares remain available for future grants of equity awards under our 2020 Omnibus Stock and Incentive ~~Plan, which became effective upon shareholder approval at the 2020 Annual Meeting of Shareholders on June 25, 2020.~~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 restricted stock award granted to our then Chief Executive Officer ~~("CEO")~~ in fiscal 2019, which vests over a four-year period from the date of grant, and ~~is described further~~restricted stock awards granted in March 2021, which vest 50% one year from the ~~Company’s Current Report on Form 8-K/A filed with~~date of grant, 30% two years from the ~~SEC on August 20, 2019.~~date of grant and 20% three years from the date of grant.

Restricted stock award activity for the twenty-six weeks ended ~~August 1, 2020~~July 31, 2021 was as follows:

Number of
Shares Weighted
Average
Grant Date
Fair Value
Unvested, beginning of period 3,180,016
$ 5.47
Granted 2,656,188
3.39
Vested (928,438 ) 7.36
Forfeited (931,041 ) 4.80
Unvested, end of period 3,976,725
3.79


	Number of Shares	Weighted Average Grant Date Fair Value
Unvested, beginning of period	3,419,645	$	3.75
Granted	3,542,751	2.84
Vested	(1,148,003)	4.27
Forfeited	(407,836)	2.97
Unvested, end of period	5,406,557	3.09

Restricted Stock Units

Restricted stock units vest 100% one year from the date of grant with certain rights to defer settlement in shares of our common ~~stock.~~stock, except for 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.

Restricted stock unit activity for the twenty-six weeks ended ~~August 1, 2020~~July 31, 2021 was as follows:

Number of
Shares Weighted
Average
Grant Date
Fair Value
Unvested, beginning of period 71,740
$ 5.81
Granted 108,750
1.25
Vested (16,560 ) 8.76
Forfeited —
—
Unvested, end of period 163,930
2.49


	Number of Shares	Weighted Average Grant Date Fair Value
Unvested, beginning of period	163,930	$	2.49
Granted	500,000	2.56
Vested	(16,580)	8.75

Unvested, end of period	647,350	2.38

Performance-based Restricted Stock Units

~~For~~During the ~~twenty-six weeks ended August 1, 2020,~~second quarter, we granted performance-based restricted stock units ("PSUs"), contingent upon the achievement of Company-specific performance goals during the three fiscal years ~~2020 - 2022.~~2021 through 2023. Any units earned as a result of the achievement of the performance ~~goal~~goals of the PSUs will vest ~~100%~~ three years from the date of grant and will ~~settle~~be settled in shares of our common stock.

~~Table of Contents~~

~~Performance-based restricted stock unit~~PSU activity for the twenty-six weeks ended ~~August 1, 2020~~July 31, 2021 was as follows:


	Number of Units/ Shares	Weighted Average Grant Date Fair Value
Unvested, beginning of period	2,782,457	$	2.04
Granted	1,129,500	2.59

Forfeited	(204,420)	2.15
Unvested, end of period	3,707,537	2.20

Number of Units/
Shares Weighted
Average
Grant Date
Fair Value
Unvested, beginning of period 2,042,138
$ 2.48
Granted 1,167,187
3.45
Vested (29,320 ) 14.22
Forfeited (763,359 ) 3.61
Unvested, end of period 2,416,646
2.50

~~Stock Option Awards~~

~~For the twenty-six weeks ended August 1, 2020 and August 3, 2019, we did not grant any stock options.~~

Table of Content s

~~Stock option activity for the twenty-six weeks ended August 1, 2020 was as follows:~~

Number of
Options Weighted
Average
Exercise Price
Outstanding, beginning of period 168,335
$ 13.42
Granted —
—
Exercised —
—
Forfeited or expired (87,501 ) 13.69
Outstanding and exercisable, end of period 80,834
13.13

~~10.~~9. 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 July 31, 2021 and August 1, 2020, ~~and August 3, 2019,~~ the Company's effective tax rate was ~~25.7%~~22.7% and ~~0.0%~~25.7%, respectively. The effective tax rate of 22.7% for the thirteen weeks ended July 31, 2021 primarily reflects a change in estimate from the first quarter of fiscal 2021 due to an increase in the Company’s projected annual pre-tax income and an increase in annual projected deferred tax assets on which a full valuation allowance exists, partially offset by the impact of the annual loss projected during the first quarter of fiscal 2021. The 25.7% effective tax rate for the thirteen weeks ended August 1, 2020 includes the annual benefit of the fiscal 2020 pre-tax loss due the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, ~~which is slightly~~partially offset by the impact of nondeductible book goodwill impairment charges. In addition, during the thirteen weeks ended August 1, 2020, the Company recognized a small valuation allowance against certain state tax credit carryforwards that are expected to expire unutilized in the future. The 0.0% effective tax rate for the thirteen weeks ended August 3, 2019 was primarily the result of an income tax benefit on the quarter's operating loss, offset by a true-up from the first quarter provision due to an increase in the forecasted annual effective tax rate.

For the twenty-six weeks ended July 31, 2021 and August 1, 2020, ~~and August 3, 2019,~~ the Company's effective tax rate was ~~29.2%~~30.0% and ~~109.1%~~29.2%, respectively. The effective tax rate of 30.0% for the twenty-six weeks ended July 31, 2021 primarily reflects a change in estimate from the first quarter of fiscal 2021 due to an increase in the Company’s projected annual pre-tax income and an increase in annual projected deferred tax assets on which a full valuation allowance exists, partially offset by the impact of the annual loss projected during the first quarter of fiscal 2021 and favorable state audit settlements. The 29.2% effective tax rate for the twenty-six weeks ended August 1, 2020 was primarily impacted by the benefits provided by the enactment of the CARES Act, which was reduced by the unfavorable impact of the Company’s book goodwill impairment, a valuation allowance on certain state tax credit carryforwards that are expected to expire unutilized and share-based compensation expense. ~~The 109.1% effective tax rate for the twenty-six weeks ended August 3, 2019 was primarily the result of the additional tax expense related to employee share-based awards against lower pre-tax income.~~

As of ~~August 1, 2020,~~July 31, 2021, our unaudited condensed consolidated balance sheet reflected ~~an $83.0~~a $38.9 million income tax receivable related to the recovery of Federal income taxes paid in prior years and other tax law changes as a result of the CARES Act.

~~Table of Contents~~

~~11. LOSS~~10. INCOME (LOSS) 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 ~~loss~~income (loss) per common share pursuant to the "two-class" method. For the Company, participating securities are comprised entirely of unvested restricted stock awards granted prior to fiscal ~~2020 and PSUs that have met their relevant performance criteria.~~2020.

Net ~~loss~~income (loss) per share is determined using the two-class method when it is more dilutive than the treasury stock method. Basic net ~~loss~~income (loss) per share is computed by dividing net ~~loss~~income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period, including participating securities. Diluted net ~~loss~~income (loss) 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 Content s

The following table sets forth the computation of net ~~loss~~income (loss) per basic and diluted share shown on the face of the accompanying condensed consolidated statements of ~~loss:~~income (loss):

Thirteen Weeks Ended Twenty-Six Weeks Ended
August 1, 2020 August 3, 2019 August 1, 2020 August 3, 2019
Numerator
Net loss $ (46,845 ) $ (2,309 ) $ (225,135 ) $ (284 )
Net income and dividends declared allocated to participating securities —
—
(193 ) —
Net loss available to common shareholders $ (46,845 ) $ (2,309 ) $ (225,328 ) $ (284 )
Denominator
Weighted average common shares outstanding – basic 115,912,031
114,802,252
115,743,004
114,618,153
Dilutive effect of non-participating securities —
—
—
—
Weighted average common and common equivalent shares outstanding – diluted 115,912,031
114,802,252
115,743,004
114,618,153
Net loss per common share:
Basic $ (0.40 ) $ (0.02 ) $ (1.95 ) $ —
Diluted $ (0.40 ) $ (0.02 ) $ (1.95 ) $ —


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020

Numerator
Net income (loss)	$	26,187	$	(46,845)	$	17,258	$	(225,135)
Net income and dividends declared allocated to participating securities	(235)		—		(171)		(193)
Net income (loss) available to common shareholders	$	25,952	$	(46,845)	$	17,087	$	(225,328)
Denominator
Weighted average common shares outstanding – basic	117,020,528		115,912,031		116,854,969		115,743,004
Dilutive effect of non-participating securities	5,702,930		—		4,366,689		—
Weighted average common and common equivalent shares outstanding – diluted	122,723,458		115,912,031		121,221,658		115,743,004
Net income (loss) per common share:
Basic	$	0.22	$	(0.40)	$	0.15	$	(1.95)
Diluted	$	0.21	$	(0.40)	$	0.14	$	(1.95)

For the thirteen weeks ended July 31, 2021 and August 1, 2020, ~~and August 3, 2019, 2.6~~0.1 million and ~~0.8~~2.6 million potential shares of common stock, respectively, were excluded from the diluted income (loss) per common share calculation relating to non-participating securities, because the effect of including these potential shares was antidilutive.

For the twenty-six weeks ended July 31, 2021 and August 1, 2020, ~~and August 3, 2019, 2.6~~0.1 million and ~~0.4~~2.6 million potential shares of common stock, respectively, were excluded from the diluted income (loss) per common share calculation relating to non-participating securities, because the effect of including these potential shares was antidilutive.

~~12.~~11. FAIR VALUE MEASUREMENTS

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

~~Table of Contents~~

Marketable securities are classified as available-for-sale and as of ~~August 1, 2020~~July 31, 2021 generally consist of corporate bonds, commercial paper, U.S. government agencies and municipal securities, with ~~$9.7~~$10.9 million of securities with maturity dates within one year or less and ~~$11.0~~$0.0 million with maturity dates over one year and less than two years.

We consider all marketable securities available-for-sale, including those with maturity dates beyond 12 months, and therefore classify these securities within current assets on the condensed consolidated balance sheets as they are available to support current operational liquidity needs. Marketable securities are carried at fair value, with the unrealized holding gains and losses, net of income taxes, reflected in accumulated other comprehensive gain ~~(loss)~~ until realized, and any credit risk related losses recognized in net income (loss) 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 Content s

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

Level 3	—	Unobservable inputs for the asset or liability

Assets Measured on a Recurring Basis

We measure certain financial assets at fair value on a recurring basis, including our marketable securities, which are classified as available-for-sale securities, certain cash equivalents, specifically our money market accounts and assets held in our non-qualified deferred compensation plan. The money market accounts are valued based on quoted market prices in active markets. Our marketable securities are generally valued based on other observable inputs for those securities (including market corroborated pricing or other models that utilize observable inputs such as interest rates and yield curves) based on information provided by independent third-party pricing entities, except for U.S. government securities which are valued based on quoted market prices in active markets. The investments in our non-qualified deferred compensation plan are valued using quoted market prices and are included in other assets on our 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 basis.~~nonrecurring basis when carrying value exceeds fair value. This includes the evaluation of long-lived assets, goodwill and other intangible assets for impairment using Company-specific assumptions which would fall within Level 3 of the fair value hierarchy. Assets that are measured at fair value on a nonrecurring basis are remeasured when carrying value exceeds fair value. Carrying value after impairment approximates fair value.

We 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 ROU 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 within the asset group, which are primarily leasehold improvements. The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets, which for our retail stores, is primarily at the store level.

To assess the fair value of 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.

~~Table of Contents~~

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 at a rate that approximates the cost of capital of a market participant and an estimated royalty rate.

Table of Content s

The following tables ~~presents~~present quantitative information about ~~the~~ Level 3 significant unobservable inputs for the WHBM trademark, ~~measured at fair value as of April 4, 2020 and~~ long-lived assets and operating lease assets at retail stores ~~as of August 1, 2020:~~for impairment charges incurred during the periods indicated.

Twenty-Six Weeks Ended August 1, 2020

Valuation Technique

Unobservable Input

Range (Weighted Average)

WHBM Trademark

Relief from royalty

Weighted-average cost of capital

11% to 13%

Long-term revenue growth rate

-2.5% to 0%

Long-lived assets and operating lease assets at retail stores (1)

Discounted cash flow

Weighted-average cost of capital

9.5% to 11.5%

Long-term revenue growth rate

-10% to 15%

~~Quantitative Information about Level 3 Fair Value Measurements~~

Fair Value Valuation Technique Unobservable Input Range (Weighted Average)

WHBM Trademark $ 6,000
Relief from royalty Weighted-average cost of capital 11% to 13%
Long-term revenue growth rate -2.5% to 0%
Long-lived assets and operating lease assets at retail stores ⁽¹⁾
$ 89,819
Discounted cash flow Weighted-average cost of capital 9.5 % to 11.5 %
Long-term revenue growth rate -10% to 15%

⁽¹⁾~~The fair value of long-lived assets and operating lease assets at retail stores of $89.8 million specifically~~Specifically relates to only those ~~stores~~locations which had impairment charges related to the pandemic during ~~the twenty-six weeks ended August 1,~~fiscal 2020.

