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Table of Contents

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 October 30, 2021

OR
☐
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 its charter)
 
Florida   59-2389435
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer
Identification No.)
11215 Metro Parkway, Fort Myers, Florida 33966
(Address of principal executive offices)
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
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):
Large accelerated filer  
☐
   Accelerated filer  
☑
Non-accelerated filer   ☐    Smaller reporting company   ☐
Emerging growth company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑
At November 22, 2021, the registrant had 122,542,092 shares of Common Stock, $0.01 par value per share, outstanding.



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Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE
FISCAL THIRTEEN AND THIRTY-NINE WEEKS ENDED OCTOBER 30, 2021
TABLE OF CONTENTS
 
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Table of Contents

PART I – FINANCIAL INFORMATION 
ITEM 1. FINANCIAL STATEMENTS


CHICO'S FAS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
(Dollars in thousands, except per share amounts)
 
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020
  Amount % of
Sales 		Amount % of
Sales 		Amount % of
Sales 		Amount % of
Sales
Net Sales $ 453,644  100.0  % $ 351,416  100.0  % $ 1,313,664  100.0  % $ 937,854  100.0  %
Cost of goods sold 269,205  59.3  274,252  78.0  820,973  62.5  827,019  88.2 
Gross Margin 184,439  40.7  77,164  22.0  492,691  37.5  110,835  11.8 
Selling, general and administrative expenses 162,469  35.8  153,096  43.6  442,637  33.7  390,571  41.6 
Goodwill and intangible impairment charges —  0.0  —  0.0  —  0.0  113,180  12.1 
Income (Loss) from Operations 21,970  4.9  (75,932) (21.6) 50,054  3.8  (392,916) (41.9)
Interest expense, net (1,744) (0.4) (536) (0.2) (5,170) (0.4) (1,387) (0.1)
Income (Loss) before Income Taxes 20,226  4.5  (76,468) (21.8) 44,884  3.4  (394,303) (42.0)
Income tax provision (benefit) 2,000  0.5  (20,600) (5.9) 9,400  0.7  (113,300) (12.0)
Net Income (Loss) $ 18,226  4.0  % $ (55,868) (15.9) % $ 35,484  2.7  % $ (281,003) (30.0) %
Per Share Data:
Net income (loss) per common share - basic $ 0.15  $ (0.48) $ 0.30  $ (2.43)
Net income (loss) per common and common equivalent share – diluted $ 0.15  $ (0.48) $ 0.29  $ (2.43)
Weighted average common shares outstanding – basic 117,304  116,174  117,005  115,887 
Weighted average common and common equivalent shares outstanding – diluted 123,166  116,174  121,897  115,887 
The accompanying notes are an integral part of these condensed consolidated statements.

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Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands)
 
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020
Net income (loss) $ 18,226  $ (55,868) $ 35,484  $ (281,003)
Other comprehensive income (loss):
Unrealized (losses) gains on marketable securities, net of taxes (10) (32) (64) (61)
Foreign currency translation adjustment —  —  —  580 
Comprehensive income (loss) $ 18,216  $ (55,900) $ 35,420  $ (280,484)
The accompanying notes are an integral part of these condensed consolidated statements.

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Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)
 
October 30, 2021 January 30, 2021 October 31, 2020
ASSETS
Current Assets:
Cash and cash equivalents $ 134,458  $ 90,791  $ 126,497 
Marketable securities, at fair value 3,006  18,559  18,667 
Inventories 277,738  203,983  256,542 
Prepaid expenses and other current assets 51,841  30,565  36,766 
Income tax receivable 13,125  58,140  56,774 
Total Current Assets 480,168  402,038  495,246 
Property and Equipment, net 199,853  241,370  256,715 
Right of Use Assets 494,808  586,061  582,074 
Other Assets:
Goodwill 16,360  16,360  16,360 
Other intangible assets, net 5,000  5,000  6,164 
Other assets, net 25,413  24,049  37,839 
Total Other Assets 46,773  45,409  60,363 
$ 1,221,602  $ 1,274,878  $ 1,394,398 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable $ 172,897  $ 116,506  $ 147,354 
Current lease liabilities 177,563  194,551  208,351 
Other current and deferred liabilities 140,982  120,729  123,474 
Total Current Liabilities 491,442  431,786  479,179 
Noncurrent Liabilities:
Long-term debt 99,000  149,000  149,000 
Long-term lease liabilities 415,458  515,797  509,118 
Other noncurrent and deferred liabilities 6,647  11,863  14,284 
Deferred taxes 1,500  1,313  52 
Total Noncurrent Liabilities 522,605  677,973  672,454 
Commitments and Contingencies (see Note 13)
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; 163,806 and 161,032 and 161,219 shares issued respectively; and 122,509 and 119,735 and 119,922 shares outstanding, respectively
1,225  1,197  1,199 
Additional paid-in capital 505,419  498,488  496,993 
Treasury stock, at cost, 41,297 shares, respectively
(494,395) (494,395) (494,395)
Retained earnings 195,306  159,765  238,877 
Accumulated other comprehensive gain —  64  91 
Total Shareholders’ Equity 207,555  165,119  242,765 
$ 1,221,602  $ 1,274,878  $ 1,394,398 

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

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Table of Contents

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  
Shares Par Value Shares Amount Total
BALANCE, July 31, 2021 122,565  $ 1,226  $ 503,168  41,297  $ (494,395) $ 177,077  $ 10  $ 187,086 
Net income —  —  —  —  —  18,226  —  18,226 
Unrealized losses on marketable securities, net of taxes —  —  —  —  —  —  (10) (10)
Issuance of common stock 94  —  (1) —  —  —  —  (1)
Dividends on common stock —  —  —  —  —  3  —  3 
Repurchase of common stock & tax withholdings related to share-based awards (150) (1) (895) —  —  —  —  (896)
Share-based compensation —  —  3,147  —  —  —  —  3,147 
BALANCE, October 30, 2021 122,509  $ 1,225  $ 505,419  41,297  $ (494,395) $ 195,306  $ —  $ 207,555 
BALANCE, August 1, 2020 119,891  $ 1,199  $ 495,163  41,297  $ (494,395) $ 294,708  $ 123  $ 296,798 
Net loss —  —  —  —  —  (55,868) —  (55,868)
Unrealized losses on marketable securities, net of taxes —  —  —  —  —  —  (32) (32)
Issuance of common stock 132  1  160  —  —  —  —  161 
Dividends on common stock —  —  —  —  —  37  —  37 
Repurchase of common stock & tax withholdings related to share-based awards (101) (1) (137) —  —  —  —  (138)
Share-based compensation —  —  1,807  —  —  —  —  1,807 
BALANCE, October 31, 2020 119,922  $ 1,199  $ 496,993  41,297  $ (494,395) $ 238,877  $ 91  $ 242,765 


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

6

Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(In thousands, except per share amounts)
Thirty-Nine Weeks Ended
Common Stock Additional Paid-in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Gain (Loss)  
  Shares Par Value Shares Amount Total
BALANCE, January 30, 2021 119,735  $ 1,197  $ 498,488  41,297  $ (494,395) $ 159,765  $ 64  $ 165,119 
Net income —  —  —  —  —  35,484  —  35,484 
Unrealized losses on marketable securities, net of taxes —  —  —  —  —  —  (64) (64)
Issuance of common stock 3,242  33  (33) —  —  —  —  — 
Dividends on common stock —  —  —  —  —  57  —  57 
Repurchase of common stock & tax withholdings related to share-based awards (468) (5) (1,872) —  —  —  —  (1,877)
Share-based compensation —  —  8,836  —  —  —  —  8,836 
BALANCE, October 30, 2021 122,509  $ 1,225  $ 505,419  41,297  $ (494,395) $ 195,306  $ —  $ 207,555 
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 —  —  —  —  —  (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 —  —  —  —  —  (281,003) —  (281,003)
Unrealized losses on marketable securities, net of taxes —  —  —  —  —  —  (61) (61)
Foreign currency translation adjustment —  —  —  —  —  —  580  580 
Issuance of common stock 1,940  19  393  —  —  —  —  412 
Dividends on common stock ($0.09 per share)
—  —  —  —  —  (10,884) —  (10,884)
Repurchase of common stock & tax withholdings related to share-based awards (436) (4) (1,129) —  —  —  —  (1,133)
Share-based compensation —  —  5,600  —  —  —  —  5,600 
BALANCE, October 31, 2020 119,922  $ 1,199  $ 496,993  41,297  $ (494,395) $ 238,877  $ 91  $ 242,765 

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

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Table of Contents

CHICO'S FAS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
  Thirty-Nine Weeks Ended
  October 30, 2021 October 31, 2020
Cash Flows from Operating Activities:
Net income (loss) $ 35,484  $ (281,003)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Goodwill and intangible impairment charges —  113,180 
Inventory write-offs 374  59,687 
Depreciation and amortization 39,662  48,536 
Non-cash lease expense 139,116  163,072 
Exit of frontline Canada operations —  498 
Right of use asset impairment —  3,236 
Loss on disposal and impairment of property and equipment, net 1,432  27,554 
Deferred tax benefit 190  (18,409)
Share-based compensation expense 8,836  5,600 
Changes in assets and liabilities:
Inventories (74,129) (71,004)
Prepaid expenses and other assets (13,830) (2,704)
Income tax receivable 45,015  (49,643)
Accounts payable 56,503  12,923 
Accrued and other liabilities 16,643  19,097 
Lease liability (166,990) (94,500)
Net cash provided by (used in) operating activities 88,306  (63,880)
Cash Flows from Investing Activities:
Purchases of marketable securities (269) (5,351)
Proceeds from sale of marketable securities 15,753  50,500 
Purchases of property and equipment (8,246) (9,537)
Net cash provided by investing activities 7,238  35,612 
Cash Flows from Financing Activities:
Proceeds from borrowings —  255,500 
Payments on borrowings (50,000) (149,000)
Payments of debt issuance costs —  (4,279)
Proceeds from issuance of common stock —  412 
Dividends paid —  (10,701)
Payments of tax withholdings related to share-based awards (1,877) (1,133)
Net cash (used in) provided by financing activities (51,877) 90,799 
Effects of exchange rate changes on cash and cash equivalents —  (6)
Net increase in cash and cash equivalents 43,667  62,525 
Cash and Cash Equivalents, Beginning of period
90,791  63,972 
Cash and Cash Equivalents, End of period
$ 134,458  $ 126,497 
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest $ 4,590  $ 6,456 
Cash received for income taxes, net $ 42,084  $ (45,397)
The accompanying notes are an integral part of these condensed consolidated statements.

