CHICO'S FAS, INC. (Form: 10-Q, Received: 08/27/2020 16:16:18)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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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 August 1, 2020



☐	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 FAS, Inc.

(Exact name of registrant as specified in charter)



Florida		59-2389435
(State of Incorporation)		(I.R.S. Employer Identification No.)

11215 Metro Parkway, Fort Myers, Florida 33966

(Address of principal executive offices)

239-277-6200

(Registrant's telephone number, including area code)

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



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

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

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

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

At August 17, 2020, the registrant had 119,891,735 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 AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2020

TABLE OF CONTENTS



PART I – Financial Information

Item 1.	Financial Statements:

	Condensed Consolidated Statements of Loss for the Thirteen Weeks and Twenty-Six Weeks Ended August 1, 2020 (Unaudited) and August 3, 2019 (Unaudited)	3

	Condensed Consolidated Statements of Comprehensive Loss for the Thirteen Weeks and Twenty-Six Weeks Ended August 1, 2020 (Unaudited) and August 3, 2019 (Unaudited)	4

	Condensed Consolidated Balance Sheets – August 1, 2020 (Unaudited), February 1, 2020 (Unaudited), and August 3, 2019 (Unaudited)	5

	Condensed Consolidated Statements of Shareholders’ Equity for the Thirteen Weeks and Twenty-Six Weeks Ended August 1, 2020 (Unaudited) and August 3, 2019 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the Twenty-Six Weeks Ended August 1, 2020 (Unaudited) and August 3, 2019 (Unaudited)	8

	Notes to Condensed Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36

Item 4.	Controls and Procedures	36

PART II – Other Information

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 6.	Exhibits	38

Signatures		39

Table of Contents

PART I – FINANCIAL INFORMATION



ITEM 1.	FINANCIAL STATEMENTS

CHICO'S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF LOSS

(Unaudited)

(Dollars in thousands, except per share amounts)



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

	Amount			% of Sales		Amount			% of Sales		Amount			% of Sales		Amount			% of Sales
Net Sales	$	306,174		100.0	%	$	508,356		100.0	%	$	586,438		100.0	%	$	1,026,084		100.0	%
Cost of goods sold	261,408			85.4		339,734			66.8		552,767			94.3		666,631			65.0
Gross Margin	44,766			14.6		168,622			33.2		33,671			5.7		359,453			35.0
Selling, general and administrative expenses	107,304			35.0		170,983			33.7		237,475			40.5		356,391			34.7
Goodwill and intangible impairment	—			0.0		—			0.0		113,180			19.3		—			0.0
(Loss) Income from Operations	(62,538		)	(20.4	)	(2,361		)	(0.5	)	(316,984		)	(54.1	)	3,062			0.3
Interest (expense) income, net	(507		)	(0.2	)	52			0.0		(851		)	(0.1	)	54			0.0
(Loss) Income before Income Taxes	(63,045		)	(20.6	)	(2,309		)	(0.5	)	(317,835		)	(54.2	)	3,116			0.3
Income tax (benefit) provision	(16,200		)	(5.3	)	—			0.0		(92,700		)	(15.8	)	3,400			0.3
Net Loss	$	(46,845	)	(15.3	)%	$	(2,309	)	(0.5	)%	$	(225,135	)	(38.4	)%	$	(284	)	0.0	%
Per Share Data:
Net loss per common share - basic	$	(0.40	)			$	(0.02	)			$	(1.95	)			$	—
Net loss per common and common equivalent share – diluted	$	(0.40	)			$	(0.02	)			$	(1.95	)			$	—
Weighted average common shares outstanding – basic	115,912					114,802					115,743					114,618
Weighted average common and common equivalent shares outstanding – diluted	115,912					114,802					115,743					114,618

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

Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands)



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

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

Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)



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

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

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CHICO'S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(In thousands, except per share amounts)



	Thirteen Weeks Ended
	Common Stock				Additional Paid-in Capital			Treasury Stock				Retained Earnings			Accumulated Other Comprehensive Gain (Loss)
	Shares		Par Value		Additional Paid-in Capital			Shares	Amount			Retained Earnings			Accumulated Other Comprehensive Gain (Loss)			Total
BALANCE, May 2, 2020	119,586		$	1,196	$	493,140		41,297	$	(494,395	)	$	341,563		$	(697	)	$	340,807
Net loss	—		—		—			—	—			(46,845		)	—			(46,845		)
Unrealized gains on marketable securities, net of taxes	—		—		—			—	—			—			108			108
Foreign currency translation adjustment	—		—		—			—	—			—			712			712
Issuance of common stock	354		3		(4		)	—	—			—			—			(1		)
Dividends on common stock	—		—		—			—	—			(10		)	—			(10		)
Repurchase of common stock & tax withholdings related to share-based awards	(49	)	—		(62		)	—	—			—			—			(62		)
Share-based compensation	—		—		2,089			—	—			—			—			2,089
BALANCE, August 1, 2020	119,891		$	1,199	$	495,163		41,297	$	(494,395	)	$	294,708		$	123		$	296,798

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

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

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CHICO'S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(In thousands, except per share amounts)



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

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

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

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CHICO'S FAS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)



	Twenty-Six Weeks Ended
	August 1, 2020			August 3, 2019
Cash Flows from Operating Activities:
Net loss	$	(225,135	)	$	(284	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Goodwill and intangible impairment	113,180			—
Inventory write-offs	54,308			6,232
Depreciation and amortization	33,613			46,826
Non-cash lease expense	100,710			106,961
Exit of frontline Canada operations	498			—
Right of use asset impairment	3,236			—
Loss on disposal and impairment of property and equipment, net	18,637			196
Deferred tax benefit	(6,756		)	(2,639		)
Share-based compensation expense	3,793			3,486
Changes in assets and liabilities:
Inventories	(44,926		)	1,250
Prepaid expenses and other assets	2,743			(9,897		)
Income tax receivable	(78,809		)	5,465
Accounts payable	(26,300		)	(16,509		)
Accrued and other liabilities	(338		)	(5,884		)
Lease liability	(38,673		)	(114,186		)
Net cash (used in) provided by operating activities	(90,219		)	21,017
Cash Flows from Investing Activities:
Purchases of marketable securities	(5,212		)	(25,615		)
Proceeds from sale of marketable securities	48,326			24,384
Purchases of property and equipment	(8,151		)	(14,076		)
Net cash provided by (used in) investing activities	34,963			(15,307		)
Cash Flows from Financing Activities:
Proceeds from borrowings	106,500			—
Payments on borrowings	—			(7,500		)
Proceeds from issuance of common stock	251			392
Dividends paid	(10,701		)	(20,633		)
Payments of tax withholdings related to share-based awards	(995		)	(2,484		)
Net cash provided by (used in) financing activities	95,055			(30,225		)
Effects of exchange rate changes on cash and cash equivalents	(6		)	21
Net increase (decrease) in cash and cash equivalents	39,793			(24,494		)
Cash and Cash Equivalents, Beginning of period	63,972			124,128
Cash and Cash Equivalents, End of period	$	103,765		$	99,634

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

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

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CHICO'S FAS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements of Chico's FAS, Inc. and its wholly-owned subsidiaries (collectively, the "Company") have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by accounting principles generally accepted in the U.S. for complete financial statements. In the opinion of management, such interim financial statements reflect all normal, recurring adjustments considered necessary to present fairly the condensed consolidated financial position, the results of operations and cash flows for the interim periods presented. All significant intercompany balances and transactions have been eliminated in consolidation. For further information, refer to the consolidated financial statements and notes thereto for the fiscal year ended February 1, 2020, included in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2020 filed with the Securities and Exchange Commission ("SEC") on March 16, 2020 ("2019 Annual Report on Form 10-K").

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

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

Exit of Canada Frontline Operations

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

Reclassifications

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

Use of Estimates

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

COVID-19 Pandemic

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

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

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

Adoption of New Accounting Pronouncements

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

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

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

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2019, the Financial Accounting Standards Board issued ASU 2019-12, Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2019-12 will have on its consolidated financial statements.

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3. GOODWILL AND INTANGIBLE IMPAIRMENT CHARGES

Fiscal 2020 Interim Impairment Assessment

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

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

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

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

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



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

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

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

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

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	WHBM Trademark			Chico's Franchise Rights			Total

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

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

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

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

During the twenty-six weeks ended August 1, 2020, we completed an evaluation of our long-lived assets which primarily consisted of leasehold improvements at certain underperforming stores for indicators of impairment as a result of the impact of the pandemic, and consequently, recorded pre-tax impairment charges of approximately $18.5 million. These charges are primarily included in cost of goods sold in the accompanying unaudited condensed consolidated statements of loss. Pre-tax impairment charges reduced the net carrying value of long-lived assets at retail stores to their estimated fair value, as determined using a discounted cash flow model. Pre-tax impairment charges for the thirteen weeks ended August 1, 2020 and thirteen and twenty-six weeks ended May 4, 2019 were immaterial.

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

5. INVENTORY

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

Primarily as a result of changes in the market for certain Company products and the resulting slowdown in sell through rates due to the impact of the pandemic, carrying amounts for those inventories were reduced by $12.3 million and $55.4 million for the thirteen and twenty-six weeks ended August 1, 2020, respectively. These inventory write-offs are included in cost of goods sold in the accompanying unaudited condensed consolidated statements of loss. Inventory write-offs for the thirteen and twenty-six weeks ended August 3, 2019 were $1.3 million and $6.2 million, respectively.

6. REVENUE RECOGNITION

Disaggregated Revenue

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

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

Accounting Policies

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

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

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

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

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

Contract Liability

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

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

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Performance Obligation

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

7. RETAIL FLEET OPTIMIZATION PLAN

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

8. LEASES

We lease retail stores, a limited amount of office space and certain equipment under operating leases expiring in various years through the fiscal year ending 2030. All of our leases have been classified as operating leases and are recognized and measured as such.

Certain operating leases provide for renewal options that are at a pre-determined period and rental value. Furthermore, certain leases provide that we may cancel the lease if our retail sales at that location fall below an established level. Within the first few years of the initial lease term, a majority of our store operating leases contain cancellation clauses that allow the leases to be terminated at our discretion, if certain minimum sales levels are not met. In the normal course of business, operating leases are typically renewed or replaced by other leases.

Escalation of operating lease payments of certain leases depend on an existing index or rate, such as the consumer price index or the market interest rate. These are considered variable lease payments and are included in lease payments when the escalation is known.

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

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Operating lease expense was as follows:



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

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

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



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

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

Weighted Average Remaining Lease Term (years)	4.6			4.8			5.0

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

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

⁽²⁾ The incremental borrowing rate used by the Company is based on the rate at which the Company could borrow funds using its credit rating for a collateralized loan of similar term to the lease. The weighted average discount rate represents a weighted average of the incremental borrowing rate for each lease weighted based on the remaining fixed lease obligations.

Supplemental cash flow information related to operating leases was as follows:



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

⁽¹⁾The Company deferred substantially all rent payments due in the months of April, May and June 2020, and made reduced rent payments in July 2020. We are in active discussions with landlords to find a mutually beneficial and agreeable path forward.

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Maturities of operating lease liabilities as of August 1, 2020 were as follows:



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

Accounting Policies

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

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

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

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

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

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

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

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

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9. SHARE-BASED COMPENSATION

For the twenty-six weeks ended August 1, 2020 and August 3, 2019, share-based compensation expense was $3.8 million and $3.5 million, respectively. As of August 1, 2020, approximately 11.1 million shares remain available for future grants of equity awards under our 2020 Omnibus Stock and Incentive Plan, which became effective upon shareholder approval at the 2020 Annual Meeting of Shareholders on June 25, 2020.

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 Chief Executive Officer ("CEO") in fiscal 2019, which vests over a four-year period from the date of grant and is described further in the Company’s Current Report on Form 8-K/A filed with the SEC on August 20, 2019.

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



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

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.

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



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

Performance-based Restricted Stock Units

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

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



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

Stock Option Awards

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

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



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

10. 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.

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

For the twenty-six weeks ended August 1, 2020 and August 3, 2019, the Company's effective tax rate was 29.2% and 109.1%, respectively. The effective tax rate of 29.2% for the twenty-six weeks ended August 1, 2020 was primarily impacted by the benefits provided by the enactment of the CARES Act, which was reduced by the unfavorable impact of the Company’s book goodwill impairment, a valuation allowance on certain state tax credit carryforwards that are expected to expire unutilized and share-based compensation expense. The 109.1% effective tax rate for the twenty-six weeks ended August 3, 2019 was primarily the result of the additional tax expense related to employee share-based awards against lower pre-tax income.

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

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11. LOSS PER SHARE

In accordance with relevant accounting guidance, unvested share-based payment awards that include non-forfeitable rights to dividends, whether paid or unpaid, are considered participating securities. As a result, such awards are required to be included in the calculation of loss per common share pursuant to the "two-class" method. For the Company, participating securities are comprised entirely of unvested restricted stock awards granted prior to fiscal 2020 and PSUs that have met their relevant performance criteria.

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

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



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

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

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

12. FAIR VALUE MEASUREMENTS

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

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

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

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Entities are required to use a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

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



Level 1	—	Unadjusted quoted prices in active markets for identical assets or liabilities

Level 2	—	Unadjusted quoted prices in active markets for similar assets or liabilities; or Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active; or Inputs other than quoted prices that are observable for the asset or liability

Level 3	—	Unobservable inputs for the asset or liability

Assets Measured on a Recurring Basis

We measure certain financial assets at fair value on a recurring basis, including our marketable securities, which are classified as available-for-sale securities, certain cash equivalents, specifically our money market accounts and assets held in our non-qualified deferred compensation plan. The money market accounts are valued based on quoted market prices in active markets. Our marketable securities are generally valued based on other observable inputs for those securities (including market corroborated pricing or other models that utilize observable inputs such as interest rates and yield curves) based on information provided by independent third-party pricing entities, except for U.S. government securities which are valued based on quoted market prices in active markets. The investments in our non-qualified deferred compensation plan are valued using quoted market prices and are included in other assets on our unaudited condensed consolidated balance sheets.

Assets Measured on a Nonrecurring Basis

From time to time, we measure certain assets at fair value on a non-recurring basis. This includes the evaluation of long-lived assets, goodwill and other intangible assets for impairment using Company-specific assumptions which would fall within Level 3 of the fair value hierarchy.

We assess the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses market participant rents and a market participant discount rate to calculate the fair value of ROU assets. The Company uses discounted future cash flows of the asset or asset group using a discount rate that approximates the cost of capital of a market participant to quantify fair value for other long-lived assets within the asset group which are primarily leasehold improvements. The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets, which for our retail stores, is primarily at the store level.

To assess the fair value of goodwill, we have historically utilized both an income approach and a market approach. Inputs used to calculate the fair value based on the income approach primarily include estimated future cash flows, discounted at a rate that approximates the cost of capital of a market participant. Inputs used to calculate the fair value based on the market approach include identifying sales and EBITDA multiples based on guidelines for similar publicly traded companies and recent transactions.

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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.

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

Quantitative Information about Level 3 Fair Value Measurements



	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Average)

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

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

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

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

As of August 1, 2020, February 1, 2020 and August 3, 2019, our revolving loan and letter of credit facility approximates fair value as this instrument has a variable interest rate which approximates current market rates (Level 2 criteria).

Fair value calculations contain significant judgments and estimates, which may differ from actual results due to, among other things, economic conditions, changes to the business model or changes in operating performance. The most sensitive assumptions in our estimates include short and long-term revenue recoverability rates as a result of the pandemic, which could impact future impairment charges.

We conduct reviews on a quarterly basis to verify pricing, assess liquidity and determine if significant inputs have changed that would impact the fair value hierarchy disclosure.

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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:



			Fair Value Measurements at the End of the Reporting Date Using						Twenty-Six Weeks Ended August 1, 2020
	Balance as of August 1, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairment
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts	$	34,581	$	34,581			$	—
Marketable securities:
Corporate bonds	20,742		—		20,742		—
Noncurrent Assets
Deferred compensation plan	7,818		7,818		—		—
Total recurring fair value measurements	$	63,141	$	42,399	$	20,742	$	—
Nonrecurring fair value measurements:
Noncurrent Assets
Goodwill	$	16,360	$	—	$	—	$	16,360	$	(80,414	)
Trademark	6,000		—		—		6,000		(28,000		)
Long-lived assets ⁽¹⁾	6,867		—		5,990		877		(18,493		)
Operating lease assets ⁽¹⁾	88,942		—		—		88,942		(3,236		)
Total nonrecurring fair value measurements	$	118,169	$	—	$	5,990	$	112,179	$	(130,143	)

	Balance as of February 1, 2020
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts	$	621	$	621	$	—	$	—
Marketable securities:
Corporate bonds	62,645		—		62,645		—
Commercial paper	1,248		—		1,248		—
Noncurrent Assets
Deferred compensation plan	7,464		7,464		—		—
Total recurring fair value measurements	$	71,978	$	8,085	$	63,893	$	—

	Balance as of August 3, 2019
Financial Assets:
Current Assets
Cash equivalents:
Money market accounts	$	286	$	286	$	—	$	—
Marketable securities:
Corporate bonds	60,476		—		60,476		—
Commercial paper	2,970		—		2,970		—
Noncurrent Assets
Deferred compensation plan	7,112		7,112		—		—
Total recurring fair value measurements	$	70,844	$	7,398	$	63,446	$	—

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

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13. DEBT

On August 2, 2018, the Company and certain of its domestic subsidiaries entered into a credit agreement (the “Agreement”) as borrowers and guarantors, with Wells Fargo Bank, National Association, as Agent, letter of credit issuer and swing line lender, and certain lenders party thereto. Our obligations under the Agreement are guaranteed by the subsidiary guarantors and secured by a lien on certain assets of the Company and the subsidiary borrowers and guarantors, including inventory, accounts receivable, cash deposits, and certain insurance proceeds. The Agreement provides for a five-year asset-based senior secured revolving loan and letter of credit facility of up to $200 million, maturing August 2, 2023. The interest rate applicable to the loans under the Agreement will be equal to, at the Company's option, either a base rate, determined by reference to the federal funds rate, plus an interest rate margin, or a LIBO rate, plus an interest rate margin, in each case, depending on availability under the Agreement. The Company expects borrowings to be at a LIBO rate, plus an interest rate margin. In addition, the Company will pay a commitment fee per annum on the unused portion of the commitments under the Agreement.

The Agreement contains customary representations, warranties, and affirmative covenants, as well as customary negative covenants, that, among other things restrict, subject to certain exceptions, the ability of the Company and certain of its domestic subsidiaries to: (i) incur liens, (ii) make investments, (iii) issue or incur additional indebtedness, (iv) undergo significant corporate changes, including mergers and acquisitions, (v) make dispositions, (vi) make restricted payments, (vii) prepay other indebtedness and (viii) enter into certain other restrictive agreements. The Company may pay cash dividends and repurchase shares under its share buyback program, subject to certain thresholds of available borrowings based upon the lesser of the aggregate amount of commitments under the Agreement and the borrowing base, determined after giving effect to any such transaction or payment, on a pro forma basis.

As of August 1, 2020, our outstanding debt consisted of $149.0 million in borrowings under the Agreement. As of August 1, 2020, deferred financing costs of $0.4 million was outstanding related to the Agreement and is presented in other current assets in the accompanying unaudited condensed consolidated balance sheets. On March 18, 2020, in response to store closures due to the pandemic, the Company drew $106.5 million on its facility. If we borrow in excess of 90% of our current total borrowing capacity under the facility, we are subject to a cash dominion and an additional covenant, and, as such, we do not intend to exceed 90% of our borrowing capacity under the facility.

14. COMMITMENTS AND CONTINGENCIES

In July 2015, WHBM was named as a defendant in Altman v. White House Black Market, Inc., a putative class action filed in the United States District Court for the Northern District of Georgia ("District Court"). The complaint alleges that WHBM, in violation of federal law, willfully published more than the last five digits of a credit or debit card number on customers' point-of-sale receipts. The plaintiff seeks an award of statutory damages of $100 to $1,000 for each alleged willful violation of the law, as well as attorneys' fees, costs and punitive damages. WHBM denies the material allegations of the complaint and believes the case is without merit. On February 12, 2018, the District Court issued an order certifying the class.

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

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

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

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

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

Other than as noted above, we are not currently a party to any material legal proceedings other than claims and lawsuits arising in the normal course of business. All such matters are subject to uncertainties, and outcomes may not be predictable. Consequently, the ultimate aggregate amounts of monetary liability or financial impact with respect to these matters as of August 1, 2020 are not estimable. However, while such matters could affect our consolidated operating results when resolved in future periods, management believes that upon final disposition, any monetary liability or financial impact to us would not be material to our annual consolidated financial statements.