The fair value of goodwill for the Chico's and WHBM reporting units and WHBM trademark as of April 4, 2020 was $16.4 million, 0 and $6.0 million, respectively. The carrying value of goodwill for the Chico's and WHBM reporting units and WHBM trademark as of February 1, 2020 and August 3, 2019 was $36.4 million, $60.4 million and $34.0 million, respectively.

Fifty-Two Weeks Ended January 30, 2021

Valuation Technique

Unobservable Input

WHBM Trademark

Relief from royalty

Weighted-average cost of capital

13% to 15%

Long-term revenue growth rate

-1% to 16%

Long-lived assets at retail stores and operating lease assets (1)

Discounted cash flow

Weighted-average cost of capital

11% to 13%

Long-term revenue growth rate

2% to 53%

~~The Company performed its valuation of its goodwill and indefinite-lived intangible assets using a quantitative approach as of April 4, 2020,~~(1) Specifically relates to only those locations which ~~was the last day in the second month of the first fiscal quarter. For the twenty-six weeks ended August 1, 2020, we recognized $113.2 million in goodwill and indefinite-lived intangible~~had impairment charges as further discussed in Note 3, and $18.5 million in impairment charges primarily consisting of leasehold improvements at certain underperforming stores, and $3.2 million in impairment charges for operating lease assets, as further discussed in Note 4. Impairment charges related to ~~long-lived assets for~~ the ~~twenty-six weeks ended August 3, 2019 were immaterial.~~pandemic during fiscal 2020.

As of July 31, 2021, January 30, 2021 and August 1, 2020, ~~February 1, 2020 and August 3, 2019,~~ our revolving loan and letter of credit facility approximates fair value as this instrument has a variable interest rate which approximates current market rates (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. The most sensitive assumptions in our estimates include short and long-term revenue recoverability rates as a result of the pandemic, which could impact future impairment charges.

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~~

In accordance with the provisions of the guidance, we categorized our financial assets and liabilities which are valued on a recurring and nonrecurring basis, based on the priority of the inputs to the valuation technique for the instruments, as follows:

Table of Content s

Fair Value Measurements at the End of the Reporting Date Using Twenty-Six Weeks Ended August 1, 2020
Balance as of August 1, 2020 Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3) Total Impairment
Recurring fair value measurements:
Current Assets
Cash equivalents:

Money market accounts $ 34,581
$ 34,581

$ —

Marketable securities:

Corporate bonds 20,742
—
20,742
—

Noncurrent Assets

Deferred compensation plan 7,818
7,818
—
—

Total recurring fair value measurements $ 63,141
$ 42,399
$ 20,742
$ —

Nonrecurring fair value measurements:
Noncurrent Assets
Goodwill $ 16,360
$ —
$ —
$ 16,360
$ (80,414 )
Trademark 6,000
—
—
6,000
(28,000 )
Long-lived assets ⁽¹⁾
6,867
—
5,990
877
(18,493 )
Operating lease assets ⁽¹⁾
88,942
—
—
88,942
(3,236 )
Total nonrecurring fair value measurements $ 118,169
$ —
$ 5,990
$ 112,179
$ (130,143 )

Balance as of February 1, 2020
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts $ 621
$ 621
$ —
$ —

Marketable securities:
Corporate bonds 62,645
—
62,645
—

Commercial paper 1,248
—
1,248
—

Noncurrent Assets
Deferred compensation plan 7,464
7,464
—
—

Total recurring fair value measurements $ 71,978
$ 8,085
$ 63,893
$ —

Balance as of August 3, 2019
Financial Assets:
Current Assets
Cash equivalents:
Money market accounts $ 286
$ 286
$ —
$ —

Marketable securities:
Corporate bonds 60,476
—
60,476
—

Commercial paper 2,970
—
2,970
—

Noncurrent Assets
Deferred compensation plan 7,112
7,112
—
—

Total recurring fair value measurements $ 70,844
$ 7,398
$ 63,446
$ —


			Fair Value Measurements at the End of the Reporting Date Using						Twenty-Six Weeks Ended July 31, 2021
	Balance as of July 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairment (1)
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts	$	14,493	$	14,493	$	—	$	—
Marketable securities:
Corporate bonds	10,891		—		10,891		—

Noncurrent Assets
Deferred compensation plan	6,124		6,124		—		—
Total recurring fair value measurements	$	31,508	$	20,617	$	10,891	$	—









			Fair Value Measurements at the End of the Reporting Date Using						Fifty-Two Weeks Ended January 30, 2021
	Balance as of January 30, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairment
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts	$	36,809	$	36,809	$	—	$	—
Marketable securities:



Corporate bonds	18,559		—		18,559		—


Noncurrent Assets
Deferred compensation plan	8,993		8,993		—		—
Total recurring fair value measurements	$	64,361	$	45,802	$	18,559	$	—
Nonrecurring fair value measurements:
Noncurrent Assets
Goodwill	$	16,360	$	—	$	—	$	16,360	$	(80,414)
Trademark	5,000		—		—		5,000		(29,000)
Long-lived assets	7,090		—		5,990		1,100		(29,669)
Operating lease assets	88,488		—		—		88,488		(4,795)
Total nonrecurring fair value measurements	$	116,938	$	—	$	5,990	$	110,948	$	(143,878)

			Fair Value Measurements at the End of the Reporting Date Using						Twenty-Six Weeks Ended August 1, 2020
	Balance as of August 1, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairment
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts	$	34,581	$	34,581	$	—	$	—
Marketable securities:



Corporate bonds	20,742		—		20,742		—


Noncurrent Assets
Deferred compensation plan	7,818		7,818		—		—
Total recurring fair value measurements	$	63,141	$	42,399	$	20,742	$	—

Nonrecurring fair value measurements:
Noncurrent Assets

^{Table of Contents}


Goodwill	$	16,360	$	—	$	—	$	16,360		$	(80,414)
Trademark	6,000		—		—		6,000			(28,000)
Long-lived assets	6,867		—		5,990		877		(2)	(18,493)
Operating lease assets	88,942		—		—		88,942		(2)	(3,236)
Total nonrecurring fair value measurements	$	118,169	$	—	$	5,990	$	112,179		$	(130,143)

(1)Impairment charges for assets evaluated for impairment on a nonrecurring basis were not material during the twenty-six weeks ended July 31, 2021.

(2) The fair value of ~~long-lived assets and operating lease assets of $6.9~~$1.1 million, $88.5 million, $0.9 million and $88.9 million ~~respectively,~~ specifically relates to only those ~~assets~~locations which had asset impairment charges ~~during~~related to the ~~twenty-six weeks ended August 1, 2020.~~pandemic.

~~Table of Contents~~

~~13.~~12. DEBT

On ~~August 2, 2018,~~October 30, 2020, the Company and certain ~~of its~~material domestic subsidiaries entered into aAmendment No. 1 (the "Amendment") to its credit agreement ~~(the “Agreement”~~(as amended, the "Agreement"), dated as ~~borrowers~~of August 2, 2018, by and among the Company, certain material domestic subsidiaries as co-borrowers and guarantors, ~~with~~ 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 Agreement are guaranteed by the ~~subsidiary~~ guarantors and secured by a first priority lien on certain assets of the Company and ~~the subsidiary borrowers and guarantors,~~certain material domestic subsidiaries, including inventory, accounts receivable, cash deposits, certain insurance proceeds, real estate, fixtures and certain ~~insurance proceeds.~~intellectual property. The Agreement provides for a five-year asset-based senior secured revolving loan ("ABL") and letter of credit facility of up to ~~$200~~$285.0 million, maturing ~~August 2, 2023.~~October 30, 2025. The interest rate applicable to the ~~loans~~ABL is equal to 2.25% (subject to increase to 2.50% based upon average quarterly excess availability under the ABL), with a LIBOR floor of 75 basis points. The Agreement ~~will be~~also provides for a $15.0 million first-in last-out ("FILO") loan. The interest rate applicable to the FILO is equal to, at the Company's option, either a base rate, determined by reference to the federal funds rate, or a LIBOR with a floor of 75 basis points, plus in each case an interest rate margin ~~or a LIBO rate, plus an interest rate margin, in each case, depending on availability under the Agreement.~~of 4.5%. The Company expects borrowings to be at a ~~LIBO rate,~~LIBOR, plus an interest rate ~~margin. In~~margin of 4.5%. The FILO includes a prepayment penalty equal to 1.0% in the first year, 0.5% in the second year and none thereafter. The FILO can only be prepaid if there are no outstanding borrowings under the ABL.In addition, the Company will pay a commitment fee per annum on the unused portion of the commitments under the Agreement.

The 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 mergers and acquisitions, (v) make dispositions, (vi) make restricted payments, (vii) prepay other indebtedness and (viii) enter into certain other restrictive agreements. The Company may pay cash dividends and repurchase shares under its share buyback program, subject to certain thresholds of available borrowings based upon the lesser of the aggregate amount of commitments under the Agreement and the borrowing base, determined after giving effect to any such transaction or payment, on a pro forma basis.

As of ~~August 1, 2020,~~July 31, 2021, our outstanding debt consisted of $149.0 million in borrowings under the Agreement. Availability under the 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 ~~August 1, 2020,~~July 31, 2021, the available additional borrowing capacity under the Agreement was approximately $44.8 million, inclusive of $29.3 million of excess availability.

As of July 31, 2021, deferred financing costs of ~~$0.4~~$3.9 million was outstanding related to the Agreement and is presented in other current assets in the accompanying unaudited condensed consolidated balance ~~sheets.~~sheet.

On March 18, 2020, in response to store closures due to the pandemic, the Company drew $106.5 million on its facility. If we borrow in excess of 90% of our current total borrowing capacity under the facility, we are subject to a cash dominion and an additional covenant, and, as such, we do not intend to exceed 90% of our borrowing capacity under the facility.

~~14.~~13. COMMITMENTS AND CONTINGENCIES

In ~~July 2015, WHBM~~February 2021, the Company was named as a defendant in ~~Altman~~Mercedes Haldy, et al. v. White House Black Market, Inc. (“WHBM”), et al., a putative class action filed in the Superior Court of California, Orange County, and subsequently removed to the United States District Court, ~~for the Northern~~Central District of ~~Georgia ("District Court"~~California (“Haldy”). The complaint alleges ~~that~~numerous violations of California law related to payment of wages and other compensation, meal periods, rest periods, and wage statements, among other things. Plaintiff seeks to represent a class of current and former nonexempt employees of WHBM and Chico’s stores in ~~violation~~California.

Table of ~~federal law, willfully published more than~~Content s

In August 2021, the ~~last five digits~~Company was named as a defendant in Margarita Hernandez v. Chico’s FAS, Inc., et al., a putative class action filed in the Superior Court of California, Orange County seeking to represent a ~~credit or debit card number on customers' point-of-sale receipts.~~class of current and former nonexempt employees of Chico’s, WHBM and Soma stores in California (“Hernandez”). The ~~plaintiff seeks an award of statutory damages of $100 to $1,000 for each alleged willful violation~~complaint alleges many of the ~~law,~~same wage and labor violations as ~~well as attorneys' fees, costs~~the Haldy complaint, described above, and ~~punitive damages. WHBM denies~~seeks the ~~material allegations of~~same relief.