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Table of Contents

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., a Florida corporation, and its wholly-owned subsidiaries (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. The fiscal year ended January 30, 2021 balance sheet data was derived from audited consolidated financial statements. For further information, refer to the consolidated financial statements and notes thereto for the fiscal year ended January 30, 2021, included in the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 2021 filed with the Securities and Exchange Commission ("SEC") on March 9, 2021 ("2020 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 thirty-nine weeks ended October 30, 2021 are not necessarily indicative of the results that may be expected for the entire year.
COVID-19 Pandemic Update
The COVID-19 pandemic (the "pandemic") has resulted in significant challenges across our business since March 2020 and is expected to continue to disrupt our business operations for the balance of fiscal 2021. Many markets imposed limitations, varying by market and in frequency, on the access to the Company's store fleet, including temporary store closures and/or a reduction in hours, staffing and capacity. We continue to focus on evolving consumer demand emerging from the pandemic and have accelerated our transformation to a digital-first company, fast-tracking numerous innovation and technology investments across all three of our brands. Even as governmental restrictions have relaxed and markets are primarily open, we expect continued uncertainty and volatility on our business operations, operating results and operating cash flows as the ongoing economic impacts and health concerns associated with the pandemic continue to affect consumer behavior, spending levels and shopping preferences and cause disruptions to the supply chain and increase our raw materials and freight costs. Due to the above circumstance, the Company’s results of operations for the thirteen and thirty-nine weeks ended October 30, 2021 are not necessarily indicative of the results to be expected for the full fiscal year.
Use of Estimates
    The preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. 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 pandemic has had a significant material adverse impact on our business operations, operating results and operating cash flows starting in March 2020 and is expected to continue to disrupt our business operations for the balance of fiscal 2021. The Company assessed the impact that the pandemic has had on our estimates, assumptions and accounting policies and made additional disclosures, if and as necessary.
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 constituted all of the Company’s Canadian boutiques, was part of the Company’s cost-savings measures taken to mitigate the impact of the pandemic during fiscal 2020 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.
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Adoption of New Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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 adopted this new guidance in the first quarter of fiscal 2021. The adoption of ASU 2019-12 did not have a material impact on our unaudited condensed consolidated financial statements.
In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”). The amendments in ASU 2021-01 provide optional expedients and exceptions for applying Generally Accepted Accounting Principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of the reference rate reform. This guidance is effective upon issuance (January 7, 2021). The Company adopted this new guidance in the first quarter of fiscal 2021. The adoption of ASU 2021-01 did not have a material impact on our unaudited condensed consolidated financial statements.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
    The Company currently has no material recent accounting pronouncements yet to be adopted.

3. GOODWILL AND INTANGIBLE IMPAIRMENT CHARGES
During the thirteen weeks ended May 2, 2020 ("last year's first quarter"), the Company experienced a significant decline in its market capitalization and disruptions to its operations as a result of the pandemic. Consequently, 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 last year's first quarter.
The Company performed its valuation of its goodwill and indefinite-lived intangible assets using a quantitative approach as of April 4, 2020 (the "interim test"), which was the last day in the second month of last year's first quarter. 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 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 thirty-nine weeks ended October 31, 2020: a charge of $20.0 million at the Chico's reporting unit and a charge of $60.4 million at the WHBM reporting unit. The carrying values of goodwill at the Chico's and WHBM reporting units were $16.4 million and zero, respectively, and are included in goodwill in the accompanying unaudited condensed consolidated balance sheet as of October 31, 2020. In addition, the Company recognized pre-tax impairment charges during the thirty-nine weeks ended October 31, 2020 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 were $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 October 31, 2020. Collectively, these impairment charges are included in goodwill and intangible impairment charges in the accompanying unaudited condensed consolidated statements of income (loss).
The Company evaluated the need to perform an interim impairment test for its goodwill and indefinite-lived intangible assets during the thirteen and thirty-nine weeks ended October 30, 2021 and during the thirteen weeks ended October 31, 2020. We considered macroeconomic, industry-specific and Company-specific factors in addition to the estimates and assumptions used in the most recently completed goodwill and indefinite-lived intangible assets analysis. Based on review of both quantitative and qualitative factors, we determined that we did not have a triggering event that would require an interim impairment test of goodwill and indefinite-lived intangible assets, and accordingly, we did not record any goodwill and intangible impairment charges during the thirteen and thirty-nine weeks ended October 30, 2021 and during the thirteen weeks ended October 31, 2020.
10

The following table details the changes in goodwill and other indefinite-lived intangible assets, net:
October 30, 2021
Gross Carrying Amount Accumulated Impairment Charge Net Carrying Amount
Goodwill:
Chico's reporting unit $ 36,403  $ (20,043) $ 16,360 
WHBM reporting unit 60,371  (60,371) — 
$ 96,774  $ (80,414) $ 16,360 
Other intangible assets:
WHBM trademark $ 34,000  $ (29,000) $ 5,000 
Chico's franchise rights 4,930  (4,930) — 
$ 38,930  $ (33,930) $ 5,000 
January 30, 2021
Gross Carrying Amount Accumulated Impairment Charge Net Carrying Amount
Goodwill:
Chico's reporting unit $ 36,403  $ (20,043) $ 16,360 
WHBM reporting unit 60,371  (60,371) — 
$ 96,774  $ (80,414) $ 16,360 
Other intangible assets:
WHBM trademark $ 34,000  $ (29,000) $ 5,000 
Chico's franchise rights 4,930  (4,930) — 
$ 38,930  $ (33,930) $ 5,000 
October 31, 2020
Gross Carrying Amount Accumulated Impairment Charge Net Carrying Amount
Goodwill:
Chico's reporting unit $ 36,403  $ (20,043) $ 16,360 
WHBM reporting unit 60,371  (60,371) — 
$ 96,774  $ (80,414) $ 16,360 
Other intangible assets:
WHBM trademark $ 34,000  $ (28,000) $ 6,000 
Chico's franchise rights 4,930  (4,766) 164 
$ 38,930  $ (32,766) $ 6,164 

4. LONG-LIVED ASSET IMPAIRMENT CHARGES
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.
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Fiscal 2021 Long-Lived Asset Impairment Charges
During the thirteen and thirty-nine weeks ended October 30, 2021, the Company considered whether events or changes in circumstances existed that would indicate the carrying amount of long-lived assets at retail stores may not be recoverable. Based on a review of both quantitative and qualitative factors, only a small number of underperforming stores had triggering events and were assessed for impairment during the thirteen and thirty-nine weeks ended October 30, 2021. Pre-tax impairment charges for long-lived assets at retail stores during the thirteen and thirty-nine weeks ended October 30, 2021 were immaterial.
We recorded $1.2 million in impairment expense during the thirty-nine weeks ended October 30, 2021 related to certain Company-owned real estate which is included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of income (loss).
We did not record impairment charges related to our operating lease assets during the thirteen and thirty-nine weeks ended October 30, 2021.
Fiscal 2020 Long-Lived Asset Impairment Charges Related to the Pandemic
The Company experienced varying degrees of business disruptions and periods of store closures or reduced operating hours as a result of the pandemic during the thirteen and thirty-nine weeks ended October 31, 2020. In light 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 certain of its long-lived assets and operating lease assets for impairment during the thirteen and thirty-nine weeks ended October 31, 2020.
As a result of the impact of the pandemic during the thirteen and thirty-nine weeks ended October 31, 2020, we recorded pre-tax impairment charges of approximately $8.8 million and $27.3 million, respectively, upon completion of our evaluation of long-lived assets, which primarily consisted of leasehold improvements at certain underperforming stores, capitalized implementation costs related to our cloud computing arrangements, and other technology-related assets. For the thirteen weeks ended October 31, 2020, these charges are reflected in the financial statements as $0.4 million in cost of goods sold ("COGS") and $8.4 million in selling, general and administrative ("SG&A") expenses in the accompanying unaudited condensed consolidated statements of income (loss). For the thirty-nine weeks ended October 31, 2020, these charges are reflected in the financial statements as $18.4 million in COGS and $8.9 million in SG&A expenses in the accompanying unaudited condensed consolidated statements of income (loss). These charges reduced the net carrying value of certain long-lived assets to their estimated fair value, as determined using a discounted cash flow model.
As a result of the impact of the pandemic during the thirty-nine weeks ended October 31, 2020, we completed an evaluation of our operating lease assets for indicators of impairment, and consequently, recorded pre-tax impairment charges of approximately $3.2 million, which is included in COGS in the accompanying unaudited condensed consolidated statements of income (loss). We did not record impairment charges related to our operating lease assets during the thirteen weeks ended October 31, 2020.
    
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.
We recorded no inventory write-offs for the thirteen weeks and $0.4 million in inventory write-offs for the thirty-nine weeks ended October 30, 2021, which is included in COGS in the accompanying unaudited condensed consolidated statements of income (loss). Inventory adjustments made in ordinary course are presented in inventories in the accompanying unaudited condensed consolidated statements of cash flows.
Inventory write-offs for the thirteen weeks ended October 31, 2020 were $5.4 million. Inventory write-offs for the thirty-nine weeks ended October 31, 2020 were $59.7 million, including $55.4 million in significant inventory write-offs as a result of changes in the market for those inventories and the resulting slowdown in sell through rates due to the impact of the pandemic. These inventory write-offs are included in COGS in the accompanying unaudited condensed consolidated statements of income (loss).


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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.
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020
Chico's $ 203,505  44.9  % $ 163,847  46.6  % $ 601,914  45.8  % $ 434,868  46.4  %
WHBM 138,159  30.4  104,024  29.6  364,250  27.7  270,197  28.8 
Soma 111,980  24.7  83,545  23.8  347,500  26.5  232,789  24.8 
Total Net Sales $ 453,644  100.0  % $ 351,416  100.0  % $ 1,313,664  100.0  % $ 937,854  100.0  %
Contract Liability
    Contract liabilities in the unaudited condensed consolidated balance sheets are comprised of obligations associated with our gift card and customer loyalty programs. As of October 30, 2021, January 30, 2021 and October 31, 2020, contract liabilities primarily consisted of gift cards of $32.4 million, $40.4 million and $31.5 million, respectively.
    For the thirteen and thirty-nine weeks ended October 30, 2021, the Company recognized $3.0 million and $18.7 million, respectively, of revenue that was previously included in the gift card contract liability as of January 30, 2021. For the thirteen and thirty-nine weeks ended October 31, 2020, the Company recognized $4.1 million and $16.9 million, respectively, of revenue that was previously included in the gift card contract liability as of February 1, 2020. The contract liability for our loyalty program was not material as of October 30, 2021, January 30, 2021 or October 31, 2020.
Performance Obligation
    For the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020, 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. 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 2031. 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 otherwise made reduced rent payments where and when applicable during fiscal 2020 as a result of the impact of the pandemic. In April 2020, the FASB granted a practical expedient permitting an entity to choose to forgo the evaluation of the enforceable rights and obligations of the original lease contract, specifically in situations where rent concessions have been agreed to with landlords as a result of the pandemic. Instead, the entity may account for pandemic-related rent concessions, whatever their form (e.g. rent deferral, abatement or other) either: a) as if they were part of the enforceable rights and obligations of the parties under the existing lease contract; or b) as lease modifications. During the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020, we received concessions from certain landlords in the form of rent deferrals, rent abatements and other lease or rent modifications as a result of the impact of the pandemic. In accordance with the practical expedient allowed by the FASB, the Company has elected to treat all pandemic-related rent concessions and related amendments, including pandemic-related lease amendments that extended the lease term, as lease modifications under ASC 842, Leases. In addition, the
13