15. SUBSEQUENT EVENTS

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

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

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended February 1, 2020, filed with the SEC on March 16, 2020 ("2019 Annual Report on Form 10-K").

Executive Overview

Chico’s FAS is a Florida-based fashion company founded in 1983 on Sanibel Island, Florida. The Company reinvented the fashion retail experience by creating fashion communities anchored by service, which put the customer at the center of everything we do. As one of the leading fashion retailers in North America, Chico’s FAS is a company of three unique brands - Chico’s^®, White House Black Market^® and Soma^® - each thriving in their own white space, founded by women, led by women, providing solutions that millions of women say give them confidence and joy. Our distinct lifestyle brands serve the needs of fashion-savvy women 35 years and older. We earn revenue and generate cash through the sale of merchandise in our domestic and international retail stores, our various Company-operated e-commerce websites, our call center (which takes orders for all of our brands), through unaffiliated franchise partners and through third-party channels.

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

Exit of Canada Frontline Operations

Select Financial Results

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



	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	August 1, 2020			August 3, 2019			August 1, 2020			August 3, 2019
	(in millions, except per share amounts)
Net sales	$	306		$	508		$	586		$	1,026
Significant charges ⁽¹⁾:
Inventory write-offs	12			—			55			—
Long-lived store asset impairment	—			—			18			—
Right of use asset impairment	—			—			2			—
Goodwill impairment	—			—			80			—
Indefinite-lived asset impairment	—			—			33			—
(Loss) income from operations	(63		)	(2		)	(318		)	3
Net loss	(47		)	(2		)	(225		)	(0.3		)
Net loss per common and common equivalent share - diluted	$	(0.40	)	$	(0.02	)	$	(1.95	)	$	—

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

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Overview of Financial Results

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

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

The Company’s cash flow for the twenty-six weeks ended August 1, 2020 also reflects the impact of the pandemic. We continued to take aggressive and prudent actions to drive sales, monetize inventory, reduce expenses and manage cash flows, including suspending or reducing rent payments, and partnering with suppliers and vendors to decrease operating costs and extend payment terms to enhance the Company’s financial position.

The Company remains confident that it currently has sufficient liquidity to repay its obligations as they become due for the foreseeable future and the Company continues to execute on its cost savings initiatives, among other liquidity measures. However, the extent to which the pandemic impacts our business operations, financial results, and liquidity will depend on numerous evolving factors that we may not be able to accurately predict or assess, including the duration and scope of the pandemic; our response to and ability to mitigate the impact of the pandemic; the negative impact the pandemic has on global and regional economies and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; its short- and longer-term impact on the levels of consumer confidence; the ability of our suppliers, vendors and customers to successfully address the impacts of the pandemic; actions governments, businesses and individuals take in response to the pandemic; and how quickly economies recover after the pandemic subsides.

Financial Results

Loss per diluted share for the thirteen weeks ended August 1, 2020 (the "second quarter") was $0.40 compared to loss per diluted share of $0.02 for the thirteen weeks ended August 3, 2019 ("last year's second quarter"). The second quarter net loss includes the after-tax impact of inventory write-offs of approximately $8 million as a result of the pandemic. Last year's second quarter net loss includes the unfavorable impact of accelerated depreciation charges of approximately $2 million, after-tax, related to our retail fleet optimization plan.

Loss per diluted share for the twenty-six weeks ended August 1, 2020 was $1.95 compared to $0.00 per diluted share for the twenty-six weeks ended August 3, 2019. Net loss for the twenty-six weeks ended August 1, 2020 includes impairment charges and inventory write-offs relating to the impact of the pandemic of approximately $148 million, after-tax. Net loss for the twenty-six weeks ended August 3, 2019 includes the unfavorable impact of accelerated depreciation charges of approximately $6 million, after-tax, related to our retail fleet optimization plan.

Business Highlights

The Company began the second quarter primarily as a digital-only business, with year-over-year total digital sales increasing double digits in the quarter. In May 2020, the Company commenced its phased store reopening plan under enhanced safety protocols and had opened approximately 96% of its store base by the end of the second quarter. Overall, government mandates delayed store reopening plans which resulted in stores effectively being closed the same number of weeks in the second quarter as in the first quarter.

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


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


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


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


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

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


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


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

Fiscal 2020 Third Quarter and Full-Year Outlook

Given the ongoing market disruption caused by the pandemic and related uncertainty on timing and extent of the market recovery, the Company is not providing fiscal 2020 third-quarter or full-year guidance at this time.

Our Business Strategy

Our overall business strategy is focused on building a collection of distinct high-performing retail brands serving the fashion needs of women 35 and older. The primary function of the Company is the production and procurement of beautiful merchandise that delivers the brand promise and brand positioning of each of our brands and resonates with customers. To that end, we are further strengthening our merchandise and design capabilities and enhancing our sourcing and supply chain to deliver product in a timely manner to our customers while also concentrating on improvements to the quality and aesthetic of our merchandise. Over the long term, we may build our brand portfolio by organic development or acquisition of other specialty retail concepts if research indicates that the opportunity complements our current brands and is appropriate and in the best interest of the shareholders.

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

We view our stores and Company-operated e-commerce websites as a single, integrated sales function rather than as separate, independently operated sales channels. As a result, we maintain a shared inventory platform for our primary operations, allowing us to fulfill orders for all channels from our distribution center ("DC") in Winder, Georgia. Our domestic customers can return merchandise to a store or to our DC, regardless of the original purchase location. Using our enhanced “Locate” tool, we ship in-store orders from other locations directly to the customer, expediting delivery times while reducing our shipping costs. In addition, our shared inventory system, Endless Aisle, enables customers to make purchases online and ship from store. In fiscal 2019, we completed the implementation of our Buy On-Line, Pick-up In-Store (BOPIS) capability across all our brands, further enhancing our omnichannel capabilities, and in fiscal 2020, we completed the implementation of Style Connect^SM, our proprietary digital styling software that enables us to communicate directly with the majority of our customers to drive the frontline business to digital fulfillment.

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

In fiscal 2019, we took actions across our brands to focus on three distinct areas that we believe will positively impact results. These are:


•	Driving stronger sales through improved product and marketing;


•	Optimizing the customer journey by simplifying, digitizing and extending our unique and personalized service; and


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

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


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


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


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

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

Liquidity

Liquidity is measured through cash flow, which is the measure of cash provided by or used in operating, investing and financing activities. We believe that as a result of the Company’s extensive measures to mitigate the impact of the pandemic discussed above, we were able to, and continue to, effectively manage our liquidity position.

Comparable Sales

Comparable sales is an omnichannel measure of the amount of sales generated from products the Company sells directly to the consumer relative to the amount of sales generated in the comparable prior-year period. Comparable sales is defined as sales from stores open for the preceding twelve months, including stores that have been expanded, remodeled or relocated within the same general market and includes online and catalog sales, and beginning in the third quarter of fiscal 2019, includes international sales. The comparable sales calculation excludes the negative impact of stores closed four or more days. The Company has historically viewed comparable sales as a key performance indicator to measure the performance of our business, however, due to varying degrees of business disruptions and periods of store closures or stores operating at reduced hours as a result of the pandemic during the thirteen and twenty-six weeks ended August 1, 2020, we believe this is not a meaningful measure for the thirteen and twenty-six weeks ended August 1, 2020.

Gross Margin as a Percentage of Net Sales

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

Diluted Loss per Share

Earnings per share is determined using the two-class method when it is more dilutive than the treasury stock method. Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period, including participating securities. Diluted earnings per share reflects the dilutive effect of potential common shares from non-participating securities such as stock options, performance stock units and restricted stock units. Whereas basic earnings per share serves as an indicator of the Company's profitability, we believe diluted earnings per share is a key performance measure because it gauges the Company's quality of earnings per share assuming all potential common shares from non-participating securities are exercised.

Return on Net Assets

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

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Results of Operations

Thirteen Weeks Ended August 1, 2020 Compared to the Thirteen Weeks Ended August 3, 2019

Net Loss and Loss per Diluted Share

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



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

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

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

Net Sales

The following table depicts net sales by Chico's, WHBM and Soma in dollars and as a percentage of total net sales for the thirteen weeks ended August 1, 2020 and August 3, 2019:



	Thirteen Weeks Ended
	August 1, 2020				August 3, 2019

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

⁽¹⁾ May not foot due to rounding.

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

The Company is not providing comparable sales figures for the second quarter as it is not a meaningful measure due to the significant impact of store closures as a result of the pandemic.

Cost of Goods Sold/Gross Margin

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



	Thirteen Weeks Ended
	August 1, 2020			August 3, 2019

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

For the second quarter, gross margin was $45 million, or 14.6% of net sales, compared to $169 million, or 33.2% of net sales, in last year's second quarter. The second quarter year-over-year decrease in gross margin primarily reflects the impact of temporary store closures which resulted in deleverage of occupancy costs as a percent of net sales as well as a pre-tax inventory write-off of $12 million, or 4.0% of net sales. The inventory write-off was driven by the slower than planned cadence of store reopenings during the first half of the second quarter and less relevant work wear and special occasion product.

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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 August 1, 2020 and August 3, 2019:



	Thirteen Weeks Ended
	August 1, 2020			August 3, 2019

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

For the second quarter, SG&A was $107 million, or 35.0% of net sales, compared to $171 million, or 33.7% of net sales, for last year's second quarter. The $64 million decrease in SG&A expenses reflects the Company’s ongoing expense reduction initiatives to align its cost structure with sales.

Income Taxes

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

Twenty-Six Weeks Ended August 1, 2020 Compared to the Twenty-Six Weeks Ended August 3, 2019

Net Loss and Loss per Diluted Share

For the twenty-six weeks ended August 1, 2020, the Company reported a net loss of $225 million, or $1.95 loss per diluted share, compared to net loss of $0.3 million, or $0.00 per diluted share, for the twenty-six weeks ended August 3, 2019. Results for the twenty-six weeks ended August 1, 2020 were significantly impacted by the pandemic and included the following pre-tax charges:



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

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

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

⁽²⁾ May not foot due to rounding.

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Net Sales

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



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

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

⁽¹⁾ May not foot due to rounding.

Net sales for the twenty-six weeks ended August 1, 2020 decreased to $586 million from $1,026 million for the twenty-six weeks ended August 3, 2019. This decrease of 42.8% primarily reflects disruptions related to the pandemic, including temporary store closures and limited hours during the twenty-six weeks ended August 1, 2020, and the impact of 74 net store closures since last year's second quarter, partially offset by strong digital commerce performance.

The Company is not providing comparable sales figures for the twenty-six weeks ended August 1, 2020 as it is not a meaningful measure due to the significant impact of store closures as a result of the pandemic.

Cost of Goods Sold/Gross Margin

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



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

	(dollars in millions)
Cost of goods sold	$	553		$	667
Gross margin	34			359
Gross margin percentage	5.7		%	35.0		%

Gross margin for the twenty-six weeks ended August 1, 2020 was $34 million, or 5.7% of net sales, compared to $359 million, or 35.0% of net sales, for the twenty-six weeks ended August 3, 2019. The decrease in gross margin primarily reflects the impact of pre-tax significant charges of $76 million, 13.0% of net sales, related to inventory write-offs and store impairments as reflected in the table above, as well as the impact of temporary store closures which resulted in deleverage of occupancy costs as a percent of net sales.

Selling, General and Administrative Expenses

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



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

	(dollars in millions)
Selling, general and administrative expenses	$	237		$	356
Percentage of total net sales	40.5		%	34.7		%

For the twenty-six weeks ended August 1, 2020, SG&A was $237 million, or 40.5% of net sales, compared to $356 million, or 34.7% of net sales, for the twenty-six weeks ended August 3, 2019. This $118.9 million decrease primarily reflects the Company's actions to significantly reduce its expense structure, including centralizing key functions to create a nimbler organization to better align costs with expected sales.

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Income Taxes

The effective tax rate for the twenty-six weeks ended August 1, 2020 and August 3, 2019 was 29.2% and 109.1%, respectively. The 29.2% for the twenty-six weeks ended August 1, 2020 was primarily impacted by the benefits provided by the enactment of the CARES Act, which was reduced by the unfavorable impact of the Company’s book goodwill impairment, a valuation allowance on certain state tax credit carryforwards that are expected to expire unutilized and share-based compensation expense. The effective tax rate of 109.1% for the twenty-six weeks ended August 3, 2019 was primarily the result of the additional tax expense related to employee share-based awards against lower pre-tax income.

Cash, Marketable Securities and Debt

At the end of the second quarter, cash and marketable securities totaled $125 million. Debt at the end of the second quarter totaled $149 million, remaining unchanged from the end of the first quarter of fiscal 2020.

Inventories

At the end of the second quarter, inventories, net of inventory reserves, totaled $236 million compared to $228 million at the end of last year's second quarter. Second quarter inventories were elevated year-over-year due to merchandise in-transit and inventory held for liquidation.

Income Tax Receivable

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

Adoption of New Accounting Pronouncements

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

Recently Issued Accounting Pronouncements

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

Liquidity and Capital Resources

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

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

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	Twenty-Six Weeks Ended
	August 1, 2020			August 3, 2019
	(dollars in millions)
Net cash (used in) provided by operating activities	$	(90	)	$	21
Net cash provided by (used in) investing activities	35			(15		)
Net cash provided by (used in) financing activities	95			(30		)
Net increase (decrease) in cash and cash equivalents	$	40		$	(24	)

Operating Activities

Net cash used in operating activities for the year-to-date period of fiscal 2020 was $90 million compared to net cash provided by operating activities of $21 million in last year's year-to-date period. The change in net cash used in operating activities primarily reflects the fiscal 2020 net loss, partially offset by the suspension or reduction of rent payments commencing April 2020 and reduced operational spending as sales declined.

Investing Activities

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

Financing Activities

Net cash provided by financing activities for the year-to-date period of fiscal 2020 was $95 million compared to net cash used in financing activities of $30 million in last year's year-to-date period, primarily reflecting $107 million in proceeds from borrowings and the suspension of dividend payments commencing in April 2020.

Credit Facility

The Agreement provides for a five-year asset-based senior secured revolving loan and letter of credit facility of up to $200 million, maturing August 2, 2023. In addition, during the term of the Agreement, the Company may request an increase to the commitments under the Agreement by up to an additional $100 million, subject to customary conditions, including obtaining the agreements from the lenders to provide such commitment increase. The interest rate applicable to the loans under the Agreement will be equal to, at the Company's option, either a base rate, determined by reference to the federal funds rate, plus an interest rate margin, or a LIBOR, plus an interest rate margin, in each case, depending on availability under the Agreement. The Company expects borrowings to be at a LIBOR, plus an interest rate margin. In addition, the Company will pay a commitment fee per annum on the unused portion of the commitments under the Agreement.

On March 18, 2020, the Company borrowed an additional $107 million million under the Agreement, resulting in $51 million available for additional borrowings under the Agreement, in addition to the potential additional $100 million amount noted above. This borrowing under the Agreement was a proactive measure in order to increase the Company’s cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the pandemic. In accordance with the terms of the Agreement, the proceeds from the Agreement borrowings may be used for working capital, capital expenditures or general corporate purposes. If we borrow in excess of 90% of our current total borrowing capacity under the facility, we are subject to a cash dominion and an additional covenant, and, as such, we do not intend to exceed 90% of our borrowing capacity under the facility.

As of August 1, 2020, $149 million in net borrowings were outstanding under the Agreement and is reflected as long-term debt in the unaudited condensed balance sheet included in this Form 10-Q.

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

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Store and Franchise Activity

During the twenty-six weeks ended August 1, 2020, we had 28 permanent store closures, consisting of 9 Chico's stores, 17 WHBM stores and 2 Soma stores. There were no store openings in the second quarter, and we anticipate permanently closing approximately 25 to 50 stores over the remainder of fiscal 2020. However, with the disruption we have seen from the pandemic, we intend to continuously evaluate the appropriate store base in light of economic conditions and our business strategy and may adjust the openings and closures as conditions require or as opportunities arise. Additionally, since the end of last year’s second quarter, we have permanently closed 80 stores and opened 6 stores. As of August 1, 2020, the Company's franchise operations consisted of 69 international retail locations in Mexico and 2 domestic airport locations.

Critical Accounting Policies and Estimates

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

Forward-Looking Statements

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

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

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

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pandemic, and the financial impact of certain provisions of the CARES Act; the ability of our third-party business partners, including our suppliers, logistics providers, vendors and landlords, to meet their obligations to us in light of financial stress, staffing shortages, liquidity challenges, bankruptcy filings by other industry participants and other disruptions due to the COVID-19 pandemic; the impact of the COVID-19 pandemic on our manufacturing operations in China; the exiting of store operations in Canada and other future permanent store closures; changes in the general or specialty or apparel industries; significant shifts in consumer behavior; our ability to secure and maintain customer acceptance of styles and in-store and online concepts; the ability to leverage inventory management and targeted promotions; the ability to effectively manage our inventory and allocation processes; the extent and nature of competition in the markets in which we operate; the ability to remain competitive with customer shipping terms and costs pertaining to product deliveries and returns; the extent of the market demand and overall level of spending for women's private branded clothing and related accessories; the effectiveness of our brand strategies, awareness and marketing programs; the ability to coordinate product development with buying and planning; the quality and timeliness of merchandise received from suppliers; changes in the costs of manufacturing, raw materials, transportation, distribution, labor and advertising; the availability of quality store sites; our ability to manage our store fleet and the risk that our investments in merchandise or marketing initiatives may not deliver the results we anticipate; our ability to successfully navigate the increasing use of on-line retailers for fashion purchases and the pressure that puts on traffic and transactions in our physical stores; the ability to operate our own retail websites in a manner that produces profitable sales; the ability to successfully identify and implement additional sales and distribution channels; the ability to successfully execute our business strategies and particular strategic initiatives (including, but not limited to, the Company’s digital strategy, organizational restructure, retail fleet optimization plan and three operating priorities which are driving stronger sales through improved product and marketing; optimizing the customer journey by simplifying, digitizing and extending the Company’s unique and personalized service; and transforming sourcing and supply chain operations to increase product speed to market and improve quality), sales initiatives and multi-channel strategies, customer traffic, and to achieve the expected results from them; the continuing performance, implementation and integration of management information systems; the impact of any systems failures, cyber security or other data or security breaches, including any security breaches that result in theft, transfer, or unauthorized disclosure of customer, employee, or company information or our compliance with domestic and foreign information security and privacy laws and regulations in the event of such an incident; the ability to hire, train, motivate and retain qualified sales associates, managerial employees and other employees; the successful recruitment of leadership and the successful transition of new members to our senior management team; uncertainties regarding future unsolicited offers to buy the Company and our ability to respond effectively to them as well as to actions of activist shareholders and others; changes in the political environment that create consumer uncertainty; significant changes to product import and distribution costs (such as unexpected consolidation in the freight carrier industry); the ability to utilize our distribution center and other support facilities in an efficient and effective manner; the ability to secure and protect trademarks and other intellectual property rights and to protect our reputation and brand images; the risk that natural disasters, public health crises, political uprisings, uncertainty or unrest, or other catastrophic events could adversely affect our operations and financial results; the impact of unanticipated changes in legal, regulatory or tax laws; the risks and uncertainties that are related to our reliance on sourcing from foreign suppliers, including significant economic (including the impact of changes in tariffs, taxes or other import regulations, particularly with respect to China), labor, political or other shifts; and changes in governmental policies in or towards foreign countries; currency exchange rates and other similar factors.

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

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ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Our exposure to interest rate risk relates in part to our revolving line of credit with our bank. On August 2, 2018, we entered into a new credit agreement, as further discussed in Note 13 to our unaudited condensed consolidated financial statements included in this Form 10-Q. The Agreement, which matures on August 2, 2023, has borrowing options which accrue interest, at our election, at either a base rate, determined by reference to the federal funds rate, plus an interest rate margin, or LIBOR, plus an interest rate margin, as defined in the Agreement. An increase or decrease in market interest rates of 100 basis points would increase interest expense in the amount of approximately $4.5 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 consists of cash equivalents and marketable securities primarily including corporate bonds. The marketable securities portfolio as of August 1, 2020, consisted of $9.7 million of securities with maturity dates within one year or less and $11.0 million with maturity dates over one year and less than or equal to two years. We consider all marketable securities available-for-sale, including those with maturity dates beyond 12 months, and therefore classify these securities as short-term investments within current assets on the condensed consolidated balance sheets as they are available to support current operational liquidity needs. As of August 1, 2020, an increase or decrease of 100 basis points in interest rates would not have a material effect on the fair value of our marketable securities portfolio.



ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

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

Changes in Internal Controls

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

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PART II – OTHER INFORMATION



ITEM 1.	LEGAL PROCEEDINGS

Information regarding legal proceedings is incorporated by reference from Note 14 to our unaudited condensed consolidated financial statements included in this Form 10-Q under the heading "Commitments and Contingencies."



