UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM			10-Q


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

For the quarterly period ended April ~~30, 2022~~29, 2023


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

For the transition period from to

Commission file number 001-16435



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


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

11215 Metro Parkway, Fort Myers, Florida 33966

(Address of principal executive offices) (Zip Code)

239-277-6200

(~~Registrant's~~Registrant’s telephone number, including area code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.01 Per Share	CHS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ 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~~“large accelerated filer,~~" "accelerated~~” “accelerated filer,~~" "smaller~~” “smaller reporting company,"” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☑☐

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 ☑

At May ~~30, 2022,~~29, 2023, the registrant had ~~125,143,408~~123,455,762 shares of Common Stock, $0.01 par value per share, outstanding.

Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

FOR THE

FISCAL THIRTEEN WEEKS ENDED APRIL ~~30, 2022~~29, 2023

TABLE OF CONTENTS


PART I – Financial Information

Item 1.	Financial Statements:

	Condensed Consolidated Statements of Income ~~(Loss)~~ for the Thirteen Weeks Ended April ~~30, 2022~~ 29, 202 3 (Unaudited) and ~~May 1, 2021~~April 30, 202 2 (Unaudited)	3

	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Thirteen Weeks Ended April ~~30, 2022~~ 29, 202 3 (Unaudited) and ~~May 1, 2021~~April 30, 202 2 (Unaudited)	4

	Condensed Consolidated Balance Sheets – April ~~30, 2022~~ 29, 202 3 (Unaudited), January 29, 2022 (Audited), and ~~May 1, 2021~~April 30, 202 2 (Unaudited)	5

	Condensed Consolidated Statements of Shareholders’ Equity for the Thirteen Weeks Ended April ~~30, 2022~~ 29, 202 3 (Unaudited) and ~~May 1, 2021~~April 30, 202 2 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the ~~Thirteen~~Thirt een Weeks Ended April ~~30, 2022~~ 29, 202 3 (Unaudited) and ~~May 1, 2021~~April 30, 202 2 (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1719

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2729

Item 4.	Controls and Procedures	2729

PART II – Other Information

Item 1.	Legal Proceedings	2830

Item 1A.	Risk Factors	2830



Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2830



Item 6.	Exhibits	2931

Signatures		3032

Table of Contents

PART I – FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS

~~CHICO'S~~CHICO’S FAS, INC. AND SUBSIDIARIES

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

(Unaudited)

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


		Thirteen Weeks Ended								Thirteen Weeks Ended
		April 30, 2022				May 1, 2021					April 29, 2023		April 30, 2022

		Amount		% of Sales		Amount		% of Sales					Amount		% of Sales		Amount		% of Sales
Net Sales	Net Sales	$	540,915	100.0	%	$	387,961	100.0	%			Net Sales	$	534,743	100.0	%	$	540,915	100.0	%
Cost of goods sold	Cost of goods sold	324,350		60.0		261,166		67.3				Cost of goods sold	309,734		57.9		324,350		60.0
Gross Margin	Gross Margin	216,565		40.0		126,795		32.7				Gross Margin	225,009		42.1		216,565		40.0
Selling, general and administrative expenses	Selling, general and administrative expenses	171,158		31.6		134,319		34.6				Selling, general and administrative expenses	171,673		32.1		171,158		31.6

Income (Loss) from Operations		45,407		8.4		(7,524)		(1.9)
Income from Operations												Income from Operations	53,336		10.0		45,407		8.4
Interest expense, net	Interest expense, net	(975)		(0.2)		(1,705)		(0.5)				Interest expense, net	(630)		(0.1)		(975)		(0.2)
Income (Loss) before Income Taxes		44,432		8.2		(9,229)		(2.4)
Income tax provision (benefit)		9,500		1.7		(300)		(0.1)
Net Income (Loss)		$	34,932	6.5	%	$	(8,929)	(2.3)	%
Income before Income Taxes												Income before Income Taxes	52,706		9.9		44,432		8.2
Income tax provision												Income tax provision	12,800		2.4		9,500		1.7
Net Income												Net Income	$	39,906	7.5	%	$	34,932	6.5	%
Per Share Data:	Per Share Data:											Per Share Data:
Net income (loss) per common share - basic		$	0.29			$	(0.08)
Net income (loss) per common and common equivalent share – diluted		$	0.28			$	(0.08)
Net income per common share - basic												Net income per common share - basic	$	0.33			$	0.29
Net income per common and common equivalent share – diluted												Net income per common and common equivalent share – diluted	$	0.32			$	0.28
Weighted average common shares outstanding – basic	Weighted average common shares outstanding – basic	118,993				116,689						Weighted average common shares outstanding – basic	119,702				118,993
Weighted average common and common equivalent shares outstanding – diluted	Weighted average common and common equivalent shares outstanding – diluted	123,311				116,689						Weighted average common and common equivalent shares outstanding – diluted	123,375				123,311

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

Table of Contents

~~CHICO'S~~CHICO’S FAS, INC. AND SUBSIDIARIES

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

(Unaudited)

(Inin thousands)

Thirteen Weeks Ended
April 30, 2022 May 1, 2021
Net income (loss) $ 34,932 $ (8,929)
Other comprehensive income (loss):
Unrealized losses on marketable securities, net of taxes — (34)
Comprehensive income (loss) $ 34,932 $ (8,963)


	Thirteen Weeks Ended
	April 29, 2023		April 30, 2022
Net income	$	39,906	$	34,932
Other comprehensive income:
Unrealized gains on marketable securities, net of taxes	37		—

Comprehensive income	$	39,943	$	34,932

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

Table of Contents

~~CHICO'S~~CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

~~(Unaudited)~~

(Inin thousands, except per share amounts)


		April 30, 2022		January 29, 2022		May 1, 2021			April 29, 2023		January 28, 2023		April 30, 2022
ASSETS	ASSETS							ASSETS	(Unaudited)		(Audited)		(Unaudited)

Current Assets:	Current Assets:							Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	104,131	$	115,105	$	83,874	Cash and cash equivalents	$	107,734	$	153,377	$	104,131
Marketable securities, at fair value	Marketable securities, at fair value	—		—		18,511		Marketable securities, at fair value	23,314		24,677		—
Inventories	Inventories	325,565		323,389		209,668		Inventories	293,776		276,840		325,565
Prepaid expenses and other current assets	Prepaid expenses and other current assets	53,024		41,871		39,701		Prepaid expenses and other current assets	42,766		48,604		53,024
Income tax receivable	Income tax receivable	12,737		13,698		57,513		Income tax receivable	9,202		11,865		12,737

Total Current Assets	Total Current Assets	495,457		494,063		409,267		Total Current Assets	476,792		515,363		495,457
Property and Equipment, net	Property and Equipment, net	184,240		195,332		223,898		Property and Equipment, net	191,153		192,165		184,240
Right of Use Assets	Right of Use Assets	439,896		463,077		554,795		Right of Use Assets	457,695		435,321		439,896
Other Assets:	Other Assets:							Other Assets:
Goodwill	Goodwill	16,360		16,360		16,360		Goodwill	16,360		16,360		16,360
Other intangible assets, net	Other intangible assets, net	5,000		5,000		5,000		Other intangible assets, net	5,000		5,000		5,000
Other assets, net	Other assets, net	19,648		23,005		21,038		Other assets, net	27,078		23,632		19,648
Total Other Assets	Total Other Assets	41,008		44,365		42,398		Total Other Assets	48,438		44,992		41,008
		$	1,160,601	$	1,196,837	$	1,230,358		$	1,174,078	$	1,187,841	$	1,160,601
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY							LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:	Current Liabilities:							Current Liabilities:
Accounts payable	Accounts payable	$	161,058	$	180,828	$	128,230	Accounts payable	$	136,903	$	156,262	$	161,058
Current lease liabilities	Current lease liabilities	150,476		172,506		184,296		Current lease liabilities	156,494		153,202		150,476

Other current and deferred liabilities	Other current and deferred liabilities	139,148		134,051		116,764		Other current and deferred liabilities	135,562		141,698		139,148

Total Current Liabilities	Total Current Liabilities	450,682		487,385		429,290		Total Current Liabilities	428,959		451,162		450,682
Noncurrent Liabilities:	Noncurrent Liabilities:							Noncurrent Liabilities:
Long-term debt	Long-term debt	99,000		99,000		149,000		Long-term debt	24,000		49,000		99,000
Long-term lease liabilities	Long-term lease liabilities	355,851		381,081		480,537		Long-term lease liabilities	365,422		349,409		355,851
Other noncurrent and deferred liabilities	Other noncurrent and deferred liabilities	2,290		7,867		13,249		Other noncurrent and deferred liabilities	2,866		2,637		2,290

Total Noncurrent Liabilities	Total Noncurrent Liabilities	457,141		487,948		642,786		Total Noncurrent Liabilities	392,288		401,046		457,141
Commitments and Contingencies (see Note 10)		0		0		0
Commitments and Contingencies (see Note 11)								Commitments and Contingencies (see Note 11)
Shareholders’ Equity:	Shareholders’ Equity:							Shareholders’ Equity:
Preferred stock, $0.01 par value; 2,500 shares authorized; no shares issued and outstanding	Preferred stock, $0.01 par value; 2,500 shares authorized; no shares issued and outstanding	—		—		—		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; 166,458 and 163,823 and 163,863 shares issued respectively; and 125,161 and 122,526 and 122,566 shares outstanding, respectively		1,251		1,225		1,226
Common stock, $0.01 par value; 400,000 shares authorized; 167,971 and 166,320 and 166,458 shares issued respectively; and 123,424 and 125,023 and 125,161 shares outstanding, respectively								Common stock, $0.01 par value; 400,000 shares authorized; 167,971 and 166,320 and 166,458 shares issued respectively; and 123,424 and 125,023 and 125,161 shares outstanding, respectively	1,234		1,250		1,251
Additional paid-in capital	Additional paid-in capital	504,977		508,654		500,453		Additional paid-in capital	510,958		513,914		504,977
Treasury stock, at cost, 41,297 shares, respectively		(494,395)		(494,395)		(494,395)
Treasury stock, at cost, 44,547 and 41,297 and 41,297 shares, respectively								Treasury stock, at cost, 44,547 and 41,297 and 41,297 shares, respectively	(514,168)		(494,395)		(494,395)
Retained earnings	Retained earnings	240,945		206,020		150,968		Retained earnings	354,928		315,022		240,945
Accumulated other comprehensive gain		—		—		30
Accumulated other comprehensive loss								Accumulated other comprehensive loss	(121)		(158)		—
Total Shareholders’ Equity	Total Shareholders’ Equity	252,778		221,504		158,282		Total Shareholders’ Equity	352,831		335,633		252,778
		$	1,160,601	$	1,196,837	$	1,230,358		$	1,174,078	$	1,187,841	$	1,160,601

