By  on March 3, 2006

NEW YORK — Chico's FAS Inc. reported an uncharacteristic quarterly financial performance Wednesday after the close of the stock market, saying earnings per share missed analysts' estimates.

The company attributed the miss partly to costs pertaining to its strategic growth initiatives, which include building out its newer brands, Soma, White House|Black Market and the recently acquired Fitigues.

"We will never force short-term earnings at the expense of longer-term strategic positions and performance to meet analyst expectations," Scott Edmonds, president and chief executive officer of Chico's, said on a conference call. "On the contrary, we adhere to an emphasis on long-term value."

Shares of Chico's fell 13.4 percent on Thurs­day to $41.35, the worst close since early Novem­ber. At least two stock downgrades from Wall Street also hurt the stock's performance.

In the three months ended Jan. 28, the company earned $44.5 million, or 24 cents a diluted share, up from $33 million, or 18 cents, a year ago. Results in the latest quarter missed analysts' estimates by a penny; the company missed profit expectations in the fourth quarter of 2005 by 2 cents.

Net sales in the quarter were $375.7 million, up 31.6 percent, while same-store sales rose 14.6 percent. By division, sales at Chico's and Soma stores combined rose 23.2 percent to $1.1 billion, while sales at White House|Black Market totaled $261.6 million, up 84.1 percent. Catalogue and Internet sales totaled $36.2 million, up 34.7 percent, and sales to franchisees increased 27.6 percent, to $10.69 million.

"During the fourth quarter, Chico's, White House|Black Market and Soma all achieved their highest fourth-quarter, front-line merchandise margins ever as Chico's quarter-over-quarter merchandise margins improved by 50 basis points, White House|Black Market improved by 90 basis points, and Soma improved by 490 basis points," Edmonds said in a written statement. But he added that overall gross margins were down, mainly because of a decline in gross margins from the company's outlet division and the growth of lower-margin White House|Black Market and Soma brands.

However, Edmonds said the company is focused on growing its brands, including Fitigues, and accelerating the rollout of its intimates concept, Soma. In the quarter, general, administrative and store operating expenses increased 33.7 percent, to $143.5 million.In the full year, the company earned $194 million, or $1.06, versus $141.2 million, or 78 cents, a year ago. Net revenues were up 31.7 percent, to $1.4 billion.

Chico's forecast 2006 earnings would increase 25 percent. The analyst consensus is for earnings per share of $1.32.

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