ITEM 1A.	RISK FACTORS

In addition to the other information discussed in this report, the factors described in Part I, Item 1A. “Risk Factors” in our 2019 Annual Report on Form 10-K and in Part II, Item 1A. “Risk Factors” in our quarterly report on Form 10-Q for the quarter ended May 2, 2020, should be considered as they could materially affect our business, financial condition or future results. There have not been any significant changes with respect to the risks described in our 2019 Annual Report on Form 10-K, except for those risks updated in our quarterly report on Form 10-Q for the quarter ended May 2, 2020, but these are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may adversely affect our business, financial condition or operating results.



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

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



Period	Total Number of Shares Purchased (a)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans (b)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Publicly Announced Plans
May 3, 2020 - May 30, 2020	—	$	—	—	$	55,192
May 31, 2020 - July 4, 2020	7,321		1.36	—		55,192
July 5, 2020 - August 1, 2020	38,651		1.27	—		55,192
Total	45,972		1.28	—

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

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

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ITEM 6.	EXHIBITS


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



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

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

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

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

	Exhibit 10.5		Form of 2020 Omnibus Stock and Incentive Plan Restricted Stock Agreement for Employees (for awards on or after June 24, 2020)

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

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

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

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

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

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

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

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

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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:	August 27, 2020	By:	/s/ Molly Langenstein
			Molly Langenstein
			Chief Executive Officer, President and Director

Date:	August 27, 2020	By:	/s/ David M. Oliver
			David M. Oliver
			Interim Chief Financial Officer and Senior Vice President, Controller

Exhibit 10.3

CHICO’S FAS, INC.
2020 OMNIBUS STOCK AND INCENTIVE PLAN
PERFORMANCE AWARD AGREEMENT
FOR PERFORMANCE SHARE UNITS

CHIEF EXECUTIVE OFFICER

This Performance Award Agreement (this “Performance Award Agreement”) is effective as of July 1, 2020 (the “Grant Date”), and is entered into between Chico’s FAS, Inc., a Florida corporation (the “Company”), and Molly Langenstein (the “Executive”). Capitalized terms not otherwise defined herein shall have the same meanings as in the Company’s 2020 Omnibus Stock and Incentive Plan, as amended from time to time (the “Plan”), the terms of which are hereby incorporated by reference and made a part of this Performance Award Agreement. All references to specified paragraphs pertain to paragraphs of this Performance Award Agreement unless otherwise specifically provided. The Human Resources, Compensation and Benefits Committee of the Board of Directors of the Company (the “Committee”) approved this Performance Award grant, in the form of performance share units (“PSUs”), pursuant to the Plan, in connection with the Executive’s promotion to Chief Executive Officer and President (“CEO”) of the Company and in accordance with that Employment Offer Letter for the Executive dated April 27, 2020 between the Executive and the Company, provided that the Executive continues to be employed as CEO of the Company on the Grant Date.

In consideration of the mutual promises set forth below, the parties hereto agree as follows:

1.Grant of PSUs. The Company hereby grants to the Executive the right to receive 164,062 PSUs at target (the “Target”) on the Vesting Date set forth in Paragraph 5, with the earn-out opportunity to receive PSUs equal to 0% - 150% of the Target, subject to the achievement of the Performance Goals set forth in Paragraph 2. After the achievement and certification of the Performance Goals as provided in Paragraph 2.b, each earned PSU shall entitle the Executive to receive one share of Common Stock of the Company, payable on the Payment Date (as defined below), provided the applicable requirements of Paragraphs 5, 6 and 7 are met. The PSUs are granted pursuant to the Plan and are subject to the provisions of the Plan, as well as the provisions of this Performance Award Agreement. The Executive agrees to be bound by all of the terms, provisions, conditions and limitations of the Plan and this Performance Award Agreement. To the extent the terms of the Plan and this Performance Award Agreement are in conflict, the terms of the Plan shall govern.

2. Earning the Award and Performance Goals. The Executive’s right to receive the PSUs is subject to the following conditions (and the PSUs shall not be considered earned until all of the below conditions are met):

a. The Executive continues to be employed through the Vesting Date set forth in Paragraph 5, subject to the provisions in Paragraphs 6 and 7, and

b. The performance goals established by the Committee (the “Performance Goals”) are achieved as provided in this Paragraph 2.b. Such Performance Goals have been established by the Committee and are based upon the Company’s average RONA (as defined below) performance for the three fiscal years during the Performance Period and have been set at threshold, target and maximum levels, as described on Exhibit 1 hereto. The “Performance Period” begins February 2, 2020 and ends on January 30, 2023. If the actual average performance level is below the established threshold, no PSUs shall be payable under this Performance Award Agreement. If the actual average performance level is above the established maximum, no PSUs shall be payable above such maximum. The Committee shall determine and certify the level of performance after the end of the Performance Period. Except as provided otherwise in Paragraph 7.c (with regard to a Change in Control during the Performance Period), any PSUs that are not, based on the Committee’s determination, earned by performance during the Performance Period shall be cancelled and forfeited.

c. “RONA” for each fiscal year in the Performance Period shall be computed as the Company’s (a) net income divided by (b) the “five-point average” (based on balances at the beginning of the first quarter plus the final balances for each quarter of the fiscal year) of net working capital less cash and marketable securities plus fixed assets (with all of the foregoing terms as determined per the Company’s financial statements for the applicable period) but shall exclude:


(i)	the impact of (a) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring items, (b) the impact of changes to comply with the new lease accounting standard, (c) the impact of material litigation or insurance settlements, and (d) the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles.

3. No Transfer of PSUs. During the Restriction Period (as defined in Paragraph 5), the Executive shall have no rights to or with respect to such PSUs except as specifically set forth in this Performance Award Agreement, and, during the Restriction Period, such nonvested PSUs shall not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, other than by will, the laws of descent and distribution or by qualified domestic relations order or pursuant to a beneficiary designation made under the Plan. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities, or torts of the Executive.

4. Risk of Forfeiture. Subject to Paragraphs 6 and 7: (a) upon termination of the Executive’s employment (as determined under Paragraph 8) or (b) after the Termination Date (as defined in Paragraph 8), upon the Committee’s (or its delegee’s) determination that the Executive has violated any of the covenants in Paragraphs 13 through 17 herein, in each case prior to the Vesting Date and regardless of whether the Performance Requirements under Paragraph 2.b are achieved, the Executive shall forfeit the right to receive all PSUs and all PSUs shall be automatically cancelled.

5. Vesting Date and Payment Date. Subject to the forfeiture provisions in Paragraph 4 and the accelerated vesting provisions in Paragraphs 6 and 7, if the employment requirements are met and to the extent the Performance Goals set forth in Paragraph 2 are achieved, the restrictions applicable to the PSUs will lapse on March 2, 2023 (the “Vesting Date”). The period from the Grant Date to the Vesting Date is sometimes referred to as the “Restriction Period.” To the extent not previously forfeited, and subject to the provisions in Paragraph 7.c, the vested and earned PSUs shall be paid on the date set forth in Paragraph 9.a (the “Payment Date”) in the form of unrestricted shares of Common Stock as provided in Paragraph 9, subject to the provisions in Paragraph 12. To the extent the Payment Date is a designated period (such as a designated month or months), the Company will determine in its sole discretion the exact payment date(s) within the designated period of time.

6. Termination of Employment. The Executive’s voluntary or involuntary termination of employment (as determined under Paragraph 8) shall affect the Executive’s rights under this Performance Award Agreement as follows:

a. Voluntary Termination or Termination for Cause. If, other than as specified below, the Executive voluntarily terminates employment with the Company or the Executive’s employment is terminated by the Company for Cause prior to the Vesting Date, then the Executive shall forfeit the right to receive all nonvested PSUs. For purposes of this Performance Award Agreement, “Cause” shall mean:


(i)	If the Executive has an Employment Agreement (as defined in Paragraph 27.b) in effect on the Grant Date that defines Cause, Cause as defined in the Employment Agreement; or


(ii)	If the Executive does not have an Employment Agreement in effect on the Grant Date or such Employment Agreement does not define Cause, the Executive’s engaging in any of the following conduct:


(A)	Conduct resulting in a conviction of, or entering a plea of no contest to, any felony;


(B)	Conduct resulting in a conviction of, or entering a plea of no contest to, any crime related to employment, but specifically excluding traffic offenses;


(C)	Continued neglect, gross negligence, or willful misconduct by the Executive in the performance of the Executive’s duties, which has a material adverse effect on the Company or its subsidiaries;


(D)	Willful failure to take actions permitted by law and necessary to implement the policies of the Company or its subsidiaries as such policies have been communicated to the Executive;


(E)	Material breach of the terms of this Performance Award Agreement, including but not limited to Paragraphs 13 through 18 herein; or


(F)	Drug or alcohol abuse to the extent that such abuse has an obvious and material adverse effect on the Company or its subsidiaries or upon the Executive’s ability to perform his or her duties and responsibilities.

b. Involuntary Termination without Cause. Unless Paragraph 7.c applies, if the Executive’s employment is terminated by the Company without Cause prior to the Vesting Date, then the Executive shall forfeit the right to receive all nonvested PSUs. The Committee, or its delegee, as applicable, shall retain the authority to accelerate time-vesting, but not the Payment Date, of all or a portion of the PSUs in its sole discretion, provided, however, in such event, any time-based vested PSUs shall remain subject to the related Performance Goals and further subject to forfeiture upon violation of any covenant referenced in Paragraph 4.b. and, to the extent earned, the vested PSUs shall be issued and delivered as unrestricted shares of Common Stock on the Payment Date as provided in Paragraph 9.a.

7. Retirement, Death or Disability, or Change in Control. The Executive’s Retirement, or death or Disability, or a Change in Control, shall affect the Executive’s rights under this Performance Award Agreement as follows:

a. Retirement. Unless Paragraph 7.c applies, if the Executive’s employment with the Company is terminated due to Retirement prior to the Vesting Date, to the extent not previously vested or forfeited, then the Prorated Portion (as defined below) of the PSUs shall become fully time-based vested but shall remain subject to the performance requirements in Paragraph 2.b and further subject to forfeiture upon violation of any covenant referenced in Paragraph 4.b and, to the extent earned, the Prorated Portion of the PSUs shall be issued and delivered as unrestricted shares of Common Stock on the Payment Date as provided in Paragraph 9.a. For these purposes, the “Prorated Portion” shall equal the number of PSUs which is the product of (i) a fraction, the numerator of which is the number of months (which may not be a whole number) elapsed beginning on the Grant Date and ending on the Termination Date (as defined below) and the denominator of which is the total number of months beginning on the Grant Date and ending on the Vesting Date, multiplied by (ii) the total number of PSUs. For these purposes, the Executive’s position as an employee of the Company will not be considered to be terminated by “Retirement” unless prior to the Termination Date: (i) the Executive provides written notice to the Company of intent to formally retire; (ii) the Executive has reached age 55; (iii) the Executive’s combined age and years of service with the Company as an employee is equal to 65 or greater; and (iv) the Committee, or its delegee, approves the Executive’s termination as a “Retirement” for purposes of this Performance Award Agreement, which approval is in the sole discretion of the Committee, or its delegee, as applicable.

b. Death or Disability. Unless Paragraph 7.c applies, if the Executive’s employment with the Company is terminated by death or due to a Disability prior to the Vesting Date, to the extent not previously vested or forfeited, then the PSUs shall become fully time-based vested but shall remain subject to the performance requirements in Paragraph 2.b and further subject to forfeiture upon violation of any covenant referenced in Paragraph 4.b and, to the extent earned, the vested PSUs shall be issued and delivered as unrestricted shares of Common Stock on the Payment Date as provided in Paragraph 9.a. For purposes of this Performance Award Agreement, “Disability” shall mean that the Executive was approved for a disability benefit under the Company’s long-term disability plan. If the Executive is not then covered by the Company’s disability insurance program, the Executive’s Disability status shall be determined using the same criteria and by the same persons as provided in the Company’s disability insurance program, in consultation with the Committee as needed.

c. Change in Control. Notwithstanding any other provisions of this Performance Award Agreement, the provisions of this Paragraph 7.c shall apply after a Change of Control.

(i)

(ii)

If a Change in Control shall occur prior to the Payment Date (for a Payment Date that is a designated period, then prior to the first day of such designated period) and the successor company does assume, convert, continue or otherwise replace the PSUs on proportionate and equitable terms, then the PSUs shall be vested and paid as provided in the following sentence and shall be subject to the performance requirements set forth in subparagraph (iii) below. To the extent not previously vested or forfeited, the PSUs shall vest on the Vesting Date provided the Executive is employed on the Vesting Date. If the employment of the Executive is terminated without Cause or due to the Executive’s Retirement, in each case within twenty-four (24) months after the Change in Control, then the PSUs earned in accordance with subparagraph (iii) below shall vest upon such termination of employment and shall be paid within ninety (90) days after the Executive’s separation from service (as defined in Paragraph 23.a(ii)) subject to any applicable six-month delay. If the employment of the Executive is terminated without Cause or due to the Executive’s Retirement after twenty-four (24) months after the Change in Control, then the PSUs earned in accordance with subparagraph (iii) below shall vest upon such termination of employment but shall be paid on the Payment Date set forth in Paragraph 9.a. If the employment of the Executive is terminated due to the Executive’s death or Disability, then the PSUs earned in accordance with subparagraph (iii) below shall vest upon such death or Disability but shall be paid upon the Payment Date set forth in Paragraph 9.a. If the Executive is terminated for Cause, all PSUs shall be immediately forfeited.

(iii)

For PSUs subject to subparagraphs (i) and (ii) above, performance shall be determined by the Committee as follows: For each completed fiscal year during the Performance Period that ends at least one month prior to the Change in Control, performance shall be based on actual performance as determined under Paragraph 2.b. For each fiscal year during the Performance Period that does not end at least one month prior to the Change in Control, performance shall be deemed equal to the target performance goal as described on Exhibit 1. The earned PSUs will be determined based on the average of the three (3) fiscal years as provided in Paragraph 2.b but using the performance described in this subparagraph (iii). For PSUs subject to subparagraphs (i) and (ii) above, the forfeiture provisions in Paragraph 4.b shall not apply after the Termination Date.


(iv)	If a Change in Control shall occur on or after a Payment Date (for a Payment Date that is a designated period, then on or after the first day of such designated period), then the PSUs shall vest and be paid in accordance with Paragraph 5.


(v)	For purposes of this Paragraph 7.c, a Change in Control shall have the meaning set forth in the Plan, provided that such definition shall be interpreted and applied in a manner that complies with Code Section 409A.

8. Definition of Employment and Termination Date. For purposes of this Performance Award Agreement, “employment” means employment by the Company and/or its subsidiary (as “subsidiary” is defined under the Plan). “Termination Date” means the date upon which the Executive is separated from employment, whether voluntary or involuntary. Neither the transfer of the Executive from employment by the Company to employment by a subsidiary, nor the transfer of the Executive from employment by a subsidiary to employment by the Company, nor the transfer of the Executive from employment by a subsidiary to employment by another subsidiary shall be deemed to be a termination of employment of the Executive. Furthermore, except as required in Paragraph 23.a (related to a permanent reduction in hours), in no event shall employment be deemed terminated under this Performance Award Agreement unless and until the Executive’s employment by the Company, to the extent applicable, and each of its subsidiaries, to the extent applicable, is terminated such that the Executive is no longer employed by the Company or any of its subsidiaries. Moreover, the employment of the Executive shall not be deemed to have been terminated because of absence from active employment on account of temporary illness or during authorized vacation or during temporary leaves of absence from active employment granted by the Company or a subsidiary for reasons of professional advancement, education, health, or government service, or during military leave for any period if the Executive returns to active employment within ninety (90) days after the termination of military leave, or during any period required to be treated as a leave of absence by virtue of any valid law or agreement. Notwithstanding the above, for purposes of determining the time of payment of PSUs upon an involuntary termination of employment or due to Retirement within twenty-four (24) months following a Change in Control under Paragraph 7.c(ii), any termination must be a separation from service as defined in Paragraph 23.a(ii). Subject to the requirement of Code Section 409A, the Committee’s (or its delegee’s) determination in good faith regarding whether a termination of employment of any type or Disability has occurred shall be conclusive and determinative.

9. Issuance and Delivery of Shares; Ownership Rights.

a. Issuance and Delivery of Shares. With respect to PSUs that become vested as provided in Paragraph 5, 6.b, 7.a or 7.b, the shares of Common Stock will be issued and delivered to the Executive via electronic delivery to the Executive’s account with the Company’s stock plan administrator on the Payment Date set forth on Exhibit 1 hereto and will be freely transferable by the Executive (subject to compliance with applicable securities law). With respect to PSUs that become vested as provided in Paragraph 7.c, the shares of Common Stock will be issued and delivered to the Executive via electronic delivery to the Executive’s account with the Company’s stock plan administrator as provided in Paragraph 7.c and will be freely transferable by the Executive (subject to compliance with applicable securities law). The Committee may change the above procedure for issuance and delivery of shares of Common Stock at any time but may not change the Payment Date or the date of payment under Paragraph 7.c except to the extent allowed under Code Section 409A. Notwithstanding any other provision of this Performance Award Agreement, the issuance and delivery of the shares of Common Stock under this Paragraph 9 shall be subject to the requirements of Paragraph 12, including restrictions on transfer as provided therein to the extent applicable.

b. Ownership Rights and Dividend Equivalents. The Executive has no voting or ownership rights with regard to the shares of Common Stock underlying the PSUs prior to the issuance of such shares. The Executive shall be credited with dividend equivalents for all dividends paid in cash that holders of Common Stock of the Company are entitled to receive in respect of Common Stock and that have record dates subsequent to the Grant Date and prior to the Payment Date set forth in Paragraph 9.a (or any applicable earlier payment date provided under Paragraph 7.c). The Executive shall be entitled to receive such dividend equivalents in cash to the extent the underlying PSUs are vested and earned and such dividend equivalents shall be paid on the Payment Date set forth on Exhibit 1 hereto (which does not need to be the same date as for the PSUs under Paragraph 9.a), provided, however, that, in all events, if the payment date of the PSUs is accelerated under Paragraph 7.c, then the payment date of the dividend equivalents shall also be accelerated and paid at the same time as provided under Paragraph 7.c. To the extent any nonvested PSUs are forfeited, the dividend equivalents attributable to such PSUs shall also be forfeited. After the issuance and delivery of the shares of Common Stock, the Executive shall have all voting and ownership rights as provided to other shareholders.

c. Limits on Obligations. No interest shall accrue or otherwise be due in the event the Company delays the payment of the PSUs or dividend equivalents beyond the applicable Payment Date for administrative reasons. Any delay shall be in accordance with the requirements of Code Section 409A. However, the Company shall not be liable to the Executive or any successor in interest for damages relating to any delays in issuing and delivering the shares via electronic delivery or in payment of dividend equivalents to the Executive or any successor in interest, or any mistakes or errors in the issuance or delivery of the shares or in payment or delivery of shares or cash amounts payable under this Performance Award Agreement.

10. Reorganization of Company and Subsidiaries. The existence of this Performance Award Agreement shall not affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the PSUs or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

11. Adjustment of Shares. In the event of stock dividends, spin-offs of assets or other extraordinary dividends, stock splits, reverse stock splits, combinations of shares, recapitalizations, mergers, consolidations, reorganizations, liquidations, issuances of rights or warrants and similar transactions or events involving the Company (each a “Recapitalization Event”), then for all purposes references herein to Common Stock or to PSUs shall mean and include all securities or other property (other than cash) that holders of Common Stock of the Company are entitled to receive in respect of Common Stock by reason of each successive Recapitalization Event, which securities or other property (other than cash) shall be treated in the same manner and shall be subject to the same restrictions as the PSUs.

12. Certain Restrictions. By accepting the Performance Award, the Executive agrees that if at the time of delivery of the shares of Common Stock issued hereunder any sale of such shares is not covered by an effective registration statement filed under the Securities Act of 1933 (the “Act”), the Executive will acquire the Common Stock for the Executive’s own account and without a view to resale or distribution in violation of the Act or any other securities law, and upon any such acquisition the Executive will enter into such written representations, warranties and agreements as the Company may reasonably request in order to comply with the Act or any other securities law or with this Performance Award Agreement.