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

Table of Contents

~~CHICO'S~~CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~SHAREHOLDERS'~~SHAREHOLDERS’ EQUITY

(Unaudited)

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


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

Net income																						Net income	—		—			—		—	—		39,906			—		39,906
Unrealized gains on marketable securities, net of taxes																						Unrealized gains on marketable securities, net of taxes	—		—			—		—	—		—			37		37

Issuance of common stock																						Issuance of common stock	2,651		27			93		—	—		—			—		120

Repurchase of common stock and tax withholdings related to share-based awards																						Repurchase of common stock and tax withholdings related to share-based awards	(4,250)		(43)			(6,168)		3,250	(19,773)		—			—		(25,984)
Share-based compensation																						Share-based compensation	—		—			3,119		—	—		—			—		3,119
BALANCE, April 29, 2023																						BALANCE, April 29, 2023	123,424		$	1,234		$	510,958	44,547	$	(514,168)	$	354,928		$	(121)	$	352,831
		Shares	Par Value				Additional Paid-in Capital		Shares			Amount			Retained Earnings					Accumulated Other Comprehensive Gain				Total
BALANCE, January 29, 2022	BALANCE, January 29, 2022	122,526	$	1,225				41,297		$	(494,395)						$	221,504				BALANCE, January 29, 2022	122,526		$	1,225		$	508,654	41,297	$	(494,395)	$	206,020		$	—	$	221,504

Net income	Net income	—	—		—			—		—			34,932		—					34,932		Net income	—		—			—		—	—		34,932			—		34,932

Issuance of common stock	Issuance of common stock	4,197	42		101			—		—			—		—					143		Issuance of common stock	4,197		42			101		—	—		—			—		143
Dividends on common stock	Dividends on common stock	—	—		—			—		—			(7)		—					(7)		Dividends on common stock	—		—			—		—	—		(7)			—		(7)
Repurchase of common stock & tax withholdings related to share-based awards		(1,562)	(16)		(7,641)			—		—			—		—					(7,657)
Repurchase of common stock and tax withholdings related to share-based awards																						Repurchase of common stock and tax withholdings related to share-based awards	(1,562)		(16)			(7,641)		—	—		—			—		(7,657)
Share-based compensation	Share-based compensation	—	—		3,863			—		—			—		—					3,863		Share-based compensation	—		—			3,863		—	—		—			—		3,863
BALANCE, April 30, 2022	BALANCE, April 30, 2022	125,161	$	1,251	$	504,977		41,297		$	(494,395)		$	240,945	$	—				$	252,778	BALANCE, April 30, 2022	125,161		$	1,251		$	504,977	41,297	$	(494,395)	$	240,945		$	—	$	252,778

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

Net loss		—	—		—			—		—			(8,929)		—					(8,929)
Unrealized losses on marketable securities, net of taxes		—	—		—			—		—			—		(34)					(34)

Issuance of common stock		3,125	32		(31)			—		—			—		—					1
Dividends on common stock		—	—		—			—		—			132		—					132
Repurchase of common stock & tax withholdings related to share-based awards		(294)	(3)		(819)			—		—			—		—					(822)
Share-based compensation		—	—		2,815			—		—			—		—					2,815
BALANCE, May 1, 2021		122,566	$	1,226	$	500,453		41,297		$	(494,395)		$	150,968	$	30				$	158,282

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

Table of Contents

~~CHICO'S~~CHICO’S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


		Thirteen Weeks Ended					Thirteen Weeks Ended
		April 30, 2022		May 1, 2021			April 29, 2023		April 30, 2022
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income (loss)		$	34,932	$	(8,929)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Net income						Net income	$	39,906	$	34,932
Adjustments to reconcile net income to net cash provided by (used in) operating activities:						Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization	Depreciation and amortization	11,590		13,432		Depreciation and amortization	9,940		11,590
Non-cash lease expense	Non-cash lease expense	44,131		47,737		Non-cash lease expense	46,058		44,131

Loss on disposal and impairment of property and equipment, net	Loss on disposal and impairment of property and equipment, net	1,968		31		Loss on disposal and impairment of property and equipment, net	30		1,968
Deferred tax benefit	Deferred tax benefit	(430)		10		Deferred tax benefit	132		(430)
Share-based compensation expense	Share-based compensation expense	3,863		2,815		Share-based compensation expense	3,119		3,863

Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Inventories	Inventories	(2,176)		(5,685)		Inventories	(16,936)		(2,176)
Prepaid expenses and other assets	Prepaid expenses and other assets	(6,449)		(37)		Prepaid expenses and other assets	2,183		(6,449)
Income tax receivable	Income tax receivable	961		627		Income tax receivable	2,663		961
Accounts payable	Accounts payable	(19,483)		11,900		Accounts payable	(19,359)		(19,483)
Accrued and other liabilities	Accrued and other liabilities	(1,182)		(4,190)		Accrued and other liabilities	(6,865)		(1,182)
Lease liability	Lease liability	(67,908)		(62,111)		Lease liability	(49,230)		(67,908)
Net cash used in operating activities		(183)		(4,400)
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	11,641		(183)
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Purchases of marketable securities	Purchases of marketable securities	—		(139)		Purchases of marketable securities	(271)		—
Proceeds from sale of marketable securities	Proceeds from sale of marketable securities	—		140		Proceeds from sale of marketable securities	1,640		—
Purchases of property and equipment	Purchases of property and equipment	(2,571)		(1,697)		Purchases of property and equipment	(7,789)		(2,571)

Net cash used in investing activities	Net cash used in investing activities	(2,571)		(1,696)		Net cash used in investing activities	(6,420)		(2,571)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:

Payments on borrowings						Payments on borrowings	(25,000)		—
Payments of debt issuance costs	Payments of debt issuance costs	(706)		—		Payments of debt issuance costs	—		(706)
Proceeds from issuance of common stock	Proceeds from issuance of common stock	143		1		Proceeds from issuance of common stock	120		143

Repurchase of treasury stock under repurchase program						Repurchase of treasury stock under repurchase program	(19,805)		—
Payments of tax withholdings related to share-based awards	Payments of tax withholdings related to share-based awards	(7,657)		(822)		Payments of tax withholdings related to share-based awards	(6,179)		(7,657)
Net cash used in financing activities	Net cash used in financing activities	(8,220)		(821)		Net cash used in financing activities	(50,864)		(8,220)

Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents	(10,974)		(6,917)		Net decrease in cash and cash equivalents	(45,643)		(10,974)
Cash and Cash Equivalents, Beginning of period	Cash and Cash Equivalents, Beginning of period	115,105		90,791		Cash and Cash Equivalents, Beginning of period	153,377		115,105
Cash and Cash Equivalents, End of period	Cash and Cash Equivalents, End of period	$	104,131	$	83,874	Cash and Cash Equivalents, End of period	$	107,734	$	104,131

Supplemental Disclosures of Cash Flow Information:	Supplemental Disclosures of Cash Flow Information:					Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	Cash paid for interest	$	1,480	$	1,529	Cash paid for interest	$	1,042	$	1,480
Cash received for income taxes, net		$	(6)	$	(873)
Cash (paid) received for income taxes, net						Cash (paid) received for income taxes, net	$	(92)	$	6

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

Table of Contents

~~CHICO'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~~Chico’s FAS, Inc., a Florida corporation, and its ~~wholly-owned~~wholly owned subsidiaries (the ~~"Company"~~“Company”) have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by accounting principles generally accepted in the U.S. 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 ~~29, 2022~~28, 2023 balance sheet data was derived from audited consolidated financial statements. For further information, refer to the consolidated financial statements and notes thereto for the fiscal year ended January ~~29, 2022,~~28, 2023, included in the ~~Company's~~Company’s Annual Report on Form 10-K for the fiscal year ended January ~~29, 2022~~28, 2023 filed with the Securities and Exchange Commission ~~("SEC"~~(“SEC”) on March ~~15,~~ 14, 2023 (“2022 ~~("2021~~ Annual Report on Form ~~10-K"~~10-K”).

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

Our fiscal years end on the Saturday closest to January 31 and are designated by the calendar year in which the fiscal year commences. Operating results for the thirteen weeks ended April ~~30, 2022~~29, 2023 are not necessarily indicative of the results that may be expected for the entire year.

~~COVID-19 Pandemic Update~~

The novel strain of coronavirus (‘‘COVID-19’’) pandemic (the ‘‘COVID-19 pandemic’’ or the ‘‘pandemic’’) resulted in significant challenges across our business since March 2020 and is expected to continue to disrupt our business operations for fiscal 2022 to varying degrees. In response to the pandemic, many of our 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 primarily open, 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 and cause disruptions to the supply chain and increase our raw materials and freight costs. Due to the uncertainty over the duration and severity of the economic and operational impacts of the pandemic, the material adverse impact of the pandemic may continue throughout our fiscal year 2022.

~~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 to conform to the current period's presentation.

Adoption of New Accounting Pronouncements

Disclosure of Supplier Finance Program Obligations

In September 2022, the FASB issued ASU 2022-04, “Supplier Finance Programs: Disclosure of Supplier Finance Program Obligations,” to improve the disclosures of supplier finance programs. Specifically, the ASU requires disclosure of key terms of the supplier finance programs and a roll-forward of the related obligations. The amendments in this ASU do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs. The ASU is effective for the fiscal years, and the interim periods within those years, beginning after December 15, 2022, except for the amendment on roll-forward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company did not engage in supplier finance programs during the first quarter of fiscal 2023 and, therefore, we have no incremental disclosures as required by ASU 2022-04.

There were no new accounting pronouncements adopted by the Company during the thirteen weeks ended April ~~30, 2022.~~29, 2023.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

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3. REVENUE RECOGNITION

Disaggregated Revenue

The ~~following~~ table below 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.~~brands.