The Company believes it has meritorious defenses and intends to defend the ~~complaint~~Haldy and ~~believes the case~~Hernandez cases vigorously. While it is ~~without merit. On February 12, 2018, the District Court issued an order certifying the class.~~

~~On April 9, 2018, the District Court,~~ ~~sua sponte, issued an order granting WHBM's earlier 2016 request~~too early to appeal, to the Eleventh Circuit Court of Appeals ("Eleventh Circuit"), the District Court's ruling that the plaintiff has standing to maintain the lawsuit. On April 19, 2018, WHBM filed a petition for review in the Eleventh Circuit. In the meantime, the District Court stayed all further proceedings in the case pendingpredict the outcome of the ~~appeal~~litigation or a reasonable range of potential losses in ~~the Eleventh Circuit.~~

On July 12, 2018, the plaintiff and WHBM notified the Eleventh Circuit that the plaintiff and WHBM had reached a class settlement on all claims and therefore voluntarily dismissed WHBM's appeal to the Eleventh Circuit. On August 2, 2018, the District Court reopened theeither case, for purposes of reviewing/approving the proposed settlement. On October 22, 2018, the plaintiff filed the settlement papers with the District Court, along with a motion to stay the District Court's consideration of the settlement pending the Eleventh Circuit's final disposition of Muransky v. Godiva Chocolatier, Inc., in which the Eleventh Circuit held, in an opinion issued October 3, 2018 and supplemented on April 22, 2019, that the display of the first six and last four digits of a credit or debit card number on a customer's receipt given at the point of sale establishes a "concrete injury" sufficient to confer Article III standing, enabling the customer to maintain a lawsuit. The District Court granted the motion to stay on November 15, 2018. A petition for rehearing on the October 2018 opinion was filed in the Muransky case on October 24, 2018. In October 2019, the Eleventh Circuit granted rehearing and, on February 25, 2020, heard oral argument in the en banc appeal. The Muransky opinion, if not altered on the petition for rehearing, would bind the District Court in the Altman case and likely establish that the plaintiff has standing to maintain her lawsuit against WHBM. In such event, the stay will be

~~Table of Contents~~

lifted and the proposed settlement will be reviewed by the District Court. If the Eleventh Circuit holds that there is not standing in the Muransky case, the parties have agreed to submit the proposed settlement to the Superior Court for Cobb County, Georgia for approval. The proposed settlement would not have a material adverse effect on the Company's consolidated financial condition or results of operations.

However, no assurance can be given that the proposed settlement will be approved. If the proposed settlement is rejected and the case were to proceed as a class action and WHBM were to be unsuccessful in its defense on the merits, then the ultimate resolution of ~~the case~~these matters could have a material adverse effect on the Company’s ~~consolidated financial condition or~~ results of ~~operations.~~

In May 2019, the Company was named as a defendant in Fisher v. Chico's FAS, Inc., a putative class action filed in the United States District Court for the Southern District of California. The complaint alleges that the Company advertised fictitious prices and corresponding phantom discounts on its made-for-outlet products in its Chico's outlets in violation of California's Unfair Competition Laws, California's False Advertising Laws and the California Consumer Legal Remedies Act. On October 22, 2019, the parties attended a mediation. Thereafter, the plaintiff voluntarily dismissed the case from federal court on March 5, 2020, and re-filed the complaint in San Diego County Superior Court. Subsequently, the case was settled by the parties on June 9, 2020 and a dismissal was filed with the San Diego County Superior Court on August 10, 2020. The resolution was not material to our annualoperations or consolidated financial statements.

Other than as noted above, 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, the ultimate aggregate amounts of monetary liability or financial impact with respect to ~~these~~other matters as of ~~August 1, 2020~~July 31, 2021 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.

~~15. SUBSEQUENT EVENTS~~

~~The Company is in active discussions with landlords to abate, reduce or defer lease payments for the months of suspended or reduced rent payments, and future lease obligations.~~

Table of ~~Contents~~Content s



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 ("MD&A") should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q ("this Form 10-Q") and in our Annual Report on Form 10-K for the fiscal year ended ~~February 1, 2020,~~January 30, 2021, filed with the ~~SEC~~Securities and Exchange Commission ("SEC") on March ~~16,~~ 9, 2021 ("2020 ~~("2019~~ Annual Report on Form 10-K").

Executive Overview

Chico’s FAS 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 fashion retailers in North America, Chico’s FAS is a company of three unique brands - Chico’s^®, White House Black Market^® and Soma^® - each thriving in their own white space, founded by women, led by women, providing solutions that millions of women say give them confidence and joy. Our distinct lifestyle brands serve the needs of fashion-savvy women 35 years and older. We earn revenue and generate cash through the sale of merchandise in our domestic and international retail stores, our various Company-operated e-commerce websites, our call center (which takes orders for all of our brands), through unaffiliated franchise partners and through third-party channels.

We utilize an integrated, omnichannel approach to managing our business. We want our customers to experience our brands holistically and to view the various retail 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.

~~Exit of Canada Frontline Operations~~Business Highlights

~~On July 30, 2020,~~The Company’s second quarter highlights include:

•Return to profitability: Chico’s FAS ~~Canada, Co.~~returned to profitability, posting $0.21 net income per diluted share for the thirteen weeks ended July 31, 2021 (the "second quarter") compared to a $0.40 net loss per diluted share for the thirteen weeks ended August 1, 2020 ("last year's second quarter") and a $0.02 net loss per diluted share for the thirteen weeks ended August 3, 2019 (the "second quarter of fiscal 2019"; using this as a pre-pandemic reference). Current quarter earnings was the best second quarter performance since 2013.

•Continued exceptional sales growth at Soma: Soma posted a 53% sales increase over last year's second quarter and a 38% comparable sales increase over the second quarter of fiscal 2019. According to market research firm NPD, Group Inc., ~~an immaterial subsidiary~~for the 12 months ended July 2021 compared to the same period in 2019, Soma's growth exceeded that of the ~~Company, filed~~U.S. market in non-sport bras, panties and sleepwear. In addition, as customers’ preferences have shifted to comfort, Soma strategically increased its wireless assortment, taking more market share than any other brands for ~~bankruptcy~~the 12 months ended July 2021 compared to the same period in 2019. We believe this research, along with ~~the Ontario, Canada office of the Superintendent in Bankruptcy. This action resulted~~our recent performance, is a strong indication that Soma is well positioned to capture additional market share.

•Continued improving sales performance at Chico's: Sales at Chico’s increased 59% over last year’s second quarter. Chico's continued to benefit from elevated product styling and quality enhancements, and customers responded to newness, comfort features and innovative fabrics. Inventories remained lean, which fueled high productivity and more full-price sales in the ~~permanent closure of four Chico’s and six~~quarter.

•Continued improving sales performance at White House Black Market ("WHBM") ~~boutiques~~: Sales at WHBM grew 48% over last year’s second quarter. WHBM continued to benefit from elevated quality and product enhancements, and customers responded to newness and seasonless fabrics. Inventories remained lean, which fueled high productivity and more full-price sales in ~~Ontario, Canada.~~the quarter.

•Enhanced marketing continued to drive traffic as well as new customers: Chico's FAS continued to elevate its marketing efforts, allocating more resources to digital storytelling, social influencers and other social efforts. These enhanced marketing initiatives drove more reactivated customers from the previous year as well as younger new customers which highlights the opportunities for all three brands.

•Strong balance sheet: The ~~permanent closure~~Company ended the second quarter with more than $137 million in cash and marketable securities, an increase of nearly $35 million over the ~~Canadian boutiques, which constitute all~~first quarter of ~~the Company’s Canadian boutiques, is part~~fiscal 2021.

Table of ~~the Company’s ongoing cost-savings measures taken~~Content s

•Improved gross margin: The gross margin rate improved to ~~mitigate the impact of the novel strain of coronavirus ("COVID-19") pandemic and address the operational and financial challenges associated with operating in Canada. In connection with this effort,~~38.4% in the second quarter, the best performance in 13 consecutive quarters, driven by controlled inventories and lower promotional levels.

•Continued cost discipline: Selling, general and administrative ("SG&A") expenses declined to a 30.9% rate for the second quarter, an improvement over both the second quarter rates of fiscal 2020 ~~we exited our Canada frontline operations~~ and ~~recorded on~~2019, reflecting the impact of cost savings initiatives put in place in prior years, continued cost discipline efforts and sales leverage.

•Obtained additional meaningful rent reductions: In the first half of fiscal 2021, Chico's FAS obtained approximately $15 million in incremental savings from landlords; this is in addition to the $65 million of reductions and abatements negotiated during fiscal 2020, for a total savings of $80 million.

•Shop-in-shops: Forty-seven Soma shop-in-shops are now successfully opened inside Chico's stores and are exceeding expectations, driving new customers to both brands and further expanding the Company’s digital business.

Financial Results

Income per diluted share for the second quarter was $0.21 compared to loss per diluted share of $0.40 for last year's second quarter. Last year's second quarter net ~~basis~~loss includes the after-tax impact of inventory write-offs of approximately $8 million as a ~~non-material charge, including~~result of the ~~realization~~pandemic.

Income per diluted share for the twenty-six weeks ended July 31, 2021 was $0.14 compared to loss per diluted share of $1.95 for the twenty-six weeks ended August 1, 2020. Net loss for the twenty-six weeks ended August 1, 2020 includes the after-tax impact of impairments and inventory write-offs of approximately $148 million as a ~~cumulative foreign currency translation adjustment.~~result of the pandemic.

Select Financial Results

The following table depicts select financial results for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, ~~2020 and August 3, 2019:~~2020:

Thirteen Weeks Ended Twenty-Six Weeks Ended
August 1, 2020 August 3, 2019 August 1, 2020 August 3, 2019
(in millions, except per share amounts)
Net sales $ 306
$ 508
$ 586
$ 1,026
Significant charges ⁽¹⁾:

Inventory write-offs 12
—
55
—
Long-lived store asset impairment —
—
18
—
Right of use asset impairment —
—
2
—
Goodwill impairment —
—
80
—
Indefinite-lived asset impairment —
—
33
—
(Loss) income from operations (63 ) (2 ) (318 ) 3
Net loss (47 ) (2 ) (225 ) (0.3 )
Net loss per common and common equivalent share - diluted $ (0.40 ) $ (0.02 ) $ (1.95 ) $ —


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
	(in millions, except per share amounts)
Net sales	$	472	$	306	$	860	$	586

Significant non-cash charges (1):
Inventory write-offs (2)	—		12		—		55
Long-lived store asset impairment (2)(3)	—		—		—		18
Right of use asset impairment (2)	—		—		—		2

Goodwill impairment (2)	—		—		—		80
Indefinite-lived asset impairment (2)	—		—		—		33
Income (loss) from operations	36		(63)		28		(317)
Net income (loss)	26		(47)		17		(225)
Net income (loss) per common and common equivalent share - diluted	$	0.21	$	(0.40)	$	0.14	$	(1.95)

⁽¹⁾~~Includes only~~All significant charges ~~related~~relate to ~~the pandemic.~~

~~Table of Contents~~

~~Overview of Financial Results~~

During the thirteen and twenty-six weeks ended August 1, 2020, the Company experienced varying degrees of business disruptions and periods of store closures or reduced operating hours as a result of the COVID-19 pandemic (the “pandemic”). Throughout the first half of the fiscal year, the Company was able to navigate a rapidly changing retail landscape by leveraging its omni-channel capabilities and reopening most of its stores. Sales exceeded Company expectations across all brands during the back half of the second quarter. As of August 1, 2020, approximately 96% of the store base were open to the public.

The Company recognized significant inventory write-offs and impairment charges as a result of the pandemic during the thirteen and twenty-six weeks ended August 1, 2020, however, the impact was partially mitigated by strong digital commerce performance and the Company’s ongoing cost-saving measures.

~~The Company’s cash flow for the twenty-six weeks ended August 1, 2020 also reflects~~ the impact of the pandemic. Less significant charges that may have been incurred are not reflected in the table above.

(2) Presented pre-tax.

(3) Primarily includes impairment on leasehold improvements at certain underperforming stores.

Current Trends

The novel strain of coronavirus ("COVID-19") pandemic (the "pandemic") has resulted in significant challenges across our business starting in March 2020 and is expected to continue to disrupt our business operations for the balance of fiscal 2021. Many markets imposed limitations, varying by market and in frequency, on the access to the Company's store fleet, including temporary store closures and/or a reduction in hours, staffing and capacity. We continue to focus on evolving consumer demand emerging from the pandemic experience and have accelerated our transformation to a digital-first company, fast-tracking numerous innovation and technology investments across all three of our brands. Even as governmental restrictions become relaxed and markets begin to reopen, we expect continued ~~to take aggressive~~uncertainty and ~~prudent actions to drive sales, monetize inventory, reduce expenses~~volatility on our business operations, operating results and ~~manage~~operating cash flows ~~including suspending or reducing rent payments,~~as the ongoing economic impacts and ~~partnering~~health concerns associated with ~~suppliers~~the pandemic continue to affect consumer behavior, spending levels and ~~vendors to decrease operating costs and extend payment terms to enhance the Company’s financial position.~~shopping preferences.

