(Logo: http://www.newscom.com/cgi-bin/prnh/20080211/CHICOSLOGO )    2009 Second Quarter and Six Months Financial Results   

For the second quarter ended August 1, 2009, the Company had net income of $14.9 million or $0.08 per diluted share, compared to net income of $6.7 million, or $0.04 per diluted share for the second quarter ended August 2, 2008.

The second quarter 2009 results include non-cash impairment charges totaling approximately $3.1 million, net of tax, or nearly $0.02 per diluted share. These charges consist of $2.4 million, net of tax, related to the impaired portion of a note receivable and $0.7 million, net of tax, related to underperforming stores. Excluding these charges, the Company's second quarter net income approximated $18.0 million, or $0.10 per diluted share compared to net income of $6.7 million, or $0.04 per diluted share for the like period last year.

For the six months ended August 1, 2009, the Company had net income of $29.4 million or $0.17 per diluted share, compared to net income of $19.4 million, or $0.11 per diluted share in the first six months of the prior year. Excluding all impairment charges recorded in the first half of 2009, the Company had net income of $37.6 million, or $0.21 per diluted share, compared to net income of $19.4 million, or $0.11 per diluted share for the first six months of 2008.

Sales

Net sales for the thirteen-week period ended August 1, 2009 increased from $405.2 million to $419.9 million. Consolidated comparable store sales increased 1.3% for the thirteen-week period ended August 1, 2009 compared to the 15.9% decrease for the like period last year ended August 2, 2008. The Chico's/Soma brand's same store sales increased approximately 0.4% and the White House | Black Market (WH|BM) brand's same store sales increased approximately 3.7%. Direct-to-consumer sales, not included in comparable store sales, increased 46% over second quarter 2008.

Gross Margin

Gross margin for the second quarter of 2009 increased from $213.4 million to $231.0 million and increased 230 basis points, expressed as a percentage of net sales, to 55.0% from 52.7% in the prior year's second quarter. The increase in gross margin was primarily due to lower markdowns in the Chico's brand and to a lesser extent, higher initial markups for the WH|BM brand. However, the improvements in merchandise margins was partially offset by the continued investment in merchandise payroll including the support for planning and allocation initiatives.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") for the second quarter of 2009 increased from $205.5 million in the prior period to $207.0 million in the current period. However, expressed as a percentage of net sales, SG&A in the current quarter decreased by approximately 140 basis points compared to the prior period primarily as the result of ongoing cost reduction strategies. The dollar savings from these implemented strategies were offset by the recognition of pre-tax impairment charges totaling $5.0 million. Excluding these charges, total SG&A expense would have decreased by $3.4 million, or 260 basis points, compared to the like period last year. The Company's expense reduction strategies were further offset in part by an increase in performance-based compensation accruals resulting from the Company's improved year-to-date results.

Store operating expenses for the second quarter of 2009 decreased by $2.8 million, or 210 basis points, primarily as a result of on-going store level cost reduction strategies including payroll, supplies and shipping costs.

Marketing expense for the second quarter 2009 decreased by $0.6 million due to reduced direct mail advertising in the current quarter versus the second quarter of 2008.

Shared services costs, including headquarters and other non-brand specific expenses, for the second quarter of 2009 were flat compared to the prior year's second quarter and includes the impact of the aforementioned performance-based compensation accruals.

Inventories

Consolidated inventory per selling square foot at the end of the second quarter was $50, reflecting a decrease of approximately 10% compared to $56 at the end of the prior year's second quarter. Quarter-ended inventory decreased $12.6 million or approximately 9% from the prior year's second quarter, while including approximately $5.4 million of incremental inventory in-transit over the prior period. Quarter-ended inventory for the WH|BM brand decreased approximately 18% per selling square foot over the prior year's second quarter while Chico's brand inventory was down 5% and includes the impact of $5.0 million of incremental in-transit inventory.

Cash and Marketable Securities

Cash and marketable securities at the end of the second quarter totaled $377.5 million, approximately $100 million higher than the prior year's second quarter end. Net cash provided from operating activities for the six months ended August 1, 2009 increased by $71.6 million compared to the prior year as a result of an increase in accounts payables and accrued expenses, lower inventory levels and higher cash flow from operations. Additionally, the Company expended $36.2 million in capital expenditures for the first six months in fiscal 2009 versus $69.5 million for the same period last year.

Note Receivable

During the second quarter of 2009, the Company determined that a note receivable which originated from a transaction in 2007 to sell a parcel of land was impaired. Accordingly, the Company recorded a non-cash, pre-tax impairment charge of approximately $3.8 million. As of August 1, 2009, the note has been classified with a balance of approximately $22.0 million, within other assets on the Company's consolidated balance sheets. The Company expects to reclaim ownership of the land during the third quarter of 2009.

ABOUT CHICO'S FAS, INC.

The Company is a women's specialty retailer of private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing gift items. The Company operates 1,068 specialty stores, including stores in 48 states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico.

The Chico's brand currently operates 611 boutique and 40 outlet stores, publishes a catalog during key shopping periods throughout the year, and conducts e-commerce at http://www.chicos.com/.

White House | Black Market currently operates 328 boutique and 16 outlet stores, publishes a catalog highlighting its latest fashions and conducts e-commerce at http://www.whitehouseblackmarket.com/.

Soma Intimates is the Company's developing concept with 72 boutique stores and 1 outlet store today. Soma Intimates also publishes a catalog for its customers and conducts e-commerce at http://www.soma.com/.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements contained herein, including without limitation, statements addressing the beliefs, plans, objectives, estimates or expectations of the Company or future results or events constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements involve known or unknown risks, including, but not limited to, general economic and business conditions, and conditions in the specialty retail industry. There can be no assurance that the actual future results, performance, or achievements expressed or implied by such forward-looking statements will occur.