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Thirteen Weeks Ended
April 30, 2022 May 1, 2021
Chico's $ 264,466 48.9 % $ 177,021 45.6 %
WHBM 169,029 31.2 104,047 26.8
Soma 107,420 19.9 106,893 27.6
Total Net Sales $ 540,915 100.0 % $ 387,961 100.0 %


	Thirteen Weeks Ended
	April 29, 2023				April 30, 2022
Chico’s	$	273,650	51.2	%	$	264,466	48.9	%
WHBM	153,470		28.7		169,029		31.2
Soma	107,623		20.1		107,420		19.9

Total Net Sales	$	534,743	100.0	%	$	540,915	100.0	%

Contract Liability

Contract liabilities in the unaudited condensed consolidated balance sheets are comprised of obligations associated with our gift card and customer ~~loyalty~~rewards programs. As of April 29, 2023, January 28, 2023, and April 30, 2022, ~~January 29, 2022 and May 1, 2021,~~ contract liabilities primarily consisted of gift cards of $35.3 million, $42.6 millionand $36.7 million, ~~$43.5~~respectively.

For the thirteen weeks ended April 29, 2023, the Company recognized $11.2 million ~~and $35.3 million, respectively.~~

of revenue that was previously included in the gift card contract liability as of January 28, 2023. For the thirteen weeks ended April 30, 2022, the Company recognized $11.5 million of revenue that was previously included in the gift card contract liability as of January 29, 2022. ~~For~~


	Thirteen Weeks Ended
	April 29, 2023		April 30, 2022


Beginning gift card liability	$	42,649	$	43,536
Issuances	8,224		9,060
Redemptions	(14,171)		(14,584)
Gift card breakage	(1,411)		(1,282)
Ending gift card liability	$	35,291	$	36,730

The Company maintains customer rewards programs in which customers earn points toward rewards for qualifying purchases and other marketing activities. Upon reaching specified point values, customers are issued a reward, which they may redeem on merchandise purchases at the ~~thirteen weeks ended May 1, 2021,~~Company’s stores or on its website. Generally, rewards earned must be redeemed within 60 days from the date of issuance. The Company defers a portion of the merchandise sales based on the estimated standalone selling price of the points earned. This deferred revenue is recognized ~~$10.0 million of revenue that was previously included in~~as the ~~gift card contract liability as of January 30, 2021. The contract liability for our loyalty~~rewards are redeemed or expire. While historically this point based program was ~~not material as~~specific to Soma, during the second quarter of fiscal year 2022, Chico’s FAS extended its point based rewards program to Chico’s and WHBM. As of April 29, 2023, January 28, 2023, and April 30, 2022, ~~January 29, 2022 or May 1, 2021.~~the rewards deferred revenue balance was $8.5 million, $7.4 million and $0.8 million, respectively.


	Thirteen Weeks Ended
	April 29, 2023		April 30, 2022


Beginning balance rewards deferred revenue	$	7,441	$	626
Reduction in revenue, net	1,068		131
Ending balance rewards deferred revenue	$	8,509	$	757

Performance Obligation

For the thirteen weeks ended April 29, 2023, and April 30, 2022, ~~and May 1, 2021,~~ revenue recognized from performance obligations related to prior periods were not material. Revenue to be recognized in future periods related to performance obligations is not expected to be material.

4. LEASES

~~We lease~~The Company leases retail stores, a limited amount of office space and certain equipment under operating leases expiring in various years through the fiscal year ending ~~2032.~~2033. All of our leases have been classified as operating leases and are recognized and measured as such.

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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.

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. During the thirteen weeks ended May 1, 2021, we received concessions from certain landlords in the form of rent deferrals, rent abatements and other lease or rent modifications as a result of the ongoing impact of the pandemic. In accordance with the practical expedient allowed by the FASB, the Company elected to treat all pandemic-related rent concessions and related amendments, including pandemic-related lease amendments that extended the lease term, 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.

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Operating lease expense was as follows:

Thirteen Weeks Ended
April 30, 2022 May 1, 2021
Operating lease cost (1)
$ 53,415 $ 55,406


	Thirteen Weeks Ended
	April 29, 2023		April 30, 2022
Operating lease cost (1)	$	56,489	$	53,415

(1) Includes approximately ~~$9.5~~$13.3 million and ~~$9.8~~$9.5 million in variable lease costs for the thirteen weeks ended April 29, 2023, and April 30, 2022, ~~and May 1, 2021,~~ respectively.

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


		April 30, 2022			January 29, 2022			May 1, 2021				April 29, 2023			January 28, 2023			April 30, 2022
Right of use assets	Right of use assets	$	439,896		$	463,077		$	554,795		Right of use assets	$	457,695		$	435,321		$	439,896

Current lease liabilities	Current lease liabilities	$	150,476		$	172,506		$	184,296		Current lease liabilities	$	156,494		$	153,202		$	150,476
Long-term lease liabilities	Long-term lease liabilities	355,851			381,081			480,537			Long-term lease liabilities	365,422			349,409			355,851
Total operating lease liabilities	Total operating lease liabilities	$	506,327		$	553,587		$	664,833		Total operating lease liabilities	$	521,916		$	502,611		$	506,327

Weighted Average Remaining Lease Term (years)	Weighted Average Remaining Lease Term (years)	3.9			4.0			4.3			Weighted Average Remaining Lease Term (years)	4.2			4.2			3.9

Weighted Average Discount Rate (1)	Weighted Average Discount Rate (1)	4.4		%	4.5		%	4.8		%	Weighted Average Discount Rate (1)	5.6		%	5.3		%	4.4		%

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


		Thirteen Weeks Ended					Thirteen Weeks Ended
		April 30, 2022		May 1, 2021			April 29, 2023		April 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows	Operating cash outflows	$	67,908	$	62,111	Operating cash outflows	$	49,230	$	67,908
Right of use assets obtained in exchange for lease obligations, non-cash	Right of use assets obtained in exchange for lease obligations, non-cash	14,786		8,522		Right of use assets obtained in exchange for lease obligations, non-cash	61,640		14,786

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Maturities of operating lease liabilities as of April ~~30, 2022~~29, 2023 were as follows:


Fiscal Year Ending:
~~January 28, 2023~~February 3, 2024	$	~~128,276~~
~~February 4, 2024~~	~~156,454~~143,347
February 1, 2025	~~112,490~~155,425
January 31, 2026	~~72,465~~111,378
January 30, 2027	~~45,256~~76,659
January 29, 2028	48,643
Thereafter	~~43,071~~59,334
Total future minimum lease payments	$	~~558,012~~594,786
Less imputed interest	~~(51,685)~~(72,870)
Total	$	~~506,327~~521,916

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5. SHARE-BASED COMPENSATION

For the thirteen weeks ended April 29, 2023, and April 30, 2022, ~~and May 1, 2021,~~ share-based compensation expense was ~~$3.9~~$3.1 million and ~~$2.8~~$3.9 million, respectively. As of April ~~30, 2022,~~29, 2023, approximately ~~6.6~~4.4 million shares remain available for future grants of equity awards under our 2020 Omnibus Stock and Incentive 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 in fiscal 2019, which vests over a four-year period from the date of grant, and restricted stock awards granted in March 2021, which vest 50% one year from the date of grant, 30% two years from the date of grant and 20% three years from the date of grant.

Restricted stock award activity for the thirteen weeks ended April ~~30, 2022~~29, 2023 was as follows:


		Number of Shares	Weighted Average Grant Date Fair Value			Number of Shares	Weighted Average Grant Date Fair Value
Unvested, beginning of period	Unvested, beginning of period	5,140,240	$	3.18	Unvested, beginning of period	4,611,801	$	4.02
Granted	Granted	2,344,218	4.74		Granted	1,814,065	5.96
Vested	Vested	(2,078,875)	3.04		Vested	(1,833,378)	3.64
Forfeited	Forfeited	(133,428)	3.47		Forfeited	(108,549)	4.51
Unvested, end of period	Unvested, end of period	5,272,155	3.92		Unvested, end of period	4,483,939	4.94

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, 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, and restricted stock units granted in March 2022, which vest in equal annual installments over a three-year period from the date of grant.

Restricted stock unit activity for the thirteen weeks ended April ~~30, 2022~~29, 2023 was as follows:


		Number of Shares	Weighted Average Grant Date Fair Value			Number of Shares	Weighted Average Grant Date Fair Value
Unvested, beginning of period	Unvested, beginning of period	647,350	$	2.38	Unvested, beginning of period	406,218	$	2.46
Granted	Granted	47,468	4.74		Granted	—	—
Vested	Vested	(250,000)	2.56		Vested	(165,823)	2.77

Unvested, end of period	Unvested, end of period	444,818	2.54		Unvested, end of period	240,395	2.25

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Performance-based Restricted Stock Units

During the thirteen weeks ended April ~~30, 2022,~~29, 2023, we granted performance-based restricted stock units ~~("PSUs"~~(“PSUs”), contingent upon the achievement of Company-specific performance goals during the three fiscal years ~~2022~~2023 through ~~2024.~~2025. Any units earned as a result of the achievement of the performance goals of the PSUs will vest three years from the date of grant and will be settled in shares of our common stock.

PSU activity for the thirteen weeks ended April ~~30, 2022~~29, 2023 was as follows:


		Number of Units/ Shares	Weighted Average Grant Date Fair Value			Number of Units/ Shares	Weighted Average Grant Date Fair Value
Unvested, beginning of period	Unvested, beginning of period	3,734,207	$	2.24	Unvested, beginning of period	2,696,449	$	3.48
Granted	Granted	1,082,050	3.85		Granted	1,086,413	5.96
Vested	Vested	(1,697,130)	1.16		Vested	(645,312)	3.17
Forfeited	Forfeited	(389,687)	2.83		Forfeited	(30,743)	5.49
Unvested, end of period	Unvested, end of period	2,729,440	3.46		Unvested, end of period	3,106,807	4.39

6. INCOME TAXES

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

For the ~~thirteen weeks ended April 30, 2022 and May 1, 2021,~~first quarter of fiscal year 2023 (the “first quarter”), the ~~Company's~~ effective tax rate was 24.3% compared to 21.4% ~~and 3.3%, respectively.~~for the first quarter of fiscal year 2022 (“last year’s first quarter”). The first quarter effective tax rate of 24.3% primarily reflects favorable share-based compensation benefit. Last year’s first quarter effective tax rate of 21.4% ~~for the thirteen weeks ended April 30, 2022~~ primarily reflects a favorable share-based compensation benefit and the reduction in the liability for future reversing deferred tax liabilities. The 3.3% effective tax rate for the thirteen weeks ended May 1, 2021 primarily reflects a change in the valuation allowance and favorable state audit settlements, offset by share-based compensation expense and a provision for state income and foreign withholding taxes.