13. Confidential Information.

a. Nondisclosure and Non-use. By accepting the Performance Award, the Executive covenants and agrees that both during the Executive’s employment with the Company and thereafter, the Executive (i) shall exercise the utmost diligence to protect and safeguard the Confidential Information of the Company and its Affiliates; (ii) shall not disclose to any third party any Confidential Information, except as may be required by the Company in the course of the Executive’s employment or by law; and (iii) shall not use, directly or indirectly, for the Executive’s own benefit or for the benefit of another, any Confidential Information. The Executive acknowledges that Confidential Information has been and will be developed and acquired by the Company and its Affiliates by means of substantial expense and effort, that the Confidential Information is a valuable proprietary asset of the Company’s and its Affiliates’ business, and that its disclosure would cause substantial and irreparable injury to the Company’s and its Affiliates’ business. For purposes of this Performance Award Agreement, “Affiliate” shall mean any entity controlling, controlled by, or under common control of, the Company.

b. Definition of Confidential Information. For purposes of this Performance Award Agreement, “Confidential Information” means all information of a confidential or proprietary nature, whether or not specifically labeled or identified as “confidential,” in any form or medium, that is or was disclosed to, or developed or learned by, the Executive in connection with the Executive’s past, present or future employment with the Company and that relates to the business, products, services, research or development of any of the Company or its Affiliates or their suppliers, distributors or customers. Confidential Information includes, but is not limited to, the following: (i) internal business information (including, but not limited to, information relating to strategic plans and practices, business, training, marketing, promotional and sales plans and practices, cost, rate and pricing structures, accounting and business methods); (ii) identities of, individual requirements of, specific contractual arrangements with, and information about, any of the Company’s, or any of its Affiliates’, suppliers, distributors and customers and their confidential information; (iii) trade secrets, know-how, compilations of data and analyses, techniques, systems, formulae, research, records, reports, manuals, documentation, models, data and data bases relating thereto; (iv) inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether or not patentable); and (v) other information or thing that has economic value, actual or potential, from not being generally known to or not being readily ascertainable by proper means by other persons. Nothing in this Performance Award Agreement prohibits the Executive from reporting an event that the Executive reasonably and in good faith believes is a violation of law to the relevant law-enforcement agency (such as the Securities and Exchange Commission, Equal Employment Opportunity Commission, or Department of Labor), or from cooperating in an investigation conducted by such government agency. The Executive is hereby provided notice that under the 2016 Defend Trade Secrets Act (DTSA): (1) no individual will be held criminally or civilly liable under federal or state trade secret law for disclosure of a trade secret (as defined under the DTSA) that: (A) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and made solely for the purpose of reporting or investigating a suspected violation of law; or, (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal so that it is not made public; and, (2) an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.

c. Not Confidential Information. Confidential Information shall not include information that the Executive can demonstrate: (i) is publicly known through no wrongful act or breach of obligation of confidentiality; (ii) was rightfully received by the Executive from a third party without a breach of any obligation of confidentiality by such third party; or (iii) was known to the Executive on a non-confidential basis prior to the Executive’s employment with the Company.

d. Presumption of Confidentiality. In any judicial proceeding, it will be presumed that the Confidential Information constitutes protectable trade secrets and the Executive will bear the burden of proving that any Confidential Information is publicly or rightfully known by the Executive.

e. Return of Confidential Information and Materials. The Executive agrees to return to the Company either before or immediately upon the termination of the Executive’s employment with the Company any and all information, materials or equipment which constitutes, contains, or in any way relates to the Confidential Information and any other document, equipment or materials of any kind relating in any way to the business of the Company in the possession, custody or control of the Executive which was obtained by the Executive during the course of or as a result of the Executive’s employment with the Company whether confidential or not, including, but without limitation, any copies thereof which may have been made by or for the Executive. The Executive shall also provide the Company, if requested to do so, the name of the new employer of the Executive and the Company shall have the right to advise any subsequent employer of the Executive’s obligations hereunder.

14. Non-Competition. By accepting the Performance Award, the Executive covenants and agrees that during the term of the Executive’s employment with the Company and for a twenty-four (24) month period immediately after the Termination Date (the “Restricted Period”), the Executive will not, directly or indirectly, perform any job, task, function, skill, or responsibility for a Competing Business that the Executive has provided for the Company (and/or its Affiliates) within the twelve (12) month period immediately preceding the Termination Date within the Restricted Territory. For purposes of this Performance Award Agreement, a “Competing Business” shall mean any direct competitor of the Company which, in general, means a specialty retailer of: (i) better women’s intimate apparel, sleepwear and bath and body products; or (ii) better women’s apparel whose target customers are 35 years of age or older and have an annual household income of $75,000 or more. Competing Business includes, but is not limited to: The J. Jill Group, Inc., L Brands, Inc., Soft Surroundings Holdings, LLC, The Talbots, Inc., GAP, Inc., Victoria’s Secret Stores, Inc., and Ascena Retail Group, Inc. For purposes of this Performance Award Agreement, the “Restricted Territory” means where the Company’s products are marketed as of the Termination Date.

This covenant on the part of the Executive shall be construed as an agreement independent of any other provision of this Performance Award Agreement; and the existence of any claim or cause of action of the Executive against the Company, whether predicated on this Performance Award Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of this covenant. The Executive expressly agrees that the restrictions of this Paragraph 14 will not prevent the Executive from otherwise obtaining gainful employment upon termination of the Executive’s employment with the Company as of the Termination Date and acknowledges that these restrictions are reasonable consideration for the grant of the Performance Award hereunder.

15. Non-solicitation of Employees. By accepting the Performance Award, the Executive agrees that for a period of two (2) years after the Termination Date, the Executive shall not, directly or indirectly, induce, solicit or encourage any employee of the Company or its Affiliates to terminate or alter his or her relationship with the Company or its Affiliates.

16. Non-solicitation of Customers, Suppliers, and Business Associates. By accepting the Performance Award, the Executive agrees that for a period of two (2) years after the Termination Date, the Executive shall not directly or indirectly induce, solicit or encourage any customer, supplier or other business associate of the Company or an Affiliate to terminate or alter its relationship with the Company or Affiliate, or introduce, offer or sell to or for any customer or business associate, any products or services that compete with a Company product, service, marketing item, or other item which presently exists, or which was under development or active consideration during the Executive’s employment with the Company.

17. Non-Disparagement. By accepting the Performance Award, the Executive covenants and agrees that both during the Executive’s employment with the Company and thereafter, the Executive shall not, directly or indirectly, disparage the Company, or its successors, corporate affiliates, assigns, officers, directors, shareholders, attorneys, employees, agents, trustees, representatives, or insurers. Such prohibited disparagement shall include communicating or disclosing any information or communications to anyone or any entity which is intended to or has the effect of having any negative impact on the Company, its business or reputation in the marketplace or otherwise.

18. Reasonable Cooperation. By accepting the Performance Award, the Executive acknowledges and agrees that, during the course of the Executive’s employment with the Company, the Executive will be involved in, and may have information or knowledge of, business matters that may become the subject of legal action, including threatened litigation, investigations, administrative proceedings, hearings or disputes. As such, upon reasonable notice, both during the Executive’s employment with the Company and thereafter, the Executive agrees to cooperate fully with any investigation into, defense or prosecution of, or other involvement in, claims to which the Executive has personal and relevant knowledge that are or may be made by or against the Company. This agreement to cooperate includes talking to or meeting with such persons at times and in such places as the Company and the Executive reasonably agree to, as well as giving truthful evidence and truthful testimony. The Company shall reimburse the Executive for reasonable out-of-pocket expenses actually incurred in connection with such assistance. The Executive also promises to notify the Company within five (5) days if the Executive is subpoenaed or contacted by a third party seeking information about Company activities.

19. Noncompliance Reporting. By accepting the Performance Award, the Executive agrees that if, at any time, the Executive learns of information suggesting conduct by an officer or employee of the Company (including of the Company’s subsidiaries) or a member of the Company’s Board of Directors that is unlawful, unethical, or constitutes a material violation of any Company policy, regardless of the source of such information, the Executive will report promptly such information to the Company through any of the Company’s internal mechanisms available for the reporting of such conduct such as, for instance, the Company’s Ethics and Compliance Hotline. Nothing in this Performance Award Agreement is intended to or will be used in any way to limit the Executive’s rights to communicate with a government agency, as provided for, protected under or warranted by applicable law.

20. Amendment and Termination. No amendment or termination of this Performance Award Agreement which would materially impair the rights of the Executive shall be made by the Board of Directors, the Committee, its delegee or the Plan Administrator at any time without the written consent of the Executive. No amendment or termination of the Plan will materially adversely affect the right, title and interest of the Executive under this Performance Award Agreement or to the Performance Award granted hereunder without the written consent of the Executive.

21. No Guarantee of Employment. This Performance Award Agreement shall not confer upon the Executive any right with respect to continuance of employment or other service with the Company or any subsidiary, nor shall it interfere in any way with any right the Company or any subsidiary would otherwise have to terminate such Executive’s employment or other service at any time.

22. Withholding of Taxes. The Company shall have the right to (i) make deductions from the number of shares of Common Stock otherwise deliverable upon satisfaction of the conditions precedent under this Performance Award Agreement (and other amounts payable under this Performance Award Agreement) in an amount sufficient to satisfy withholding of any U.S. or Canadian federal, state or local taxes required by law, or (ii) take such other action as may be necessary or appropriate to satisfy any such tax withholding obligations, provided, in any event, the Company shall withhold only the minimum amount necessary to satisfy applicable statutory withholding requirements in a manner compliant with Section 409A, unless the Executive has elected to have an additional amount (up to the maximum allowed by law) except that any such election shall not apply to the extent prohibited by Section 409A.

23. Other Tax Provisions.

(2) Code Section 409A Compliance. This Performance Award Agreement is intended to comply with the requirements of Code Section 409A and any right or benefit which is provided pursuant to or in connection with this Performance Award Agreement which is considered to be nonqualified deferred compensation subject to Code Section 409A (referred to as a “409A Award”) shall be provided and paid in a manner, and at such time and in such form, as complies with the applicable requirements of Code Section 409A to avoid the unfavorable tax consequences provided therein for non-compliance. Consequently, this Performance Award Agreement is intended to be administered, interpreted and construed in accordance with the applicable requirements of Code Section 409A. Notwithstanding the foregoing, the Executive and his or her successor in interest shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on the Executive or his or her successor in interest in connection with this Performance Award Agreement (including any taxes and penalties under Code Section 409A); and neither the Company nor any of its affiliates shall have any obligation to indemnify or otherwise hold the Executive or his or her successor in interest harmless from any or all of such taxes or penalties.


(i)	Except as permitted under Code Section 409A, any 409A Award payable to the Executive or for his or her benefit with respect to the Performance Award may not be reduced by, or offset against, any amount owing by the Executive to the Company or any of its affiliates.

(ii)

To the extent that entitlement to payment of any 409A Award occurs due to termination or cessation of employment, termination or cessation of employment shall be read to mean a “separation from service” within the meaning of Code Section 409A. A “separation from service” shall occur where it is reasonably anticipated that no further services will be performed after that date or that the level of bona fide services the Executive will perform after that date (whether as an employee or independent contractor of the Company or an affiliate) will permanently decrease to less than twenty percent (20%) of the average level of bona fide services performed over the immediately preceding thirty-six (36) month period. Continued services solely as a director of the Company or an affiliate shall not prevent a separation from service from occurring by the Executive as permitted by Code Section 409A. Where entitlement to payment occurs by reason of a separation from service and the Executive is a “specified employee” (within the meaning of Code Section 409A, as applicable to the Company and its affiliates and using the identification methodology selected by the Company from time to time in accordance with Code Section 409A) on the date of his or her “separation from service”, then payment of such 409A Award shall be delayed (without interest) until the first business day after the end of the six (6) month delay period required under Code Section 409A or, if earlier, after the Executive’s death.


(iii)	In the event a 409A benefit is payable over a period of time (such as within ninety (90) days following termination), the date of payment shall be determined by the Company in its sole discretion. Additionally, for purposes of complying with the requirements under Code Section 409A, the PSUs and the dividend equivalents shall be treated as separate payments.

b. No Guarantee of Tax Consequences. Neither the Company nor any affiliate nor any successor, nor the Plan Administrator, nor the Committee, nor any delegee makes any commitment or guarantee that any federal or state or other tax treatment will apply or be available to any person eligible for benefits under this Performance Award Agreement.

24. Entire Agreement. This Performance Award Agreement constitutes and contains the entire agreement between the parties with respect to the subject matter hereof and supersedes any prior or contemporaneous oral or written agreements.

25. Severability. In the event that any provision of this Performance Award Agreement shall be held illegal, invalid, or unenforceable for any reason, such provision shall be fully severable, but shall not affect the remaining provisions of this Performance Award Agreement and this Performance Award Agreement shall be construed and enforced as if the illegal, invalid, or unenforceable provision had never been included herein.

26. Governing Law. This Performance Award Agreement shall be construed in accordance with the laws of the State of Florida to the extent federal law does not supersede and preempt Florida law.

27. Miscellaneous Provisions.

a. Not a Part of Salary. The grant of this Performance Award is not intended to be a part of the salary of the Executive.

b. Conflicts with Any Employment Agreement. Notwithstanding Paragraph 24 above, if the Executive has an employment or change in control agreement with the Company or any of its subsidiaries (an “Employment Agreement”) which contains different or additional provisions relating to vesting of restricted stock unit awards, or otherwise conflicts with the terms of this Performance Award Agreement, the provisions of the Employment Agreement shall govern except to the extent compliance with such provision would result in a violation of Code Section 409A.

c. Independent Covenants. The Executive acknowledges that the promises set forth herein by either party are independent of each other and are independent of any other provision in any other agreement between the Executive and the Company and the existence of any claim or cause of action the Executive may have against the Company shall not constitute a defense to enforcement of the Executive’s promises herein. To the extent the topic of any restrictive covenant in Paragraphs 14 through 17 is addressed in an enforceable restrictive covenant agreement between the Executive and the Company, whether effective before or after this Performance Award Agreement (the “Restrictive Covenant Agreement”), the parties agree that the terms of such restrictive covenant contained in the Restrictive Covenant Agreement shall apply instead of the corresponding covenant in this Performance Award Agreement.

d. Electronic Delivery and Signatures. The Executive hereby consents and agrees to electronic delivery of share(s) of Common Stock, Plan documents, proxy materials, annual reports and other related documents. The Company has established procedures for an electronic signature system for delivery and acceptance of Plan documents (including documents relating to any programs adopted under the Plan and this Performance Award Agreement). The Executive hereby consents to such procedures and agrees that his or her electronic signature is the same as, and shall have the same force and effect as, his or her manual signature. The Executive consents and agrees that any such procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan, including any program adopted under the Plan.

e. Plan and Prospectus. A copy of the Plan, as well as a prospectus for the Plan, has been provided to the Executive, and the Executive acknowledges receipt thereof.

f. Committee Action. To the extent any provision of this Performance Award Agreement provides authority to the Committee or its delegee to act related to a non-ministerial matter, only the Committee may act to the extent such provision applies to an Insider. “Insider” means an individual who is, on the relevant date, subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended.

28. Clawback Provision. As a condition of receiving the Performance Award, the Executive acknowledges and agrees that the Executive’s rights, payments and benefits with respect to the PSUs and the shares of Common Stock underlying the PSUs shall be subject to such recovery or clawback as may be required pursuant to any applicable federal or other law or regulation, any applicable listing standard of any national securities exchange or system on which the Common Stock is then listed or reported or the terms of the Company’s Incentive Compensation Clawback Policy or similar policy as may be adopted from time to time by the Board of Directors or the Committee, which could in certain circumstances require repayment or forfeiture of the PSUs or any shares of Common Stock or other cash or property received with respect to the PSUs. Except where offset of, or recoupment from, incentive compensation covered by Code Section 409A is prohibited by Code Section 409A, to the extent allowed by law and as determined by the Committee, the Executive agrees that such repayment may, in the discretion of the Committee, be accomplished by withholding of future compensation to be paid to the Executive by the Company. Any recovery of incentive compensation covered by Code Section 409A shall be implemented in a manner which complies with Code Section 409A.

To evidence its grant of the Performance Award and the terms, conditions and restrictions thereof, the Company has signed this Performance Award Agreement as of the Grant Date. This Performance Award Agreement shall not become legally binding unless the Executive has accepted this Performance Award Agreement within thirty (30) days after the Grant Date by signing below. If the Executive fails to timely accept this Performance Award Agreement, the grant of the Performance Award shall be cancelled and forfeited ab initio.



ACKNOWLEDGED AND ACCEPTED /s/ Molly Langenstein Molly Langenstein EXECUTIVE	CHICO’S FAS, INC. By: /s/ Greg Baker Greg Baker, Senior Vice President, General Counsel and Corporate Secretary

Exhibit 1 to Performance Award Agreement

Grant Date: July 1, 2020

Vesting Date: March 2, 2023

Payment Date: March 2, 2023 through March 31, 2023 (Specific payment date(s) within this period to be determined by the Company.)

Performance Goals:



Target Performance Goals
FY 2020	RONA = 3.0%
FY 2021	RONA = 50 bps increase over actual FY 2020 RONA
FY 2022	RONA = 50 bps increase over actual FY 2021 RONA



Threshold Performance Goal (for each fiscal year)	60% of Target RONA
Maximum Performance Goal (for each fiscal year)	150% of Target RONA
* If performance for a fiscal year is between the Threshold and Target or between the Target and Maximum Performance Goals, the “% of Target RONA” achieved for that fiscal year will be determined by applying linear interpolation to the performance interval.

Payout Percentage:

Overall Performance will be the average of the “% of Target RONA” achieved (from 0% to 150%) for each fiscal year.

Payout Percentage will equal the Overall Performance times the target number of PSUs.

*Any fractional PSU earned will be rounded up to the nearest whole PSU.

Exhibit 10.4

CHICO’S FAS, INC.
2020 OMNIBUS STOCK AND INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT

CHIEF EXECUTIVE OFFICER

This Restricted Stock Agreement (this “Restricted Stock Agreement”) is effective as of July 1, 2020 (the “Grant Date”), and is entered into between Chico’s FAS, Inc., a Florida corporation (the “Company”), and Molly Langenstein (the “Executive”). Capitalized terms not otherwise defined herein shall have the same meanings as in the Company’s 2020 Omnibus Stock and Incentive Plan, as amended from time to time (the “Plan”), the terms of which are hereby incorporated by reference and made a part of this Restricted Stock Agreement. All references to specified paragraphs pertain to paragraphs of this Restricted Stock Agreement unless otherwise specifically provided. The Human Resources, Compensation and Benefits Committee of the Board of Directors of the Company (the “Committee”) approved this Restricted Stock grant pursuant to the Plan, in connection with the Executive’s promotion to Chief Executive Officer and President (“CEO”) of the Company and in accordance with that Employment Offer Letter for the Executive dated April 27, 2020 between the Executive and the Company, provided that the Executive continues to be employed as CEO of the Company on the Grant Date.

In consideration of the mutual promises set forth below, the parties hereto agree as follows:

1.Grant of Restricted Stock. The Company hereby grants to the Executive all right, title and interest in the record and beneficial ownership of 164,063 shares of common stock, $.01 par value per share, of the Company (“Common Stock”) subject to the provisions of this Restricted Stock Agreement (the “Restricted Stock”). The Restricted Stock is granted pursuant to the Plan and is subject to the provisions of the Plan, as well as the provisions of this Restricted Stock Agreement. The Executive agrees to be bound by all of the terms, provisions, conditions and limitations of the Plan and this Restricted Stock Agreement. To the extent the terms of the Plan and this Restricted Stock Agreement are in conflict, the terms of the Plan shall govern.

2. No Transfer of Nonvested Shares. During the period that any shares of Restricted Stock are nonvested under this Restricted Stock Agreement, such nonvested shares shall not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, other than by will, the laws of descent and distribution, by qualified domestic relations order or as expressly provided in Paragraph 3 or pursuant to a beneficiary designation made under the Plan. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities, or torts of the Executive.

3. Custody of Restricted Stock. The shares of Restricted Stock will be issued in the name of the Executive and delivered electronically to the Plan Administrator as escrow agent (the “Escrow Agent”), and will not be sold, assigned, transferred, pledged or otherwise disposed of or encumbered unless and until the expiration of the applicable Restriction Period set forth in Paragraph 5 or the occurrence of any of the events contemplated by Paragraphs 6 or 7. Notwithstanding the foregoing, while such restrictions remain in effect, the Executive may transfer the shares of Restricted Stock to a trust created by such Executive for the benefit of the Executive and the Executive’s family as part of the Executive’s estate planning program, provided that prior to any such transfer, (a) the Executive must submit to the Company a legal opinion of the Executive’s counsel, satisfactory to the Committee, or its delegee, that the transfer to such trust and the holdings of the shares of Restricted Stock by such trust shall have no adverse tax or securities law consequences for the Company and (b) the trust must execute and deliver to the Company a joinder to this Restricted Stock Agreement, satisfactory to the Committee, or its delegee, which shall, among other things, acknowledge the terms of the grant of the Restricted Stock and the restrictions on transfer of the shares of Restricted Stock imposed and established pursuant to the terms of this Restricted Stock Agreement and the Plan, and the trust must continue the deposit of the shares of Restricted Stock with the Escrow Agent and deposit with the Escrow Agent a stock power endorsed in blank by the trustee on behalf of the trust. The Company may instruct the transfer agent for its Common Stock to reflect in its records the restrictions on transfer set forth in this Restricted Stock Agreement and the Plan. No shares of Restricted Stock will be delivered by the Escrow Agent to the Executive as provided in Paragraph 9 unless and until the shares of Restricted Stock have vested and all other terms and conditions in this Restricted Stock Agreement and the Plan have been satisfied.