Company continued recording lease expense during deferral periods, as applicable, in accordance with its existing policies. The Company made rent payments in accordance with its lease terms during the thirteen and thirty-nine weeks ended October 30, 2021.
Operating lease expense was as follows:
Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020
Operating lease cost (1)
$ 53,448  $ 58,710  $ 164,195  $ 179,273 
(1) For the thirteen and thirty-nine weeks ended October 30, 2021, includes $9.5 million and $28.7 million, respectively, in variable lease costs. For the thirteen and thirty-nine weeks ended October 31, 2020, includes $9.8 million and $25.9 million, respectively, in variable lease costs.
Supplemental balance sheet information related to operating leases was as follows:
October 30, 2021 January 30, 2021 October 31, 2020
Right of use assets $ 494,808  $ 586,061  $ 582,074 
Current lease liabilities $ 177,563  $ 194,551  $ 208,351 
Long-term lease liabilities 415,458  515,797  509,118 
Total operating lease liabilities $ 593,021  $ 710,348  $ 717,469 
Weighted Average Remaining Lease Term (years) 4.1 4.5 4.6
Weighted Average Discount Rate (1)
4.5  % 4.9  % 5.5  %
(1) The incremental borrowing rate used by the Company is based on the rate at which the Company could borrow funds using its credit rating for a collateralized loan of similar term to the lease. The weighted average discount rate represents a weighted average of the incremental borrowing rate for each lease weighted based on the remaining fixed lease obligations. 
Supplemental cash flow information related to operating leases was as follows:
Thirty-Nine Weeks Ended
October 30, 2021 October 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows $ 166,990  $ 94,500 
(1)
Right of use assets obtained in exchange for lease obligations, non-cash 27,510  75,938 
(1) The Company suspended or deferred rental payments when and where applicable as a result of the impact of the pandemic during the thirteen and thirty-nine weeks ended October 31, 2020.
Maturities of operating lease liabilities as of October 30, 2021 were as follows:
Fiscal Year Ending:
January 29, 2022 $ 52,959 
January 28, 2023 192,698 
February 4, 2024 149,453 
February 1, 2025 107,390 
January 31, 2026 69,107 
Thereafter 79,291 
Total future minimum lease payments $ 650,898 
Less imputed interest (57,877)
Total $ 593,021 
14

    


8. SHARE-BASED COMPENSATION
For the thirty-nine weeks ended October 30, 2021 and October 31, 2020, share-based compensation expense was $8.8 million and $5.6 million, respectively. As of October 30, 2021, approximately 7.9 million shares remain available for future grants of equity awards under our 2020 Omnibus Stock and Incentive Plan.
Restricted Stock Awards
    Restricted stock awards vest in equal annual installments over a three-year period from the date of grant, except for a restricted stock award granted to our then Chief Executive Officer in fiscal 2019, which vests over a four-year period from the date of grant, and restricted stock awards granted in March 2021, which vest 50% one year from the date of grant, 30% two years from the date of grant and 20% three years from the date of grant.
Restricted stock award activity for the thirty-nine weeks ended October 30, 2021 was as follows:
Number of
Shares 		Weighted
Average
Grant Date
Fair Value
Unvested, beginning of period 3,419,645  $ 3.75 
Granted 3,730,651  2.96 
Vested (1,498,137) 4.03 
Forfeited (483,901) 2.89 
Unvested, end of period 5,168,258  3.17 
Restricted Stock Units
    Restricted stock units vest 100% one year from the date of grant with certain rights to defer settlement in shares of our common stock, except for restricted stock units granted in March 2021, which vest 50% one year from the date of grant, 30% two years from the date of grant and 20% three years from the date of grant.
Restricted stock unit activity for the thirty-nine weeks ended October 30, 2021 was as follows:
Number of
Shares 		Weighted
Average
Grant Date
Fair Value
Unvested, beginning of period 163,930  $ 2.49 
Granted 500,000  2.56 
Vested (16,580) 8.75 
Unvested, end of period 647,350  2.38 
15

Performance-based Restricted Stock Units
During the third quarter, we granted performance-based restricted stock units ("PSUs") contingent upon the achievement of Company-specific performance goals during the three fiscal years 2021 through 2023. Any units earned as a result of the achievement of the performance goals of the PSUs will vest three years from the date of grant and will be settled in shares of our common stock.
PSU activity for the thirty-nine weeks ended October 30, 2021 was as follows:
Number of Units/
Shares 		Weighted
Average
Grant Date
Fair Value
Unvested, beginning of period 2,782,457  $ 2.04 
Granted 1,171,170  2.67 
Forfeited (209,420) 2.10 
Unvested, end of period 3,744,207  2.23 

9. INCOME TAXES
The provision for income taxes is based on a current estimate of the annual effective tax rate and is adjusted as necessary for quarterly events. Our effective income tax rate may fluctuate from quarter to quarter as a result of a variety of factors, including changes in our assessment of certain tax contingencies, valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix of earnings across jurisdictions.
For the thirteen weeks ended October 30, 2021 and October 31, 2020, the Company's effective tax rate was 9.9% and 26.9%, respectively. The effective tax rate of 9.9% for the thirteen weeks ended October 30, 2021 primarily reflects a change in estimate from the second quarter due to an increase in annual projected deferred tax assets on which a full valuation allowance exists, offset by a 2020 fiscal provision to return benefit due to the reversal of a valuation allowance related to 2020 temporary differences and the rate differential provided by the Coronavirus Aid, Relief, and Economic Security ("CARES") Act. The 26.9% effective tax rate for the thirteen weeks ended October 31, 2020 includes the annual benefit of the fiscal 2020 pre-tax loss due to the CARES Act, which was slightly offset by the impact of nondeductible book goodwill impairment charges.
For the thirty-nine weeks ended October 30, 2021 and October 31, 2020, the Company's effective tax rate was 20.9% and 28.7%, respectively. The effective tax rate of 20.9% for the thirty-nine weeks ended October 30, 2021 primarily reflects an annual projected deferred tax assets on which a full valuation allowance exists, offset by a 2020 fiscal provision to return benefit due to the reversal of a valuation allowance related to 2020 temporary differences, the rate differential provided by the CARES Act and favorable state audit settlements. The 28.7% effective tax rate for the thirty-nine weeks ended October 31, 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.
As of October 30, 2021, our unaudited condensed consolidated balance sheet reflected a $10.4 million income tax receivable, after collection of $50.0 million during the thirty-nine weeks ended October 30, 2021, related to the recovery of Federal income taxes paid in prior years and other tax law changes as a result of the CARES Act.

10. INCOME (LOSS) PER SHARE
In accordance with relevant accounting guidance, unvested share-based payment awards that include non-forfeitable rights to dividends, whether paid or unpaid, are considered participating securities. As a result, such awards are required to be included in the calculation of income (loss) per common share pursuant to the "two-class" method. For the Company, participating securities are comprised entirely of unvested restricted stock awards granted prior to fiscal 2020.
Net income (loss) per share is determined using the two-class method when it is more dilutive than the treasury stock method. Basic net income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period, including participating securities. Diluted net income (loss) per share reflects the dilutive effect of potential common shares from non-participating securities such as restricted stock awards granted after fiscal 2019, stock options, PSUs and restricted stock units.
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The following table sets forth the computation of net income (loss) per basic and diluted share shown on the face of the accompanying condensed consolidated statements of income (loss):
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020
Numerator
Net income (loss) $ 18,226  $ (55,868) $ 35,484  $ (281,003)
Net income and dividends declared allocated to participating securities (123) —  (313) (173)
Net income (loss) available to common shareholders $ 18,103  $ (55,868) $ 35,171  $ (281,176)
Denominator
Weighted average common shares outstanding – basic 117,304,112  116,174,306  117,004,683  115,886,832 
Dilutive effect of non-participating securities 5,862,125  —  4,891,986  — 
Weighted average common and common equivalent shares outstanding – diluted 123,166,237  116,174,306  121,896,669  115,886,832 
Net income (loss) per common share:
Basic $ 0.15  $ (0.48) $ 0.30  $ (2.43)
Diluted $ 0.15  $ (0.48) $ 0.29  $ (2.43)
For the thirteen weeks ended October 30, 2021 and October 31, 2020, 0.1 million and 2.4 million potential shares of common stock, respectively, were excluded from the diluted income (loss) per common share calculation relating to non-participating securities, because the effect of including these potential shares was antidilutive.
For the thirty-nine weeks ended October 30, 2021 and October 31, 2020, 0.2 million and 2.2 million potential shares of common stock, respectively, were excluded from the diluted income (loss) per common share calculation relating to non-participating securities, because the effect of including these potential shares was antidilutive.

11. 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.
Marketable securities are classified as available-for-sale and as of October 30, 2021 generally consist of corporate bonds, commercial paper, U.S. government agencies and municipal securities, with $3.0 million of securities with maturity dates within one year or less and no maturity dates over one year.
We consider all marketable securities available-for-sale, including those with maturity dates beyond 12 months, and therefore classify these securities within current assets on the 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 until realized, and any credit risk related losses recognized in net income (loss) during the period incurred. For the purposes of computing realized and unrealized gains and losses, cost is determined on a specific identification basis.
Fair value is defined as the price that would be received to sell an 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.
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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 nonrecurring basis when carrying value exceeds fair value. This includes the evaluation of long-lived assets, goodwill and other intangible assets for impairment using Company-specific assumptions which would fall within Level 3 of the fair value hierarchy. Assets that are measured at fair value on a nonrecurring basis are remeasured when carrying value exceeds fair value. Carrying value after impairment approximates fair value.
We assess the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses market participant rents and a market participant discount rate to calculate the fair value of ROU 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.
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.
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The following tables present quantitative information about Level 3 significant unobservable inputs for the WHBM trademark, long-lived assets and operating lease assets at retail stores for impairment charges incurred during the periods indicated.
Thirty-Nine Weeks Ended October 31, 2020
Valuation Technique Unobservable Input Range (Weighted Average)
WHBM Trademark 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)
Discounted cash flow
Weighted-average cost of capital
9.5% to 11.5%
Long-term revenue growth rate
-10% to 15%
(1) Specifically relates to only those locations which had impairment charges related to the pandemic during fiscal 2020.
Fifty-Two Weeks Ended January 30, 2021
Valuation Technique Unobservable Input
WHBM Trademark Relief from royalty Weighted-average cost of capital
13% to 15%
Long-term revenue growth rate
 -1% to 16%
Long-lived assets at retail stores and operating lease assets (1)
Discounted cash flow
Weighted-average cost of capital
11% to 13%
Long-term revenue growth rate
2% to 53%
(1) Specifically relates to only those locations which had impairment charges related to the pandemic during fiscal 2020.
As of October 30, 2021, January 30, 2021 and October 31, 2020, 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.
In accordance with the provisions of the guidance, we categorized our financial assets and liabilities which are valued on a recurring and nonrecurring basis, based on the priority of the inputs to the valuation technique for the instruments, as follows:
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    Fair Value Measurements at the End of the Reporting Date Using Thirty-Nine Weeks Ended October 30, 2021
  Balance as of October 30, 2021 Quoted Prices in Active Markets for Identical Assets
(Level 1) 		Significant Other Observable Inputs
(Level 2) 		Significant Unobservable Inputs
(Level 3)
Total Impairment (1)
Recurring fair value measurements:
Current Assets
Cash equivalents:
Money market accounts $ 22,388  $ 22,388  $ —  $ — 
Marketable securities:
Corporate bonds 3,006  —  3,006  — 
Noncurrent Assets
Deferred compensation plan 6,317  6,317  —  — 
Total recurring fair value measurements $ 31,711  $ 28,705  $ 3,006  $ — 
Fair Value Measurements at the End of the Reporting Date Using Fifty-Two Weeks Ended
January 30, 2021
Balance as of January 30, 2021 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 $ 36,809  $ 36,809  $ —  $ — 
Marketable securities:
Corporate bonds 18,559  —  18,559  — 
Noncurrent Assets
Deferred compensation plan 8,993  8,993  —  — 
Total recurring fair value measurements $ 64,361  $ 45,802  $ 18,559  $ — 
Nonrecurring fair value measurements:
Noncurrent Assets
Goodwill $ 16,360  $ —  $ —  $ 16,360  $ (80,414)
Trademark 5,000  —  —  5,000  (29,000)
Long-lived assets 7,090  —  5,990  1,100 
(2)
(29,669)
Operating lease assets 88,488  —  —  88,488 
(2)
(4,795)
Total nonrecurring fair value measurements $ 116,938  $ —  $ 5,990  $ 110,948  $ (143,878)
Fair Value Measurements at the End of the Reporting Date Using Thirty-Nine Weeks Ended October 31, 2020
  Balance as of October 31, 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 $ 36,678  $ 36,678  $ —  $ — 
Marketable securities:
Corporate bonds 18,667  —  18,667  — 
Noncurrent Assets
Deferred compensation plan 7,902  7,902  —  — 
Total recurring fair value measurements $ 63,247  $ 44,580  $ 18,667  $ — 
Nonrecurring fair value measurements:
Noncurrent Assets
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Goodwill $ 16,360  $ —  $ —  $ 16,360  $ (80,414)
Trademark 6,000  —  —  6,000  (28,000)
Long-lived assets 7,161  —  5,990  1,171 
(2)
(27,307)
Operating lease assets 88,942  —  —  88,942 
(2)
(3,236)
Total nonrecurring fair value measurements $ 118,463  $ —  $ 5,990  $ 112,473  $ (138,957)
(1) Impairment charges for assets evaluated for impairment on a nonrecurring basis were not material during the thirty-nine weeks ended October 30, 2021.
(2) The fair value of $1.1 million, $88.5 million, $1.2 million and $88.9 million specifically relates to only those locations which had asset impairment charges related to the pandemic.