The Company remains confident that it currently has sufficient liquidity to repay its obligations as they become due for the foreseeable future ~~and~~as the Company continues to ~~execute~~drive operational efficiency and effectiveness, including executing on its

Table of Content s

cost ~~savings~~saving initiatives ~~among other liquidity measures.~~announced in fiscal 2020 to mitigate the macro challenges of the pandemic. However, the extent to which the pandemic impacts our business operations, financial results, and liquidity will depend on numerous evolving factors that we may not be able to accurately predict or assess, including the duration and scope of the pandemic; our response to and ability to mitigate the impact of the pandemic; the negative impact the pandemic has on global and regional economies and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; its short- and longer-term impact on the levels of consumer confidence; the ability of our suppliers, vendors and customers to successfully address the impacts of the pandemic; actions governments, businesses and individuals take in response to the pandemic; and how quickly economies recover after the pandemic subsides.

~~Financial Results~~Exit of Canada Frontline Operations

~~Loss per diluted share~~On July 30, 2020, Chico’s FAS Canada, Co., an immaterial subsidiary of the Company, filed for bankruptcy with the Ontario, Canada office of the Superintendent in Bankruptcy. This action resulted in the permanent closure of four Chico’s and six WHBM boutiques in Ontario, Canada. The permanent closure of the Canadian boutiques, which constituted all of the Company’s Canadian boutiques, is part of the Company’s ongoing cost-savings measures taken to mitigate the impact of the pandemic and address the operational and financial challenges associated with operating in Canada. In connection with this effort, in the second quarter of fiscal 2020, we exited our Canada frontline operations and recorded on a net basis a non-material charge, including the realization of a cumulative foreign currency translation adjustment.

Fiscal 2021 Outlook

During the balance of fiscal 2021, we expect improving year-over-year demand, but recognize that there is economic uncertainty as we continue to manage through the pandemic. In addition, we are facing macro supply chain headwinds in the back half of the fiscal year that we expect will impact sales and gross margin, including higher freight costs, extended inbound transit times and product supplier handover delays driven by the pandemic.

Accordingly, given the uncertainty caused by the pandemic, the Company is not providing specific fiscal 2021 third quarter and full year guidance at this time. The Company is, however, providing high-level outlook expectations for the ~~thirteen weeks ended August 1, 2020 (the "second quarter") was $0.40~~third quarter and full fiscal year 2021. The ongoing financial impact of the pandemic is not estimable with precision and may vary significantly from estimates reflected in our high-level outlook expectations below.

For the fiscal 2021 third quarter compared to ~~loss~~the fiscal 2020 third quarter, the Company currently expects:

•Consolidated year-over-year net sales improvement between 18% to 22%;

•Gross margin rate improvement of 13 to 15 percentage points over last fiscal year;

•SG&A as a percent of net sales to improve 500 to 600 basis points year-over-year; and

•Income tax rate of 34% to 35%.

For the fiscal 2021 full year compared to the fiscal 2020 full year, the Company currently expects:

•Consolidated year-over-year net sales improvement between 32% to 35%;

•Gross margin rate improvement of 20 to 22 percentage points over last fiscal year;

•SG&A as a percent of net sales to improve 500 to 600 basis points year-over-year; and

•Income tax rate of 34% to 35%.

Key Performance Indicators

In assessing the performance of our business, we consider a variety of key performance and financial measures to evaluate our business, develop financial forecasts and make strategic decisions. These key measures include comparable sales, gross margin as a percent of sales, diluted income (loss) per ~~diluted~~ share ~~of $0.02 for the thirteen weeks ended August 3, 2019~~and return on net assets ("~~last year's second quarter"~~RONA"). In light of the pandemic, we have shifted our focus to effectively manage our liquidity position, including aligning our operating cost structure with expected sales. We will continue to evaluate our other key performance and financial measures in addition to our liquidity position. The ~~second quarter net loss includes~~following describes these measures.

Liquidity

Liquidity is measured through cash flow, which is the ~~after-tax impact~~measure of ~~inventory write-offs of approximately $8 million~~cash provided by or used in operating, investing and financing activities. We believe that as a result of the ~~pandemic. Last year's second quarter net loss includes~~Company’s extensive measures to mitigate the ~~unfavorable~~ impact of ~~accelerated depreciation charges~~the pandemic discussed above, we were able to, and continue to, effectively manage our liquidity position.

Table of ~~approximately $2 million, after-tax, related~~Content s

Comparable Sales

Comparable sales is an omnichannel measure of the amount of sales generated from products the Company sells directly to ~~our retail fleet optimization plan.~~

~~Loss per diluted share~~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 preceding twelve months, including stores that have been expanded, remodeled or relocated within the same general market and includes online and catalog sales, and beginning in the third quarter of fiscal 2019, includes international sales. The comparable sales calculation excludes the negative impact of stores closed four or more days. The Company has historically viewed comparable sales as a key performance indicator to measure the performance of our business, however, we are not providing comparable sales figures for the thirteen and twenty-six weeks ended July 31, 2021 compared to the thirteen and twenty-six weeks ended August 1, 2020 was $1.95 compared to $0.00 per diluted share for the twenty-six weeks ended August 3, 2019. Net loss for the twenty-six weeks ended August 1, 2020 includes impairment charges and inventory write-offs relatingas we believe it is not a meaningful measure due to the ~~impact~~varying degrees of business disruptions and periods of store closures and/or stores operating at reduced hours as a result of the pandemic of approximately $148 million, after-tax. Net loss for the twenty-six weeks ended August 3, 2019 includes the unfavorable impact of accelerated depreciation charges of approximately $6 million, after-tax, related to our retail fleet optimization plan.during fiscal 2020.

~~Business Highlights~~

~~The Company began the second quarter primarily~~Gross Margin as a ~~digital-only~~Percentage of Net Sales

Gross margin as a percentage of net sales is computed as gross margin divided by net sales. We believe gross margin as a percentage of net sales is a primary metric to measure the performance of our business ~~with year-over-year total digital~~as it is used to determine the value of incremental sales, ~~increasing double digits in~~and to guide pricing and promotion decisions.

Diluted Income (Loss) per Share

Income (loss) per share is determined using the ~~quarter. In May 2020,~~two-class method when it is more dilutive than the ~~Company commenced its phased store reopening plan under enhanced safety protocols and had opened approximately 96% of its store base~~treasury stock method. Basic income (loss) per share is computed by dividing net income available to common shareholders by the ~~end~~weighted-average number of common shares outstanding during the period, including participating securities. Diluted income (loss) per share reflects the dilutive effect of potential common shares from non-participating securities such as stock options, performance stock units and restricted stock units. Whereas basic income (loss) per share serves as an indicator of the ~~second quarter. Overall, government mandates delayed store reopening plans which resulted in stores effectively being closed~~Company's profitability, we believe diluted income (loss) per share is a key performance measure because it gauges the ~~same number~~Company's quality of ~~weeks in~~income (loss) per share assuming all potential common shares from non-participating securities are exercised.

Return on Net Assets

RONA is defined as (a) net income (loss) divided by (b) the ~~second quarter as in~~“five-point average” (based on balances at the beginning of the first ~~quarter.~~

~~The Company continues to focus on sales and financial initiatives to improve its operational position. Specifically:~~

~~Our investments in and focus on our digital business are delivering positive results. Year-over-year, digital sales in~~quarter plus the ~~apparel group and intimates~~final balances for each ~~grew double digits. Soma led the way with digital sales improving 70% in the second~~ quarter ~~over last year.~~

~~COVID-19 presented a major challenge and we took the opportunity to reassort inventory to customer demand.~~

~~We achieved a 37% year-over-year SG&A improvement by streamlining our organizational structure and aligning expenses with sales.~~

We are performing a strategic real estate review and reevaluating each store’s strategic value and profitability. We are evaluating options for stores not meeting elevated standards and taking action where warranted as evident by our recent exit of frontline stores in Canada.

~~Table of Contents~~

~~We are partnering with landlords and achieving rent relief in the form of rent reductions, abatements and other concessions to partially mitigate the impact of COVID-19 on our business.~~

~~Our financial position and liquidity have been strengthened through accelerating online sales, store reopenings, an expense structure aligned with sales and reductions in capital spending.~~

~~We continued to invest in and focus on innovation in technology, product and marketing.~~

~~Fiscal 2020 Third Quarter and Full-Year Outlook~~

~~Given the ongoing market disruption caused by the pandemic and related uncertainty on timing and extent~~ of the ~~market recovery,~~fiscal year) of net working capital less cash and marketable securities plus fixed assets. We believe RONA is a primary metric as it helps to determine how well the Company is ~~not providing fiscal 2020 third-quarter or full-year guidance at this time.~~utilizing its assets. As such, a higher RONA could indicate that the Company is using its assets and working capital efficiently and effectively.

Our Business Strategy

Our overall business strategy is focused on building a collection of distinct high-performing retail brands primarily serving the fashion needs of women 35 and older.

In fiscal 2020, the Company took actions to rapidly transform into a digital-first company, fast-tracking numerous innovation and digital technology investments. We also enhanced our marketing efforts to drive traffic and new customers to our brands, while retaining newly acquired customers at a meaningfully higher rate than fiscal 2019.

The primary function of the Company is the production and procurement of beautiful merchandise that delivers the brand promise and brand positioning of each of our brands and resonates with customers. To that end, we are further strengthening our merchandise and design capabilities and enhancing our sourcing and supply chain to deliver product in a timely manner to our customers while also concentrating on improvements to 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 in the best interest of the shareholders.

We pursue improving the performance of our brands by building our omnichannel capabilities, growing our online presence, managing our store base, ~~growing our online presence,~~ executing marketing plans, effectively leveraging expenses, considering additional sales channels and markets, and optimizing the merchandise offerings of each of our brands. We continue to invest heavily in our omnichannel capabilities so our customers can fully experience our brands in the manner they choose.

We view our stores and Company-operated e-commerce websites as a single, integrated sales function rather than as separate, independently operated sales 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. Our domestic

Table of Content s

customers can return merchandise to a store or to our DC, regardless of the original purchase location. Using our enhanced ~~“Locate”~~"Locate” tool, we ship in-store orders from other locations directly to the customer, expediting delivery times while reducing our shipping costs. In addition, our shared inventory system, Endless Aisle, enables customers to make purchases online and ship from store. In fiscal 2019, we completed the implementation of our Buy On-Line, Pick-up In-Store (BOPIS) capability across all our brands, further enhancing our omnichannel capabilities, and in fiscal 2020, we completed the implementation of ~~Style Connect~~StyleConnect^SMTM, our proprietary digital styling software that enables us to communicate directly with the majority of our customers, to drive the frontline business to digital fulfillment.

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

We continue to leverage our digital investments to convert single-channel customers to be omnichannel customers, as the average omnichannel customer spends approximately three times more than a single-channel customer.

In ~~fiscal 2019, we took actions across~~order to maximize the opportunities in each of our brands, towe are targeting five key focus ~~on three distinct~~ areas ~~that we believe will positively impact results. These are:~~for 2021:

1.Continuing our ongoing digital transformation;

2.Further refining product through fit, quality, fabric and innovation in each of our brands;

3.Driving ~~stronger sales~~increased customer engagement through ~~improved product~~marketing;

4.Maintaining our operating and ~~marketing;~~cost discipline; and

~~Optimizing~~5.Further enhancing the ~~customer journey by simplifying, digitizing and extending~~productivity of our ~~unique and personalized service; and~~real estate portfolio.

~~Transforming our sourcing and supply chain operations to increase product speed to market and improve quality.~~

On April 29, 2020, the Company announced a leadership transition, effective June 24, 2020, designed to strengthen and provide ongoing stability and continuity of the business, and to further support the Company’s future, including the following:

~~Molly Langenstein, former President, Apparel Group, became Chief Executive Officer ("CEO") and President of the Company and joined the Board;~~

~~Bonnie R. Brooks transitioned from CEO and President of the Company to Executive Chair of the Board; and~~

~~Director William S. Simon became lead independent director of the Board.~~

Table of ~~Contents~~Content

~~Key Performance Indicators~~

In assessing the performance of our business, we consider a variety of key performance and financial measures to evaluate our business, develop financial forecasts and make strategic decisions. These key measures include comparable sales, gross margin as a percent of sales, diluted earnings per share and return on net assets ("RONA"). In light of the pandemic, we have shifted our focus to effectively manage our liquidity position, including aligning our operating cost structure with expected sales. We will continue to evaluate our other key performance measures in addition to our liquidity position. The following describes these measures.