4. Risk of Forfeiture. Subject to Paragraphs 6 and 7, upon termination of employment (as defined in Paragraph 8) prior to the last day of a Restriction Period, the Executive shall forfeit the Restricted Stock that would otherwise have vested at the end of said Restriction Period. The Executive hereby appoints the Escrow Agent with full power of substitution, as the Executive’s true and lawful attorney-in-fact with irrevocable power and authority in the name and on behalf of the Executive, to take any action and execute all documents and instruments, including, without limitation, stock powers which may be necessary to electronically transfer such nonvested shares of Restricted Stock to the Company upon such forfeiture.

5. Vesting Dates. Subject to the forfeiture and accelerated vesting provisions in Paragraphs 6 and 7, the restrictions applicable to the Restricted Stock will lapse in accordance with the following Restriction Periods: (i) the restrictions as to one-third of the Restricted Stock will lapse on July 1, 2021; (ii) the restrictions as to an additional one-third of the Restricted Stock will lapse on July 1, 2022; and (iii) the restrictions as to the remaining one-third of the Restricted Stock will lapse on July 1, 2023. The restrictions applicable to the Restricted Stock will lapse only in whole share increments, with any fractional shares being combined and included with the third tranche if the combined fractional shares equal one (1) share but included one (1) share each with the second tranche and third tranche if the combined fractional shares equal two (2) shares.

a. Voluntary Termination or Termination for Cause. If, other than as specified below, the Executive voluntarily terminates employment with the Company or the Executive’s employment is terminated by the Company for Cause prior to the last day of a Restriction Period, then the Executive shall forfeit all nonvested Restricted Stock. For purposes of this Restricted Stock Agreement, “Cause” shall mean:

(i) If the Executive has an Employment Agreement (as defined in Paragraph 27(b)) in effect on the Grant Date that defines Cause, Cause as defined in the Employment Agreement; or

(ii) If the Executive does not have an Employment Agreement in effect on the Grant Date or such Employment Agreement does not define Cause, the Executive’s engaging in any of the following conduct:


(A)	Conduct resulting in a conviction of, or entering a plea of no contest to, any felony;


(B)	Conduct resulting in a conviction of, or entering a plea of no contest to, any crime related to employment, but specifically excluding traffic offenses;


(C)	Continued neglect, gross negligence, or willful misconduct by the Executive in the performance of the Executive’s duties, which has a material adverse effect on the Company or its subsidiaries;


(D)	Willful failure to take actions permitted by law and necessary to implement the policies of the Company or its subsidiaries as such policies have been communicated to the Executive;


(E)	Material breach of the terms of this Restricted Stock Agreement, including but not limited to Paragraphs 13 through 18 herein; or


(F)	Drug or alcohol abuse to the extent that such abuse has an obvious and material adverse effect on the Company or its subsidiaries or upon the Executive’s ability to perform his or her duties and responsibilities.

b. Involuntary Termination without Cause. Unless Paragraph 7(c) applies, if the Executive’s employment is terminated by the Company without Cause prior to the last day of a Restriction Period, then the Executive shall forfeit all nonvested Restricted Stock under this Restricted Stock Agreement. The Committee, or its delegee, as applicable, shall retain the authority to accelerate vesting of all or a portion of this Award in its discretion.

a. Retirement. If the Executive’s employment with the Company is terminated by Retirement prior to the last day of a Restriction Period, then as of the Termination Date, such number of shares of nonvested Restricted Stock equal to the Accelerated Portion shall fully vest, all restrictions (other than those described in Paragraph 12) applicable to the Accelerated Portion of the nonvested Restricted Stock shall terminate, the Company shall release from escrow or trust and shall deliver the Accelerated Portion of the nonvested Restricted Stock as provided under Paragraph 9 and the Executive shall forfeit all nonvested Restricted Stock in excess of the Accelerated Portion. For these purposes, the “Accelerated Portion” shall equal the number of shares of nonvested Restricted Stock which is the product of (i) a fraction, the numerator of which is the number of months (which may not be a whole number) elapsed beginning on the Grant Date and ending on the Termination Date and the denominator of which is the total number of months beginning on the Grant Date and ending on the last day of the last Restriction Period, multiplied by (ii) the total number of shares of nonvested Restricted Stock immediately prior to the Termination Date. For these purposes, the Executive’s position as an employee of the Company will not be considered to be terminated by “Retirement” unless prior to the Termination Date (i) the Executive provides written notice to the Company of intent to formally retire; (ii) the Executive has reached age 55; (iii) the Executive’s combined age and years of service with the Company as an employee is equal to 65 or greater; and (iv) the Committee or its delegee approves the Executive’s termination as a “Retirement” for purposes of this Restricted Stock Agreement, which approval is in the sole discretion of the Committee, or its delegee, as applicable.

b. Death or Disability. If the Executive’s employment by the Company is terminated by death or due to a Disability prior to the last day of a Restriction Period, then all nonvested Restricted Stock shall fully vest and all restrictions (other than those described in Paragraph 12) applicable to such Restricted Stock shall terminate. For purposes of this Restricted Stock Agreement, Disability shall mean that the Executive was approved for a disability benefit under the Company’s long-term disability plan. If the Executive is not then covered by the Company’s disability insurance program, the Executive’s Disability status shall be determined using the same criteria and by the same persons as provided in the Company’s disability insurance program, in consultation with the Committee as needed.

c. Change in Control. If a Change in Control shall occur prior to the last day of a Restriction Period, then all nonvested Restricted Stock shall fully vest, all restrictions (other than those described in Paragraph 12) applicable to such Restricted Stock shall terminate and the Company shall release from escrow or trust and shall deliver to the Executive all shares of the Restricted Stock, as provided in Paragraph 9, but only if either: (i) the successor company does not assume, convert, continue, or otherwise replace the Restricted Stock on proportionate and equitable terms or (ii) if the successor company does assume, convert, continue, or otherwise replace the Restricted Stock on proportionate and equitable terms and the Executive is terminated without Cause on or within twenty-four (24) months after the Change in Control.

8. Definition of Employment and Termination Date. For purposes of this Restricted Stock Agreement, “employment” means employment by the Company and/or its subsidiary (as “subsidiary” is defined under the Plan). “Termination Date” means the date upon which the Executive is separated from employment, whether voluntary or involuntary. Neither the transfer of the Executive from employment by the Company to employment by a subsidiary, nor the transfer of the Executive from employment by a subsidiary to employment by the Company, nor the transfer of the Executive from employment by a subsidiary to employment by another subsidiary shall be deemed to be a termination of employment of the Executive. Furthermore, except as required in Paragraph 23 (related to a permanent reduction in hours), in no event shall employment be deemed terminated under this Restricted Stock Agreement unless and until the Executive’s employment by the Company, to the extent applicable, and each of its subsidiaries, to the extent applicable, is terminated such that the Executive is no longer employed by the Company or any of its subsidiaries. Moreover, the employment of the Executive shall not be deemed to have been terminated because of absence from active employment on account of temporary illness or during authorized vacation or during temporary leaves of absence from active employment granted by the Company or a subsidiary for reasons of professional advancement, education, health, or government service, or during military leave for any period if the Executive returns to active employment within ninety (90) days after the termination of military leave, or during any period required to be treated as a leave of absence by virtue of any valid law or agreement. Subject to the requirements of Section 409A (as defined in Paragraph 23) to the extent applicable, the Committee’s (or its delegee’s) determination in good faith regarding whether a termination of employment of any type or Disability has occurred shall be conclusive and determinative. To the extent applicable, the provisions of this Paragraph 8 shall be subject to the provisions of Paragraph 23 for purposes of determining time of payment of a 409A benefit (as defined in Paragraph 23).

9. Issuance and Delivery of Shares; Ownership Rights.

a. Issuance and Delivery of Shares. Once vested, the shares of vested Restricted Stock will be delivered to the Executive via electronic delivery to the Executive’s account with the Company’s stock plan administrator and will be freely transferable by the Executive. The Committee may change the procedure for issuance and delivery of shares of vested Restricted Stock at any time. Notwithstanding any other provision of this Restricted Stock Agreement, the issuance and delivery of the shares of Common Stock under this Paragraph 9 shall be subject to the requirements of Paragraph 12, including restrictions on transfer as provided therein to the extent applicable.

b. Ownership Rights and Stock Dividends. During the Restriction Period, the Executive may exercise full voting rights with respect to the Restricted Stock. Subject to Paragraph 12, during the Restriction Period, all dividends and other distributions with respect to the Restricted Stock that are paid in Common Stock or other securities of the Company shall be (i) issued in the name of the Executive and delivered electronically to the Escrow Agent, (ii) subject to the same restrictions on transferability, forfeiture, vesting (including pro-rata vesting), and withholding provisions as the Restricted Stock with respect to which they were paid and (iii) delivered via electronic delivery to the Executive’s account with the Company’s stock plan administrator and become freely transferable by the Executive when and only to the extent the underlying shares of Restricted Stock have vested.

c. Cash Dividends. During the Restriction Period, if the Executive is employed on the record date for any cash dividends declared on the Common Stock, such cash dividends payable with respect to the Restricted Stock (the “Cash Dividends”) shall be accumulated and held by the Company until payable or forfeited pursuant hereto. No interest shall accrue on the Cash Dividends or otherwise be paid for the holding period. The Cash Dividends shall be subject to the same restrictions on transferability, forfeiture, vesting (including pro-rata vesting), and withholding provisions as the Restricted Stock with respect to which they were paid. Payment of the Cash Dividends shall be made on the applicable Vesting Date in Paragraph 5 (determined using the same rounding provisions as provided in Paragraph 5), subject to pro-rata or full accelerated vesting or forfeiture and accelerated earlier payment (to the extent vested) upon a Termination Date that occurs before a Vesting Date in the event vesting of the Restricted Stock is accelerated under Paragraph 6(b) or Paragraph 7, and also subject to any delay in payment required by Section 409A (as described in Paragraph 23).

d. Limits on Obligations. No interest shall accrue or otherwise be due in the event the Company delays the payment of the Cash Dividends beyond the holding period for administrative reasons. Any delay shall be in accordance with the requirements of Code Section 409A to the extent applicable. However, the Company shall not be liable to the Executive or any successor in interest for damages relating to any delays in issuing or delivering the shares via electronic delivery or in payment of Cash Dividends to the Executive or any successor in interest, or any mistakes or errors in the issuance or delivery of the shares or in payment or delivery of shares or cash amounts payable under this Restricted Stock Agreement.

10. Reorganization of Company and Subsidiaries. The existence of this Restricted Stock Agreement shall not affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Restricted Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

11. Adjustment of Shares. In the event of stock dividends, spin-offs of assets or other extraordinary dividends, stock splits, reverse stock splits, combinations of shares, recapitalizations, mergers, consolidations, reorganizations, liquidations, issuances of rights or warrants and similar transactions or events involving the Company (each a “Recapitalization Event”), then for all purposes references herein to Common Stock or to Restricted Stock shall mean and include all securities or other property (other than cash) that holders of Common Stock of the Company are entitled to receive in respect of Common Stock by reason of each successive Recapitalization Event, which securities or other property (other than cash) shall be treated in the same manner and shall be subject to the same restrictions as the underlying Restricted Stock.

12. Certain Restrictions. By accepting the Restricted Stock, the Executive agrees that if at the time of delivery of the shares of Restricted Stock issued hereunder any sale of such shares is not covered by an effective registration statement filed under the Securities Act of 1933 (the “Act”), the Executive will acquire the Restricted Stock for the Executive’s own account and without a view to resale or distribution in violation of the Act or any other securities law, and upon any such acquisition the Executive will enter into such written representations, warranties and agreements as the Company may reasonably request in order to comply with the Act or any other securities law or with this Restricted Stock Agreement.

13. Confidential Information.

a. Nondisclosure and Non-use. By accepting the Restricted Stock, the Executive covenants and agrees that both during the Executive’s employment with the Company and thereafter, the Executive (i) shall exercise the utmost diligence to protect and safeguard the Confidential Information of the Company and its Affiliates; (ii) shall not disclose to any third party any Confidential Information, except as may be required by the Company in the course of the Executive’s employment or by law; and (iii) shall not use, directly or indirectly, for the Executive’s own benefit or for the benefit of another, any Confidential Information. The Executive acknowledges that Confidential Information has been and will be developed and acquired by the Company and its Affiliates by means of substantial expense and effort, that the Confidential Information is a valuable proprietary asset of the Company’s and its Affiliates’ business, and that its disclosure would cause substantial and irreparable injury to the Company’s and its Affiliates’ business. For purposes of this Restricted Stock Agreement, “Affiliate” shall mean any entity controlling, controlled by, or under common control of, the Company.

b. Definition of Confidential Information. For purposes of this Restricted Stock Agreement, “Confidential Information” means all information of a confidential or proprietary nature, whether or not specifically labeled or identified as “confidential,” in any form or medium, that is or was disclosed to, or developed or learned by, the Executive in connection with the Executive’s past, present or future employment with the Company and that relates to the business, products, services, research or development of any of the Company or its Affiliates or their suppliers, distributors or customers. Confidential Information includes, but is not limited to, the following: (i) internal business information (including, but not limited to, information relating to strategic plans and practices, business, training, marketing, promotional and sales plans and practices, cost, rate and pricing structures, accounting and business methods); (ii) identities of, individual requirements of, specific contractual arrangements with, and information about, any of the Company’s, or any of its Affiliates’, suppliers, distributors and customers and their confidential information; (iii) trade secrets, know-how, compilations of data and analyses, techniques, systems, formulae, research, records, reports, manuals, documentation, models, data and data bases relating thereto; (iv) inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether or not patentable); and (v) other information or thing that has economic value, actual or potential, from not being generally known to or not being readily ascertainable by proper means by other persons. Nothing in this Restricted Stock Agreement prohibits the Executive from reporting an event that the Executive reasonably and in good faith believes is a violation of law to the relevant law-enforcement agency (such as the Securities and Exchange Commission, Equal Employment Opportunity Commission, or Department of Labor), or from cooperating in an investigation conducted by such government agency. The Executive is hereby provided notice that under the 2016 Defend Trade Secrets Act (DTSA): (1) no individual will be held criminally or civilly liable under federal or state trade secret law for disclosure of a trade secret (as defined under the DTSA) that: (A) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and made solely for the purpose of reporting or investigating a suspected violation of law; or, (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal so that it is not made public; and, (2) an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.

14. Non-Competition. By accepting the Restricted Stock, the Executive covenants and agrees that during the term of the Executive’s employment with the Company and for a twenty-four (24) month period immediately after the Termination Date (the “Restricted Period”), the Executive will not, directly or indirectly, perform any job, task, function, skill, or responsibility for a Competing Business that the Executive has provided for the Company (and/or its Affiliates) within the twelve (12) month period immediately preceding the Termination Date within the Restricted Territory. For purposes of this Restricted Stock Agreement, a “Competing Business” shall mean any direct competitor of the Company which, in general, means a specialty retailer of: (i) better women’s intimate apparel, sleepwear and bath and body products; or (ii) better women’s apparel whose target customers are 35 years of age or older and have an annual household income of $75,000 or more. Competing Business includes, but is not limited to: The J. Jill Group, Inc., L Brands, Inc., Soft Surroundings Holdings, LLC, The Talbots, Inc., GAP, Inc., Victoria’s Secret Stores, Inc., and Ascena Retail Group, Inc. For purposes of this Restricted Stock Agreement, the “Restricted Territory” means where the Company’s products are marketed as of the Termination Date.

This covenant on the part of the Executive shall be construed as an agreement independent of any other provision of this Restricted Stock Agreement; and the existence of any claim or cause of action of the Executive against the Company, whether predicated on this Restricted Stock Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of this covenant. The Executive expressly agrees that the restrictions of this Paragraph 14 will not prevent the Executive from otherwise obtaining gainful employment upon termination of the Executive’s employment with the Company as of the Termination Date and acknowledges that these restrictions are reasonable consideration for the grant of the Restricted Stock hereunder.

15. Non-solicitation of Customers, Suppliers, and Business Associates. By accepting the Restricted Stock, the Executive agrees that for a period of two (2) years after the Termination Date, the Executive shall not directly or indirectly induce, solicit or encourage any customer, supplier or other business associate of the Company or an Affiliate to terminate or alter its relationship with the Company or Affiliate, or introduce, offer or sell to or for any customer or business associate, any products or services that compete with a Company product, service, marketing item, or other item which presently exists, or which was under development or active consideration during the Executive’s employment with the Company.

16. Non-solicitation of Employees. By accepting the Restricted Stock, the Executive agrees that for a period of two (2) years after the Termination Date, the Executive shall not, directly or indirectly, induce, solicit or encourage any employee of the Company or its Affiliates to terminate or alter his or her relationship with the Company or its Affiliates.

17. Non-Disparagement. By accepting the Restricted Stock, the Executive covenants and agrees that both during the Executive’s employment with the Company and thereafter, the Executive shall not, directly or indirectly, disparage the Company, or its successors, corporate affiliates, assigns, officers, directors, shareholders, attorneys, employees, agents, trustees, representatives, or insurers. Such prohibited disparagement shall include communicating or disclosing any information or communications to anyone or any entity which is intended to or has the effect of having any negative impact on the Company, its business or reputation in the marketplace or otherwise.

18. Reasonable Cooperation. By accepting the Restricted Stock, the Executive acknowledges and agrees that, during the course of the Executive’s employment with the Company, the Executive will be involved in, and may have information or knowledge of, business matters that may become the subject of legal action, including threatened litigation, investigations, administrative proceedings, hearings or disputes. As such, upon reasonable notice, both during the Executive’s employment with the Company and thereafter, the Executive agrees to cooperate fully with any investigation into, defense or prosecution of, or other involvement in, claims to which the Executive has personal and relevant knowledge that are or may be made by or against the Company. This agreement to cooperate includes talking to or meeting with such persons at times and in such places as the Company and the Executive reasonably agree to, as well as giving truthful evidence and truthful testimony. The Company shall reimburse the Executive for reasonable out-of-pocket expenses actually incurred in connection with such assistance. The Executive also promises to notify the Company within five (5) days if the Executive is subpoenaed or contacted by a third party seeking information about Company activities.

19. Noncompliance Reporting. By accepting the Restricted Stock, the Executive agrees that if, at any time, the Executive learns of information suggesting conduct by an officer or employee of the Company (including of the Company’s subsidiaries) or a member of the Company’s Board of Directors that is unlawful, unethical, or constitutes a material violation of any Company policy, regardless of the source of such information, the Executive will report promptly such information to the Company through any of the Company’s internal mechanisms available for the reporting of such conduct such as, for instance, the Company’s Ethics and Compliance Hotline. Nothing in this Restricted Stock Agreement is intended to or will be used in any way to limit the Executive’s rights to communicate with a government agency, as provided for, protected under or warranted by applicable law.

20. Amendment and Termination. No amendment or termination of this Restricted Stock Agreement which would materially impair the rights of the Executive shall be made by the Board of Directors, the Committee, its delegee or the Plan Administrator at any time without the written consent of the Executive. No amendment or termination of the Plan will materially adversely affect the right, title and interest of the Executive under this Restricted Stock Agreement or to the Restricted Stock granted hereunder without the written consent of the Executive.

21. No Guarantee of Employment. This Restricted Stock Agreement shall not confer upon the Executive any right with respect to continuance of employment or other service with the Company or any subsidiary, nor shall it interfere in any way with any right the Company or any subsidiary would otherwise have to terminate such Executive’s employment or other service at any time.

22. Withholding of Taxes. The Company shall have the right to (i) make deductions from the number of shares of Restricted Stock otherwise deliverable upon satisfaction of the conditions precedent under this Restricted Stock Agreement, and deductions from cash amounts payable under this Restricted Stock Agreement, in an amount sufficient to satisfy withholding of any U.S. or Canadian federal, state, or local taxes required by law, or (ii) take such other action as may be necessary or appropriate to satisfy any such tax withholding obligations, provided, in any event, the Company shall withhold only the minimum amount necessary to satisfy applicable statutory withholding requirements in a manner compliant with Section 409A, if applicable, unless the Executive has elected to have an additional amount (up to the maximum allowed by law) except that any such election shall not apply to the extent prohibited by Section 409A, if applicable.