12. DEBT
On October 30, 2020, the Company and certain material domestic subsidiaries entered into Amendment No. 1 (the "Amendment") to its credit agreement (as amended, the "Agreement"), dated as of August 2, 2018, by and among the Company, certain material domestic subsidiaries as co-borrowers and guarantors, Wells Fargo Bank, National Association ("Wells Fargo Bank"), as Agent, letter of credit issuer and swing line lender, and certain lenders party thereto. Our obligations under the Agreement are guaranteed by the guarantors and secured by a first priority lien on certain assets of the Company and certain material domestic subsidiaries, including inventory, accounts receivable, cash deposits, certain insurance proceeds, real estate, fixtures and certain intellectual property. The Agreement provides for a five-year asset-based senior secured revolving loan ("ABL") and letter of credit facility of up to $285.0 million, maturing October 30, 2025. The interest rate applicable to the ABL is equal to 2.25% (subject to increase to 2.50% based upon average quarterly excess availability under the ABL), with a LIBOR floor of 75 basis points. The Agreement also provides for a $15.0 million first-in last-out ("FILO") loan. The interest rate applicable to the FILO is equal to, at the Company's option, either a base rate, determined by reference to the federal funds rate, or a LIBOR with a floor of 75 basis points, plus in each case an interest rate margin of 4.5%. The Company expects borrowings to be at a LIBOR, plus an interest rate margin of 4.5%. The FILO includes a prepayment penalty equal to 1.0% in the first year, 0.5% in the second year and none thereafter. The FILO can only be prepaid if there are no outstanding borrowings under the ABL. 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 October 30, 2021, our outstanding debt consisted of $99.0 million in borrowings under the Agreement. Availability under the Agreement is determined based upon a monthly borrowing base calculation which includes eligible credit card receivables, real estate and inventory, less outstanding borrowings, letters of credit and certain designated reserves. As of October 30, 2021, the available additional borrowing capacity under the Agreement was approximately $166.0 million, inclusive of $29.3 million of excess availability.
As of October 30, 2021, deferred financing costs of $3.7 million was outstanding related to the Agreement and is presented in other current assets in the accompanying unaudited condensed consolidated balance sheet.

13. COMMITMENTS AND CONTINGENCIES
In February 2021, the Company was named as a defendant in Mercedes Haldy, et al. v. White House Black Market, Inc. (“WHBM”), et al., a putative class action filed in the Superior Court of California, Orange County, and subsequently removed to the United States District Court, Central District of California (“Haldy”). The complaint alleges numerous violations of California law related to payment of wages and other compensation, meal periods, rest periods, and wage statements, among other things. Plaintiff seeks to represent a class of current and former nonexempt employees of WHBM and Chico’s stores in California.
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In August 2021, the Company was named as a defendant in Margarita Hernandez v. Chico’s FAS, Inc., et al., a putative class action filed in the Superior Court of California, Orange County seeking to represent a class of current and former nonexempt employees of Chico’s, WHBM and Soma stores in California (“Hernandez”). The complaint alleges many of the same wage and labor violations as the Haldy complaint, described above, and seeks the same relief.
During a mediation in September 2021, the Company reached an agreement in principle to settle the above cases. A Memorandum of Understanding was entered into by all parties as of October 18, 2021. A full settlement agreement has been drafted and is being finalized for execution by all parties. Based on the foregoing, the Company does not expect that the resolution of these cases will have a material adverse effect on its results of operations or consolidated financial statements, but if a settlement agreement is not executed or is not approved by the court, the ultimate resolution of these cases could have a material adverse effect on the Company’s results of operations or consolidated financial statements.
Other than as noted above, we are not currently a party to any material legal proceedings other than claims and lawsuits arising in the normal course of our business. All such matters are subject to uncertainties, and outcomes may not be predictable. Consequently, the ultimate aggregate amounts of monetary liability or financial impact with respect to other matters as of October 30, 2021 are not estimable. However, while such matters could affect our consolidated operating results when resolved in future periods, management believes that upon final disposition, any monetary liability or financial impact to us would not be material to our annual consolidated financial statements.
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ITEM 2. MANAGEMENT'S 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 Quarterly Report on Form 10-Q ("this Form 10-Q") and in our Annual Report on Form 10-K for the fiscal year ended January 30, 2021, filed with the Securities and Exchange Commission ("SEC") on March 9, 2021 ("2020 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.
Business Highlights
Company highlights for the thirteen weeks ended October 30, 2021 (the "third quarter") include:
•Robust results: Chico's FAS continued its profitable growth, posting $0.15 net income per diluted share for the third quarter, compared to a $0.48 net loss per diluted share for the thirteen weeks ended October 31, 2020 ("last year's third quarter") and a $0.07 net loss per diluted share for the thirteen weeks ended November 2, 2019 (the "third quarter of fiscal 2019"; as a pre-pandemic reference). The current quarter earnings represent the best third quarter performance since 2016.
•Continued improving sales performance at Chico's: Comparable sales at Chico's increased 23.3% over last year's third quarter. Chico's continued to benefit from elevated product styling and quality enhancements, and customers particularly responded enthusiastically to denim, wovens and sweaters. Inventories remained lean, which fueled high productivity and increased full-price sales in the quarter.
•Continued improving sales performance at White House Black Market ("WHBM"): Comparable sales at WHBM grew 33.4% over last year's third quarter. WHBM continued to benefit from elevated quality and product enhancements, and customers particularly responded to denim and new jacket silhouettes. Inventories remained lean, which fueled high productivity and increased full-price sales in the quarter.
•Continued exceptional sales growth at Soma: Soma posted a 30.2% comparable sales increase over last year's third quarter and a remarkable 43.5% comparable sales increase over the third quarter of fiscal 2019. Data from market research firm NPD Group Inc. shows that Soma’s growth continues to outpace the market in non-sport bras, panties and sleepwear. Management believes this research, along with Soma’s recent performance, is a clear indication that Soma is well positioned to continue capturing additional market share and grow into a billion dollar brand.
•Enhanced marketing continued to drive traffic as well as new customers: Chico's FAS continued to elevate its marketing efforts, allocating more resources to digital storytelling, influencers and other social efforts. These enhanced marketing initiatives are driving more customers to our brands, with our total customer count up nearly 8% from the third quarter last year, and their average age continues to trend younger than existing customers.
•Strong balance sheet: The Company ended the third quarter with more than $137 million in cash and marketable securities, even after repaying $50 million of long-term debt during the quarter.
•Improved gross margin: The third gross margin rate rose to 40.7%, the best third quarter performance since fiscal 2014, driven by higher full-price sales, less promotional activity, strategic inventory management and improved leverage of occupancy costs on higher sales, partially offset by increases in raw materials and freight costs.
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•Continued cost discipline: Selling, general and administrative ("SG&A") expenses declined to 35.8% of net sales for the third quarter, an improvement over the third quarter rates of both fiscal 2020 and 2019, reflecting the impact of cost savings initiatives put in place in prior years, continued cost discipline efforts and sales leverage.
•Obtained additional rent reductions: In the first nine months of fiscal 2021, Chico's FAS obtained approximately $22 million in incremental savings from landlords. This is in addition to the $65 million of reductions and abatements negotiated during fiscal 2020, for a total savings of $87 million. We believe these renegotiated store leases will provide an occupancy tailwind and will further enhance store profitability.
Financial Results
    Income per diluted share for the third quarter was $0.15 compared to loss per diluted share of $0.48 for last year's third quarter. Results for the third quarter include the unfavorable impact of litigation settlement charges of approximately $4 million, after-tax. Results for last year's third quarter included the after-tax impact of impairment charges of approximately $6 million as a result of the coronavirus ("COVID-19") pandemic (the "pandemic").
Income per diluted share for the thirty-nine weeks ended October 30, 2021 was $0.29 compared to loss per diluted share of $2.43 for the thirty-nine weeks ended October 31, 2020. Results the thirty-nine weeks ended October 30, 2021 include the unfavorable impact of litigation settlement charges of approximately $4 million, after-tax. Results for the thirty-nine weeks ended October 31, 2020 includes the after-tax impact of impairment charges and inventory write-offs of approximately $154 million as a result of the pandemic.
Select Financial Results
    The following table depicts select financial results for the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020:
Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020
(in millions, except per share amounts)
Net sales $ 454  $ 351  $ 1,314  $ 938 
Significant non-cash charges (1):
Inventory write-offs (2)
—  —  —  55 
Long-lived store asset impairment (2)(3)
—  —  —  18 
Right of use asset impairment (2)
—  —  —  2 
Other long-lived asset impairment (2)(4)
8  8 
Goodwill impairment (2)
—  —  —  80 
Indefinite-lived asset impairment (2)
—  —  —  33 
Income (loss) from operations 22  (76) 50  (393)
Net income (loss) 18  (56) 35  (281)
Net income (loss) per common and common equivalent share - diluted 0.15  (0.48) 0.29  (2.43)
(1) All significant charges relate to the impact of the pandemic. Less significant charges that may have been incurred are not reflected in the table above.
(2) Presented pre-tax.
(3) Primarily includes impairment on leasehold improvements at certain underperforming stores.
(4) Includes impairment on capitalized implementation costs related to our cloud computing arrangements and other technology-related assets.
Current Trends
The pandemic has resulted in significant challenges across our business starting in March 2020 and is expected to continue to disrupt our business operations for the balance of fiscal 2021. Many markets imposed limitations, varying by market and in frequency, on the access to the Company's store fleet, including temporary store closures and/or a reduction in hours, staffing and capacity. We continue to focus on evolving consumer demand emerging from the pandemic experience and have accelerated our transformation to a digital-first company, fast-tracking numerous innovation and technology investments across all three of our brands. Even as governmental restrictions become relaxed and markets are primarily open, we expect continued uncertainty and volatility on our business operations, operating results and operating cash flows as the ongoing economic
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impacts and health concerns associated with the pandemic continue to affect consumer behavior, spending levels and shopping preferences.
The Company remains confident that it currently has sufficient liquidity to repay its obligations as they become due for the foreseeable future as the Company continues to drive operational efficiency and effectiveness, including executing on its cost saving initiatives announced in fiscal 2020 to mitigate the macro challenges of the pandemic. 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; supply chain disruptions; actions governments, businesses and individuals take in response to the pandemic; and how quickly economies recover after the pandemic subsides.
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 WHBM boutiques in Ontario, Canada. The permanent closure of the Canadian boutiques, which constituted all of the Company’s Canadian boutiques, is part of the Company’s ongoing cost-savings measures taken to mitigate the impact of the 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.
Fiscal 2021 Fourth Quarter Outlook
For the fiscal 2021 fourth quarter the Company currently expects:
•Consolidated net sales of $495 million to $510 million;
•Gross margin rate as a percent of net sales of 33.0% to 34.5%;
•SG&A expenses as a percent of net sales of 32.3% to 32.8%;
•Effective income tax rate of 33.0%; and
•Earnings per diluted share of $0.00 to $0.05.
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 income (loss) 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 and financial 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, we are not providing comparable sales figures for the thirty-nine weeks ended October 30, 2021 compared to the thirty-nine weeks ended October 31, 2020 as we believe it is not a meaningful measure due to the varying degrees of business disruptions and periods of store closures and/or stores operating at reduced hours as a result of the pandemic during fiscal 2020.
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    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 Income (Loss) per Share
    Income (loss) per share is determined using the two-class method when it is more dilutive than the treasury stock method. Basic income (loss) per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period, including participating securities. Diluted income (loss) per share reflects the dilutive effect of potential common shares from non-participating securities such as stock options, performance stock units and restricted stock units. Whereas basic income (loss) per share serves as an indicator of the Company's profitability, we believe diluted income (loss) per share is a key performance measure because it gauges the Company's quality of income (loss) per share assuming all potential common shares from non-participating securities are exercised.
    Return on Net Assets
    RONA is defined as (a) net income (loss) divided by (b) the “five-point average” (based on balances at the beginning of the first quarter plus the final balances for each quarter of the fiscal year) of net working capital less cash and marketable securities plus fixed assets. We believe RONA is a primary metric as it helps to determine how well the Company is utilizing its assets. As such, a higher RONA could indicate that the Company is using its assets and working capital efficiently and effectively.
Our Business Strategy
    Our overall business strategy is focused on building a collection of distinct high-performing retail brands primarily serving the fashion needs of women 35 and older.
In fiscal 2020, the Company took actions to rapidly transform into a digital-first company, fast-tracking numerous innovation and digital technology investments. We also enhanced our marketing efforts to drive traffic and new customers to our brands, while retaining newly acquired customers at a meaningfully higher rate than fiscal 2019.
The primary function of the Company is the production and procurement of beautiful merchandise that delivers the brand promise and brand positioning of each of our brands and 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, growing our online presence, managing our store base, 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 StyleConnectTM, 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”
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standard. We also will continue to consider potential alternative sales channels for our brands, including international franchise, wholesale, licensing and other opportunities.
We continue to leverage our digital investments to convert single-channel customers to be omnichannel customers, as the average omnichannel customer spends approximately three times more than a single-channel customer.
In order to maximize the opportunities in each of our brands, we are targeting five key focus areas for 2021:
1.Continuing our ongoing digital transformation;
2.Further refining product through fit, quality, fabric and innovation in each of our brands;
3.Driving increased customer engagement through marketing;
4.Maintaining our operating and cost discipline; and
5.Further enhancing the productivity of our real estate portfolio.
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Results of Operations
Thirteen Weeks Ended October 30, 2021 Compared to the Thirteen Weeks Ended October 31, 2020
    Net Income (Loss) and Income (Loss) per Diluted Share
For the third quarter, the Company reported net income of $18 million, or $0.15 per diluted share, compared to a net loss of $56 million, or $0.48 per diluted share, in last year's third quarter. Results for the third quarter include pre-tax litigation settlement charges of approximately $4 million. Results for last year's third quarter included a pre-tax impairment charge of $8 million as a result of the impact of the pandemic and is reflected in SG&A expenses in the accompanying unaudited condensed consolidated statements of income (loss).
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 October 30, 2021 and October 31, 2020:
  Thirteen Weeks Ended
  October 30, 2021 October 31, 2020
 