As of April ~~30, 2022,~~29, 2023, our unaudited condensed consolidated balance sheet reflected ~~an $11.4~~a $7.9 million income tax receivable related to the recovery of ~~Federal~~federal income taxes paid in prior years and other tax law changes as a result of the Coronavirus Aid, Relief, and Economic Security ~~Act.~~Act (“CARES Act”).

7. 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 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.

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

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

Thirteen Weeks Ended
April 30, 2022 May 1, 2021
Numerator
Net income (loss) $ 34,932 $ (8,929)
Net income and dividends declared allocated to participating securities (178) —
Net income (loss) available to common shareholders $ 34,754 $ (8,929)
Denominator
Weighted average common shares outstanding – basic 118,993,187 116,689,409
Dilutive effect of non-participating securities 4,318,246 —
Weighted average common and common equivalent shares outstanding – diluted 123,311,433 116,689,409
Net income (loss) per common share:
Basic $ 0.29 $ (0.08)
Diluted $ 0.28 $ (0.08)


	Thirteen Weeks Ended
	April 29, 2023		April 30, 2022

Numerator:
Net income	$	39,906	$	34,932
Net income allocated to participating securities	(58)		(178)
Net income available to common shareholders	$	39,848	$	34,754
Denominator:
Weighted average common shares outstanding – basic	119,702		118,993
Dilutive effect of non-participating securities	3,673		4,318
Weighted average common and common equivalent shares outstanding – diluted	123,375		123,311
Net income per common share:
Basic	$	0.33	$	0.29
Diluted	$	0.32	$	0.28

For the thirteen weeks ended April 29, 2023 and April 30, 2022, ~~and May 1, 2021, 0.1~~1.6 million and ~~1.2~~0.1 million potential shares of common stock, respectively, were excluded from the diluted income ~~(loss)~~ per common share calculation relating to non-participating securities, ~~because~~due to the antidilutive effect of including these ~~potential shares was antidilutive.~~shares.

8. FAIR VALUE MEASUREMENTS

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

Marketable securities are classified as available-for-sale and ~~has historically~~as of April 29, 2023, consisted of ~~corporate bonds, commercial paper,~~ U.S. government agencies, corporate bonds and ~~municipal securities. We did not have marketable~~commercial paper, with $39.0 million of securities ~~as of April 30, 2022.~~with maturity dates within one year or less and $3.0 million with maturity dates over one year.

We consider all marketable securities available-for-sale, including those with maturity dates beyond 12 months, and therefore classify these securities within current assets on the unaudited condensed consolidated balance sheets, as applicable, as they were available to support current operational liquidity needs. Marketable securities are carried at fair value, with the unrealized holding gains and losses, net of income taxes, reflected in accumulated other comprehensive gain (loss) until realized, and any credit ~~risk related~~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 ~~a set~~asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Entities are required to use a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

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


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

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Assets Measured on a Recurring Basis

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

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.

As of April 29, 2023, January 28, 2023, and April 30, 2022, ~~January 29, 2022 and May 1, 2021,~~ our revolving loan and letter of credit facility approximates fair value, as this instrument has a variable interest rate ~~which~~that 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.

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:

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Fair Value Measurements at the End of the Reporting Date Using
Balance as of April 30, 2022 Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3)
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts $ 25,403 $ 25,403 $ — $ —
Total recurring fair value measurements $ 25,403 $ 25,403 $ — $ —
Fair Value Measurements at the End of the Reporting Date Using
Balance as of January 29, 2022 Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3)
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts $ 25,396 $ 25,396 $ — $ —
Noncurrent Assets
Deferred compensation plan 6,233 6,233 — —
Total recurring fair value measurements $ 31,629 $ 31,629 $ — $ —
Fair Value Measurements at the End of the Reporting Date Using
Balance as of May 1, 2021 Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3)
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts $ 6,864 $ 6,864 $ — $ —
Marketable securities:
Corporate bonds 18,511 — 18,511 —
Noncurrent Assets
Deferred compensation plan 6,023 6,023 — —
Total recurring fair value measurements $ 31,398 $ 12,887 $ 18,511 $ —

Impairment charges for assets evaluated for impairment on a nonrecurring basis were not material during the thirteen weeks ended April 30, 2022 and May 1, 2021 and for the fifty-two weeks ended January 29, 2022.


			Fair Value Measurements at the End of the Reporting Date Using
	Balance as of April 29, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts	$	18,630	$	18,630	$	—	$	—
Marketable securities:
U.S. government agencies	5,524		—		5,524		—
Corporate bonds	12,849		—		12,849		—
Commercial paper	4,941		—		4,941		—


Deferred compensation plan	210		210		—		—
Total recurring fair value measurements	$	42,154	$	18,840	$	23,314	$	—









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


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


Deferred compensation plan	209		209		—		—
Total recurring fair value measurements	$	66,528	$	41,851	$	24,677	$	—








			Fair Value Measurements at the End of the Reporting Date Using
	Balance as of April 30, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts	$	25,403	$	25,403	$	—	$	—
Marketable securities:



Corporate bonds	—		—		—		—



Deferred compensation plan	5,728		5,728		—		—
Total recurring fair value measurements	$	31,131	$	31,131	$	—	$	—

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9. DEBT

On February 2, 2022, the Company and certain material domestic subsidiaries entered into Amendment No. 2 (the ~~"Amendment"~~“Amendment”) to its credit agreement (as amended, the ~~"Credit Agreement"~~“Credit Agreement”) originally entered into on August 2, 2018 and amended October 30, 2020, by and among the Company, certain material domestic subsidiaries as co-borrowers and guarantors, Wells Fargo Bank, National Association ("(“Wells Fargo ~~Bank"~~Bank”), as Agent, letter of credit issuer and swing line lender, and certain lenders party thereto. Our obligations under the Credit Agreement are guaranteed by the guarantors and are secured by a first priority lien on certain assets of the Company and certain material domestic subsidiaries, including inventory, accounts receivable, cash deposits, certain insurance proceeds, real estate, fixtures and certain intellectual property. The Credit Agreement provides for a five-year asset-based senior secured revolving loan ~~("ABL"~~(“ABL”) and letter of credit facility of up to $285.0 million, maturing February 2, 2027. The interest rate applicable to Term Secured Overnight Financing Rate ~~("SOFR"~~(“SOFR”) Loans drawn under the ABL is equal to Term SOFR plus 1.60% (subject to a further decrease to Term SOFR plus 1.35% or an increase to Term SOFR plus 1.85% based upon average quarterly excess availability under the ABL). The Credit Agreement also provides for a $15.0 million first-in last-out ~~("FILO"~~(“FILO”) loan. The interest rate applicable to the FILO is equal to Term SOFR plus 3.60% (subject to a further decrease to Term SOFR plus 3.35% or an increase to Term SOFR plus 3.85% based on average

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quarterly excess availability under the FILO). However, for any ABL or FILO with a SOFR interest rate period of six months, the interest rate applicable to the ABL and FILO is increased by 30 basis points.

The Credit Agreement contains customary representations, warranties, and affirmative covenants, as well as customary negative covenants, that, among other things restrict, subject to certain exceptions, the ability of the Company and certain of its domestic subsidiaries ~~to:~~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 Credit Agreement and the borrowing base, determined after giving effect to any such transaction or payment, on a pro forma basis. In addition, the Company must pay a commitment fee per annum on the unused portion of the commitments under the Credit Agreement.

As of April ~~30, 2022, $99.0~~29, 2023, $24.0 million in net borrowings were outstanding under the Credit Agreement. Availability under the Credit Agreement is determined based upon a monthly borrowing base calculation, which includes eligible credit card receivables, real estate and inventory, less outstanding borrowings, letters of credit and certain designated reserves. As of April ~~30, 2022,~~29, 2023, the available additional borrowing capacity under the Credit Agreement was approximately ~~$187.0~~$263.0 million, inclusive of the current loan cap of $30.0 million.

As of April ~~30, 2022,~~29, 2023, deferred financing costs of ~~$4.0~~$3.1 million ~~was~~were outstanding related to the Credit Agreement and isare presented in other current assets in the accompanying unaudited condensed consolidated balance sheet.

10. SHARE REPURCHASES

During the thirteen weeks ended April 29, 2023, under our $300.0 million share repurchase program announced in November 2015, we repurchased 3.25 million shares at a total cost of approximately $19.8 million, at an average price of $6.09 per share. As of April 29, 2023, the Company had $35.4 million remaining for future repurchases under the program. However, we have no continuing obligation to repurchase shares under this authorization, and the timing, actual number and value of any additional shares to be purchased will depend on the performance of our stock price, market conditions and other considerations.

11. COMMITMENTS AND CONTINGENCIES

In February 2021, the Company was named as a defendant in 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, Central District of California (‘‘Haldy’’). The Haldy complaint alleges 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 California.

In August 2021, the 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 class of current and former nonexempt employees of Chico’s, WHBM and Soma stores in California (‘‘Hernandez’’). The Hernandez complaint alleges many of the same wage and labor violations as the Haldy complaint and seeks the same relief.

During a mediation in September 2021, the Company reached an agreement in principle to settle the above cases. A Memorandum of Understanding was entered into by all parties as of October 18, 2021 and a full settlement agreement was executed by all parties as of January 10, 2022. On May 19, 2022, the Superior Court of California entered an Order granting the parties' unopposed motion for preliminary approval of the class settlement, and set October 14, 2022 as the hearing date for final approval of the settlement.Based on the foregoing, the Company does not expect that the resolution of these cases will have a material adverse effect on its business, results of operations or consolidated financial statements, but if the settlement agreement is not approved by the respective courts, the ultimate resolution of these cases could have a material adverse effect on the Company’s results of operations or consolidated financial statements.

~~Other than as noted above, we~~We are not currently a party to any material legal proceedings other than claims and lawsuits arising in the normal course of our business. All such matters are subject to uncertainties, and outcomes may not be predictable. Consequently, as of April 29, 2023, the ultimate aggregate amounts of monetary liability or financial impact with respect to ~~other~~such matters ~~as of April 30, 2022~~ 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.