~~Liquidity~~

Liquidity is measured through cash flow, which is the measure of cash provided by or used in operating, investing and financing activities. We believe that as a result of the Company’s extensive measures to mitigate the impact of the pandemic discussed above, we were able to, and continue 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 preceding twelve months, including stores that have been expanded, remodeled or relocated within the same general market and includes online and catalog sales, and beginning in the third quarter of fiscal 2019, includes international sales. The comparable sales calculation excludes the negative impact of stores closed four or more days. The Company has historically viewed comparable sales as a key performance indicator to measure the performance of our business, however, due to varying degrees of business disruptions and periods of store closures or stores operating at reduced hours as a result of the pandemic during the thirteen and twenty-six weeks ended August 1, 2020, we believe this is not a meaningful measure for the thirteen and twenty-six weeks ended ~~August 1, 2020.~~s

~~Gross Margin as a Percentage of Net Sales~~

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

~~Diluted Loss per Share~~

Earnings per share is determined using the two-class method when it is more dilutive than the treasury stock method. Basic earnings 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 earnings per share reflects the dilutive effect of potential common shares from non-participating securities such as stock options, performance stock units and restricted stock units. Whereas basic earnings per share serves as an indicator of the Company's profitability, we believe diluted earnings per share is a key performance measure because it gauges the Company's quality of earnings per share assuming all potential common shares from non-participating securities are exercised.

~~Return on Net Assets~~

RONA is defined as (a) net income divided by (b) the “five-point average” (based on balances at the beginning of the first quarter 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 primary metric as it helps to determine how well the Company is utilizing its assets. As such, a higher RONA could indicate that the Company is using its assets and working capital efficiently and effectively.

~~Table of Contents~~

Results of Operations

Thirteen Weeks Ended ~~August 1, 2020~~July 31, 2021 Compared to the Thirteen Weeks Ended August ~~3, 2019~~1, 2020

Net ~~Loss~~Income (Loss) and ~~Loss~~Income (Loss) per Diluted Share

For the second quarter, the Company reported a net ~~loss~~income of ~~$47~~$26 million, or ~~$0.40 loss~~$0.21 per diluted share, compared to a net loss of $2$47 million, or ~~$0.02 loss~~$0.40 per diluted share, in last year's second quarter. ~~The~~Results for last year's second quarter ~~results~~ include a pre-tax non-cash inventory write-off of $12 million as a result of the ~~pandemic.~~

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

Gross margin:
Inventory write-offs $ 12
4.0 %
Total significant charges impacting gross margin $ 12
4.0 %

⁽¹⁾~~Includes only significant charges related to~~impact of the ~~pandemic.~~pandemic and is reflected in cost of goods sold ("COGS") in the accompanying unaudited condensed consolidated statements of income (loss).

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 July 31, 2021 and August 1, ~~2020 and August 3, 2019:~~2020:

Thirteen Weeks Ended
August 1, 2020 August 3, 2019

(dollars in millions) ⁽¹⁾
Chico's $ 140
45.6 % $ 269
52.9 %
WHBM 82
26.9
140
27.5
Soma 84
27.5
100
19.6
Total Net Sales $ 306
100.0 % $ 508
100.0 %

⁽¹⁾ ~~May not foot due to rounding.~~


	Thirteen Weeks Ended
	July 31, 2021				August 1, 2020

	(dollars in millions)

Chico's	$	221	46.9	%	$	140	45.6	%
WHBM	122		25.9		82		26.9
Soma	129		27.2		84		27.5

Total Net Sales	$	472	100.0	%	$	306	100.0	%

For the second quarter, net sales were ~~$306~~$472 million compared to ~~$508~~$306 million in last year's second quarter. This ~~39.8% decrease~~54.2% improvement primarily reflects ~~disruptions related to~~ the ~~pandemic, including the continuation~~impact of temporary store closures and limited hours during ~~the~~last year’s second quarter, ~~as well as the impact of 74~~partially offset by 29 net permanent store closures since last year’s second ~~quarter, partially offset by double-digit growth in digital performance.~~quarter.

The Company is not providing comparable sales figures for the second quarter compared to last year’s second quarter as it is not a meaningful measure due to the significant impact of the pandemic during last year’s second quarter, including temporary store closures ~~as a result of the pandemic.~~or stores operating at reduced hours.

Cost of Goods Sold/Gross Margin

The following table depicts ~~cost of goods sold ("COGS")~~COGS and gross margin in dollars and gross margin as a percentage of total net sales for the thirteen weeks ended July 31, 2021 and August 1, ~~2020 and August 3, 2019:~~2020:


	Thirteen Weeks Ended							Thirteen Weeks Ended
	August 1, 2020			August 3, 2019				July 31, 2021			August 1, 2020

	(dollars in millions)							(dollars in millions)
Cost of goods sold	$	261		$	340		Cost of goods sold	$	291		$	261
Gross margin	45			169			Gross margin	181			45
Gross margin percentage	14.6		%	33.2		%	Gross margin percentage	38.4		%	14.6		%

For the second quarter, gross margin was ~~$45~~$181 million, or ~~14.6%~~38.4% of net sales, compared to ~~$169~~$45 million, or ~~33.2%~~14.6% of net sales, in last year's second quarter. The ~~second quarter~~ year-over-year ~~decrease~~improvement in gross margin rate primarily reflects margin expansion as a result of higher full price sales and less promotional activity, improved leverage of occupancy costs with rising sales, and the impact of ~~temporary store closures which resulted in deleverage of occupancy costs~~inventory write-offs as a percent of net sales as well as a pre-tax inventory write-off of $12 million, or 4.0% of net sales. The inventory write-off was driven by the slower than planned cadence of store reopenings during the first halfresult of the pandemic in last year’s second ~~quarter and less relevant work wear and special occasion product.~~

Selling, General and Administrative Expenses

The following table depicts SG&A expenses, 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 July 31, 2021 and August 1, ~~2020 and August 3, 2019:~~2020:


	Thirteen Weeks Ended
	July 31, 2021			August 1, 2020

	(dollars in millions)
Selling, general and administrative expenses	$	146		$	107
Percentage of total net sales	30.9		%	35.0		%

Thirteen Weeks Ended
August 1, 2020 August 3, 2019

(dollars in millions)
Selling, general and administrative expenses $ 107
$ 171
Percentage of total net sales 35.0 % 33.7 %

For the second quarter, SG&A ~~was~~expenses were $146 million, or 30.9% of net sales, compared to $107 million, or 35.0% of net sales, ~~compared to $171 million, or 33.7% of net sales,~~ for last year's second ~~quarter. The $64 million decrease in SG&A expenses reflects~~quarter, primarily reflecting the ~~Company’s ongoing expense reduction~~benefit of fiscal 2020 cost savings initiatives ~~to align its cost structure with sales.~~and sales leverage.

For the second quarter, the ~~$16~~$7.7 million income tax ~~benefit~~provision resulted in an effective tax rate of ~~25.7%~~22.7% compared to ~~0.0%~~25.7% for last year’s second quarter. The 22.7% effective tax rate for the second quarter primarily reflects a change in estimate from the first quarter of fiscal 2021 due to an increase in the Company’s projected annual pre-tax income and an increase in annual projected deferred tax assets on which a full valuation allowance exists, partially offset by the impact of the annual loss projected during the first quarter of fiscal 2021. The 25.7% effective tax rate for ~~the~~last year's second quarter includes the annual benefit of the fiscal 2020 pre-tax loss due the Coronavirus Aid, Relief, and Economic Security ~~(“CARES”~~("CARES") Act, ~~which is slightly~~partially offset by the impact of nondeductible book goodwill impairment charges. In addition, during the second quarter, the Company recognized a small valuation allowance against certain state tax credit carryforwards that are expected to expire unutilized in the future. The 0.0% effective tax rate for last year's second quarter was primarily the result of an income tax benefit on the quarter's operating loss, offset by a true-up from the first quarter provision due to an increase in the forecasted annual effective tax rate.

Twenty-Six Weeks Ended ~~August 1, 2020~~July 31, 2021 Compared to the Twenty-Six Weeks Ended August ~~3, 2019~~1, 2020

Net ~~Loss~~Income (Loss) and ~~Loss~~Income (Loss) per Diluted Share

For the twenty-six weeks ended ~~August 1, 2020,~~July 31, 2021, the Company reported a net ~~loss~~income of ~~$225~~$17 million, or ~~$1.95 loss~~$0.14 per diluted share, compared to net loss of ~~$0.3~~$225 million, or ~~$0.00~~$1.95 per diluted share, for the twenty-six weeks ended August ~~3, 2019.~~1, 2020. Results for the twenty-six weeks ended August 1, 2020 ~~were significantly impacted by~~includes approximately $189 million in pre-tax non-cash charges as a result of the impact of the pandemic and ~~included~~is reflected in the ~~following pre-tax charges:~~

Summary of Significant Charges ⁽¹⁾
Twenty-Six Weeks Ended
August 1, 2020

Amount ⁽²⁾
% of Net Sales
(dollars in millions)

Gross margin:
Inventory write-offs $ 55
9.4 %
Long-lived store asset impairment 18
3.2
Right of use asset impairment 2
0.4
Total significant charges impacting gross margin 76
13.0
Goodwill and intangible impairment:
Goodwill impairment 80
13.7
Indefinite-lived asset impairment 33
5.6
Total goodwill and intangible impairment charges 113
19.3
Total $ 189
32.3 %

income (loss) as $76 million in COGS and $113 million in goodwill and intangible impairment charges.

The following table depicts net sales by Chico's, WHBM and Soma in dollars and as a percentage of total net sales for the twenty-six weeks ended July 31, 2021 and August 1, ~~2020 and August 3, 2019:~~2020:

Twenty-Six Weeks Ended
August 1, 2020 August 3, 2019

(dollars in millions) ⁽¹⁾
Chico's $ 271
46.3 % $ 546
53.2 %
WHBM 166
28.3
301
29.3
Soma 149
25.4
180
17.5
Total net sales $ 586
100.0 % $ 1,026
100.0 %

⁽¹⁾ ~~May not foot due to rounding.~~


	Twenty-Six Weeks Ended
	July 31, 2021				August 1, 2020

	(dollars in millions)
Chico's	$	398	46.3	%	$	271	46.3	%
WHBM	226		26.3		166		28.3
Soma	236		27.4		149		25.4

Total net sales	$	860	100.0	%	$	586	100.0	%

Net sales for the twenty-six weeks ended ~~August 1, 2020 decreased~~July 31, 2021 increased to ~~$586~~$860 million from ~~$1,026~~$586 million for the twenty-six weeks ended August ~~3, 2019.~~1, 2020. This ~~decrease~~increase of ~~42.8%~~46.7% primarily reflects disruptions related to the pandemic, including temporary store closures and limited hours, during the twenty-six weeks ended August 1, 2020, ~~and~~partially offset by the impact of 7429 net store closures since last year's second ~~quarter, partially offset by strong digital commerce performance.~~quarter.

The Company is not providing comparable sales figures for the twenty-six weeks ended July 31, 2021 compared to the twenty-six weeks ended August 1, 2020 as it is not a meaningful measure due to the significant impact of the pandemic during the twenty-six weeks ended August 1, 2020, including temporary store closures ~~as a result~~or stores operating at reduced hours.

Cost of Goods Sold/Gross Margin

The following table depicts COGS and gross margin in dollars and gross margin as a percentage of total net sales for the twenty-six weeks ended July 31, 2021 and August 1, ~~2020 and August 3, 2019:~~2020:

Gross margin for the twenty-six weeks ended ~~August 1, 2020~~July 31, 2021 was ~~$34~~$308 million, or ~~5.7%~~35.8% of net sales, compared to ~~$359~~$34 million, or ~~35.0%~~5.7% of net sales, for the twenty-six weeks ended August ~~3, 2019.~~1, 2020. The ~~decrease~~year-over-year improvement in gross margin rate primarily reflects the impact of ~~pre-tax significant charges of $76 million, 13.0% of net sales, related to~~ inventory write-offs and store impairments as ~~reflected in~~a result of the ~~table above, as well as~~pandemic during the ~~impact of temporary store closures which resulted in deleverage~~twenty-six weeks ended August 1, 2020, improved leverage of occupancy costs with rising sales and margin expansion as a ~~percent~~result of ~~net sales.~~less promotional activity.