(dollars in millions) (1)
Chico's $ 204  44.9  % $ 164  46.6  %
WHBM 138  30.4  104  29.6 
Soma 112  24.7  84  23.8 
Total Net Sales $ 454  100.0  % $ 351  100.0  %
(1) May not foot due to rounding.
For the third quarter, net sales were $454 million compared to $351 million in last year's third quarter. This 29.1% improvement primarily reflects the decline in store sales during last year’s third quarter as a result of the pandemic and higher full-price sales partially offset by 31 net permanent store closures since last year’s third quarter.
The following table depicts comparable sales percentages by Chico's, WHBM and Soma for the thirteen weeks ended October 30, 2021 and October 31, 2020:
Thirteen Weeks Ended
October 30, 2021 October 31, 2020
Chico's 23.3  % (32.3) %
White House Black Market 33.4  (28.7)
Soma 30.2  10.5 
Total Company 27.9  (24.1)
    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 October 30, 2021 and October 31, 2020:
  Thirteen Weeks Ended
  October 30, 2021 October 31, 2020
  (dollars in millions)
Cost of goods sold $ 269  $ 274 
Gross margin 184  77 
Gross margin percentage 40.7  % 22.0  %
For the third quarter, gross margin was $184 million, or 40.7% of net sales, compared to $77 million, or 22.0% of net sales, in last year's third quarter. The year-over-year improvement in gross margin rate primarily reflects margin expansion as a result of higher full price sales, less promotional activity, strategic inventory management and improved leverage of occupancy costs on higher sales, partially offset by increases in raw materials and freight costs.
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Selling, General and Administrative Expenses
The following table depicts SG&A expenses, 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 October 30, 2021 and October 31, 2020:
  Thirteen Weeks Ended
  October 30, 2021 October 31, 2020
  (dollars in millions)
Selling, general and administrative expenses $ 162  $ 153 
Percentage of total net sales 35.8  % 43.6  %
    For the third quarter, SG&A expenses were $162 million, or 35.8% of net sales, compared to $153 million, or 43.6% of net sales, for last year's third quarter, primarily reflecting the benefit of fiscal 2020 cost savings initiatives and sales leverage, slightly offset by the impact of $4 million in pre-tax litigation settlement charges for the third quarter and pre-tax impairment charges in last year’s third quarter.
Income Taxes
    For the third quarter, the $2.0 million income tax provision resulted in an effective tax rate of 9.9% compared to 26.9% for last year’s third quarter. The 9.9% effective tax rate for the third quarter primarily reflects a change in estimate from the second quarter of fiscal 2021 due to an increase in annual projected deferred tax assets on which a full valuation allowance exists, offset by a 2020 fiscal provision to return benefit due to the reversal of a valuation allowance related to 2020 temporary differences and the rate differential provided by the CARES Act. The 26.9% effective tax rate for last year's third quarter includes the annual benefit of the fiscal 2020 pre-tax loss due to the CARES Act, which was slightly offset by the impact of nondeductible book goodwill impairment charges.
Thirty-Nine Weeks Ended October 30, 2021 Compared to the Thirty-Nine Weeks Ended October 31, 2020
Net Income (Loss) and Income (Loss) per Diluted Share
    For the thirty-nine weeks ended October 30, 2021, the Company reported net income of $35 million, or $0.29 per diluted share, compared to net loss of $281 million, or $2.43 per diluted share, for the thirty-nine weeks ended October 31, 2020. Results for the thirty-nine weeks ended October 30, 2021 include pre-tax litigation settlement charges of approximately $4 million. Results for the thirty-nine weeks ended October 31, 2020 included approximately $198 million in pre-tax non-cash charges as a result of the impact of the pandemic and is reflected in the accompanying unaudited condensed consolidated statements of income (loss) as $76 million in COGS, $8 million in SG&A expenses and $113 million in goodwill and intangible impairment charges.
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 thirty-nine weeks ended October 30, 2021 and October 31, 2020:
  Thirty-Nine Weeks Ended
  October 30, 2021 October 31, 2020
  (dollars in millions)
Chico's $ 602  45.8  % $ 435  46.4  %
WHBM 364  27.7  270  28.8 
Soma 348  26.5  233  24.8 
Total net sales $ 1,314  100.0  % $ 938  100.0  %
Net sales for the thirty-nine weeks ended October 30, 2021 increased to $1,314 million from $938 million for the thirty-nine weeks ended October 31, 2020. This increase of 40.1% primarily reflects disruptions related to the pandemic, including temporary store closures and limited hours, during the thirty-nine weeks ended October 31, 2020, partially offset by the impact of 31 net store closures since last year's third quarter.
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The Company is not providing comparable sales figures for the thirty-nine weeks ended October 30, 2021 compared to the thirty-nine weeks ended October 31, 2020 as it is not a meaningful measure due to the significant impact of the pandemic during the thirty-nine weeks ended October 31, 2020, including temporary store closures or stores operating at reduced hours.
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 thirty-nine weeks ended October 30, 2021 and October 31, 2020:
  Thirty-Nine Weeks Ended
  October 30, 2021 October 31, 2020
  (dollars in millions)
Cost of goods sold $ 821  $ 827 
Gross margin 493  111 
Gross margin percentage 37.5  % 11.8  %
Gross margin for the thirty-nine weeks ended October 30, 2021 was $493 million, or 37.5% of net sales, compared to $111 million, or 11.8% of net sales, for the thirty-nine weeks ended October 31, 2020. The year-over-year improvement in gross margin rate primarily reflects the impact of inventory write-offs and store impairments as a result of the pandemic during the thirty-nine weeks ended October 31, 2020, improved leverage of occupancy costs with rising sales and margin expansion as a result of less promotional activity.
Selling, General and Administrative Expenses
The following table depicts SG&A expenses, which includes store and direct operating expenses, marketing expenses and NSSC expenses, in dollars and as a percentage of total net sales for the thirty-nine weeks ended October 30, 2021 and October 31, 2020:
  Thirty-Nine Weeks Ended
  October 30, 2021 October 31, 2020
  (dollars in millions)
Selling, general and administrative expenses $ 443  $ 391 
Percentage of total net sales 33.7  % 41.6  %
For the thirty-nine weeks ended October 30, 2021, SG&A expenses was $443 million, or 33.7% of net sales, compared to $391 million, or 41.6% of net sales, for the thirty-nine weeks ended October 31, 2020. The decrease in SG&A expenses as a percent of total net sales primarily reflects the benefit of fiscal 2020 cost savings initiatives and sales leverage, partially offset by the impact of $4 million in pre-tax litigation settlement charges for the thirty-nine weeks ended October 30, 2021 and pre-tax impairment charges for the thirty-nine weeks ended October 31, 2020.
    Income Taxes
    The effective tax rate for the thirty-nine weeks ended October 30, 2021 and October 31, 2020 was 20.9% and 28.7%, respectively. The 20.9% for the thirty-nine weeks ended October 30, 2021 primarily reflects an annual projected deferred tax assets on which a full valuation allowance exists, offset by a 2020 fiscal provision to return benefit due to the reversal of a valuation allowance related to 2020 temporary differences, the rate differential provided by the CARES Act and favorable state audit settlements. The effective tax rate of 28.7% for the thirty-nine weeks ended October 31, 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.
Cash, Marketable Securities and Debt
At the end of the third quarter, cash and marketable securities totaled $137 million compared to $145 million at the end of last year’s third quarter. Debt at the end of the third quarter totaled $99 million, a $50 million decrease from last year’s third quarter.
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Inventories
    At the end of the third quarter, inventories totaled $278 million compared to $257 million at the end of last year's third quarter. The $21 million, or 8.3%, increase from last year’s third quarter primarily reflects strategic inventory management to align assortments with consumer demand to support the Company’s sales growth.
Income Tax Receivable
    At the end of the third quarter, our unaudited condensed consolidated balance sheet reflected a $10 million income tax receivable after collection of $50 million during the thirty-nine weeks ended October 30, 2021, 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") 2019-12, Simplifying the Accounting for Income Taxes and ASU 2021-01, Reference Rate Reform (Topic 848) as of January 31, 2021. Adoption of ASU 2019-12 and ASU 2021-01 did not have a material impact on our unaudited condensed consolidated financial statements.
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, as applicable.