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

~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations ("(“MD~~&A"~~&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"~~10-Q”) and in our Annual Report on Form 10-K for the fiscal year ended January ~~29, 2022,~~28, 2023, filed with the Securities and Exchange Commission ~~("SEC"~~(“SEC”) on March ~~15,~~ 14, 2023 (“2022 ~~("2021~~ Annual Report on Form ~~10-K"~~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® ~~("WHBM"~~(“WHBM”) 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. We sometimes refer to our Chico’s and WHBM brands collectively as our ~~"Apparel~~“Apparel Group."” Our distinct lifestyle brands serve the needs of fashion-savvy women with household incomes in the ~~moderate to high~~moderate-to-high income level. We earn revenue and generate cash through the sale of merchandise in our domestic retail stores, our various Company-operated e-commerce websites, social commerce, our call center (which takes orders for all of our brands), and through unaffiliated franchise ~~partners and through third-party channels.~~partners.

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

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

Business Highlights

The ~~Company's~~Company’s first quarter highlights ~~for the thirteen weeks ended April 30, 2022 (the "first quarter")~~ include:

•Strong first quarter results: ~~Chico's FAS~~The Company posted ~~$0.28~~$0.32 net income per diluted share for the first quarter, an improvement of 14.3% compared to the first quarter of last year, primarily driven by ~~comparable sales growth of 40.6%, meaningful~~ gross margin expansion ~~and diligent expense control.~~of 210 basis points.

•~~Continued improving~~Compelling two-year stacked comparable sales ~~performance at Chico's~~: The positive sales trajectory continued at Chico's, evidenced by the strong 52% first quarter increase in comparable sales versus the thirteen weeks ended May 1, 2021 (“last year’s first quarter”). Customers responded enthusiastically to product innovation and solutions offering fit, comfort and wearability, including products like denim, the No IronTM ~~shirt franchise, So Slimming~~® ~~bottoms and the Travelers~~TM collection. Compared to the thirteen weeks ended May 4, 2019 (the “first quarter of fiscal 2019”), Chico’s delivered sales gains on leaner inventory, achieved higher sell-through rates on regular price and drove increased average unit retail.

•~~Continued improving sales performance at WHBM: WHBM continued to deliver exceptional sales gains, posting a 65% comparable sales increase in~~For the first quarter, total Chico’s FAS comparable sales decreased 0.6% versus last year’s first quarter. Customers responded to versatile dressing in seasonless fabrics, including timeless tailoring, premium denim and inspiring dresses. WHBM continued its diligent inventory discipline with on-hand inventory levels below pre-pandemic levels, driving higher productivity, elevated full-priceOn a two-year stacked basis, comparable sales ~~and positive~~increased 40.0%, notably exceeding our strategic plan. Chico’s comparable sales grew 4.9%, versus the first quarter last year. On a sequential basis, Soma’s® comparable sales improved 250 basis points and were down 2.5% versus last year’s first quarter. White House Black Market® (“WHBM”) comparable sales decreased 8.0% versus last year’s strong first quarter increase of ~~fiscal 2019.~~64.8%. All three brands reported higher average unit retail driven by full-price selling.

•~~Continued market share gains at Soma~~Robust operating income growth: ~~Soma posted a first~~First quarter income from operations was $53.3 million, or 10.0% of net sales, ~~increase~~compared to $45.4 million, or 8.4% of ~~0.5%, driven largely by the foundations business and partially offset by the slowdown~~net sales, in ~~lounge and cozy categories. The strong foundations business was fueled by the launch of Bodify~~TM~~, a Smart Bra~~TM ~~utilizing first-to-market technology. Data from market research firm NPD Group Inc. shows that Soma's growth continues to outpace the market in non-sport bras and panties for the first quarter.~~

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•~~Enhanced marketing continued to drive traffic and bring new customers to all three brands~~: Chico's FAS continued to elevate its marketing, focusing resources on digital storytelling and influencers. Strategic marketing is driving more customers to the Company’s brands, with total customer count up nearly 15% over last year’s first quarter, ~~and the average age of new customers continuing to trend younger.~~driven primarily by gross margin expansion.

•~~Improved gross margin~~Strong balance sheet: The Company ended the first quarter ~~gross margin rate rose to 40.0%, exceeding first~~with $131.0 million in cash and marketable securities, after repaying $25.0 million of long-term debt and repurchasing 3.25 million shares during the quarter outlook by 230 basis points and outperforming last year’s first quarter by 730 basis points. Higher average unit retail and full-price sales combined with occupancy leverage offset elevated raw material and freight costs.

•~~Ongoing cost discipline~~: Selling, general and administrative expenses ("SG&A") declined to 31.6% of net sales, an improvement of 300 basis points over last year’s first quarter, reflecting the impact of sales leverage and the ongoing benefit of cost savings initiatives implemented in prior years.for $19.8 million.

Financial Results

Income per diluted share for the ~~first quarter~~thirteen weeks ended April 29, 2023 was ~~$0.28~~$0.32 compared to ~~loss~~income per diluted share of ~~$0.08~~$0.28 for ~~last year's first quarter.~~thirteen weeks ended April 30, 2022.

Select Financial Results

The following table depicts select financial results for the thirteen weeks ended April 29, 2023 and April 30, ~~2022 and May 1, 2021:~~2022:

Thirteen Weeks Ended
April 30, 2022 May 1, 2021
(in millions, except per share amounts)
Net sales $ 541 $ 388
Income (loss) from operations 45 (8)
Net income (loss) 35 (9)
Net income (loss) per common and common equivalent share - diluted 0.28 (0.08)

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	Thirteen Weeks Ended
	April 29, 2023		April 30, 2022
	(in millions, except per share amounts)
Net sales	$	535	$	541

Income from operations	53		45
Net income	40		35
Net income per common and common equivalent share - diluted	0.32		0.28

Current Trends

~~The ongoing pandemic has resulted in significant challenges across~~Our financial results, we believe, demonstrate that we are successfully executing on our ~~business starting in March 2020~~strategic pillars of customer led, product obsessed, digital first and ~~is expected~~operationally excellent.

We offer our customers the ability to ~~continue~~shop through three powerful platforms – digital, stores and our social stylists. Our customers have proven to ~~disrupt~~be resilient, and our ~~business operations in fiscal 2022~~multi-channel customers are especially valuable to ~~varying degrees. In response~~us, spending three times more than single-channel customers. We continually work to assure we are meeting our customers’ demands with the ~~pandemic, many~~right balance and styles of inventory and accommodating their evolving shopping preferences. We are constantly innovating and introducing new fashion, trends and fabrications to our ~~markets imposed limitations, varying by market and in frequency, on~~assortments. Over the ~~access~~last several years, we have made meaningful investments 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 acceleratedtransform our ~~transformation to~~Company into a digital-first ~~company,~~enterprise, fast-tracking numerous innovation and technology investments across all three ofbrands to improve service, engagement and decision making. And, we are disciplined in the way we manage our ~~brands. Even as governmental restrictions become relaxed~~inventories, costs, real estate and ~~markets are primarily open, we expect continued uncertainty and volatility on our business operations, operating results~~cash.

Our cash position, total liquidity and operating cash ~~flows~~flow remain strong, providing us with flexibility to manage the business, make investments to further propel our growth and return excess cash to shareholders, as ~~the ongoing economic impacts and health concerns associated with the pandemic continue~~deemed appropriate. We expect our financial position to ~~affect consumer behavior, spending levels and shopping preferences.~~

The Company remains confident that it currently has sufficient liquidity to repay its obligations as they become due for the foreseeable future as the Company continues to drive operational efficiency and effectiveness, including executing on its cost saving initiatives announcedfurther strengthen in fiscal ~~2020~~2023. In addition to ~~mitigate~~funding strategic investments, we believe our cash flow will allow us to navigate any economic developments that may arise over the ~~macro challenges of the pandemic. However, the extent~~coming quarters.

Looking ahead, we remain cautiously optimistic on customer demand and our ability to ~~which the pandemic impacts~~react in this dynamic environment, further supported by a strong balance sheet. We are managing lean inventories; making prudent investments in digital, technology and stores; and progressing on our ~~business operations, financial results, and liquidity will depend on numerous evolving factors~~key strategic initiatives that we ~~may not be able to accurately predict or assess, including~~expect will deliver both top- and bottom-line growth over 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; supply chain disruptions; actions governments, businesses and individuals take in response to the pandemic; and how quickly economies recover after the pandemic subsides.long term.

Fiscal ~~2022~~2023 Second Quarter and ~~Updated Full Year~~Full-Year Outlook

For ~~the~~ fiscal ~~2022~~2023 second quarter, the Company currently expects:

•Consolidated net sales of ~~$535~~$545 million to ~~$550~~$565 million;

•Gross margin rate as a percent of net sales of ~~38.7%~~39.0% to ~~39.4%~~39.5%;

•SG&A ~~expenses~~ as a percent of net sales of ~~31.2%~~30.5% to ~~31.6%~~31.0%;

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•Effective income tax rate of ~~26.0%~~28.0% to 29.0%; and

•Earnings per diluted share of ~~$0.21~~$0.25 to ~~$0.26.~~$0.30.

For ~~the~~ fiscal ~~2022 full~~2023, a 53-week year, the Company currently expects:

•Consolidated net sales of ~~$2,130~~$2,175 million to ~~$2,160~~$2,205 million;

•Gross margin rate as a percent of net sales of ~~38.3%~~38.4% to ~~38.6%~~38.8%;

•SG&A ~~expenses~~ as a percent of net sales of 32.6% to ~~32.9%~~33.0%;

•Effective income tax rate of 26.0%;

•Earnings per diluted share of ~~$0.64~~$0.70 to ~~$0.74;~~$0.82; and

•Capital and cloud-based expenditures of ~~approximately $65~~$80 million to ~~$70~~$90 million.

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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 liquidity, comparable sales, gross margin as a percent of sales, diluted income ~~(loss)~~ per share and return on net assets ~~("RONA"~~(“RONA”). ~~In light of the pandemic, we have shifted our~~Our focus remains 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 following describes these measures.~~which are described below.

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~~are 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 also 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 for four or more days. The Company views comparable sales as a key performance indicator to measure the performance of our business, however, we are not providing comparable sales figures for last year's first quarter compared to the thirteen weeks ended May 2, 2020 (the "first quarter of fiscal 2020") as we do not believe it is a meaningful measure due to the varying degrees of business disruptions and periods of store closures and/or stores operating at reduced hours as a result of the pandemic during fiscal 2020.