Selling, General and Administrative Expenses

The following table depicts SG&A, which includes store and direct operating expenses, marketing expenses and NSSC expenses, in dollars and as a percentage of total net sales for the twenty-six weeks ended July 31, 2021 and August 1, ~~2020 and August 3, 2019:~~2020:

For the twenty-six weeks ended ~~August 1, 2020,~~July 31, 2021, SG&A was ~~$237~~$280 million, or ~~40.5%~~32.5% of net sales, compared to ~~$356~~$237 million, or ~~34.7%~~40.5% of net sales, for the twenty-six weeks ended August ~~3, 2019. This $118.9 million~~1, 2020. The decrease in SG&A primarily reflects the ~~Company's actions to significantly reduce its expense structure, including centralizing key functions to create a nimbler organization to better align costs with expected sales.~~benefit of fiscal 2020 cost savings initiatives and sales leverage.

The effective tax rate for the twenty-six weeks ended July 31, 2021 and August 1, 2020 was 30.0% and ~~August 3, 2019 was~~ 29.2% ~~and 109.1%~~, respectively. The 30.0% for the twenty-six weeks ended July 31, 2021 primarily reflects a change in estimate from the first quarter of fiscal 2021 due to an increase in the Company’s projected annual pre-tax income and an increase in annual projected deferred tax assets on which a full valuation allowance exists, partially offset by the impact of the annual loss projected during the first quarter of fiscal 2021 and favorable state audit settlements. The effective tax rate of 29.2% for the twenty-six weeks ended August 1, 2020 was primarily impacted by the benefits provided by the enactment of the CARES Act, which was reduced by the unfavorable impact of the Company’s book goodwill impairment, a valuation allowance on certain state tax credit carryforwards that are expected to expire unutilized and share-based compensation expense. The effective tax rate of 109.1% for the twenty-six weeks ended August 3, 2019 was primarily the result of the additional tax expense related to employee share-based awards against lower pre-tax income.

Cash, Marketable Securities and Debt

At the end of the second quarter, cash and marketable securities totaled $137 million compared to $125 ~~million.~~million at the end of last year’s second quarter. Debt at the end of the second quarter totaled $149 million, remaining unchanged from ~~the end of the first quarter of fiscal 2020.~~last year’s second quarter.

At the end of the second quarter, inventories ~~net of inventory reserves,~~ totaled ~~$236~~$202 million compared to ~~$228~~$236 million at the end of last year's second quarter. ~~Second quarter inventories were elevated year-over-year due~~This $34 million, or 14.3%, decrease primarily reflects conservative inventory management to ~~merchandise in-transit~~better align inventory and ~~inventory held for liquidation.~~assortments with consumer demand.

Income Tax Receivable

At the end of the second quarter, our unaudited condensed consolidated balance sheet reflected ~~an $83~~a $39 million income tax receivable related to the recovery of Federal income taxes paid in prior years and other tax law changes as a result of the CARES Act.

Adoption of New Accounting Pronouncements

As discussed in Note 1 to our unaudited condensed consolidated financial statements included in this Form 10-Q, we adopted Accounting Standards Update ("ASU") ~~2018-13,~~2019-02, ~~Fair Value Measurement (Topic~~ ~~820):~~ ~~Disclosure Framework-Changes to~~Simplifying the ~~Disclosure Requirements~~Accounting for ~~Fair Value Measurement~~Income Taxes and ASU ~~2016-13,~~2021-01, ~~Financial Instruments — Credit Losses~~Reference Rate Reform (Topic ~~326) ("~~848)~~ASU 2016-13")~~ as of ~~February 2, 2020. On February 2, 2020, we recorded a cumulative effect adjustment of approximately $0.8 million as a decrease to opening retained earnings upon adoption of ASU 2016-13.~~January 31, 2021. Adoption of ASU ~~2018-13~~2019-02 and ASU 2021-01 did not have a material impact on our unaudited condensed consolidated financial statements. We also adopted the temporary practical expedient issued by the FASB's Q&A in April 2020 relating to lease concessions due to the effects of the pandemic. Adoption of the practical expedient did not have a material impact on our unaudited condensed consolidated financial statements as of August 1, 2020.

Recently Issued Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements included in this Form 10-Q for a description of certain newly issued accounting pronouncements which may impact our financial statements in future reporting ~~periods.~~periods, as applicable.

Liquidity and Capital Resources

In response to the pandemic, the Company has taken actions to reinforce its financial position and liquidity. Specific actions include: significantly reducing capital and expense structures, centralizing key functions to create a ~~nimbler~~more nimble organization to better align costs with expected sales; suspending the quarterly dividend commencing April 2020; aligning inventory receipts with expected demand; partnering with suppliers and vendors to reduce operating costs and extend payment terms; and reviewing real estate and actively negotiating with landlords to deliver rent relief in the form of reductions, abatements and other concessions. ~~Subject~~In October 2020, the Company also amended and extended its credit facility to ~~certain assumptions regarding the duration~~strengthen its liquidity and ~~severity of the pandemic, and our responses thereto (including such actions we have taken or may take in the future as disclosed elsewhere in this Form 10-Q), we believe that~~enhance its financial stability. The Company anticipates satisfying its material cash requirements from its cash flows from operating activities, our cash and marketable securities on hand, capacity within our credit facility and other liquidity ~~options will be sufficient to repay our obligations for the foreseeable future.~~options.

The following table summarizes cash flows for the year-to-date period ~~August 1, 2020~~July 31, 2021 compared to last year's year-to-date period August ~~3, 2019:~~1, 2020:


	Twenty-Six Weeks Ended
	July 31, 2021		August 1, 2020
	(dollars in millions) (1)
Net cash provided by (used in) operating activities	$	34	$	(90)
Net cash provided by investing activities	2		35
Net cash (used in) provided by financing activities	(1)		95

Net increase in cash and cash equivalents	$	36	$	40

Operating Activities

Net cash ~~used in~~provided by operating activities for the year-to-date period of fiscal ~~2020~~2021 was ~~$90~~$34 million compared to net cash ~~provided by~~used in operating activities of ~~$21~~$90 million in last year's year-to-date period. The change in net cash ~~used in~~provided by operating activities primarily reflects higher net income, the ~~fiscal 2020 net loss,~~timing of income taxes and payables, as well as inventory management, partially offset by ~~the suspension or reduction of~~normalized rent payments ~~commencing April 2020~~ and ~~reduced operational spending as sales declined.~~rent settlements.

Investing Activities

Net cash provided by investing activities for the year-to-date period of fiscal ~~2020~~2021 was ~~$35~~$2 million compared to ~~net cash used in investing activities of $15~~$35 million in last year's year-to-date period, ~~primarily~~ reflecting a ~~$44~~$36 million ~~increase~~decrease in ~~the~~ net proceeds from the sale of marketable ~~securities.~~securities, partially offset by reduced capital spend.

Financing Activities

Net cash ~~provided by~~used in financing activities for the year-to-date period of fiscal ~~2020~~2021 was ~~$95~~$1 million compared to net cash ~~used in~~provided by financing activities of ~~$30~~$95 million in last year's year-to-date period, primarily reflecting $107 million in proceeds from borrowings ~~and the suspension~~in last year's year-to-date period, partially offset by an $11 million dividend payment in last year's year-to-date period.

intellectual property. The Agreement provides for a five-year asset-based senior secured revolving loan ("ABL") and letter of credit facility of up to ~~$200~~$285.0 million, maturing August 2, 2023. In addition, during the term of the Agreement, the Company may request an increase to the commitments under the Agreement by up to an additional $100 million, subject to customary conditions, including obtaining the agreements from the lenders to provide such commitment increase.October 30, 2025. The interest rate applicable to the ~~loans~~ABL is equal to 2.25% (subject to increase to 2.50% based upon average quarterly excess availability under the ABL), with a LIBOR floor of 75 basis points. The Agreement ~~will be~~also provides for a $15.0 million first-in last-out ("FILO") loan. The interest rate applicable to the FILO is equal to, at the Company's option, either a base rate, determined by reference to the federal funds rate, or a LIBOR with a floor of 75 basis points, plus in each case an interest rate margin ~~or a LIBOR, plus an interest rate margin, in each case, depending on availability under the Agreement.~~of 4.5%. The Company expects borrowings to be at a LIBOR, plus an interest rate ~~margin. In~~margin of 4.5%. The FILO includes a prepayment penalty equal to 1.0% in the first year, 0.5% in the second year and none thereafter. The FILO can only be prepaid if there are no outstanding borrowings under the ABL.In addition, the Company will pay a commitment fee per annum on the unused portion of the commitments under the Agreement.

~~On March 18, 2020,~~The 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 ~~borrowed an~~and certain of its domestic subsidiaries to: (i) incur liens, (ii) make investments, (iii) issue or incur additional ~~$107 million million~~indebtedness, (iv) undergo significant corporate changes, including mergers and acquisitions, (v) make dispositions, (vi) make restricted payments, (vii) prepay other indebtedness and (viii) enter into certain other restrictive agreements. The Company may pay cash dividends and repurchase shares under its share buyback program, subject to certain thresholds of available borrowings based upon the lesser of the aggregate amount of commitments under the Agreement ~~resulting in $51 million available for additional borrowings under~~and the ~~Agreement, in addition~~borrowing base, determined after giving effect to ~~the potential additional $100 million amount noted above. This borrowing under the Agreement was~~any such transaction or payment, on a proactive measure in order to increase the Company’s cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the pandemic. In accordance with the terms of the Agreement, the proceeds from the Agreement borrowings may be used for working capital, capital expenditures or general corporate purposes. If we borrow in excess of 90% of our current total borrowing capacity under the facility, we are subject to a cash dominion and an additional covenant, and, as such, we do not intend to exceed 90% of our borrowing capacity under the facility.pro forma basis.

As of ~~August 1, 2020,~~July 31, 2021, $149 million in ~~net~~ borrowings were outstanding under the Agreement, and is reflected as long-term debt in the unaudited condensed balance sheet included in this Form 10-Q. Availability under the 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 July 31, 2021, the available additional borrowing capacity under the Agreement was approximately $45 million, inclusive of $29 million of excess availability.

The Company is currently evaluating the impact that the pending discontinuation of, or transition away from, LIBOR will have on the Agreement. We have been in discussions with Wells Fargo Bank, ~~National Association~~ regarding this and do not currently expect the ~~move~~transition to have a significant impact on our unaudited condensed consolidated financial statements.

During the twenty-six weeks ended ~~August 1, 2020,~~July 31, 2021, we had 2818 permanent store closures, consisting of 9 Chico's stores, 178 WHBM stores and 1 Soma store. As of July 31, 2021, the Company's franchise operations consisted of 66 international retail locations in Mexico and 2 ~~Soma stores. There were no~~domestic airport locations.

In fiscal 2018, the Company announced a retail fleet optimization plan to rebalance the mix between our physical store ~~openings~~presence and our digital network. We have continued to refine that strategy, particularly in light of the pandemic.

Stores continue to be an important part of our omnichannel strategy, and digital sales are higher in markets where we have a retail presence, but we intend to continue rationalizing our real estate portfolio, reflecting our emphasis on digital and our priority for higher profitability standards. We have closed 18 underperforming locations since the beginning of fiscal 2021 and ended the second quarter ~~and we anticipate permanently closing approximately 25~~with 1,284 boutiques. We will continue to ~~50 stores over the remainder of fiscal 2020.~~shrink our store base to align with these standards, primarily as leases come due, lease kickouts are available, or buyouts make economic sense. However, with the ~~disruption we have seen from~~uncertainty of the pandemic, we intend to continuously evaluate the appropriate store base in light of economic conditions and our business strategy and may adjust the openings and closures as conditions require or as opportunities arise. ~~Additionally, since the end~~

Table of last year’s second quarter, we have permanently closed 80 stores and opened 6 stores. As of August 1, 2020, the Company's franchise operations consisted of 69 international retail locations in Mexico and 2 domestic airport locations.Content s

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon the condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management has discussed the development and selection of these critical accounting policies and estimates with the Audit Committee of our Board of Directors and believes the assumptions and estimates, as set forth in our ~~2019~~2020 Annual Report on Form 10-K, are significant to reporting our results of operations and financial position. There have been no material changes to our critical accounting policies as disclosed in our ~~2019~~2020 Annual Report on Form 10-K.