23. Other Tax Provisions.

a. Section 409A and 409A Benefit. It is intended that any right or benefit which is provided pursuant to or in connection with this Award which is considered to be nonqualified deferred compensation subject to Section 409A (“Section 409A”) of the Internal Revenue Code (a “409A benefit”) shall be provided and paid in a manner, and at such time (i.e., at the applicable payment event described herein if a Section 409A payment event or otherwise at the first Section 409A payment event thereafter consisting of a fixed time (here, the applicable Vesting Date), a Section 409A separation from service (as described below), or a Section 409A Change in Control (as described below) and including, in the discretion of the Committee or its delegee, any applicable Section 409A de minimis limited cashout payment permitted under Treasury Reg. Section 1.409A-3(j)(4)(v)) and in such form, as complies with the applicable requirements of Section 409A to avoid the unfavorable tax consequences provided therein for non-compliance. Consequently, this Restricted Stock Agreement is intended to be administered, interpreted and construed in accordance with the applicable requirements of Section 409A and, with regard to any 409A benefit and notwithstanding any other provision of this Restricted Stock Agreement, the provisions of Paragraph 23 shall apply. Notwithstanding the foregoing, the Executive and his or her successor in interest shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on the Executive or his or her successor in interest in connection with this Restricted Stock Agreement (including any taxes and penalties under Section 409A); and neither the Company nor any of its affiliates shall have any obligation to indemnify or otherwise hold the Executive or his or her successor in interest harmless from any or all of such taxes or penalties.

b. No Offset and Separate Payments. Except as permitted under Section 409A, any 409A benefit payable to the Executive or for his or her benefit may not be reduced by, or offset against, any amount owing by the Executive to the Company or any of its affiliates. For purposes of determining the application of, and compliance with, Section 409A, Restricted Stock, stock dividends and cash dividends shall be treated as a separate payment and, to the extent paid in installments, each installment shall be considered a separate payment.

c. Change in Control. To the extent that entitlement to payment of any 409A benefit occurs due to a Change in Control, then the provisions of this Paragraph 23(c) apply with regard to the timing of payment (but not vesting) of the 409A benefit. If a Change in Control shall occur prior to the applicable Vesting Date and the successor company does not assume, convert, continue, or otherwise replace the Restricted Stock on proportionate and equitable terms, then the 409A benefit shall be paid no later than thirty (30) days after the date of the Change in Control pursuant to and in accordance with the requirements of Treasury Regulations 1.409A-3(j)(4)(ix)(B) (related to termination of all similar plans and agreements subject to Section 409A). If a Change in Control shall occur prior to the applicable Vesting Date and the successor company does assume, convert, continue or otherwise replace the Restricted Stock on proportionate and equitable terms, but prior to the applicable Vesting Date, the Company terminates the Executive’s employment other than for Cause or the Executive’s employment with the Company is terminated by Retirement within twenty-four (24) months after the Change in Control, then the 409A benefit shall be paid on the Termination Date, subject to the provisions in Paragraph 23(d). For a 409A benefit only, to be a Change in Control under this Restricted Stock Agreement, the Change in Control must meet the requirements of Treasury Regulations 1.409A-3(i)(5) (a “Section 409A Change in Control”). The above shall only govern the payment timing of a 409A benefit (to the extent vested) and shall not impact the vesting of the 409A benefit (which shall be governed by Paragraphs 5 through 7).

d. Separation from Service and Six-Month Delay Period. To the extent that entitlement to payment of any 409A benefit occurs due to termination of employment, the terms “termination of employment” or “termination date” shall be read to mean “separation from service” (within the meaning of Section 409A and as applicable to the Company and its affiliates). Where entitlement to payment occurs by reason of such termination of employment and the Executive is a “specified employee” (within the meaning of Section 409A, as applicable to the Company and its affiliates and using the identification methodology selected by the Company from time to time in accordance with Section 409A) on the date of his or her “separation from service”, then payment of such 409A benefit shall be delayed (without interest) until the first business day after the end of the six-month delay period required under Section 409A or, if earlier, after the Executive’s death. A “separation from service” shall occur where it is reasonably anticipated that no further services will be performed after that date or that the level of bona fide services the Executive will perform after that date (whether as an employee or independent contractor of the Company or an affiliate) will permanently decrease to less than twenty percent (20%) of the average level of bona fide services performed over the immediately preceding thirty-six (36) month period. Continued services solely as a director of the Company or an affiliate shall not prevent a separation from service from occurring by the Executive as permitted by Section 409A.

e. Discretion. In the event a 409A benefit is payable over a period of time (such as within thirty (30) days after a Change in Control), the date of payment shall be determined by the Company in its sole discretion.

f. No Guarantee of Tax Consequences. Neither the Company nor any affiliate nor any successor nor the Plan Administrator nor the Committee nor any delegee makes any commitment or guarantee that any federal or state or other tax treatment will apply or be available to any person eligible for benefits under this Restricted Stock Agreement.

24. Entire Agreement. This Restricted Stock Agreement constitutes and contains the entire agreement between the parties with respect to the subject matter hereof and supersedes any prior or contemporaneous oral or written agreements.

25. Severability. In the event that any provision of this Restricted Stock Agreement shall be held illegal, invalid, or unenforceable for any reason, such provision shall be fully severable, but shall not affect the remaining provisions of this Restricted Stock Agreement and this Restricted Stock Agreement shall be construed and enforced as if the illegal, invalid, or unenforceable provision had never been included herein.

26. Governing Law. This Restricted Stock Agreement shall be construed in accordance with the laws of the State of Florida to the extent federal law does not supersede and preempt Florida law.

27. Miscellaneous Provisions.

a. Not a Part of Salary. The grant of this Restricted Stock is not intended to be a part of the salary of the Executive.

b. Conflicts with Any Employment Agreement. Notwithstanding Paragraph 24 above, if the Executive has an employment or change in control agreement with the Company or any of its subsidiaries (an “Employment Agreement”) which contains different or additional provisions relating to vesting of restricted stock awards, or otherwise conflicts with the terms of this Restricted Stock Agreement, the provisions of the Employment Agreement shall govern except to the extent compliance with such provision would result in a violation of Section 409A.

c. Independent Covenants. The Executive acknowledges that the promises set forth herein by either party are independent of each other and are independent of any other provision in any other agreement between the Executive and the Company and the existence of any claim or cause of action the Executive may have against the Company shall not constitute a defense to enforcement of the Executive’s promises herein. To the extent the topic of any restrictive covenant in Paragraphs 14 through 17 is addressed in an enforceable restrictive covenant agreement between the Executive and the Company, whether effective before or after this Restricted Stock Agreement (the “Restrictive Covenant Agreement”), the parties agree that the terms of such restrictive covenant contained in the Restrictive Covenant Agreement shall apply instead of the corresponding covenant in this Restricted Stock Agreement.

d. Electronic Delivery and Signatures. The Executive hereby consents and agrees to electronic delivery of share(s) of Common Stock, Plan documents, proxy materials, annual reports and other related documents. The Company has established procedures for an electronic signature system for delivery and acceptance of Plan documents (including documents relating to any programs adopted under the Plan and this Restricted Stock Agreement). The Executive hereby consents to such procedures and agrees that his or her electronic signature is the same as, and shall have the same force and effect as, his or her manual signature. The Executive consents and agrees that any such procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan, including any program adopted under the Plan.

e. Plan and Prospectus. A copy of the Plan, as well as a prospectus for the Plan, has been provided to the Executive, and the Executive acknowledges receipt thereof.

f. Committee Action. To the extent any provision of this Restricted Stock Agreement provides authority to the Committee or its delegee to act related to a non-ministerial matter, only the Committee may act to the extent such provision applies to an Insider. “Insider” means an individual who is, on the relevant date, subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended.

28. Clawback Provision. As a condition of receiving the Restricted Stock, the Executive acknowledges and agrees that the Executive’s rights, payments and benefits with respect to the Restricted Stock or other cash or property received with respect to the Restricted Stock shall be subject to such recovery or clawback as may be required pursuant to any applicable federal or other law or regulation, any applicable listing standard of any national securities exchange or system on which the Common Stock is then listed or reported or the terms of the Company’s Incentive Compensation Clawback Policy or similar policy as may be adopted from time to time by the Board of Directors or the Committee, which could in certain circumstances require repayment or forfeiture of the Restricted Stock or any shares of Common Stock or other cash or property received with respect to the Restricted Stock. Except where offset of, or recoupment from, incentive compensation covered by Section 409A is prohibited by Section 409A, to the extent allowed by law and as determined by the Committee, the Executive agrees that such repayment may, in the discretion of the Committee, be accomplished by withholding of future compensation to be paid to the Executive by the Company. Any recovery of incentive compensation covered by Section 409A shall be implemented in a manner which complies with Section 409A.

To evidence its grant of the Restricted Stock Award and the terms, conditions and restrictions thereof, the Company has signed this Restricted Stock Agreement as of the Grant Date. This Restricted Stock Agreement shall not become legally binding unless the Executive has accepted this Restricted Stock Agreement within thirty (30) days after the Grant Date by signing below. If the Executive fails to timely accept this Restricted Stock Agreement, the grant of the Restricted Stock shall be cancelled and forfeited ab initio.



ACKNOWLEDGED AND ACCEPTED /s/ Molly Langenstein Molly Langenstein EXECUTIVE	CHICO’S FAS, INC. By: /s/ Greg Baker Greg Baker, Senior Vice President, General Counsel and Corporate Secretary

Exhibit 10.5

CHICO’S FAS, INC.
2020 OMNIBUS STOCK AND INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT

EMPLOYEE

This Restricted Stock Agreement (this “Restricted Stock Agreement”) is effective as of the Grant/Award Date indicated on the Appendix hereto (the “Grant Date”), and is entered into between Chico’s FAS, Inc., a Florida corporation (the “Company”), and the Participant named in the Appendix hereto (the “Employee”). Capitalized terms not otherwise defined herein shall have the same meanings as in the Company’s 2020 Omnibus Stock and Incentive Plan, as amended from time to time (the “Plan”), the terms of which are hereby incorporated by reference and made a part of this Restricted Stock Agreement. All references to specified paragraphs pertain to paragraphs of this Restricted Stock Agreement unless otherwise specifically provided. The Human Resources, Compensation and Benefits Committee of the Board of Directors of the Company (the “Committee”) or its delegee approved this Restricted Stock grant pursuant to the Plan, provided that the Employee continues to be employed as an employee of the Company on the Grant Date.

In consideration of the mutual promises set forth below, the parties hereto agree as follows:

1.Grant of Restricted Stock. The Company hereby grants to the Employee all right, title and interest in the record and beneficial ownership of the number of shares of common stock, $.01 par value per share, of the Company (“Common Stock”) indicated on the Appendix hereto subject to the provisions of this Restricted Stock Agreement (the “Restricted Stock”). The Restricted Stock is granted pursuant to the Plan and is subject to the provisions of the Plan, as well as the provisions of this Restricted Stock Agreement. The Employee agrees to be bound by all of the terms, provisions, conditions and limitations of the Plan and this Restricted Stock Agreement. To the extent the terms of the Plan and this Restricted Stock Agreement are in conflict, the terms of the Plan shall govern.

3. Custody of Restricted Stock. The shares of Restricted Stock will be issued in the name of the Employee and delivered electronically to the Plan Administrator as escrow agent (the “Escrow Agent”), and will not be sold, assigned, transferred, pledged or otherwise disposed of or encumbered unless and until the expiration of the applicable Restriction Period set forth in Paragraph 5 or the occurrence of any of the events contemplated by Paragraphs 6 or 7. Notwithstanding the foregoing, while such restrictions remain in effect, the Employee may transfer the shares of Restricted Stock to a trust created by such Employee for the benefit of the Employee and the

Employee’s family as part of the Employee’s estate planning program, provided that prior to any such transfer, (a) the Employee must submit to the Company a legal opinion of the Employee’s counsel, satisfactory to the Committee, or its delegee, that the transfer to such trust and the holdings of the shares of Restricted Stock by such trust shall have no adverse tax or securities law consequences for the Company and (b) the trust must execute and deliver to the Company a joinder to this Restricted Stock Agreement, satisfactory to the Committee, or its delegee, which shall, among other things, acknowledge the terms of the grant of the Restricted Stock and the restrictions on transfer of the shares of Restricted Stock imposed and established pursuant to the terms of this Restricted Stock Agreement and the Plan, and the trust must continue the deposit of the shares of Restricted Stock with the Escrow Agent and deposit with the Escrow Agent a stock power endorsed in blank by the trustee on behalf of the trust. The Company may instruct the transfer agent for its Common Stock to reflect in its records the restrictions on transfer set forth in this Restricted Stock Agreement and the Plan. No shares of Restricted Stock will be delivered by the Escrow Agent to the Employee as provided in Paragraph 9 unless and until the shares of Restricted Stock have vested and all other terms and conditions in this Restricted Stock Agreement and the Plan have been satisfied.

4. Risk of Forfeiture. Subject to Paragraphs 6 and 7, upon termination of employment (as defined in Paragraph 8) prior to the last day of a Restriction Period, the Employee shall forfeit the Restricted Stock that would otherwise have vested at the end of said Restriction Period. The Employee hereby appoints the Escrow Agent with full power of substitution, as the Employee’s true and lawful attorney-in-fact with irrevocable power and authority in the name and on behalf of the Employee, to take any action and execute all documents and instruments, including, without limitation, stock powers which may be necessary to electronically transfer such nonvested shares of Restricted Stock to the Company upon such forfeiture.

5. Vesting Dates. Subject to the forfeiture and accelerated vesting provisions in Paragraphs 6 and 7, the restrictions applicable to the Restricted Stock will lapse in accordance with the following Restriction Periods, as shown in the Vesting Schedule indicated on the Appendix hereto: (i) the restrictions as to one-third of the Restricted Stock will lapse on the first anniversary of the Grant Date; (ii) the restrictions as to an additional one-third of the Restricted Stock will lapse on the second anniversary of the Grant Date; and (iii) the restrictions as to the remaining one-third of the Restricted Stock will lapse on the third anniversary of the Grant Date. The restrictions applicable to the Restricted Stock will lapse only in whole share increments, with any fractional shares being combined and included with the third tranche if the combined fractional shares equal one (1) share but included one (1) share each with the second tranche and third tranche if the combined fractional shares equal two (2) shares.

6. Termination of Employment. The Employee’s voluntary or involuntary termination of employment (as determined under Paragraph 8) shall affect the Employee’s rights under this Restricted Stock Agreement as follows:

a. Voluntary Termination or Termination for Cause. If, other than as specified below, the Employee voluntarily terminates employment with the Company or the Employee’s employment is terminated by the Company for Cause prior to the last day of a Restriction Period, then the

Employee shall forfeit all nonvested Restricted Stock. For purposes of this Restricted Stock Agreement, “Cause” shall mean:

(i) If the Employee has an Employment Agreement (as defined in Paragraph 27(b)) in effect on the Grant Date that defines Cause, Cause as defined in the Employment Agreement; or

(ii) If the Employee does not have an Employment Agreement in effect on the Grant Date or such Employment Agreement does not define Cause, the Employee’s engaging in any of the following conduct:


(A)	Conduct resulting in a conviction of, or entering a plea of no contest to, any felony;


(B)	Conduct resulting in a conviction of, or entering a plea of no contest to, any crime related to employment, but specifically excluding traffic offenses;


(C)	Continued neglect, gross negligence, or willful misconduct by the Employee in the performance of the Employee’s duties, which has a material adverse effect on the Company or its subsidiaries;


(D)	Willful failure to take actions permitted by law and necessary to implement the policies of the Company or its subsidiaries as such policies have been communicated to the Employee;


(E)	Material breach of the terms of this Restricted Stock Agreement, including but not limited to Paragraphs 13 through 18 herein; or


(F)	Drug or alcohol abuse to the extent that such abuse has an obvious and material adverse effect on the Company or its subsidiaries or upon the Employee’s ability to perform his or her duties and responsibilities.

b. Involuntary Termination without Cause. Unless Paragraph 7(c) applies, if the Employee’s employment is terminated by the Company without Cause prior to the last day of a Restriction Period, then the Employee shall forfeit all nonvested Restricted Stock under this Restricted Stock Agreement. The Committee, or its delegee, as applicable, shall retain the authority to accelerate vesting of all or a portion of this Award in its discretion.

7. Retirement, Death or Disability, or Change in Control. The Employee’s Retirement, or death or Disability, or a Change in Control, shall affect the Employee’s rights under this Restricted Stock Agreement as follows:

a. Retirement. If the Employee’s employment with the Company is terminated by Retirement prior to the last day of a Restriction Period, then as of the Termination Date, such number of shares of nonvested Restricted Stock equal to the Accelerated Portion shall fully vest, all restrictions (other than those described in Paragraph 12) applicable to the Accelerated Portion of the nonvested Restricted Stock shall terminate, the Company shall release from escrow or trust and

shall deliver the Accelerated Portion of the nonvested Restricted Stock as provided under Paragraph 9 and the Employee shall forfeit all nonvested Restricted Stock in excess of the Accelerated Portion. For these purposes, the “Accelerated Portion” shall equal the number of shares of nonvested Restricted Stock which is the product of (i) a fraction, the numerator of which is the number of months (which may not be a whole number) elapsed beginning on the Grant Date and ending on the Termination Date and the denominator of which is the total number of months beginning on the Grant Date and ending on the last day of the last Restriction Period, multiplied by (ii) the total number of shares of nonvested Restricted Stock immediately prior to the Termination Date. For these purposes, the Employee’s position as an employee of the Company will not be considered to be terminated by “Retirement” unless prior to the Termination Date (i) the Employee provides written notice to the Company of intent to formally retire; (ii) the Employee has reached age 55; (iii) the Employee’s combined age and years of service with the Company as an employee is equal to 65 or greater; and (iv) the Committee or its delegee approves the Employee’s termination as a “Retirement” for purposes of this Restricted Stock Agreement, which approval is in the sole discretion of the Committee, or its delegee, as applicable.

b. Death or Disability. If the Employee’s employment by the Company is terminated by death or due to a Disability prior to the last day of a Restriction Period, then all nonvested Restricted Stock shall fully vest and all restrictions (other than those described in Paragraph 12) applicable to such Restricted Stock shall terminate. For purposes of this Restricted Stock Agreement, Disability shall mean that the Employee was approved for a disability benefit under the Company’s long-term disability plan. If the Employee is not then covered by the Company’s disability insurance program, the Employee’s Disability status shall be determined using the same criteria and by the same persons as provided in the Company’s disability insurance program, in consultation with the Committee as needed.

c. Change in Control. If a Change in Control shall occur prior to the last day of a Restriction Period, then all nonvested Restricted Stock shall fully vest, all restrictions (other than those described in Paragraph 12) applicable to such Restricted Stock shall terminate and the Company shall release from escrow or trust and shall deliver to the Employee all shares of the Restricted Stock, as provided in Paragraph 9, but only if either: (i) the successor company does not assume, convert, continue, or otherwise replace the Restricted Stock on proportionate and equitable terms or (ii) if the successor company does assume, convert, continue, or otherwise replace the Restricted Stock on proportionate and equitable terms and the Employee is terminated without Cause on or within twenty-four (24) months after the Change in Control.

terminated under this Restricted Stock Agreement unless and until the Employee’s employment by the Company, to the extent applicable, and each of its subsidiaries, to the extent applicable, is terminated such that the Employee is no longer employed by the Company or any of its subsidiaries. Moreover, the employment of the Employee shall not be deemed to have been terminated because of absence from active employment on account of temporary illness or during authorized vacation or during temporary leaves of absence from active employment granted by the Company or a subsidiary for reasons of professional advancement, education, health, or government service, or during military leave for any period if the Employee returns to active employment within ninety (90) days after the termination of military leave, or during any period required to be treated as a leave of absence by virtue of any valid law or agreement. Subject to the requirements of Section 409A (as defined in Paragraph 23) to the extent applicable, the Committee’s (or its delegee’s) determination in good faith regarding whether a termination of employment of any type or Disability has occurred shall be conclusive and determinative. To the extent applicable, the provisions of this Paragraph 8 shall be subject to the provisions of Paragraph 23 for purposes of determining time of payment of a 409A benefit (as defined in Paragraph 23).

