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Chico's FAS Inc CHS
Q1 2013 Earnings Call Transcript

Transcript Call Date 05/29/2013

Operator: Good morning and welcome to the Chico's FAS Inc. First Quarter 2013 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation there will be an opportunity to ask questions.

I would now like to turn the conference over to Mr. Todd Vogensen, Vice President of Investor Relations. Please go ahead, Sir.

Todd Vogensen - VP, IR: Thanks, Denis, and good morning, everyone. Welcome to the Chico's FAS first quarter earnings conference call and webcast. Joining me today at our National Store Support Center in Fort Myers are Dave Dyer, CEO; and Pam Knous, CFO.

Before Dave begins his executive overview, we would like to remind you that our discussions this morning include forward-looking statements and quarter-to-date data points, which are subject to and protected by the Safe Harbor statement found in our SEC filings and in today's earnings release. These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ materially. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that projected results expressed or implied by such statements, will not be realized. Also, the results discussed on this call do exclude non-recurring acquisition and integration costs for Boston Proper.

A reconciliation to GAAP results is included in today's press release for your reference and with that I'll turn it over to Dave.

David F. Dyer - President and CEO: Thank you Todd and good morning everyone. I was told by a boss early in my career that if he wanted a weather report he would hire a weather man. So I have always been reluctant to talk about the effects of weather on business. However this past quarter I should have hired a weather man.

The unseasonably cool spring and highly promotional environment resulted in weaker than anticipated performance for Chico's FAS. For us this was particularly the case in the Chico's brand, which as we've discussed with you one year ago excels in warmer weather and was cycling the successful launch of So Slimming jeans. White House/Black Market and Soma successfully navigated through the weather and promotional environment, both delivering positive single-digit comps on top of double-digit comps in 2012, whereas Boston Proper sales were impacted by both the weather and systems conversions that we did early in the quarter.

As our past performance would support, we once again responded quickly to the sales softness to manage expenses and to end the quarter with clean inventories. I want to commend all of our teams for managing so well through this quarter. Therefore our key financial metrics were; record sales, plus 3.1%; earnings per share, flat to last year's record of $0.32; comparable sales, flat to last year which was – last year was up 9.6%; gross margin – record gross margin dollars yet down 50 basis points reflecting the promotional environment and SG&A, a deleverage of 70 points reflecting our strategic investments in marketing and occupancy expenses with the new stores.

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