Forward-Looking Statements

This Form 10-Q may contain certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as ~~amended~~amended. These statements reflect our current views with respect to certain events that could have an effect on our future financial performance, including but without limitation, statements regarding our plans, objectives, and the future success of our store concepts and business initiatives. These statements may address items such as future sales and sales initiatives, business strategies and strategic initiatives, including our digital strategy, environmental, social and governance program details, customer traffic, gross margin expectations, SG&A expense expectations, including statements about the ~~COVID-19~~ pandemic and the expected impact of actions we have taken in response thereto, expected savings, operating margin expectations, expectations regarding revenue recognition, earnings or loss per share expectations, planned store openings, closings and expansions, proposed business ventures, new channels of sales or distribution, expected impact of ongoing litigation, expectations regarding the impact of the pending discontinuation of LIBOR, future stock repurchase plans, future plans to pay dividends, future comparable sales, future product sourcing plans, future inventory levels, including the ability to leverage inventory management and targeted promotions, planned marketing expenditures, planned capital expenditures and future cash needs.

These statements relate to expectations concerning matters that are not historical fact and may include the words or phrases such as “will,” “could,” “should,” “expects,” “believes,” “anticipates,” “plans,” “intends,” “estimates,” “approximately,” “our planning assumptions,” “future outlook” and similar expressions. Except for historical information, matters discussed in this Form 10-Q are forward-looking statements. These forward-looking statements are based largely on information currently available to our management and on our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry, and are subject to various risks and uncertainties that could cause actual results to differ materially from historical results or those expressed or implied by such forward-looking statements. Although we believe our expectations are based on reasonable estimates and assumptions, they are not guarantees of performance and there are a number of known and unknown risks, uncertainties, contingencies and other factors (many of which are outside our control) that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Accordingly, there is no assurance that our expectations will, in fact, occur or that our estimates or assumptions will be correct, and we caution investors and all others not to place undue reliance on such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described in Item 1A, “Risk Factors” in our ~~2019~~2020 Annual Report on Form 10-K, ~~our Quarterly Report on~~this Form 10-Q ~~for the quarter ended May 2, 2020~~ and the following:

The financial strength of retailing in particular and the economy in general; the extent of financial difficulties or economic uncertainty that may be experienced by customers; the effects of the ~~COVID-19~~ pandemic, including uncertainties about its depth and duration, ~~(including resurgence),~~new variants of COVID-19 that have emerged, and the speed, efficacy and availability of vaccine and treatment developments, as well as the impacts to general economic conditions and the economic slowdown affecting consumer behavior and discretionary spending (during and after the ~~COVID-19~~ pandemic) and ~~potential future~~ temporary store ~~closures~~restrictions (including reduced hours or capacity) due to government mandates, and the effectiveness of store reopenings, cost reduction initiatives, ~~(including our ability to effectively restructure our lease portfolio to obtain rent relief),~~ and other actions taken in response to the ~~COVID-19~~

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pandemic, and the financial impact of certain provisions of the CARES Act; the ability of our third-party business partners, including our suppliers, logistics providers, vendors and landlords, to meet their obligations to us in light of financial stress, staffing shortages, liquidity challenges, bankruptcy filings by other industry participants and other disruptions due to the ~~COVID-19~~ pandemic; the impact of the ~~COVID-19~~ pandemic on our manufacturing operations in China; the exiting of store operations in Canada and other future permanent store closures; changes in the general or specialty or apparel industries; significant shifts in consumer behavior; our ability to secure and maintain customer acceptance of styles and in-store and online concepts; the ability to leverage inventory management and targeted promotions; the ability to effectively manage our inventory

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and allocation processes; the extent and nature of competition in the markets in which we operate; the ability to remain competitive with customer shipping terms and increases in costs pertaining to product deliveries and returns; the extent of the market demand and overall level of spending for women's private branded clothing and related accessories; the effectiveness of our brand strategies, awareness and marketing programs; the ability to coordinate product development with buying and planning; the quality and timeliness of merchandise received from suppliers; changes in the costs of manufacturing, raw materials, transportation, distribution, labor and advertising; the availability of quality store sites; our ability to manage our store fleet and the risk that our investments in merchandise or marketing initiatives may not deliver the results we anticipate; our ability to successfully navigate the increasing use of ~~on-line~~online retailers for fashion purchases and the pressure that puts on traffic and transactions in our physical stores; the ability to operate our own retail websites in a manner that produces profitable sales; the ability to successfully identify and implement additional sales and distribution channels; the ability to successfully execute our business strategies and particular strategic initiatives (including, but not limited to, the Company’s ~~digital~~turnaround strategy, ~~organizational restructure,~~ retail fleet optimization plan and ~~three~~five fiscal 2021 operating priorities which ~~are~~are: continuing our ongoing digital transformation; further refining product through fit, quality, fabric and innovation in each of our brands; driving ~~stronger sales~~increased customer engagement through ~~improved product~~marketing; maintaining our operating and ~~marketing; optimizing~~cost discipline; and further enhancing the customer journey by simplifying, digitizing and extending the Company’s unique and personalized service; and transforming sourcing and supply chain operations to increase product speed to market and improve quality)productivity of our real estate portfolio), sales initiatives and multi-channel strategies, customer traffic, and to achieve the expected results from them; the continuing performance, implementation and integration of management information systems; the impact of any systems failures, cyber security or other data or security breaches, including any security breaches that result in theft, transfer, or unauthorized disclosure of customer, employee, or company information or our compliance with domestic and foreign information security and privacy laws and regulations in the event of such an incident; the ability to hire, train, motivate and retain qualified sales associates, managerial employees and other ~~employees;~~employees in an inclusive environment; the successful recruitment of leadership and the successful transition of new members to our senior management team; uncertainties regarding future unsolicited offers to buy the Company and our ability to respond effectively to them as well as to actions of activist shareholders and others; changes in the political environment that create consumer uncertainty; significant changes to product import and distribution costs (such as unexpected consolidation in the freight carrier ~~industry)~~industry, higher freight costs, product supplier handover delays and extended inbound transit times); the ability to utilize our distribution center and other support facilities in an efficient and effective manner; the ability to secure and protect trademarks and other intellectual property rights and to protect our reputation and brand images; the risk that natural disasters, public health crises, political uprisings, uncertainty or unrest, or other catastrophic events could adversely affect our operations and financial results; the impact of unanticipated changes in legal, regulatory or tax laws; the risks and uncertainties that are related to our reliance on sourcing from foreign suppliers, including significant economic labor, political or other shifts (including the impact of changes in tariffs, taxes or other import regulations, particularly with respect to ~~China), labor, political~~China, or ~~other shifts;~~legislation prohibiting certain imports from China); and changes in governmental policies in or towards foreign countries; currency exchange rates and other similar factors.

All forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice. The forward-looking statements included herein are only made as of the date of this ~~Quarterly Report on~~ Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk of our financial instruments as of ~~August 1, 2020~~July 31, 2021 has not significantly changed since ~~February 1, 2020.~~January 30, 2021. We are exposed to market risk from changes in interest rates on any future indebtedness and our marketable securities and from foreign currency exchange rate fluctuations.

Our exposure to interest rate risk relates in part to our ~~revolving line of~~ credit agreement with our bank. On ~~August 2, 2018,~~October 30, 2020, we entered into ~~a new~~Amendment No. 1 (the "Amendment") to our credit agreement (as amended, the "Agreement"), as further discussed in Note 1312 to ~~our~~the accompanying unaudited condensed consolidated financial statements and Part I, Item 2, MD&A, included in this Form 10-Q. The Agreement, which matures on ~~August 2, 2023,~~October 30, 2025, has borrowing options which accrue interest, at our election, at either a base rate, determined by reference to the federal funds rate, plus an interest rate margin, or LIBOR, plus an interest rate margin, as defined in the Agreement. AnAs of July 31, 2021, $149 million in borrowings were outstanding under the Agreement and is reflected as long-term debt in the accompanying unaudited condensed consolidated balance sheet. Due to the 75 basis points LIBOR floor under the Agreement, an increase ~~or decrease~~ in market interest rates of 100 basis points would increase interest expense in the amount of approximately ~~$4.5~~$2.2 million over the remaining term of the loan.

The Company is currently evaluating the impact that the pending discontinuation of, or transition away from, LIBOR will have on the Agreement. We have been in discussions with Wells Fargo Bank, National Association regarding this and do not expect the move to have a significant impact on our unaudited condensed consolidated financial statements.

Our investment portfolio is maintained in accordance with our investment policy which identifies allowable investments, specifies credit quality standards and limits the credit exposure of any single issuer. Our investment portfolio consists of cash equivalents and marketable securities which primarily ~~including~~includes corporate bonds. The marketable securities portfolio as of ~~August 1, 2020,~~July 31, 2021 consisted of ~~$9.7~~$10.9 million of securities with maturity dates within one year or less and ~~$11.0~~$0.0 million with maturity dates over one year and less than or equal to two years. We consider all ~~marketable~~ securities available-for-sale, including those with maturity dates beyond 12 months, and therefore classify these securities as short-term investments within current assets on the condensed consolidated balance sheets as they are available to support current operational liquidity needs. As of ~~August 1, 2020,~~July 31, 2021, an increase or decrease of 100 basis points in interest rates would not have a material effect on the fair value of our marketable securities portfolio.



ITEM 4.			CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.

As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of management, including our Chief Executive Officer and Interim Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, the Chief Executive Officer and Interim Chief Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures were effective in providing reasonable assurance in timely alerting them to material information relating to us (including our consolidated subsidiaries) and that information required to be disclosed in our reports is recorded, processed, summarized and reported as required to be included in our periodic SEC filings.

Changes in Internal Controls

There were no significant changes in our internal controls or in other factors that could significantly affect our disclosure controls and procedures subsequent to the date of the above referenced evaluation. Furthermore, there was no change in our internal control over financial reporting or in other factors during the quarterly period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION



ITEM 1.			LEGAL PROCEEDINGS

Information regarding legal proceedings is incorporated by reference from Note 1413 to our unaudited condensed consolidated financial statements included in this Form 10-Q under the heading "Commitments and Contingencies."



ITEM 1A.			RISK FACTORS

In addition to the other information discussed in this report, the factors described in Part I, Item 1A. “Risk Factors” in our ~~2019~~2020 Annual Report on Form 10-K ~~and in Part II, Item 1A. “Risk Factors” in our quarterly report on Form 10-Q for the quarter ended May 2, 2020,~~ should be considered as they could materially affect our business, financial condition or future results. ~~There~~Except as presented below, there have ~~not~~ been ~~any significant~~no material changes with respect to the risks described in our ~~2019~~2020 Annual Report on Form 10-K, ~~except for those risks updated in our quarterly report on Form 10-Q for the quarter ended May 2, 2020,~~ but these are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may adversely affect our business, financial condition or operating results.