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 more nimble organization to better align costs with expected sales; suspending the quarterly dividend commencing April 2020; aligning inventory receipts with expected demand; partnering with suppliers and vendors to reduce operating costs and extend payment terms; and reviewing real estate and actively negotiating with landlords to deliver rent relief in the form of reductions, abatements and other concessions. In October 2020, the Company also amended and extended its credit facility to strengthen its liquidity and enhance its financial stability. The Company anticipates satisfying its material cash requirements from its cash flows from operating activities, our cash and marketable securities on hand, capacity within our credit facility and other liquidity options.
The following table summarizes cash flows for the year-to-date period October 30, 2021 compared to last year's year-to-date period October 31, 2020:
Thirty-Nine Weeks Ended
October 30, 2021 October 31, 2020
 
(dollars in millions) (1)
Net cash provided by (used in) operating activities $ 88  $ (64)
Net cash provided by investing activities 7  36 
Net cash (used in) provided by financing activities (52) 91 
Net increase in cash and cash equivalents $ 44  $ 63 
(1) May not foot due to rounding.
Operating Activities
Net cash provided by operating activities for the year-to-date period of fiscal 2021 was $88 million compared to net cash used in operating activities of $64 million in last year's year-to-date period. The change in net cash provided by operating activities primarily reflects higher net income, the timing of income taxes and payables, as well as inventory management, partially offset by normalized rent payments and rent settlements.
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Investing Activities
Net cash provided by investing activities for the year-to-date period of fiscal 2021 was $7 million compared to $36 million in last year's year-to-date period, reflecting a $30 million decrease in net proceeds from the sale of marketable securities, partially offset by reduced capital spend.
Financing Activities
Net cash used in financing activities for the year-to-date period of fiscal 2021 was $52 million compared to net cash provided by financing activities of $91 million in last year's year-to-date period, primarily reflecting a $50 million payment on borrowings in the current year-to-date period compared to a $107 million in proceeds from borrowings in last year's year-to-date period, partially offset by an $11 million dividend payment in last year's year-to-date period.
Credit Facility
On October 30, 2020, the Company and certain material domestic subsidiaries entered into Amendment No. 1 (the "Amendment") to its credit agreement (as amended, the "Agreement"), dated as of August 2, 2018, by and among the Company, certain material domestic subsidiaries as co-borrowers and guarantors, Wells Fargo Bank, National Association ("Wells Fargo Bank"), as Agent, letter of credit issuer and swing line lender, and certain lenders party thereto. Our obligations under the Agreement are guaranteed by the guarantors and secured by a first priority lien on certain assets of the Company and certain material domestic subsidiaries, including inventory, accounts receivable, cash deposits, certain insurance proceeds, real estate, fixtures and certain intellectual property. The Agreement provides for a five-year asset-based senior secured revolving loan ("ABL") and letter of credit facility of up to $285.0 million, maturing October 30, 2025. The interest rate applicable to the ABL is equal to 2.25% (subject to increase to 2.50% based upon average quarterly excess availability under the ABL), with a LIBOR floor of 75 basis points. The Agreement also provides for a $15.0 million first-in last-out ("FILO") loan. The interest rate applicable to the FILO is equal to, at the Company's option, either a base rate, determined by reference to the federal funds rate, or a LIBOR with a floor of 75 basis points, plus in each case an interest rate margin of 4.5%. The Company expects borrowings to be at a LIBOR, plus an interest rate margin of 4.5%. The FILO includes a prepayment penalty equal to 1.0% in the first year, 0.5% in the second year and none thereafter. The FILO can only be prepaid if there are no outstanding borrowings under the ABL. 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 October 30, 2021, $99 million in 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. Availability under the Agreement is determined based upon a monthly borrowing base calculation which includes eligible credit card receivables, real estate and inventory, less outstanding borrowings, letters of credit and certain designated reserves. As of October 30, 2021, the available additional borrowing capacity under the Agreement was approximately $166 million, inclusive of $29 million of excess availability.
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, regarding this and do not currently expect the transition to have a significant impact on our unaudited condensed consolidated financial statements.
Store and Franchise Activity
During the thirty-nine weeks ended October 30, 2021, we had 23 permanent store closures, consisting of 11 Chico's stores, 9 WHBM stores and 3 Soma stores. As of October 30, 2021, the Company's franchise operations consisted of 59 international retail locations in Mexico and 2 domestic airport locations.
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Stores continue to be an important part of our omnichannel strategy, and digital sales are higher in markets where we have a retail presence, but we intend to continue rationalizing our real estate portfolio, reflecting our emphasis on digital and our priority for higher profitability standards. We have closed 23 underperforming locations since the beginning of fiscal 2021 and ended the third quarter with 1,279 boutiques. We will continue to shrink our store base to align with these standards, primarily as leases come due, lease kickouts are available, or buyouts make economic sense. However, with the uncertainty of 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.

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 2020 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 2020 Annual Report on Form 10-K.

Forward-Looking Statements
This Form 10-Q contains statements concerning our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry and other statements that are not historical facts. These are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, words or phrases such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “will,” “plans,” "path," “should,” “approximately,” “our planning assumptions,” “future outlook” and similar expressions identify forward-looking statements. These forward-looking statements are based largely on information currently available to our management and are subject to various risks and uncertainties that could cause actual results to differ materially from historical results or those expressed or implied by such forward-looking statements. Although we believe our expectations are based on reasonable estimates and assumptions, they are not guarantees of performance. There is no assurance that our expectations will occur or that our estimates or assumptions will be correct, and we caution investors and all others not to place undue reliance on such forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, those described in Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K and, from time to time, in Item 1A, “Risk Factors” of our Quarterly Reports on Form 10-Q and the following:
The effects of the pandemic, including uncertainties about its depth and duration, new variants of COVID-19 that have emerged, the speed, efficacy and availability of vaccines and treatments, its impact on general economic conditions, consumer behavior and discretionary spending, the effectiveness of any actions taken in response to the pandemic, and the impact of the pandemic on our manufacturing operations; the extent, availability and effectiveness of any pandemic stimulus packages or loan programs, including the CARES Act; the ability of 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 supply chain and other disruptions; increases in unemployment rates and taxes; general economic conditions, inflation, consumer confidence, consumer spending patterns and market disruptions including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises or other major events, or the prospect of these events; shifts in consumer behavior, and our ability to adapt, identify and respond to new and changing fashion trends and customer preferences, and to coordinate product development with buying and planning; changes in the general or specialty retail or apparel industries, including market demand and overall level of spending for women’s private branded clothing and related accessories; our ability to secure and maintain customer acceptance of styles and in-store and online concepts; competition in the markets in which we operate, including our ability to remain competitive with customer shipping terms and costs; customer traffic at our stores; fluctuations in foreign currency exchange rates; significant changes in the costs of manufacturing, raw materials, transportation, importing, distribution, labor and advertising; the quality and timeliness of merchandise received from suppliers; our ability to manage our store fleet, including achieving the expected results of store openings or store closures; our ability to appropriately manage our inventory and allocation processes and leverage targeted promotions; our ability to maintain our cost saving discipline; our ability to operate our retail websites in a profitable manner; our ability to successfully identify and implement additional sales and distribution channels; our ability to successfully execute and achieve the expected results of our business and brand strategies, awareness, merchandising and
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marketing programs including, but not limited to, the Company’s turnaround strategy, retail fleet optimization plan, sales initiatives and multi-channel strategies and five operating priorities for fiscal 2021, which are: 1) continuing our ongoing digital transformation; 2) further refining product through fit, quality, fabric and innovation in each of our brands; 3) driving increased customer engagement through marketing; 4) maintaining our operating and cost discipline; and 5) further enhancing the productivity of our real estate portfolio; our ability to utilize our distribution center and other support facilities in an efficient and effective manner; our reliance on sourcing from foreign suppliers, including significant economic labor, political or other shifts (including the impact of changes in tariffs, taxes or other import regulations, particularly with respect to China, or legislation prohibiting certain imports from China); U.S. and foreign governmental actions and policies and changes thereto; the continuing performance, implementation and integration of our management information systems; the impact of any system failure, cyber security or other data security breaches, including any security breaches resulting in the theft, transfer, or unauthorized disclosure of customer, employee, or company information; our ability to comply with any domestic and foreign information security and privacy laws, regulations and technology platform rules or other obligations related to data privacy and security; the ability to attract, hire, train, motivate and retain qualified employees in an inclusive environment; the successful recruitment of leadership and transition of members of our senior management team; uncertainties regarding future unsolicited offers to buy the Company and actions of activist shareholders and others and our ability to respond effectively; our ability to secure and protect our intellectual property rights and to protect our reputation and brand images; unanticipated changes in legal, regulatory or tax laws; and our ability to comply with the terms of our Credit Agreement, which includes restrictive provisions limiting our flexibility in operating our business and obtaining credit on reasonable terms.
These factors should be considered in evaluating forward-looking statements contained herein. 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 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 October 30, 2021 has not materially changed since January 30, 2021. We are exposed to market risk from changes in interest rates on any future indebtedness and our marketable securities and from foreign currency exchange rate fluctuations.
Our exposure to interest rate risk relates in part to our credit agreement with our bank. On October 30, 2020, we entered into Amendment No. 1 (the "Amendment") to our credit agreement (as amended, the "Agreement"), as further discussed in Note 12 to the accompanying unaudited condensed consolidated financial statements and Part I, Item 2, MD&A, included in this Form 10-Q. The Agreement, which matures on October 30, 2025, 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. As of October 30, 2021, $99 million in borrowings were outstanding under the Agreement and is reflected as long-term debt in the accompanying unaudited condensed consolidated balance sheet. Due to the 75 basis points LIBOR floor under the Agreement, an increase in market interest rates of 100 basis points would increase interest expense in the amount of approximately $1.4 million over the remaining term of the loan. 
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.
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 which primarily includes corporate bonds. The marketable securities portfolio as of October 30, 2021 consisted of $3 million of securities with maturity dates within one year or less and no maturity dates over one year. We consider all 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 October 30, 2021, 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 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 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 13 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 2020 Annual Report on Form 10-K should be considered as they could materially affect our business, financial condition or future results. There have been no material changes with respect to the risks described in our 2020 Annual Report on Form 10-K, except for those risks updated in our quarterly report on Form 10-Q for the quarter ended July 31, 2021, 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
August 1, 2021 - August 28, 2021 130,806  $ 6.18  —  $ 55,192 
August 29, 2021 - October 2, 2021 19,113  4.59  —  55,192 
October 3, 2021 - October 30, 2021 —  —  —  55,192 
Total 149,919  5.98  — 

(a) Total number of shares purchased consists of 149,919 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 third quarter. The repurchase program has no specific termination date and will expire when we have repurchased all securities authorized for repurchase thereunder, unless terminated earlier by our Board of Directors. The Company has no continuing obligation to repurchase shares under this authorization, and the timing, actual number and value of any additional shares to be purchased will depend on the performance of our stock price, market conditions and other considerations.