9. Issuance and Delivery of Shares; Ownership Rights.

a. Issuance and Delivery of Shares. Once vested, the shares of vested Restricted Stock will be delivered to the Employee via electronic delivery to the Employee’s account with the Company’s stock plan administrator and will be freely transferable by the Employee. The Committee may change the procedure for issuance and delivery of shares of vested Restricted Stock at any time. Notwithstanding any other provision of this Restricted Stock Agreement, the issuance and delivery of the shares of Common Stock under this Paragraph 9 shall be subject to the requirements of Paragraph 12, including restrictions on transfer as provided therein to the extent applicable.

b. Ownership Rights and Stock Dividends. During the Restriction Period, the Employee may exercise full voting rights with respect to the Restricted Stock. Subject to Paragraph 12, during the Restriction Period, all dividends and other distributions with respect to the Restricted Stock that are paid in Common Stock or other securities of the Company shall be (i) issued in the name of the Employee and delivered electronically to the Escrow Agent, (ii) subject to the same restrictions on transferability, forfeiture, vesting (including pro-rata vesting), and withholding provisions as the Restricted Stock with respect to which they were paid and (iii) delivered via electronic delivery to the Employee’s account with the Company’s stock plan administrator and become freely transferable by the Employee when and only to the extent the underlying shares of Restricted Stock have vested.

c. Cash Dividends. During the Restriction Period, if the Employee is employed on the record date for any cash dividends declared on the Common Stock, such cash dividends payable with respect to the Restricted Stock (the “Cash Dividends”) shall be accumulated and held by the Company until payable or forfeited pursuant hereto. No interest shall accrue on the Cash Dividends or otherwise be paid for the holding period. The Cash Dividends shall be subject to the same restrictions on transferability, forfeiture, vesting (including pro-rata vesting), and withholding provisions as the Restricted Stock with respect to which they were paid. Payment of the Cash Dividends shall be made on the applicable Vesting Date in Paragraph 5 (determined using the same

rounding provisions as provided in Paragraph 5), subject to pro-rata or full accelerated vesting or forfeiture and accelerated earlier payment (to the extent vested) upon a Termination Date that occurs before a Vesting Date in the event vesting of the Restricted Stock is accelerated under Paragraph 6(b) or Paragraph 7, and also subject to any delay in payment required by Section 409A (as described in Paragraph 23).

d. Limits on Obligations. No interest shall accrue or otherwise be due in the event the Company delays the payment of the Cash Dividends beyond the holding period for administrative reasons. Any delay shall be in accordance with the requirements of Code Section 409A to the extent applicable. However, the Company shall not be liable to the Employee or any successor in interest for damages relating to any delays in issuing or delivering the shares via electronic delivery or in payment of Cash Dividends to the Employee or any successor in interest, or any mistakes or errors in the issuance or delivery of the shares or in payment or delivery of shares or cash amounts payable under this Restricted Stock Agreement.

11. Adjustment of Shares. In the event of stock dividends, spin-offs of assets or other extraordinary dividends, stock splits, reverse stock splits, combinations of shares, recapitalizations, mergers, consolidations, reorganizations, liquidations, issuances of rights or warrants and similar transactions or events involving the Company (each a “Recapitalization Event”), then for all purposes references herein to Common Stock or to Restricted Stock shall mean and include all securities or other property (other than cash) that holders of Common Stock of the Company are entitled to receive in respect of Common Stock by reason of each successive Recapitalization Event, which securities or other property (other than cash) shall be treated in the same manner and shall be subject to the same restrictions as the underlying Restricted Stock.

12. Certain Restrictions. By accepting the Restricted Stock, the Employee agrees that if at the time of delivery of the shares of Restricted Stock issued hereunder any sale of such shares is not covered by an effective registration statement filed under the Securities Act of 1933 (the “Act”), the Employee will acquire the Restricted Stock for the Employee’s own account and without a view to resale or distribution in violation of the Act or any other securities law, and upon any such acquisition the Employee will enter into such written representations, warranties and agreements as the Company may reasonably request in order to comply with the Act or any other securities law or with this Restricted Stock Agreement.

13. Confidential Information.

a. Nondisclosure and Non-use. By accepting the Restricted Stock, the Employee covenants and agrees that both during the Employee’s employment with the Company and thereafter, the Employee (i) shall exercise the utmost diligence to protect and safeguard the Confidential Information of the Company and its Affiliates; (ii) shall not disclose to any third party any Confidential Information, except as may be required by the Company in the course of the Employee’s employment or by law; and (iii) shall not use, directly or indirectly, for the Employee’s own benefit or for the benefit of another, any Confidential Information. The Employee acknowledges that Confidential Information has been and will be developed and acquired by the Company and its Affiliates by means of substantial expense and effort, that the Confidential Information is a valuable proprietary asset of the Company’s and its Affiliates’ business, and that its disclosure would cause substantial and irreparable injury to the Company’s and its Affiliates’ business. For purposes of this Restricted Stock Agreement, “Affiliate” shall mean any entity controlling, controlled by, or under common control of, the Company.

b. Definition of Confidential Information. For purposes of this Restricted Stock Agreement, “Confidential Information” means all information of a confidential or proprietary nature, whether or not specifically labeled or identified as “confidential,” in any form or medium, that is or was disclosed to, or developed or learned by, the Employee in connection with the Employee’s past, present or future employment with the Company and that relates to the business, products, services, research or development of any of the Company or its Affiliates or their suppliers, distributors or customers. Confidential Information includes, but is not limited to, the following: (i) internal business information (including, but not limited to, information relating to strategic plans and practices, business, training, marketing, promotional and sales plans and practices, cost, rate and pricing structures, accounting and business methods); (ii) identities of, individual requirements of, specific contractual arrangements with, and information about, any of the Company’s, or any of its Affiliates’, suppliers, distributors and customers and their confidential information; (iii) trade secrets, know-how, compilations of data and analyses, techniques, systems, formulae, research, records, reports, manuals, documentation, models, data and data bases relating thereto; (iv) inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether or not patentable); and (v) other information or thing that has economic value, actual or potential, from not being generally known to or not being readily ascertainable by proper means by other persons. Nothing in this Restricted Stock Agreement prohibits the Employee from reporting an event that the Employee reasonably and in good faith believes is a violation of law to the relevant law-enforcement agency (such as the Securities and Exchange Commission, Equal Employment Opportunity Commission, or Department of Labor), or from cooperating in an investigation conducted by such government agency. The Employee is hereby provided notice that under the 2016 Defend Trade Secrets Act (DTSA): (1) no individual will be held criminally or civilly liable under federal or state trade secret law for disclosure of a trade secret (as defined under the DTSA) that: (A) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and made solely for the purpose of reporting or investigating a suspected violation of law; or, (B) is made in a complaint or other

document filed in a lawsuit or other proceeding, if such filing is made under seal so that it is not made public; and, (2) an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.

c. Not Confidential Information. Confidential Information shall not include information that the Employee can demonstrate: (i) is publicly known through no wrongful act or breach of obligation of confidentiality; (ii) was rightfully received by the Employee from a third party without a breach of any obligation of confidentiality by such third party; or (iii) was known to the Employee on a non-confidential basis prior to the Employee’s employment with the Company.

d. Presumption of Confidentiality. In any judicial proceeding, it will be presumed that the Confidential Information constitutes protectable trade secrets and the Employee will bear the burden of proving that any Confidential Information is publicly or rightfully known by the Employee.

e. Return of Confidential Information and Materials. The Employee agrees to return to the Company either before or immediately upon the termination of the Employee’s employment with the Company any and all information, materials or equipment which constitutes, contains, or in any way relates to the Confidential Information and any other document, equipment or materials of any kind relating in any way to the business of the Company in the possession, custody or control of the Employee which was obtained by the Employee during the course of or as a result of the Employee’s employment with the Company whether confidential or not, including, but without limitation, any copies thereof which may have been made by or for the Employee. The Employee shall also provide the Company, if requested to do so, the name of the new employer of the Employee and the Company shall have the right to advise any subsequent employer of the Employee’s obligations hereunder.

14. Non-Competition. By accepting the Restricted Stock, the Employee covenants and agrees that during the term of the Employee’s employment with the Company and for a twelve (12) month period [six (6) month period for Vice Presidents and below] [twenty-four (24) month period in the case of the Chief Executive Officer] immediately after the Termination Date (the “Restricted Period”), the Employee will not, directly or indirectly, perform any job, task, function, skill, or responsibility for a Competing Business that the Employee has provided for the Company (and/or its Affiliates) within the twelve (12) month period immediately preceding the Termination Date within the Restricted Territory. For purposes of this Restricted Stock Agreement, a “Competing Business” shall mean any direct competitor of the Company which, in general, means a specialty retailer of: (i) better women’s intimate apparel, sleepwear and bath and body products; or (ii) better women’s apparel whose target customers are 35 years of age or older and have an annual household income of $75,000 or more. Competing Business includes, but is not limited to: The J. Jill Group,

Inc., L Brands, Inc., Soft Surroundings Holdings, LLC, The Talbots, Inc., GAP, Inc., Victoria’s Secret Stores, Inc., and Ascena Retail Group, Inc. For purposes of this Restricted Stock Agreement, the “Restricted Territory” means where the Company’s products are marketed as of the Termination Date.

This covenant on the part of the Employee shall be construed as an agreement independent of any other provision of this Restricted Stock Agreement; and the existence of any claim or cause of action of the Employee against the Company, whether predicated on this Restricted Stock Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of this covenant. The Employee expressly agrees that the restrictions of this Paragraph 14 will not prevent the Employee from otherwise obtaining gainful employment upon termination of the Employee’s employment with the Company as of the Termination Date and acknowledges that these restrictions are reasonable consideration for the grant of the Restricted Stock hereunder.

15. Non-solicitation of Customers, Suppliers, and Business Associates. By accepting the Restricted Stock, the Employee agrees that for a period of two (2) years after the Termination Date, the Employee shall not directly or indirectly induce, solicit or encourage any customer, supplier or other business associate of the Company or an Affiliate to terminate or alter its relationship with the Company or Affiliate, or introduce, offer or sell to or for any customer or business associate, any products or services that compete with a Company product, service, marketing item, or other item which presently exists, or which was under development or active consideration during the Employee’s employment with the Company.

16. Non-solicitation of Employees. By accepting the Restricted Stock, the Employee agrees that for a period of two (2) years after the Termination Date, the Employee shall not, directly or indirectly, induce, solicit or encourage any employee of the Company or its Affiliates to terminate or alter his or her relationship with the Company or its Affiliates.

17. Non-Disparagement. By accepting the Restricted Stock, the Employee covenants and agrees that both during the Employee’s employment with the Company and thereafter, the Employee shall not, directly or indirectly, disparage the Company, or its successors, corporate affiliates, assigns, officers, directors, shareholders, attorneys, employees, agents, trustees, representatives, or insurers. Such prohibited disparagement shall include communicating or disclosing any information or communications to anyone or any entity which is intended to or has the effect of having any negative impact on the Company, its business or reputation in the marketplace or otherwise.

18. Reasonable Cooperation. By accepting the Restricted Stock, the Employee acknowledges and agrees that, during the course of the Employee’s employment with the Company, the Employee will be involved in, and may have information or knowledge of, business matters that may become the subject of legal action, including threatened litigation, investigations, administrative proceedings, hearings or disputes. As such, upon reasonable notice, both during the Employee’s employment with the Company and thereafter, the Employee agrees to cooperate fully with any investigation into, defense or prosecution of, or other involvement in, claims to which the

Employee has personal and relevant knowledge that are or may be made by or against the Company. This agreement to cooperate includes talking to or meeting with such persons at times and in such places as the Company and the Employee reasonably agree to, as well as giving truthful evidence and truthful testimony. The Company shall reimburse the Employee for reasonable out-of-pocket expenses actually incurred in connection with such assistance. The Employee also promises to notify the Company within five (5) days if the Employee is subpoenaed or contacted by a third party seeking information about Company activities.

19. Noncompliance Reporting. By accepting the Restricted Stock, the Employee agrees that if, at any time, the Employee learns of information suggesting conduct by an officer or employee of the Company (including of the Company’s subsidiaries) or a member of the Company’s Board of Directors that is unlawful, unethical, or constitutes a material violation of any Company policy, regardless of the source of such information, the Employee will report promptly such information to the Company through any of the Company’s internal mechanisms available for the reporting of such conduct such as, for instance, the Company’s Ethics and Compliance Hotline. Nothing in this Restricted Stock Agreement is intended to or will be used in any way to limit the Employee’s rights to communicate with a government agency, as provided for, protected under or warranted by applicable law.

20. Amendment and Termination. No amendment or termination of this Restricted Stock Agreement which would materially impair the rights of the Employee shall be made by the Board of Directors, the Committee, its delegee or the Plan Administrator at any time without the written consent of the Employee. No amendment or termination of the Plan will materially adversely affect the right, title and interest of the Employee under this Restricted Stock Agreement or to the Restricted Stock granted hereunder without the written consent of the Employee.

21. No Guarantee of Employment. This Restricted Stock Agreement shall not confer upon the Employee any right with respect to continuance of employment or other service with the Company or any subsidiary, nor shall it interfere in any way with any right the Company or any subsidiary would otherwise have to terminate such Employee’s employment or other service at any time.

22. Withholding of Taxes. The Company shall have the right to (i) make deductions from the number of shares of Restricted Stock otherwise deliverable upon satisfaction of the conditions precedent under this Restricted Stock Agreement, and deductions from cash amounts payable under this Restricted Stock Agreement, in an amount sufficient to satisfy withholding of any U.S. or Canadian federal, state, or local taxes required by law, or (ii) take such other action as may be necessary or appropriate to satisfy any such tax withholding obligations, provided, in any event, the Company shall withhold only the minimum amount necessary to satisfy applicable statutory withholding requirements in a manner compliant with Section 409A, if applicable, unless the Employee has elected to have an additional amount (up to the maximum allowed by law) except that any such election shall not apply to the extent prohibited by Section 409A, if applicable.

23. Other Tax Provisions.

a. Section 409A and 409A Benefit. It is intended that any right or benefit which is provided pursuant to or in connection with this Award which is considered to be nonqualified deferred compensation subject to Section 409A (“Section 409A”) of the Internal Revenue Code (a “409A benefit”) shall be provided and paid in a manner, and at such time (i.e., at the applicable payment event described herein if a Section 409A payment event or otherwise at the first Section 409A payment event thereafter consisting of a fixed time (here, the applicable Vesting Date), a Section 409A separation from service (as described below), or a Section 409A Change in Control (as described below) and including, in the discretion of the Committee or its delegee, any applicable Section 409A de minimis limited cashout payment permitted under Treasury Reg. Section 1.409A-3(j)(4)(v)) and in such form, as complies with the applicable requirements of Section 409A to avoid the unfavorable tax consequences provided therein for non-compliance. Consequently, this Restricted Stock Agreement is intended to be administered, interpreted and construed in accordance with the applicable requirements of Section 409A and, with regard to any 409A benefit and notwithstanding any other provision of this Restricted Stock Agreement, the provisions of Paragraph 23 shall apply. Notwithstanding the foregoing, the Employee and his or her successor in interest shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on the Employee or his or her successor in interest in connection with this Restricted Stock Agreement (including any taxes and penalties under Section 409A); and neither the Company nor any of its affiliates shall have any obligation to indemnify or otherwise hold the Employee or his or her successor in interest harmless from any or all of such taxes or penalties.

b. No Offset and Separate Payments. Except as permitted under Section 409A, any 409A benefit payable to the Employee or for his or her benefit may not be reduced by, or offset against, any amount owing by the Employee to the Company or any of its affiliates. For purposes of determining the application of, and compliance with, Section 409A, Restricted Stock, stock dividends and cash dividends shall be treated as a separate payment and, to the extent paid in installments, each installment shall be considered a separate payment.

c. Change in Control. To the extent that entitlement to payment of any 409A benefit occurs due to a Change in Control, then the provisions of this Paragraph 23(c) apply with regard to the timing of payment (but not vesting) of the 409A benefit. If a Change in Control shall occur prior to the applicable Vesting Date and the successor company does not assume, convert, continue, or otherwise replace the Restricted Stock on proportionate and equitable terms, then the 409A benefit shall be paid no later than thirty (30) days after the date of the Change in Control pursuant to and in accordance with the requirements of Treasury Regulations 1.409A-3(j)(4)(ix)(B) (related to termination of all similar plans and agreements subject to Section 409A). If a Change in Control shall occur prior to the applicable Vesting Date and the successor company does assume, convert, continue or otherwise replace the Restricted Stock on proportionate and equitable terms, but prior to the applicable Vesting Date, the Company terminates the Employee’s employment other than for Cause or the Employee’s employment with the Company is terminated by Retirement within twenty-four (24) months after the Change in Control, then the 409A benefit shall be paid on the Termination Date, subject to the provisions in Paragraph 23(d). For a 409A benefit only, to be a Change in Control under this Restricted Stock Agreement, the Change in Control must meet the requirements of Treasury Regulations 1.409A-3(i)(5) (a “Section 409A Change in Control”). The above shall

only govern the payment timing of a 409A benefit (to the extent vested) and shall not impact the vesting of the 409A benefit (which shall be governed by Paragraphs 5 through 7).

d. Separation from Service and Six-Month Delay Period. To the extent that entitlement to payment of any 409A benefit occurs due to termination of employment, the terms “termination of employment” or “termination date” shall be read to mean “separation from service” (within the meaning of Section 409A and as applicable to the Company and its affiliates). Where entitlement to payment occurs by reason of such termination of employment and the Employee is a “specified employee” (within the meaning of Section 409A, as applicable to the Company and its affiliates and using the identification methodology selected by the Company from time to time in accordance with Section 409A) on the date of his or her “separation from service”, then payment of such 409A benefit shall be delayed (without interest) until the first business day after the end of the six-month delay period required under Section 409A or, if earlier, after the Employee’s death. A “separation from service” shall occur where it is reasonably anticipated that no further services will be performed after that date or that the level of bona fide services the Employee will perform after that date (whether as an employee or independent contractor of the Company or an affiliate) will permanently decrease to less than twenty percent (20%) of the average level of bona fide services performed over the immediately preceding thirty-six (36) month period. Continued services solely as a director of the Company or an affiliate shall not prevent a separation from service from occurring by the Employee as permitted by Section 409A.

26. Governing Law. This Restricted Stock Agreement shall be construed in accordance with the laws of the State of Florida to the extent federal law does not supersede and preempt Florida law.

27. Miscellaneous Provisions.

a. Not a Part of Salary. The grant of this Restricted Stock is not intended to be a part of the salary of the Employee.

b. Conflicts with Any Employment Agreement. Notwithstanding Paragraph 24 above, if the Employee has an employment or change in control agreement with the Company or any of its subsidiaries (an “Employment Agreement”) which contains different or additional provisions relating to vesting of restricted stock awards, or otherwise conflicts with the terms of this Restricted Stock Agreement, the provisions of the Employment Agreement shall govern except to the extent compliance with such provision would result in a violation of Section 409A.

c. Independent Covenants. The Employee acknowledges that the promises set forth herein by either party are independent of each other and are independent of any other provision in any other agreement between the Employee and the Company and the existence of any claim or cause of action the Employee may have against the Company shall not constitute a defense to enforcement of the Employee’s promises herein. To the extent the topic of any restrictive covenant in Paragraphs 14 through 17 is addressed in an enforceable restrictive covenant agreement between the Employee and the Company, whether effective before or after this Restricted Stock Agreement (the “Restrictive Covenant Agreement”), the parties agree that the terms of such restrictive covenant contained in the Restrictive Covenant Agreement shall apply instead of the corresponding covenant in this Restricted Stock Agreement.

d. Electronic Delivery and Signatures. The Employee hereby consents and agrees to electronic delivery of share(s) of Common Stock, Plan documents, proxy materials, annual reports and other related documents. The Company has established procedures for an electronic signature system for delivery and acceptance of Plan documents (including documents relating to any programs adopted under the Plan and this Restricted Stock Agreement). The Employee hereby consents to such procedures and agrees that his or her electronic signature is the same as, and shall have the same force and effect as, his or her manual signature. The Employee consents and agrees that any such procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan, including any program adopted under the Plan.

e. Plan and Prospectus. A copy of the Plan, as well as a prospectus for the Plan, has been provided to the Employee, and the Employee acknowledges receipt thereof.

28. Clawback Provision. As a condition of receiving the Restricted Stock, the Employee acknowledges and agrees that the Employee’s rights, payments and benefits with respect to the Restricted Stock or other cash or property received with respect to the Restricted Stock shall be

subject to such recovery or clawback as may be required pursuant to any applicable federal or other law or regulation, any applicable listing standard of any national securities exchange or system on which the Common Stock is then listed or reported or the terms of the Company’s Incentive Compensation Clawback Policy or similar policy as may be adopted from time to time by the Board of Directors or the Committee, which could in certain circumstances require repayment or forfeiture of the Restricted Stock or any shares of Common Stock or other cash or property received with respect to the Restricted Stock. Except where offset of, or recoupment from, incentive compensation covered by Section 409A is prohibited by Section 409A, to the extent allowed by law and as determined by the Committee, the Employee agrees that such repayment may, in the discretion of the Committee, be accomplished by withholding of future compensation to be paid to the Employee by the Company. Any recovery of incentive compensation covered by Section 409A shall be implemented in a manner which complies with Section 409A.