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 itgross margin is used to determine the value of incremental sales, and to guide pricing and promotion decisions.

Diluted Income ~~(Loss)~~ per Share

Income ~~(loss)~~ per share is determined using the two-class method when it is more dilutive than the treasury stock method. Basic income ~~(loss)~~ 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 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~~While basic income ~~(loss)~~ per share serves as an indicator of the ~~Company's~~Company’s profitability, we believe diluted income ~~(loss)~~ per share is a key performance measure because it gauges the ~~Company's~~Company’s quality of income ~~(loss)~~ per share, assuming all potential common shares from non-participating securities are exercised.

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Return on Net Assets (“RONA”)

RONA is defined as (a) net income ~~(loss)~~ 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.

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 with ~~moderate to high~~moderate-to-high household income levels.

In fiscal 2020, the Company took actions to rapidly transform into a digital-first company, fast-tracking numerous innovation and digital technology investments, and we continued those investments during fiscal 2021. We have 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 the pre-pandemic year of 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 that resonates with customers. To that end, we ~~continue to strengthen~~are continually strengthening our merchandise and design capabilities, and ~~enhance~~enhancing our sourcing and supply chain to deliver product in a timely manner to our customers, while also ~~concentrating~~focusing on ~~improvements to~~improving the quality and aesthetic of our merchandise. Over the long term, we may build our brand portfolio by organic development or acquisition of other specialty retail concepts if research indicates that the opportunity complements our current brands and is appropriate and in the best interest of our shareholders.

We pursue improving the performance of our brands by building our omnichannel capabilities, growing our online presence, managing our store base, executing marketing plans, ~~effectively~~ leveraging expenses effectively, 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"~~(“DC”) in Winder, Georgia. Our domestic customers can return merchandise to a store or to our DC, regardless of the original purchase location. Using our enhanced ~~“Locate”~~

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“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 that ship either from DC or store. Our mobile apps launched in 2022, following our previously introduced customized, branded digital styling software tools, StyleConnect® and ~~ship from store. In fiscal 2019, we completed the implementation of our~~MY CLOSET,SM and Buy On-Line, Pick-up In-Store, ~~(BOPIS) capability across~~ all ~~our brands, further enhancing our omnichannel capabilities,~~of which we believe are driving customer engagement, loyalty and ~~in fiscal 2020, we completed the implementation of StyleConnect~~TM ~~and MY CLOSET~~TM~~, our proprietary digital styling software tools that enable us to communicate directly with the majority of our customers, to drive the frontline business to digital fulfillment.~~cross-channel shopping.

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 innovative 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, or multi-channel, customers, as the average omnichannel customer spends more than three times the average single-channel customer.

~~We have~~are focused on driving profitable growth through four ~~clearly defined~~ strategic ~~pillars that have guided our turnaround strategy since 2019 and will continue to guide us in the future.~~

1.pillars: ~~Customer led;~~customer led, product obsessed, digital first, and operationally excellent.

2.•~~Product obsessed;~~By being customer-led, we are focused on building community engagement, creating exceptional customer experiences and increasing customer lifetime value.

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

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

•To be operationally excellent, we are continually focusing on diligently managing our inventory, cost of sales, supply chain, expenses, and real estate, while generating healthy cash flow and delivering a strong bottom line.

2022

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Results of Operations

Thirteen Weeks Ended April ~~30, 2022~~29, 2023 Compared to the Thirteen Weeks Ended ~~May 1, 2021~~April 30, 2022

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

For the first quarter, the Company reported net income of $40 million, or $0.32 per diluted share, compared to net income of $35 million, or $0.28 per diluted share, ~~compared to a net loss of $9 million, or $0.08 loss per diluted share,~~ in last ~~year's~~year’s first quarter.

Net Sales

The following table depicts net sales by ~~Chico's,~~Chico’s, WHBM and Soma in dollars and as a percentage of total net sales for the thirteen weeks ended April 29, 2023 and April 30, ~~2022 and May 1, 2021:~~2022:

Thirteen Weeks Ended
April 30, 2022 May 1, 2021

(dollars in millions) (1)
Chico's $ 264 48.9 % $ 177 45.6 %
WHBM 169 31.2 104 26.8
Soma 107 19.9 107 27.6
Total Net Sales $ 541 100.0 % $ 388 100.0 %

~~(1)~~ ~~May not foot due to rounding.~~


	Thirteen Weeks Ended
	April 29, 2023				April 30, 2022

	(dollars in millions)

Chico’s	$	274	51.2	%	$	264	48.9	%
WHBM	153		28.7		169		31.2
Soma	108		20.1		107		19.9

Total Net Sales	$	535	100.0	%	$	541	100.0	%

For the first quarter, net sales were ~~$541~~$534.7 million compared to ~~$388~~$540.9 million in last ~~year's~~year’s first quarter. This ~~39.4% improvement~~decrease of 1.1% primarily reflects a comparable sales ~~increase~~decrease of ~~40.6%~~0.6%, ~~partially offset by 29 permanent~~as well as the impact of net store closures since last year’s first quarter. The ~~40.6%~~0.6% comparable sales ~~improvement~~decline was driven by a decrease in transaction count, mostly offset by an increase in ~~transaction count and higher~~ average dollar sale.

The following table depicts comparable sales percentages by ~~Chico's,~~Chico’s, WHBM and Soma for the ~~first quarter:~~thirteen weeks ended April 29, 2023 and April 30, 2022:


	Thirteen Weeks Ended
	April 29, 2023		April 30, 2022
	Compared to Fiscal 2022		Compared to Fiscal 2021
Chico’s	4.9	%	52.0	%
WHBM	(8.0)		64.8
Soma	(2.5)		(1.4)
Total Company	(0.6)		40.6

~~Thirteen Weeks Ended~~ ~~(1)~~

~~April 30, 2022~~

~~Chico's~~

~~52.0~~

~~WHBM~~

~~64.8~~

~~Soma~~

~~(1.4)~~

~~Total Company~~

~~40.6~~

~~(1)~~ The Company is not providing comparable sales figures for last year’s first quarter compared to the first quarter of fiscal 2020 as we do not believe it is a meaningful measure due to the significant impacts of the pandemic during fiscal 2020.

Cost of Goods Sold/Gross Margin

The following table depicts cost of goods sold and gross margin in dollars and gross margin as a percentage of total net sales for the thirteen weeks ended April 29, 2023 and April 30, ~~2022 and May 1, 2021:~~2022:


		Thirteen Weeks Ended							Thirteen Weeks Ended
		April 30, 2022			May 1, 2021				April 29, 2023			April 30, 2022

		(dollars in millions)							(dollars in millions)
Cost of goods sold	Cost of goods sold	$	324		$	261		Cost of goods sold	$	310		$	324
Gross margin	Gross margin	217			127			Gross margin	225			217
Gross margin percentage	Gross margin percentage	40.0		%	32.7		%	Gross margin percentage	42.1		%	40.0		%

For the first quarter, gross margin was ~~$217~~$225.0 million, or 42.1% of net sales, compared to $216.6 million, or 40.0% of net sales, ~~compared to $127 million, or 32.7% of net sales,~~ in last ~~year's~~year’s first quarter. The ~~730 basis point improvement~~210-basis-point increase in gross margin ~~rate~~ primarily reflects higher average unit retail, lower inbound freight cost, and ~~full price sales combined with occupancy leverage that~~corporate expense savings, partially offset ~~elevated~~by higher raw material and ~~freight~~occupancy costs.

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Selling, General and Administrative Expenses

The following table depicts SG&A, which includes store and direct operating expenses, marketing expenses and National Store Support Center ~~("NSSC")~~ expenses, in dollars and as a percentage of total net sales for the thirteen weeks ended April 29, 2023 and April 30, ~~2022 and May 1, 2021:~~2022:


		Thirteen Weeks Ended							Thirteen Weeks Ended
		April 30, 2022			May 1, 2021				April 29, 2023			April 30, 2022

		(dollars in millions)							(dollars in millions)
Selling, general and administrative expenses	Selling, general and administrative expenses	$	171		$	134		Selling, general and administrative expenses	$	172		$	171
Percentage of total net sales	Percentage of total net sales	31.6		%	34.6		%	Percentage of total net sales	32.1		%	31.6		%

For the first quarter, SG&A was ~~$171~~$171.7 million, or 32.1% of net sales, compared to $171.2 million, or 31.6% of net sales, ~~compared to $134 million, or 34.6% of net sales, for last year's first quarter, primarily reflecting sales leverage and the ongoing benefit of cost savings initiatives.~~

~~Income Taxes~~

~~For the first quarter, the $9.5 million income tax provision resulted in an effective tax rate of 21.4% compared to a $0.3 million income tax benefit, or effective tax rate of 3.3%,~~ for last year’s first quarter. The ~~21.4%~~50-basis-points deleverage primarily reflects increased marketing and store operating expenses to support our long-term growth strategies, partially offset by disciplined expense management.

Income Taxes

For the first quarter, the effective tax rate was 24.3% compared to 21.4% for ~~the~~last year’s first quarter. The first quarter effective tax rate of 24.3% primarily reflects afavorable share-based compensation benefit. Last year’s first quarter effective tax rate of 21.4% primarily reflects favorable share-based compensation benefit and the reduction in the liability for future reversing deferred tax liabilities. The 3.3% effective tax rate for last year's first quarter primarily reflects a change in the valuation allowance and favorable state audit settlements, offset by share-based compensation expense and a provision for state income and foreign withholding taxes.

Cash, Marketable Securities and ~~Debt~~Capital Allocation

At the end of the first quarter, cash and marketable securities totaled ~~$104~~$131.0 million compared to ~~$102 million at the end of last year’s first quarter. Debt at the end of the first quarter totaled $99 million compared to $149~~$104.1 million at the end of last year’s first quarter.

Long-term debt at the end of the first quarter totaled $24.0 million compared to $99.0 million at the end of last year’s first quarter, reflecting a principal payment of $25.0 million in the first quarter of fiscal year 2023, in addition to the $50.0 million paid in fiscal year 2022.

During the first quarter of fiscal 2023, under its $300.0 million share repurchase program announced in November 2015, the Company repurchased 3.25 million shares for $19.8 million, at an average price of $6.09 per share. As of April 29, 2023, the Company had $35.4 million remaining for future repurchases under the program.