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ITEM 6. EXHIBITS
(a)The following documents are filed as exhibits to this Form 10-Q:
Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 10.5
Exhibit 10.6
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
Exhibit 101 The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended October 30, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Income (Loss), (ii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Shareholders' Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
Exhibit 104 The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended October 30, 2021, formatted in Inline XBRL (included within Exhibit 101).

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Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
    CHICO'S FAS, INC.
Date: December 1, 2021     By: /s/ Molly Langenstein
    Molly Langenstein
    Chief Executive Officer, President and Director
Date: December 1, 2021     By: /s/ Patrick J. Guido
    Patrick J. Guido
    Executive Vice President, Chief Financial Officer
Date: December 1, 2021     By: /s/ David M. Oliver
    David M. Oliver
    Senior Vice President - Finance, Controller and Chief Accounting Officer
38

Exhibit 10.4

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered into this 20th day of September 2021, by and between Patrick J. Guido (the “Indemnified Party”) and CHICO’S FAS, INC., a Florida corporation (the “Corporation”).

WITNESSETH

    WHEREAS, it is essential to the Corporation to retain and attract as Directors and/or Executive Officers the most capable persons available; and

    WHEREAS, the substantial increase in corporate litigation subjects directors and officers to expensive litigation risks at the same time that the availability of directors’ and officers’ liability insurance has been severely limited; and
    
    WHEREAS, in addition, the statutory indemnification provisions of the Florida Business Corporation Act and Article VII of the bylaws of the Corporation (the “Article”) expressly provide that they are non-exclusive; and

    WHEREAS, the Indemnified Party does not regard the protection available under the Article and insurance, if any, as adequate in the present circumstances, and considers it necessary and desirable to his service as a Director and/or Executive Officer to have adequate protection, and the Corporation desires the Indemnified Party to serve in such capacity and have such protection; and

    WHEREAS, the Florida Business Corporation Act and the Article provide that indemnification of Directors and Executive Officers of the Corporation may be authorized by agreement, and thereby contemplates that contracts of this nature may be entered into between the Corporation and the Indemnified Party with respect to indemnification of the Indemnified Party as a Director and/or Executive Officer of the Corporation.

    NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements contained in this Agreement, it is hereby agreed as follows:

1.INDEMNIFICATION GENERALLY.

(a)    Grant of Indemnity. (i) Subject to and upon the terms and conditions of this Agreement, the Corporation shall indemnify and hold harmless the Indemnified party in respect of any and all costs, claims, losses, damages and expenses which may be incurred or suffered by the Indemnified Party as a result of or arising out of prosecuting, defending, settling or investigating:

            (1)    any threatened, pending, or completed claim, demand, inquiry, investigation, action , suit or proceeding, whether formal or informal or brought by or in the right of the Corporation or otherwise and whether of a civil, criminal, administrative or investigative nature, in which the Indemnified Party may be or may have been involved as a party or otherwise, arising out of the fact that the Indemnified Party is or was a director, officer, employee, independent contractor or stockholder of the Corporation or any of its “Affiliates” (as such term is defined in the rules and regulations promulgated by the Securities and Exchange Commission under the Securities Act of 1933), or served as a director, officer, employee, independent contractor or stockholder in or for any person, firm, partnership, corporation or other entity at the request of the Corporation (including without limitation service in any capacity for or in connection with any employee benefit plan maintained by the Corporation or on behalf of the Corporation’s employees);

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            (2)    any attempt (regardless of its success) by any person to charge or cause the Indemnified Party to be charged with wrongdoing or with financial responsibility for damages arising out of or incurred in connection with the matters indemnified against in this Agreement; or

            (3)    any expense, interest, assessment, fine, tax, judgment or settlement payment arising out of or incident to any of the matters indemnified against in this Agreement including reasonable fees and disbursements of legal counsel, experts, accountants, consultants and investigators (before and at trial and in appellate proceedings).

        (ii)    The obligation of the Corporation under this Agreement is not conditioned in any way on any attempt by the Indemnified Party to collect from an insurer any amount under a liability insurance policy.

        (iii)    In no case shall any indemnification be provided under this Agreement to the Indemnified Party by the Corporation in:

(1)Any action or proceeding brought by or in the name or interest of the Indemnified Party against the Corporation; or

(2)Any action or proceeding brought by the Corporation against the Indemnified Party, which action is initiated at the direction of the Board of Directors of the Corporation.

(b)    Claims for Indemnification. (i) Whenever any claims shall arise for indemnification under this Agreement, the Indemnified Party shall notify the Corporation promptly and in any event within 30 days after the Indemnified Party has actual knowledge of the facts constituting the basis for such claim. The notice shall specify all facts known to the Indemnified Party giving rise to such indemnification right and the amount or an estimate of the amount of liability (including estimated expenses) arising therefrom.

        (ii)    Any indemnification under this Agreement shall be made no later than 30 days after receipt by the Corporation of the written notification specified in Section 1(b)(i), unless a determination is made within such 30 day period by (X) the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to the mater described in the notice of (Y) independent legal counsel, agreed to by the Corporation, in a written opinion (which counsel shall be appointed if such a quorum is not obtainable), that the Indemnified Party has not met the relevant standards for indemnification under this Agreement.

    (c)    Rights to Defend or Settle; Third Party Claims, etc. (i) If the facts giving rise to any indemnification right under this Agreement shall involve any actual or threatened claim or demand against the Indemnified Party, or any possible claim by the Indemnified Party against any third party, such claim shall be referred to as a “Third Party Claim.” If the Corporation provides the Indemnified Party with an agreement in writing in form and substance satisfactory to the Indemnified Party and his counsel, agreeing to indemnify, defend or prosecute and hold the Indemnified Party harmless from all costs and liability arising from any Third Party Claim (an “Agreement of Indemnity”), and demonstrating to the satisfaction of the Indemnified Party the financial wherewithal to accomplish such indemnification, the Corporation may at its own expense undertake full responsibility for the defense or prosecution of such Third Party Claim. The Corporation may contest or settle any such Third Party Claim for money damages on such terms and conditions as it deems appropriate but shall be obligated to consult in good faith with the Indemnified Party and not to contest or settle any Third Party Claim involving injunctive or equitable relief against or affecting the Indemnified Party of his properties or assets without the prior written consent of the Indemnified Party, such consent not to be withheld unreasonably. The Indemnified Party may participate at his own expense and with his own counsel in defense or
    2


prosecution of a Third Party Claim pursuant to this Section 1(c)(i), and such participation shall not relieve the Corporation of its obligation to indemnify the Indemnified Party under this Agreement.

        (ii)    If the Corporation fails to deliver a satisfactory Agreement of Indemnity and evidence of financial wherewithal within 10 days after receipt of notice pursuant to Section 1(b), the Indemnified Party may contest or settle the Third Party Claim on such terms as it sees fit but shall not reach a settlement with respect to the payment of money damages without consulting in good faith with the Corporation. The Corporation may participate at its own expense and with its own counsel in defense or prosecution of a Third Party Claim pursuant to this Section 1(c)(ii), but any such participation shall not relieve the Corporation of its obligations to indemnify the Indemnified Party under this Agreement. All expenses (including attorneys’ fees) incurred in defending or prosecuting any Third Party Claim shall be paid promptly by the Corporation as the suit or other matter is proceeding, upon the submission of bills therefore or other satisfactory evidence of such expenditures during the pendency of any matter as to which indemnification is available under this Agreement. The failure to make such payments within 10 days after submission of evidence of those expenses shall constitute a breach of a material obligation of the Corporation under this Agreement.

        (iii)    If by reason of any Third Party Claim a lien, attachment, garnishment or execution is placed upon any of the property or assets of the Indemnified Party, the Corporation shall promptly furnish a satisfactory indemnity bond to obtain the prompt release of such lien, attachment, garnishment or execution.

        (iv)    The Indemnified Party shall cooperate in the defense of any Third Party Claim which is controlled by the Corporation, but the Indemnified Party shall continue to be entitled to indemnification and reimbursement for all costs and expenses incurred by him in connection therewith as provided in this Agreement.

    (d)    Cooperation.    The parties to this Agreement shall execute such powers of attorney as may be necessary or appropriate to permit participation of counsel selected by any party hereto and, as may be reasonably related to any such claim or action, shall provide to the counsel, accountants and other representatives of each party access during normal business hours to all properties, personnel, books, records, contracts, commitments and all other business records of such other party and will furnish to such other party copies of all such documents as may be reasonably requested (certified, if requested).

    (e)    Choice of Counsel.    In all matters as to which indemnification is available to the Indemnified Party under this Agreement, the Indemnified Party shall be free to choose and retain counsel, provided the Indemnified Party shall secure the prior written consent of the Corporation as to such selection, which consent shall not be unreasonably withheld.

    (f)    Consultation.    If the Indemnified Party desires to retain the services of an attorney prior to the determination by the Corporation as to whether it will undertake the defense or prosecution of the Third Party Claim as provided in Section 1(c), the Indemnified Party shall notify the Corporation of such desire in the notice delivered pursuant to Section 1(b)(i), and such notice shall identify the counsel to be retained. The Corporation shall then have 10 days within which to advise the Indemnified Party whether it will assume the defense or prosecution of the Third Party Claim in accordance with Section 1(c)(i). If the Indemnified Party does not receive an affirmative response within such 10-day period, he shall be free to retain counsel of his choice, and the indemnity provided in Section 1(a) shall apply to the reasonable fees and disbursements of such counsel incurred after the expiration of such 10-day period. Any fees or disbursements incurred prior to the expiration of such 10-day period shall not be covered by the indemnity of Section 1(a).

    (g)    Repayment. (i) Notwithstanding the other provisions of this Agreement to the contrary, if the Corporation has incurred any cost, damage or expense under this Agreement paid to or for the benefit of the Indemnified Party and it is determined by a court of competent
    3


jurisdiction from which no appeal may be taken that the Indemnified Party’s actions or omissions constitute “Non-indemnifiable Conduct” as that term is defined in Section 1(g)(ii), the Indemnified Party shall and does hereby undertake in such circumstances to reimburse the Corporation for any and all such amounts previously paid to or for the benefit of the Indemnified Party.