The Employee may reject this Restricted Stock Agreement on the internet hosting website designated by the Company for the Plan during the thirty (30) days following the Grant Date, in which case this Restricted Stock Agreement shall be cancelled and forfeited ab initio. If the Employee does not reject this Restricted Stock Agreement within those thirty (30) days, this Restricted Stock Agreement shall be deemed accepted by the Employee.

IN WITNESS WHEREOF, this Restricted Stock Agreement has been executed and delivered by the Company.

CHICO’S FAS, INC.

By: Molly Langenstein

Title: Chief Executive Officer and President

Exhibit 10.6

SEPARATION AGREEMENT AND GENERAL RELEASE

Chico's FAS, Inc. deeply appreciates all of your contributions to the business. Your separation is not, in any way, the result of your performance. Rather, your position is being eliminated solely as a result of the pandemic of COVID-19 and its impact on the business.

This Agreement is made between Ann Joyce (referred to in the first person) and Chico's FAS, Inc. ("Chico's”), its parent corporation, affiliates, subsidiaries, divisions, successors and assignees and the current and former employees, officers, directors and agents thereof (collectively referred to as the "Released Parties").

1. Last Day of Employment. My last day of active employment with Chico's FAS, Inc. is April 28. 2020. My separation date is May 1, 2020.

2. Separation Program Eligibility Requirements. To be eligible to receive the consideration described in Paragraph 3 below, I must have been separated as part of the COVID-19 NSSC Corporate Officer Organizational Realignment — May 2020, must fully execute this Separation Agreement and General Release ("Agreement") and must not revoke this Agreement as provided in Paragraph 7 below. If I do not fully execute this Agreement within 45 days, this Agreement is null and void.

3. Consideration. In consideration for signing this Agreement and the compliance with promises and agreements herein, Chico's agrees:

a.to pay me $ 162,500.00 (equivalent to 26 weeks of salary); and


b.	to pay for 6 months of COBRA coverage if I am currently enrolled in Chico's healthcare benefits. I understand I will be enrolled by Chico's and applicable coverage payment(s) will be made directly to the COBRA Plan Administrator.

The Separation benefit in 3(a) will be less all applicable deductions and paid in bi-weekly installments and is contingent upon the receipt of the signed Separation Agreement and General Release. Payments will begin with the later of June 5, 2020 or the first pay period after your execution and non-revocation of the Agreement.

I understand and agree that I would not receive the benefits set forth in this Paragraph. except for my execution of this Agreement and the fulfillment of the promises contained herein.

4. I agree to refer all requests for employment references to The Work Number at www.theworkninber.com, employer code 12336. The Work Number, in turn, will provide only confirmation of employment, dates of employment and job title.

5. Applicable Data. I have been provided with a list of the job titles and ages of all individuals in the COVID-19 NSSC Corporate Officer Organizational Realignment - May 2020 who were eligible for the Separation Program, and a list of the ages of all individuals in the COVID-19 NSSC Corporate Officer Organizational Realignment - May 2020 who were not eligible for the Separation Program.

6. Affirmations. I acknowledge and agree as follows: (a) Upon receipt of my final regular paycheck paying me through May 1, 2020, I will have received all compensation due, including, but not limited to all wages, commissions, bonuses, overtime, and any accrued, unused paid time off to which I am entitled; (b) I have no known workplace injuries or occupational diseases other than what I have previously reported to Chico's and I understand any open workers' compensation claim will be unaffected by my separation of employment; (c) I have been provided and/or have not been denied any leave requested under the federal Family and Medical Leave Act or any applicable state leave law; (d) I have not filed, caused to be tiled, or am presently a party to any claim, complaint, or action against Chico's in any forum or form; (e) I have either submitted for reimbursement or received payment for any business expenses; and (f) I have no knowledge or suspicion of any illegal or unethical conduct or other wrongdoing by an officer, director, employee or agent of Chico's which I have not reported previously to Chico's.

7.Revocation. 1 may revoke this Agreement for a period of seven calendar days following the day I execute this Agreement. Any revocation within this period must be submitted, in writing, to Kristin Gwinner, Chief Human Resources Officer, and state, "I hereby revoke my acceptance of our Agreement." The revocation must be personally delivered to Kristin Gwinner, or her designee, or mailed to Kristin Gwinner and postmarked within seven calendar days of execution of this Agreement. This Agreement will not become effective or enforceable until the revocation period has expired.

1 understand that I have up to 45 calendar days to review this Agreement and that Chico's advises me to consult with an attorney prior to execution of this Agreement. I may accept and sign this Agreement before the end of the 45-day period, but I am not required to do so by Chico's. I agree that any modifications of any kind to this Agreement do not restart or affect in any manner the original 45-day consideration period.

8.General Release of Claims. I knowingly and voluntarily release and forever discharge the Released Parties of and from any and all claims, known and unknown, 1 have or may have against the Released Parties as of the date of execution of this Agreement, including, but not limited to, any alleged violation of:


•	Title VII of the Civil Rights Act of 1964, as amended;


•	The Lilly Ledbetter Fair Pay Act of 2009;


•	The Civil Rights Act of 1991;


•	Sections 1981 through 1988 of Title 42 of the United States Code, as amended;


•	The Employee Retirement Income Security Act of 1974, as amended;


•	The Immigration Reform and Control Act, as amended;


•	The Americans with Disabilities Act of 1990, as amended;


•	The Age Discrimination in Employment Act of 1967, as amended;


•	The Older Workers Benefit Protection Act;


•	The Family and Medical Leave Act of 1993, as amended;


•	The Workers Adjustment and Retraining Notification Act. as amended;


•	The Occupational Safety and Health Act, as amended;


•	The Genetic Information Nondiscrimination Act of 2008;


•	The Florida Civil Rights Act, as amended;


•	The Florida Minimum Wage Law, as amended;


•	Equal Pay Law for Florida, as amended;


•	State and federal whistleblower laws;


•	Health Insurance Portability and Accountability Act;


•	Any other federal, state or local civil or human rights law or any other local, state or federal law, regulation or ordinance;


•	Any claim based on my employment or the termination of that employment, whether grounded in public policy, contract, tort, or common law or otherwise; or


•	Any allegation for costs, fees, or other expenses including attorneys' fees incurred in these matters.

By entering into this Agreement, Released Parties do not admit they have violated any of these laws. Released Parties deny any liability to me whatsoever.

I understand that this is a general release and nothing in this Agreement (a) releases any claim that by law cannot be released by private agreement; (b) limits my right to any benefit vested under any employee benefit plan; and (c) limits or affects my right to challenge the validity of this Agreement.

9. Non-Disparagement. I promise and agree that I will not, directly or indirectly, publicly or privately, make, publish or solicit, or encourage others to make, publish or solicit any disparaging. negative, denigrating or derogatory statements, comments, announcements or remarks concerning Released Parties or any of their respective products, services, businesses, operations, financial affairs, goodwill, business reputation or commercial relationships.

10.Repayment Upon Re-employment. I understand if I return to work for Chico's in any capacity within 26 weeks following my last date of employment, I will be responsible for repaying a proportionate amount of the benefits referenced in Paragraph 3(a) above. In addition, I understand if I become employed with a company other than Chico's (and not in contravention of my noncompetition obligations), I must notify Chico's in writing prior to starting such employment and Chico's retains the right to reduce or forfeit any benefits not yet paid to me pursuant to this Agreement.

11.Confidential and Proprietary Business Information. I acknowledge that during my employment with Chico's, I had access to confidential and proprietary business information that is the property of Chico's, the disclosure of which would cause substantial and irreparable harm, loss of good will. and injury to Chico's. I agree to return to Chico's all such confidential and proprietary business information in my possession, custody or control or in the possession, custody or control of another to which I have access, as well as, all files, memoranda, records, documents, computer records, copies of the foregoing, and other information related to Chico's in my custody or control. I further agree not to disclose and not to use any such confidential or proprietary business information without the prior written authorization of the President and Chief Executive Officer of Chico's FAS. Inc.

12.Return of Chico's Property. I agree that I will, contemporaneously with my signature on this Agreement, return to Chico's all property of Chico's that I have not already returned, including, without limitation, computer equipment. keys, credit cards, cellular telephones. records, correspondence, business cards, appointment calendars, customer lists, address lists and files, documents and copies of any of the foregoing. I understand Chico's retains the right to offset from my separation payments all expenses associated with property not returned.

13.Cooperation. From time to time, Chico's may require my assistance in a matter I may have been involved in, or have knowledge of, during my employment with Chico's. I agree to cooperate in good faith with such requests for assistance. Such requests for assistance will be reasonable in scope and in time.

14.Unforeseen Circumstances. I have been advised and understand that, to preserve the Company's long-term future, Chico's reserves the right to temporarily suspend separation payments in the event of an unforeseen financial crisis beyond the control of Chico's - similar to the challenges brought about by the pandemic of COVID-19.

15.Governing Law and Interpretation. This Agreement is to be construed and governed under the laws of the state of Florida, without regard to its conflict of laws provision.

16.No Admission of Wrongdoing. The parties agree that neither this Agreement nor the furnishing of the consideration for this Agreement shall be deemed or construed at any time for any purpose as an admission by either party of any liability or unlawful conduct of any kind.

17.Amendment. This Agreement may not be modified, altered, or changed except in a written document signed by both parties that specifically refers to this Agreement.

18.Entire Agreement. This Agreement contains the entire agreement between the parties concerning the subject matters addressed herein. It supersedes any prior agreements or understandings between the parties, except that nothing in this Agreement is intended to supersede or modify my confidentiality and non-solicitation obligations (as set forth in a Restrictive Covenant Agreement, or pursuant to the terms of Chico's FAS, Inc.'s Amended and Restated 2012 Omnibus Stock and Incentive Plan (i) Restricted Stock Agreement and (ii) Performance Award Agreement) that remain in full force and effect. The non-competition provision contained within those materials is hereby modified solely as to duration (with all other restrictions remaining unchanged). As such, the duration of the non-competition provision shall coincide with the time period covered by the separation benefits. If any part of the Agreement is found to be invalid, the remaining parts of the Agreement will remain in effect as if no invalid part existed.

Chico’s FAS, Inc.

/s/ Ann Joyce /s/ Kristin Gwinner

Ann Joyce Kristin Gwinner, Chief Human Resources Officer

Date: 6/4/2020 Date: 6/5/2020

Exhibit 10.7

SEPARATION AGREEMENT AND GENERAL RELEASE

This Agreement is made between Mary van Praag (referred to in the first person) and Chico's FAS, Inc. ("Chico's"), its parent corporation, affiliates, subsidiaries, divisions, successors and assignees and the current and former employees, officers, directors and agents thereof (collectively referred to as the "Released Parties").

1. Last Day of Employment. My last day of active employment with Chico's FAS, Inc. is April 28, 2020. My separation date is May 1, 2020.

2. Separation Program Eligibility Requirements. To be eligible to receive the consideration described in Paragraph 3 below, I must have been separated as part of the COVID-19 NSSC Corporate Officer Organizational Realignment — May 2020, must fully execute this Separation Agreement and General Release ("Agreement"), and must not revoke this Agreement as provided in Paragraph 7 below. If I do not fully execute this Agreement within 45 days, this Agreement is null and void.

3. Consideration. In consideration for signing this Agreement and the compliance with promises and agreements herein, Chico's agrees:


a.	to pay me $ 168,750.00 (equivalent to 26 weeks of salary); and


b.	to pay for 6 months of COBRA coverage if I am currently enrolled in Chico's healthcare benefits. I understand I will be enrolled by Chico's and applicable coverage payment(s) will be made directly to the COBRA Plan Administrator.

The Separation benefit in 3(a) will be less all applicable deductions and paid in seven bi-weekly installments of $24,107.14 and is contingent upon the receipt of the signed Separation Agreement and General Release. Payments will begin with the first pay period after your execution and non-revocation of the Agreement.

I understand and agree that 1 would not receive the benefits set forth in this Paragraph, except for my execution of this Agreement and the fulfillment of the promises contained herein.

4. I agree to refer all requests for employment references to The Work Number at www.theworknumber.com. employer code 12336. The Work Number, in turn, will provide only confirmation of employment, dates of employment and job title.

5. Applicable Data. I have been provided with a list of the job titles and ages of all individuals in the COVID-19 NSSC Corporate Officer Organizational Realignment — May 2020 who were eligible for the Separation Program, and a list of the ages of all individuals in the COVID-19 NSSC Corporate Officer Organizational Realignment — May 2020 who were not eligible for the Separation Program.

denied any leave requested under the federal Family and Medical Leave Act or any applicable state leave law; (d) I have not filed, caused to be filed, or am presently a party to any claim, complaint, or action against Chico's in any forum or form; (e) I have either submitted for reimbursement or received payment for any business expenses; and (f) I have no knowledge or suspicion of any illegal or unethical conduct or other wrongdoing by an officer, director, employee or agent of Chico's which I have not reported previously to Chico's.

7.Revocation. I may revoke this Agreement for a period of seven calendar days following the day I execute this Agreement. Any revocation within this period must be submitted, in writing, to Kristin Gwinner, Chief Human Resources Officer, and state, "I hereby revoke my acceptance of our Agreement." The revocation must be personally delivered to Kristin Gwinner, or her designee, or mailed to Kristin Gwinner and postmarked within seven calendar days of execution of this Agreement. This Agreement will not become effective or enforceable until the revocation period has expired.

I understand that I have up to 45 calendar days from May 1, 2020 to review this Agreement and that Chico's advises me to consult with an attorney prior to execution of this Agreement. I may accept and sign this Agreement before the end of the 45-day period, but I am not required to do so by Chico's. I agree that any modifications of any kind to this Agreement do not restart or affect in any manner the original 45-day consideration period:

8.General Release of Claims. I knowingly and voluntarily release and forever discharge the Released Parties of and from any and all claims, known and unknown, I have or may have against the Released Parties as of the date of execution of this Agreement, including, but not limited to, any alleged violation of:


•	Title VII of the Civil Rights Act of 1964, as amended;


•	The Lilly Ledbetter Fair Pay Act of 2009;


•	The Civil Rights Act of 1991;


•	Sections 1981 through 1988 of Title 42 of the United States Code, as amended;


•	The Employee Retirement Income Security Act of 1974, as amended;


•	The Immigration Reform and Control Act, as amended;


•	The Americans with Disabilities Act of 1990, as amended;


•	The Age Discrimination in Employment Act of 1967, as amended;


•	The Older Workers Benefit Protection Act;


•	The Family and Medical Leave Act of 1993, as amended;


•	The Workers Adjustment and Retraining Notification Act, as amended;


•	The Occupational Safety and Health Act, as amended;


•	The Genetic Information Nondiscrimination Act of 2008;


•	The Florida Civil Rights Act, as amended;


•	The Florida Minimum Wage Law, as amended;


•	Equal Pay Law for Florida, as amended;


•	State and federal whistleblower laws;


•	Health Insurance Portability and Accountability Act;


•	Any other federal, state or local civil or human rights law or any other local, state or federal law, regulation or ordinance;


•	Any claim based on my employment or the termination of that employment, whether grounded in public policy, contract, tort, or common law or otherwise; or


•	Any allegation for costs, fees, or other expenses including attorneys' fees incurred in these matters.

By entering into this Agreement, Released Parties do not admit they have violated any of these laws. Released Parties deny any liability to me whatsoever.

9.Non-Disparagement. I promise and agree that I will not, directly or indirectly, publicly or privately, make, publish or solicit, or encourage others to make, publish or solicit any disparaging, negative, denigrating or derogatory statements, comments, announcements or remarks concerning Released Parties or any of their respective products, services, businesses, operations, financial affairs, goodwill, business reputation or commercial relationships.

10.Repayment Upon Re-employment. I understand if I return to work for Chico's in any capacity within 14 weeks following my execution of the Agreement, I will be responsible for repaying a proportionate amount of the benefits referenced in Paragraph 3(a) above.

11.Confidential and Proprietary Business Information. I acknowledge that during my employment with Chico's, I had access to confidential and proprietary business information that is the property of Chico's, the disclosure of which would cause substantial and irreparable harm, loss of good will, and injury to Chico's. I agree to return to Chico's all such confidential and proprietary business information in my possession, custody or control or in the possession, custody or control of another to which I^- have access, as well as, all files, memoranda, records, documents, computer records, copies of the foregoing, and other information related to Chico's in my custody or control. I further agree not to disclose and not to use any such confidential or proprietary business information without the prior written authorization of the President and Chief Executive Officer of Chico's FAS, Inc.

12.Breach. In the event that I breach any of my obligations under this Agreement, payments under the Agreement shall cease.

13.Return of Chico's Property. I agree that I will, contemporaneously with my signature on this Agreement, return to Chico's all property of Chico's that I have not already returned, including, without limitation, computer equipment, keys, credit cards, cellular telephones, records, correspondence, business cards, appointment calendars, customer lists, address lists and files, documents and copies of any of the foregoing. I understand Chico's retains the right to offset from my separation payments all expenses associated with property not returned.

14.Cooperation. From time to time, Chico's may require my assistance in a matter I may have been involved in, or have knowledge of, during my employment with Chico's. I agree to cooperate in good faith with such requests for assistance. Such requests for assistance will be reasonable in scope and in time.

15. Unforeseen Circumstances. I have been advised and understand that, to preserve the Company's long-term future, Chico's reserves the right to temporarily suspend separation payments in the event of an unforeseen financial crisis beyond the control of Chico's - similar to the challenges brought about by the pandemic of COVID-19.

16.Governing Law and Interpretation. This Agreement is to be construed and governed under the laws of the state of Florida, without regard to its conflict of laws provision.

17.No Admission of Wrongdoing. The parties agree that neither this Agreement nor the furnishing of the consideration for this Agreement shall be deemed or construed at any time for any purpose as an admission by either party of any liability or unlawful conduct of any kind.

18.Amendment. This Agreement may not be modified, altered, or changed except in a written document signed by both parties that specifically refers to this Agreement.

19.Entire Agreement. This Agreement contains the entire agreement between the parties concerning the subject matters addressed herein. It supersedes any prior agreements or understandings between the parties, except that nothing in this Agreement is intended to supersede or modify my confidentiality and non-solicitation obligations (as set forth in a Restrictive Covenant Agreement, or pursuant to the terms of Chico's FAS, Inc.'s Amended and Restated 2012 Omnibus Stock and Incentive Plan (i) Restricted Stock Agreement and (ii) Performance Award Agreement) that remain in full force and effect. The non-competition provision contained within those materials is hereby eliminated (with all other restrictions remaining unchanged). If any part of the Agreement is found to be invalid, the remaining parts of the Agreement will remain in effect as if no invalid part existed.

Chico’s FAS, Inc.

/s/ Mary van Praag /s/ Kristin Gwinner

Mary van Praag Kristin Gwinner, Chief Human Resources Officer

Date: 6/4/2020 Date: 6/5/2020

Exhibit 31.1

CHICO’S FAS, INC. AND SUBSIDIARIES CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Molly Langenstein, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Chico’s FAS, Inc. for the period ended August 1, 2020;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 27, 2020



/s/ Molly Langenstein
Name:		Molly Langenstein
Title:		Chief Executive Officer, President and Director

Exhibit 31.2

CHICO’S FAS, INC. AND SUBSIDIARIES CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, David M. Oliver, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Chico’s FAS, Inc. for the period ended August 1, 2020;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 27, 2020



/s/ David M. Oliver
Name:		David M. Oliver
Title:		Interim Chief Financial Officer and Senior Vice President, Controller

Exhibit 32.1

Certification Pursuant To 18 U.S.C. Section 1350,

As Adopted Pursuant To

Section 906 Of The Sarbanes-Oxley Act Of 2002

I, Molly Langenstein, Chief Executive Officer, President and Director of Chico’s FAS, Inc. (the “Company”) certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:


(1)	The Quarterly Report of the Company on Form 10-Q for the period ended August 1, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Molly Langenstein

Molly Langenstein

Chief Executive Officer, President and Director

Date: August 27, 2020

Exhibit 32.2

Certification Pursuant To 18 U.S.C. Section 1350,

As Adopted Pursuant To

Section 906 Of The Sarbanes-Oxley Act Of 2002

I, David M. Oliver, Interim Chief Financial Officer and Senior Vice President, Controller of Chico’s FAS, Inc. (the “Company”) certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:


(1)	The Quarterly Report of the Company on Form 10-Q for the period ended August 1, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David M. Oliver

David M. Oliver

Interim Chief Financial Officer and Senior Vice President, Controller

Date: August 27, 2020