Inventories

At the end of the first quarter, inventories totaled ~~$326~~$293.8 million compared to ~~$210~~$325.6 million at the end of last ~~year's~~year’s first quarter. The ~~$116~~decrease of $31.8 million, or ~~55.3%~~9.8%, ~~increase from last year’s first quarter~~was primarily ~~reflects elevated on-hand inventories to align with higher consumer demand, an increase in in-transit inventories~~ due to ~~extended in-transit times in the global~~normalized supply chain ~~strategic investments~~conditions that resulted in ~~basics and replenishment inventories, and higher average unit costs.~~significantly lower in-transit inventories.

Income Tax Receivable

At the end of the first quarter, our unaudited condensed consolidated balance sheet reflected ~~an $11~~a $7.9 million income tax receivable related to the recovery of ~~Federal~~federal income taxes paid in prior years and other tax law changes as a result of the ~~Coronavirus Aid, Relief, and Economic Security~~CARES Act.

Liquidity and Capital Resources

The Company’s material cash requirements include amounts outstanding under operating ~~leases;~~leases, open purchase orders for inventory and other operating expenses in the normal course of ~~business;~~business, contractual commitments for future capital ~~expenditures;~~expenditures, long-term debt ~~obligations;~~obligations and interest payments on long-term debt. Our ongoing capital requirements will continue to be primarily for enhancing and expanding our omnichannel capabilities, including investments in our ~~stores;~~stores, information ~~technology;~~technology and supply chain.

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 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. In October 2020 and February 2022, the Company amended and extended its credit facility to strengthen its liquidity and enhance its financial stability.

The Company anticipates satisfying its material cash requirements from its cash flows from operating activities, our cash on hand, capacity within our credit facility and other liquidity options.

The following table summarizes cash flows for the year-to-date period April 29, 2023 compared to last year’s year-to-date period April 30, 2022:

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~~The following table summarizes cash flows for the year-to-date period April 30, 2022 compared to last year's year-to-date period May 1, 2021:~~


		Thirteen Weeks Ended					Thirteen Weeks Ended
		April 30, 2022		May 1, 2021			April 29, 2023		April 30, 2022
		(dollars in millions) (1)					(dollars in millions) (1)
Net cash used in operating activities		$	(0.2)	$	(4)
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	$	12	$	(0.2)
Net cash used in investing activities	Net cash used in investing activities	(3)		(2)		Net cash used in investing activities	(6)		(3)
Net cash used in financing activities	Net cash used in financing activities	(8)		(1)		Net cash used in financing activities	(51)		(8)

Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents	$	(11)	$	(7)	Net decrease in cash and cash equivalents	$	(46)	$	(11)

(1) May not foot due to rounding.

Operating Activities

Net cash provided by operating activities during the first quarter of fiscal 2023 was $12 million compared to $0.2 million net cash used in ~~operating activities for the year-to-date period of fiscal 2022 was $0.2 million compared to $4 million in~~ last ~~year's year-to-date period.~~year’s first quarter. The change in net cash ~~used in~~provided by operating activities primarily reflects ~~higher net income, partially offset by elevated inventories~~the timing of lease payments and ~~payment of the Company's fiscal 2021 incentive compensation plan.~~changes in inventory.

Investing Activities

Net cash used in investing activities ~~for~~during the ~~year-to-date period~~first quarter of fiscal ~~2022~~2023 was $3$6 million compared to $2$3 million in last ~~year's year-to-date period,~~year’s first quarter, reflecting a net $1 million decrease in marketable securities and a $5 million increase in capital spend.

Financing Activities

Net cash used in financing activities ~~for~~during the ~~year-to-date period~~first quarter of fiscal ~~2022~~2023 was $8$51 million compared to $8 million used in last year’s first quarter. The change in net cash used in financing activities primarily reflects a $25 million increase in payment on borrowings and approximately $20 million in share repurchases, partially offset by $1 million ~~in last year's year-to-date period, primarily reflecting $7 million~~less in payments of tax withholding related to the vesting of share-based awards.

Credit Facility

On February 2, 2022, the Company and certain material domestic subsidiaries entered into Amendment No. 2 (the ~~"Amendment"~~“Amendment”) to its credit agreement (as amended, the ~~"Credit Agreement"~~“Credit Agreement”) originally entered into on August 2, 2018 and amended October 30, 2020, by and among the Company, certain material domestic subsidiaries as co-borrowers and guarantors, Wells Fargo Bank, National Association ("(”Wells Fargo ~~Bank"~~Bank”), as Agent, letter of credit issuer and swing line lender, and certain lenders party thereto. Our obligations under the Credit Agreement are guaranteed by the guarantors and are secured by a ~~first priority~~first-priority lien on certain assets of the Company and certain material domestic subsidiaries, including inventory, accounts receivable, cash deposits, certain insurance proceeds, real estate, fixtures and certain intellectual property. The Credit Agreement provides for a five-year asset-based senior secured revolving loan ~~("ABL"~~(“ABL”) and letter of credit facility of up to $285.0 million, maturing February 2, 2027. The interest rate applicable to Term Secured Overnight Financing Rate ~~("SOFR"~~(“SOFR”) Loans drawn under the ABL is equal to Term SOFR plus 1.60% (subject to a further decrease to Term SOFR plus 1.35% or an increase to Term SOFR plus 1.85% based upon average quarterly excess availability under the ABL). The Credit Agreement also provides for a $15.0 million first-in last-out ~~("FILO"~~(“FILO”) loan. The interest rate applicable to the FILO is equal to Term SOFR plus 3.60% (subject to a further decrease to Term SOFR plus 3.35% or an increase to Term SOFR plus 3.85% based on average quarterly excess availability under the FILO). However, for any ABL or FILO with a SOFR interest rate period of six months, the interest rate applicable to the ABL and FILO is increased by 30 basis points.

The Credit Agreement contains customary representations, warranties and affirmative covenants, as well as customary negative covenants, that, among other things, restrict, subject to certain exceptions, the ability of the Company and certain of its domestic subsidiaries to: (i) incur liens, (ii) make investments, (iii) issue or incur additional indebtedness, (iv) undergo significant corporate changes, including 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 (i) the aggregate amount of commitments under the Credit Agreement and (ii) the borrowing base, determined after giving effect to any such transaction or payment, on a pro forma basis. In addition, the Company must pay a commitment fee per annum on the unused portion of the commitments under the Credit Agreement.

As of April ~~30, 2022, $99.0~~29, 2023, $24 million in net borrowings were outstanding under the Credit Agreement. Availability under the Credit Agreement is determined based upon a monthly borrowing base calculation, which includes eligible credit card receivables, real estate and inventory, less outstanding borrowings, letters of credit and certain designated reserves. As of April 29, 2023, the available additional borrowing capacity under the Credit Agreement was approximately $263 million, inclusive of the current loan cap of $30 million.

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~~April 30, 2022, the available additional borrowing capacity under the Credit Agreement was approximately $187.0 million, inclusive of the current loan cap of $30.0 million.~~

Store and Franchise Activity

During the thirteen weeks ended April 30, 2022, we had 2 permanent store closures, consisting of 1 Chico's store and 1 WHBM store. As of April 30, 2022, the Company's franchise operations consisted of 59 international retail locations in Mexico and 2 domestic airport locations.

Stores continue to be an important part of our omnichannel strategy, and digital sales are typically higher in markets where we have a retail ~~presence, but we intend~~presence. We will continue to ~~optimize~~actively manage our real estate portfolio, reflecting our ~~emphasis on digital~~digital-first strategy and ~~our priority for~~ higher overall store and Company profitability standards. We will continue to adjust our store base as appropriate to align with these standards, primarily as leases come due, lease kickouts are available, or buyouts make economic sense.

We closed 2net seven underperforming locations during the thirteen weeks ended April ~~30, 2022 and ended~~29, 2023 ending the first quarter with ~~1,264~~1,262 boutiques. The Company anticipates closing ~~a total of approximately 40~~an additional 20 stores in fiscal ~~2022,~~2023, which primarily includes underperforming, mall-based ~~Chico's~~Chico’s and WHBM boutiques. ~~We also plan~~Closing locations has been highly accretive to ~~invest~~our profitability, and due to our strengthened financial position, we have been able to negotiate longer-term new and renewed leases with more favorable terms in ~~opening~~more desirable locations.

This year, the Company expects to upgrade approximately 60 Chico’s boutiques and may open up to 3015 Soma boutiques if the right high-return opportunities develop. The Company has identified three stores so far and is actively looking for additional locations.

As of April 29, 2023, the Company’s franchise operations consisted of 58 international retail locations in ~~fiscal 2022. We will continue to evaluate our store base in light of economic conditions~~Mexico and ~~our business strategy and may adjust the openings and closures as conditions require or as opportunities arise.~~two domestic airport locations.

Critical Accounting 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 estimates with the Audit Committee of our Board of Directors and believes the assumptions and estimates, as set forth in our ~~2021~~2022 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 estimates as disclosed in our ~~2021~~2022 Annual Report on Form 10-K.