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1. The ongoing COVID-19 pandemic			The COVID-19 pandemic has resulted in significant challenges across our business since March 2020 and we expect continued uncertainty and volatility in our business operations, operating results and operating cash flows as the ongoing economic impacts and health concerns associated with the pandemic continue to affect consumer behavior, spending levels and shopping preferences as well as our operational logistics. In March 2020, the World Health Organization declared COVID-19 a pandemic, resulting in local and state governments and private entities mandating various restrictions, including travel restrictions, restrictions on public gatherings, stay-at-home orders and advisories and quarantining of people who may have been exposed to the virus, resulting in the Company’s decision to temporarily close all of its retail stores in March 2020. During and after this time, many markets also imposed restrictions on the access to the Company’s stores, including temporary store closures and/or a reduction in hours, staffing and capacity. While most of these restrictions have since been lifted or eased, and the Company reopened most of its stores by July 2020, recent increases in new COVID-19 cases, including the delta variant, may lead to restrictions being reinstated, or new restrictions imposed in these jurisdictions, such as requiring proof of vaccination status to access stores. While we have accelerated our transformation to a digital-first company during the pandemic, the reinstatement of restrictions on the access to the Company’s store fleet, including temporary store closures and/or a reduction in hours, staffing and capacity. or imposition of new restrictions could adversely impact our business operations, financial performance and liquidity. Since reopening our stores, new safety practices or protocols have impacted our business and may continue and/or increase. In addition, any significant reduction in our customers’ willingness to shop our stores, the levels of our customers’ spending at our stores or our employees’ willingness to staff our stores, as a result of health concerns related to the pandemic or its impact on the economy and consumer discretionary spending, and any increase in the cost of operating our stores due to additional health and safety precautions, may adversely impact our business operations, financial performance and liquidity. In response to the pandemic and uncertain economic conditions and customer traffic and demand, the Company deferred substantially all rent payments due in the months of April, May and June 2020 and otherwise made reduced rent payments where and when applicable during fiscal 2020. Throughout fiscal 2020 and the first half of fiscal 2021, we engaged in extensive discussions with our landlords in an effort to achieve appropriate rent relief and other lease concessions and, in some cases, to terminate existing leases. As of July 31, 2021, the Company achieved commitments of $81 million in rent abatements and reductions resulting from its comprehensive real estate and lease portfolio review. If we are forced to reclose stores for an extended period of time in response to new government mandates or if customers' shopping habits do not rebound as we expect them to once the pandemic subsides, we may not be able to negotiate additional future rent relief, such as abatements, or terminate the leases, on commercially reasonable terms or at all. Failure to obtain further rent relief in such circumstances may adversely impact our business operations, financial performance and liquidity. Our industry has been experiencing supply chain inflation and disruptions due to the pandemic. The inability of our third-party business partners, including our suppliers, logistics providers and vendors, to meet their obligations to us in light of financial stress, labor shortages, liquidity challenges and other disruptions due to the pandemic could adversely impact our business operations, financial performance and liquidity. In particular, we have incurred and expect to continue to incur higher shipping costs due to sourcing new transportation methods to offset vendor capacity constraints and related surcharges, as well as product supplier handover delays and extended inbound transit times due to labor shortages. Higher shipping costs and constraints on our shipping capacity and longer delivery times may result in higher expenses, delayed shipments and inventory delays or product shortages that result in lost sales, all of which could adversely impact our business operations, financial performance and liquidity. The pandemic has also resulted in periods of significant disruption and volatility in the global capital markets, which could adversely affect our ability to access the capital or financing markets, if needed, and our ability to meet our liquidity needs, all of which cannot be predicted. The full extent of the impact that the pandemic will have on our business remains to be seen, as the pandemic and associated containment and remediation efforts continue to rapidly evolve, and such impact will depend on many factors including the duration of any future store restrictions, the duration of any future quarantines, shelter-in-place orders or other travel restrictions, the duration and severity of the pandemic, the impact of the pandemic on consumer spending, and how quickly and to what extent normal economic and operating conditions resume. New variants of COVID-19 may increase the spread or severity of COVID-19 and previously developed vaccines and therapies may not be as effective against new COVID-19 variants. If the pandemic continues to be prolonged and severe, it will likely amplify the negative impacts on our business, financial condition, results of operations and liquidity of, and may also heighten, many of the other risks described in our Annual Report on Form 10-K.

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

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


Period	Total Number of Shares Purchased (a)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans (b)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Publicly Announced Plans
May 2, 2021 - May 29, 2021	—	$	—	—	$	55,192
May 30, 2021 - July 3, 2021	23,951		6.62	—		55,192
July 4, 2021 - July 31, 2021	—		—	—		55,192
Total	23,951		6.62	—

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
May 3, 2020 - May 30, 2020 —
$ —
—
$ 55,192
May 31, 2020 - July 4, 2020 7,321
1.36
—
55,192
July 5, 2020 - August 1, 2020 38,651
1.27
—
55,192
Total 45,972
1.28
—

(a) Total number of shares purchased consists of ~~45,972~~23,951 shares of restricted stock repurchased in connection with employee tax withholding obligations under employee compensation plans, which are not purchases under any publicly announced plan.

(b) In November 2015, we announced a $300 million share repurchase plan. There was approximately $55.2 million remaining under the program as of the end of the second quarter. The repurchase program has no specific termination date and will expire when we have repurchased all securities authorized for repurchase thereunder, unless terminated earlier by our Board of Directors. The Company has no continuing obligation to repurchase shares under this authorization, and the timing, actual number and value of any additional shares to be purchased will depend on the performance of our stock price, market conditions and other considerations.

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~~ITEM 6.~~	~~EXHIBITS~~


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



ITEM 6.			~~Exhibit 10.1~~EXHIBITS

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

	~~Chico's FAS, Inc. 2020 Omnibus Stock and Incentive Plan, effective June 25, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, as filed with the Commission on June 29, 2020)~~
		Exhibit 10.1
~~Exhibit 10.2~~		~~Chico's FAS, Inc. Cash Bonus Incentive Plan, as amended and restated June 24, 2020 (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K, as filed with the Commission on June 29, 2020)~~

~~Exhibit 10.3~~		~~Performance Award Agreement for Performance Share Units between Chico’s FAS, Inc. and Molly Langenstein under the 2020 Omnibus Stock and Incentive Plan, dated July 1, 2020~~

~~Exhibit 10.4~~		~~Restricted Stock Award Agreement between Chico’s FAS, Inc. and Molly Langenstein under the 2020 Omnibus Stock and Incentive Plan, dated July 1, 2020~~

~~Exhibit 10.5~~		Form of 2020 Omnibus Stock and Incentive Plan Restricted Stock Agreement for ~~Employees~~Non-Employee Directors (for awards on or after June 24, ~~2020)~~2021)

		Exhibit ~~10.6~~31.1	~~Separation Agreement and General Release between the Company and Ann Joyce~~

~~Exhibit 10.7~~		~~Separation Agreement and General Release between the Company and Mary van Praag~~

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

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

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

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

		Exhibit 101	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~August 1, 2020,~~July 31, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Statements of ~~Loss,~~Income (Loss), (ii) Condensed Consolidated Statements of Comprehensive ~~Loss,~~Income (Loss), (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Shareholders' Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

		Exhibit 104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~August 1, 2020,~~July 31, 2021, formatted in Inline XBRL (included within Exhibit 101).

Table of ~~Contents~~Content s

SIGNATURES

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

CHICO'S FAS, INC.

Date:

September 1, 2021

By:

/s/ Molly Langenstein

Molly Langenstein

Chief Executive Officer, President and Director

~~CHICO'S FAS, INC.~~

~~Date:~~

~~August 27, 2020~~

~~By:~~

~~/s/ Molly Langenstein~~

Date:

September 1, 2021

By:

~~Molly Langenstein~~

~~Chief Executive Officer, President and Director~~

~~Date:~~

~~August 27, 2020~~

~~By:~~

/s/ David M. Oliver

David M. Oliver

Interim Chief Financial Officer and Senior Vice President, Controller


PART I – Financial Information

~~PART I – Financial Information~~Item 1.			Financial Statements:

~~Item 1.~~			~~Financial Statements:~~

	Condensed Consolidated Statements of ~~Loss~~Income (Loss) for the Thirteen ~~Weeks~~ and Twenty-Six Weeks Ended July 31, 2021 (Unaudited) and August 1, 2020 (Unaudited) ~~and August 3, 2019 (Unaudited)~~	34

			Condensed Consolidated Statements of Comprehensive ~~Loss~~Income (Loss) for the Thirteen ~~Weeks~~ and Twenty-Six Weeks Ended July 31, 2021 (Unaudited) and August 1, 2020 (Unaudited) ~~and August 3, 2019 (Unaudited)~~	45

			Condensed Consolidated Balance Sheets – July 31, 2021 (Unaudited), January 30, 2021 (Audited), and August 1, 2020 (Unaudited)~~, February 1, 2020 (Unaudited), and August 3, 2019 (Unaudited)~~	56

			Condensed Consolidated Statements of Shareholders’ Equity for the Thirteen ~~Weeks~~ and Twenty-Six Weeks Ended July 31, 2021 (Unaudited) and August 1, 2020 (Unaudited) ~~and August 3, 2019 (Unaudited)~~	67

			Condensed Consolidated Statements of Cash Flows for the Twenty-Six Weeks Ended July 31, 2021 (Unaudited) and August 1, 2020 (Unaudited) ~~and August 3, 2019 (Unaudited)~~	89

			Notes to Condensed Consolidated Financial Statements (Unaudited)	910

Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations	2524

Item 3.			Quantitative and Qualitative Disclosures About Market Risk	36

Item 4.			Controls and Procedures	36

PART II – Other Information

Item 1.			Legal Proceedings	37

Item 1A.			Risk Factors	37



Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	3739



Item 6.			Exhibits	3839

Signatures				3940




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



	August 1, 2020			February 1, 2020			August 3, 2019
ASSETS
Current Assets:
Cash and cash equivalents	$	103,765		$	63,972		$	99,634
Marketable securities, at fair value	20,742			63,893			63,446
Inventories	235,844			246,737			227,736
Prepaid expenses and other current assets	31,446			41,069			41,469
Income tax receivable	85,940			7,131			6,450
Total Current Assets	477,737			422,802			438,735
Property and Equipment, net	271,750			315,382			337,049
Right of Use Assets	571,992			648,397			697,332
Other Assets:
Goodwill	16,360			96,774			96,774
Other intangible assets, net	6,164			38,930			38,930
Other assets, net	28,931			20,374			17,468
Total Other Assets	51,455			156,078			153,172
	$	1,372,934		$	1,542,659		$	1,626,288
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	108,166		$	134,204		$	137,142
Current lease liabilities	218,691			157,043			158,866
Other current and deferred liabilities	111,318			114,498			108,861
Total Current Liabilities	438,175			405,745			404,869
Noncurrent Liabilities:
Long-term debt	149,000			42,500			50,000
Long-term lease liabilities	482,380			555,922			611,308
Other noncurrent and deferred liabilities	6,529			8,188			8,860
Deferred taxes	52			212			2,129
Total Noncurrent Liabilities	637,961			606,822			672,297
Commitments and Contingencies (see Note 14)
Shareholders’ Equity:
Preferred stock, $0.01 par value; 2,500 shares authorized; no shares issued and outstanding	—			—			—
Common stock, $0.01 par value; 400,000 shares authorized; 161,188 and 159,715 and 159,297 shares issued respectively; and 119,891 and 118,418 and 118,000 shares outstanding, respectively	1,199			1,184			1,180
Additional paid-in capital	495,163			492,129			487,789
Treasury stock, at cost, 41,297 shares, respectively	(494,395		)	(494,395		)	(494,395		)
Retained earnings	294,708			531,602			554,694
Accumulated other comprehensive gain (loss)	123			(428		)	(146		)
Total Shareholders’ Equity	296,798			530,092			549,122
	$	1,372,934		$	1,542,659		$	1,626,288



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

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



	WHBM Trademark			Chico's Franchise Rights			Total

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



Fiscal Year Ending:
January 30, 2021	$	156,617
January 29, 2022	190,630
January 28, 2023	153,349
February 4, 2024	106,104
February 1, 2025	77,695
Thereafter	108,998
Total future minimum lease payments	$	793,393
Less imputed interest	(92,322		)
Total	$	701,071



	Number of Options		Weighted Average Exercise Price
Outstanding, beginning of period	168,335		$	13.42
Granted	—		—
Exercised	—		—
Forfeited or expired	(87,501	)	13.69
Outstanding and exercisable, end of period	80,834		13.13



	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Average)

WHBM Trademark	$	6,000	Relief from royalty	Weighted-average cost of capital	11% to 13%
				Long-term revenue growth rate	-2.5% to 0%
Long-lived assets and operating lease assets at retail stores ⁽¹⁾	$	89,819	Discounted cash flow	Weighted-average cost of capital	9.5 % to 11.5 %
				Long-term revenue growth rate	-10% to 15%



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

Gross margin:
Inventory write-offs	$	12	4.0	%
Total significant charges impacting gross margin	$	12	4.0	%



Summary of Significant Charges ⁽¹⁾
	Twenty-Six Weeks Ended
	August 1, 2020
	Amount ⁽²⁾		% of Net Sales
	(dollars in millions)

Gross margin:
Inventory write-offs	$	55	9.4	%
Long-lived store asset impairment	18		3.2
Right of use asset impairment	2		0.4
Total significant charges impacting gross margin	76		13.0
Goodwill and intangible impairment:
Goodwill impairment	80		13.7
Indefinite-lived asset impairment	33		5.6
Total goodwill and intangible impairment charges	113		19.3
Total	$	189	32.3	%