Forward-Looking Statements

This Form 10-Q may contain statements concerning our current expectations, assumptions, plans, estimates, judgments, and projections about our business and our industry, and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, words or phrases such as “aim,” “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “target,” “may,” “will,” “plans,” ~~"path,"~~“path,” “outlook,” “project,” “should,” ~~“assumptions,~~“strategy,” ~~“outlook”~~“potential,” “confident,” “assumptions” and similar expressions identify forward-looking statements. These forward-looking statements are based largely on information currently available to our management 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. There is no assurance that our expectations will 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~~actual results to ~~such differences~~differ include, but are not limited to, those factors described in Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K and, from time to time, in Item 1A, “Risk Factors” ofin our Quarterly Reports on Form 10-Q and the following:

•the effects of the pandemic, including uncertainties about its depth and duration, new variants of COVID-19 that have emerged, the speed, efficacy and availability of vaccines and treatments, its impact on general economic conditions, human capital management, consumer behavior and discretionary spending, the effectiveness of any actions taken in response to the pandemic, and the impact of the pandemic on our manufacturing operations and shipping costs and timelines;

•the ability of our suppliers, logistics providers, vendors, and landlords to meet their obligations to us in light of financial stress, labor shortages, liquidity challenges, bankruptcy filings by other industry participants and supply chain and other disruptions;

•~~increases in unemployment rates;~~

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•~~increases in labor shortages and~~ our ability to sufficiently staff our retail stores;

•changes in general economic conditions, including, but not limited to, consumer confidence and ~~consumer~~ spending patterns;

•the ~~impact~~impacts of rising inflation, gasoline prices and interest rates on consumer spending;

•the availability of, and interest rates on, consumer credit;

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•the impact of consumer debt levels and consumers’ ability to meet credit obligations;

•market disruptions, including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, adverse developments affecting the financial services industry, political and social crises, war and other military conflicts ~~(including~~(such as the ~~ongoing military conflict between Russia and~~war in Ukraine) or other major events, or the prospect of these events ~~including~~(including their impact on consumer ~~spending;~~spending, inflation and the global supply chain);

•shifts in consumer behavior, and our ability to adapt, identify, and respond to new and changing fashion trends and customer preferences, and to coordinate product development with buying and planning;

•changes in the general or specialty retail or apparel industries, including significant decreases in market demand and the overall level of spending for women’s private branded clothing and related accessories;

•our ability to secure and maintain customer acceptance of in-store and online concepts and styles;

•our ability to maintain strong relationships with our vendors, manufacturers, licensors and retail customers;

•increased competition in the markets in which we operate, including for, among other things, premium mall space;

•our ability to remain competitive with customer shipping terms and costs;

•decreases in customer traffic at malls, shopping centers and our stores;

•fluctuations in foreign currency exchange rates and commodity prices;

•significant increases in the costs of manufacturing, raw materials, transportation, importing, distribution, labor and advertising;

•decreases in the quality of merchandise received from suppliers and increases in delivery times for receiving such merchandise;

•our ability to appropriately manage our store fleet ~~including the closing of underperforming stores and opening of new stores,~~ and our ability to achieve the expected results of any ~~such~~ store openings or store closings;

•our ability to appropriately manage inventory and allocation processes and leverage targeted promotions;

•our ability to maintain ~~cost saving~~cost-saving discipline;

•our ability to generate sufficient cash flow;

•our ability to operate our retail websites in a profitable manner;

•our ability to successfully identify and implement additional sales and distribution channels;

•our ability to successfully execute and achieve the expected results of our business, brand strategies, brand awareness programs and merchandising and marketing programs including, but not limited to, the Company’s ~~turnaround strategy, retail fleet optimization~~three-year strategic growth plan, sales initiatives, multi-channel strategies and ~~five operating priorities~~four strategic pillars, which ~~are: 1) continuing our ongoing~~are (1) customer led, (2) product obsessed, (3) digital ~~transformation; 2) further refining product through fit, quality, fabric~~first and innovation in each of our brands; 3) driving increased customer engagement through marketing; 4) maintaining our operating and cost discipline; and 5) further enhancing the productivity of our real estate portfolio;(4) operationally excellent;

•our ability to utilize our ~~NSSC, DC~~Fort Myers campus, distribution center and other support facilities in an efficient and effective manner;

•our reliance on sourcing from foreign ~~suppliers and~~ suppliers;

•significant adverse economic, labor, political, or other shifts (including adverse changes in tariffs, taxes or other import regulations, particularly with respect to China or Vietnam, or legislation prohibiting certain imports from ~~China)~~China or Vietnam);

•U.S. and foreign governmental actions and policies, and changes thereto;

•the continuing performance, implementation, and integration of our management information systems;

•our ability to successfully update and maintain our information systems;

•the impact of any system failure, ~~cyber security~~cybersecurity or other data security breaches, including any security breaches resulting in the theft, transfer, or unauthorized disclosure of customer, employee or company ~~information;~~information that we or our third-party vendors may experience;

•the risks that our share repurchase program may not successfully enhance shareholder value, or that share repurchases could be negatively perceived by investors;

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•our ability to comply with applicable domestic and foreign information security and privacy laws, regulations and technology platform rules or other obligations related to data privacy and security;

•our ability to attract, hire, train, motivate and retain qualified employees in an inclusive environment;

•our ability to successfully recruit leadership or transition members of our senior management team;

•increased public focus and opinion on environmental, social and governance (“ESG”) initiatives and our ability to meet any announced ESG goals and initiatives;

•future unsolicited offers to buy the Company and actions of activist shareholders and others and our ability to respond effectively;

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•our ability to secure and protect our trademark and other intellectual property ~~rights and~~rights;

•our ability to protect our reputation and our brand images;

•unanticipated obligations or changes in estimates arising from new or existing litigation, ~~(including settlements thereto),~~ income taxes and other regulatory proceedings;

•unanticipated adverse changes in legal, regulatory or tax laws; and

•our ability to comply with the terms of our ~~Credit Agreement,~~credit agreement, including the restrictive provisions limiting our flexibility in operating our business and obtaining additional credit on commercially reasonable terms.

These factors should be considered in evaluating forward-looking statements contained herein. All forward-looking statements that are made, or are 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 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 April ~~30, 2022~~29, 2023 has not materially changed since January ~~29, 2022.~~28, 2023. 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 Credit Agreement with Wells Fargo Bank, which is further discussed in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Item 1, Note 9 to the accompanying unaudited condensed consolidated financial statements included in this Form 10-Q. The interest rate applicable to Term SOFR Loans drawn under the ABL is equal to Term SOFR plus 1.60% (subject to a further decrease to Term SOFR plus 1.35% or an increase to Term SOFR plus 1.85% based upon average quarterly excess availability under the ABL). The Credit Agreement also provides for a $15.0 million FILO loan. The interest rate applicable to the FILO is equal to Term SOFR plus 3.60% (subject to a further decrease to Term SOFR plus 3.35% or an increase to Term SOFR plus 3.85% based on average quarterly excess availability under the FILO). However, for any ABL or FILO with a SOFR interest rate period of six months, the interest rate applicable to the ABL and FILO is increased by 30 basis points. As of April ~~30, 2022, $99~~29, 2023, $24 million in borrowings ~~were~~was outstanding under the Credit Agreement and is reflected as long-term debt in the accompanying unaudited condensed consolidated balance sheet. An increase in market interest rates of 100 basis points would increase interest expense in the amount of approximately ~~$4.8~~$1.0 million over the remaining term of the loan.

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 ~~has historically consisted~~consists of cash equivalents and marketable securities which ~~primarily included~~includes U.S. government agencies, corporate ~~bonds. We did not have~~bonds and commercial paper. The marketable securities portfolio as of April ~~30, 2022.~~29, 2023 consisted of $39.0 million of securities with maturity dates within one year or less and $3.0 million with maturity dates over one year. We consider all securities available-for-sale including those with maturity dates beyond 12 months, and therefore classified these securities, as applicable, as short-term investments within current assets on the consolidated balance sheets, as they are available to support current operational liquidity needs.


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 (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the ~~SEC's~~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 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)~~Act). Based upon that evaluation, the Chief Executive Officer and 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 each of 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 was no change in our internal controls 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 1011 to our unaudited condensed consolidated financial statements included in this Form 10-Q under the heading ~~"Commitments~~“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 ~~2021~~2022 Annual Report on Form 10-K should be considered as they could materially affect our business, financial condition or future results. There have been no material changes with respect to the risks described in our ~~2021~~2022 Annual Report on Form 10-K, except for those risks updated in our quarterly report on Form 10-Q for the quarter ended April 29, 2023, 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.


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
January 30, 2022- February 26, 2022 — $ — — $ 55,192
February 27, 2022 - April 2, 2022 1,525,827 4.90 — 55,192
April 3, 2022 - April 30, 2022 35,909 5.15 — 55,192
Total 1,561,736 4.90 —


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
January 29, 2023 - February 25, 2023	—	$	—	—	$	55,192
February 26, 2023 - April 1, 2023	4,250,308		6.10	3,250,000		35,386
April 2, 2023 - April 29, 2023	—		—	—		35,386
Total	4,250,308		6.10	3,250,000

(a) Total number of shares purchased ~~consists~~includes of ~~1,561,736~~1,000,308 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~~$35.4 million remaining under the program as of the end of the first quarter. The repurchase program has no specific termination date and will expire when we have repurchased all securities authorized for repurchase thereunder, unless terminated earlier by our Board of Directors. The Company has no continuing obligation to repurchase shares under this authorization, and the timing, actual number and value of any additional shares to be purchased will depend on the performance of our stock price, market conditions and other considerations.

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ITEM 6.			EXHIBITS

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


			Exhibit 10.1						Amendment No. 2 to Credit Agreement, dated as of February 2, 2022, by and among Chico’s FAS, Inc., certain of its subsidiaries and Wells Fargo Bank, National Association and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K, as filed with the Commission on February 4, 2022)

			~~Exhibit 10.2~~						~~Indemnification Agreement with Eli Kumekpor, dated as of March 23, 2022~~

			~~Exhibit 10.3~~						Form of 2020 Omnibus Stock and Incentive Plan Restricted Stock Agreement for Employees (for awards on or after March 1, ~~2022)~~202 3 ) (incorporated by reference to Exhibit 10.54 to the Company’s Form 10-K, as filed with the SEC on March 14, 2023)

			Exhibit ~~10.4~~						~~Form of 2020 Omnibus Stock and Incentive Plan Restricted Stock Unit Agreement for Executive Chair (for awards on or after March 1, 2022)~~

			~~Exhibit 10.5~~10.2						Form of 2020 Omnibus Stock and Incentive Plan Performance Award Agreement for Performance Share Units for Employees (for awards on or after March 1, ~~2022)~~202 3 ) (incorporated by reference to Exhibit 10.55 to the Company’s Form 10-K, as filed with the SEC on March 14, 2023)

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

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

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

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

			Exhibit 101						The following financial statements from the Company’s Quarterly Report on Form 10-Q for the ~~quarter ended~~Quarter Ended April ~~30, 2022,~~29, 2023, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Income, ~~(Loss),~~ (ii) Condensed Consolidated Statements of Comprehensive 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~~Quarter Ended April ~~30, 2022,~~29, 2023, formatted in Inline XBRL (included within Exhibit 101).

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~~Table of Contents~~

SIGNATURES

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

CHICO'S FAS, INC.

Date:

June ~~8, 2022~~7, 2023

By:

/s/ Molly Langenstein

Molly Langenstein

Chief Executive Officer, President and Director

Date:

June ~~8, 2022~~7, 2023

By:

/s/ Patrick J. Guido

Patrick J. Guido

Executive Vice President - Chief Financial Officer

Date:

June ~~8, 2022~~7, 2023

By:

/s/ David M. Oliver

David M. Oliver

Senior Vice President - Finance, Controller and Chief Accounting Officer

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