        (ii)    For these purposes, “Non-indemnifiable Conduct” shall mean actions or omissions of the Indemnified Party material to the cause of action to which the indemnification under this Agreement related is determined to involve:

            (1)    a violation of the criminal law, unless the Indemnified Party had reasonable cause to believe his conduct was lawful and had no reasonable cause to believe his conduct was unlawful;

            (2)    a transaction in which the Indemnified Party derived an improper personal benefit;

            (3)    if the Indemnified Party is a director of the Corporation, a circumstance under which the liability provisions of Section 607.0834 (or any successor or similar statute) are applicable;

            (4)    willful misconduct or a conscious disregard for the best interests of the Corporation (when indemnification is sought in a proceeding by or in the right of the Corporation to procure a judgment in favor of the Corporation or when indemnification is sought in a proceeding by or in the right of a stockholder); or

            (5)    conduct pursuant to then applicable law that prohibits such indemnification.

2.TERM.

This Agreement shall be effective upon its execution by all parties and shall continue in full force and effect until the date seven years after the date of this Agreement, or seven years after the termination of the Indemnified Party’s employment or term of office, whichever is later, provided that such term shall be extended by any period of time during which the Corporation is in breach of a material obligation to the Indemnified Party, plus ninety days. Such term shall also be extended with respect to each Third Party Claim then pending and as to which notice under Section 1(b) has theretofore been given by the Indemnified Party to the Corporation, and this Agreement shall continue to be applicable to each such Third Party Claim.

3.REPRESENTATIONS AND AGREEMENTS OF THE CORPORATION.

(a)    Authority. The Corporation represents, covenants and agrees that it has the corporate power and authority to enter into this Agreement and to carry out its obligations under this Agreement. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by the Board of Directors of the Corporation. This Agreement is a valid and binding obligation of the Corporation and is enforceable against the Corporation in accordance with its terms.

(b)    Non-contestability. The Corporation represents, covenants and agrees that it will not initiate, and that it will use its best efforts to cause any of its Affiliates not to initiate, any action, suit or proceeding challenging the validity or enforceability of this Agreement.

(c)    Good Faith Judgment.     The Corporation represents, covenants and agrees that it will exercise good faith judgment in determining the entitlement of the Indemnified Party to indemnification under this Agreement.
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4.RELATIONSHIP OF THIS AGREEMENT TO OTHER INDEMNITIES.

(a)    Non-exclusivity. (i) This Agreement and all rights granted to the Indemnified Party under this Agreement are in addition to and are not deemed to be exclusive with or of any other rights that may be available to the Indemnified Party under any Articles of Incorporation, bylaw, statute, agreement, or otherwise.

    (ii)    The rights, duties and obligations of the Corporation and the Indemnified Party under this Agreement do no limit, diminish or supersede the rights, duties and obligations of the Corporation and the Indemnified Party with respect to the indemnification afforded to the Indemnified Party under any liability insurance, the Florida Business Corporation Act, or under the bylaws or the Articles of Incorporation of the Corporation. In addition, the Indemnified Party’s rights under this Agreement will not be limited or diminished in any respect by any amendment to the bylaws or the Articles of Incorporation of the Corporation.

(b)    Availability, Contribution, etc. (i)    The availability or nonavailability of indemnification by way of insurance policy, Articles of Incorporation, bylaw, vote of stockholders, or otherwise from the Corporation to the Indemnified Party shall not affect the right of the Indemnified Party to indemnification under this Agreement, provided that all rights under this Agreement shall be subject to applicable statutory provisions in effect from time to time.

    (ii)    Any funds received by the Indemnified Party by way of indemnification or payment from any source other than from the Corporation under this Agreement shall reduce any amount otherwise payable to the Indemnified Party under this Agreement.

    (iii)    If the Indemnified Party is entitled under any provision of this Agreement to indemnification by the Corporation for some claims, issues or matters, but not as to other claims, issues or matters, or for some or a portion of the expenses, judgments, fines or penalties actually and reasonably incurred by him or amounts actually and reasonably paid in settlement by him in the investigation, defense, appeal or settlement of any matter for which indemnification is sought under this Agreement, but not for the total amount thereof, the Corporation shall nevertheless indemnify the Indemnified Party for the portion of such claims, issues or matters or expenses, judgments, fines, penalties or amounts paid in settlement to which the Indemnified Party is entitled.

    (iv)    If for any reason a court of competent jurisdiction from which no appeal can be taken rules than the indemnity provided under this Agreement is unavailable, or if for any reason the indemnity under this Agreement is insufficient to hold the Indemnified Party harmless as provided in this Agreement, then in either event, the Corporation shall contribute to the amounts paid or payable by the Indemnified Party in such proportion as equitably reflects the relative benefits received by, and fault of the Indemnified Party and the Corporation and its Affiliates.

(c)    Allowance for Compliance with SEC Requirements.     The Indemnified Party acknowledges that the Securities and Exchange Commission (“SEC”) has expressed the opinion that indemnification of directors and officers from liabilities under the Securities Act of 1933 (the “1933 Act”) is against public policy as expressed in the 1933 Act and, is therefore, unenforceable. The Indemnified Party hereby agrees that it will not be a breach of this Agreement for the Corporation to undertake with the SEC in connection with the registration for sale of any stock or other securities of the Corporation from time to time that, in the event a claim for indemnification against such liabilities (other than the payment by the Corporation of expenses incurred or paid by a director of officer of the Corporation in the successful defense of any action, suit or proceeding) is asserted in connection with such stock or other securities being registered, the Corporation will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of competent jurisdiction on the question of whether or not such indemnification by it is against public
    5


policy as expressed in the 1933 Act and will be governed by the final adjudication of such issue. The Indemnified Party further agrees that such submission to a court of competent jurisdiction shall not be a breach of this Agreement.

5.MISCELLANEOUS.

(a)    Notices. All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when received if personally delivered; when transmitted if transmitted by telecopy, electronic telephone line facsimile transmission or other similar electronic or digital transmission method; the day after it is sent, if sent by recognized expedited delivery service; and five days after it is sent, if mailed, first class mail, postage prepaid. In each case notice shall be sent to:



If to the Indemnified Party:
                Patrick J. Guido
                        XXXX
                        XXXX

If to the Corporation:    
                Chico’s FAS, Inc.
                11215 Metro Parkway
                Fort Myers, FL 33966
                Attn: General Counsel

or to such other address as either party may have specified in writing to the other using the procedures specified above in this Section 5(a).

        (b)    Construction and Interpretation. (i)    This Agreement shall be construed pursuant to and governed by the substantive laws of the State of Florida (and any provision of Florida law shall not apply if the law of a state or jurisdiction other than Florida would otherwise apply).

            (ii)    The headings of the various sections in this Agreement are inserted for the convenience of the parties and shall not affect the meaning, construction or interpretation of this Agreement.

            (iii)    Any provision of this Agreement which is determined by a court of competent jurisdiction to be prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. In any such case, such determination shall not affect any other provision of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect. If any provision or term of this Agreement is susceptible to two or more constructions or interpretations, one or more of which would render the provision or term void or unenforceable, the parties agree that a construction or interpretation which renders the term or provision valid shall be favorable.

            (iv)    As used in this Agreement, (1) the word “including” is always without limitation; (2) the words in the singular number include words of the plural number and vice versa; and (3) the word “person” includes a trust, corporation, association, partnership, joint venture, business trust, unincorporated organization, limited liability company, government, public body or authority and any governmental agency or department as well as a natural person.

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        (c)    Entire Agreement.    This Agreement constitutes the entire Agreement, and supersedes all prior agreements and understandings, oral and written, among the parties to this Agreement with respect to the subject matter hereof.

        (d)    Specific Enforcement. (i) The parties agree and acknowledge that in the event of a breach by the Corporation of its obligation promptly to indemnify the Indemnified Party as provided in this Agreement, or breach of any other material provision of this Agreement, damages at law will be an insufficient remedy to the Indemnified Party. Accordingly, the parties agree that, in addition to any other remedies or rights that may be available to the Indemnified Party, the Indemnified Party shall also be entitled, upon application to a court of competent jurisdiction, to obtain temporary or permanent injunctions to compel specific performance of the obligations of the Corporation under this Agreement.

            (ii)    There shall exist in such action a rebuttable presumption that the Indemnified Party has met the applicable standard(s) of conduct and is therefore entitled to indemnification pursuant to this Agreement, and the burden of proving that the relevant standards have not been met by the Indemnified Party shall be on the Corporation. Neither the failure of the corporation (including its Board of Directors or independent legal counsel) prior to the commencement of such action to have made a determination that indemnification is proper in the circumstances because the Indemnified Party has met the applicable standard of conduct, nor an actual determination by the Corporation (including its Board of Directors or independent legal counsel) that the Indemnified Party has not met such applicable standard of conduct, shall (X) constitute a defense to the action, (Y) create a presumption that the Indemnified Party has not met the applicable standard of conduct, or (Z) otherwise alter the presumption in favor of the Indemnified Party referred to in the preceding sentence.

        (e)    Cost of Enforcement; Interest. (i) If the Indemnified party engages the services of an attorney or any other third party or in any way initiates legal action to enforce his rights under this Agreement, including but not limited to the collection of monies due from the Corporation to the Indemnified Party, the prevailing party shall be entitled to recover all reasonable costs and expenses (including reasonable attorneys’ fees before and at trial and in appellate proceedings). Should the Indemnified Party prevail, such costs and expenses shall be in addition to monies otherwise due him under this Agreement.

            (ii)    If any monies shall be due the Indemnified Party from the Corporation under this Agreement and shall not be paid within 30 days from the date of written request for payment, interest shall accrue on such unpaid amount at the rate of 2% per annum in excess of the prime rate announced from time to time by Bank of America, or such lower rate as may be required to comply with applicable law from the date when due until it is paid in full.

        (f)    Application to Third Parties, Etc.    Nothing in this Agreement, whether express or implied, is intended or should be construed to confer upon, or to grant to, any person, except the Corporation, the Indemnified Party and their respective heirs, assignees and successors, any claim, right or remedy under or because of this Agreement or in any provision of it. This Agreement shall be binding upon and inure to the benefit of the successors in interest and assigns, heirs and personal representatives, as the case may be, of the parties, including any successor corporation resulting from a merger, consolidation, recapitalization, reorganization, sale of all or substantially all of the assets of the Corporation, or any other transaction resulting in the successor corporation assuming the liabilities of the Corporation under this Agreement (by operation of law, or otherwise).

        (g)    Further Assurances.     The parties to this Agreement will execute and deliver, or cause to be executed and delivered, such additional or further documents, agreements or instruments and shall cooperate with one another in all respects for the purpose of carrying out the transactions contemplated by this Agreement.

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        (h)    Venue; Process. The parties to this Agreement agree that jurisdiction and venue in any action brought pursuant to this Agreement to enforce its terms or otherwise with respect to the relationships between the parties shall properly lie in the Circuit Court of the Twentieth Judicial Circuit of the State of Florida in and for Lee County or in the United States District Court for the Middle District of Florida, Tampa Division. Such jurisdiction and venue are merely permissive; jurisdiction and venue shall also continue to lie in any court where jurisdiction and venue would otherwise be proper. The parties agree that they will not object that any action commenced in the foregoing jurisdictions is commenced in a forum non conveniens. The parties further agree that the mailing by certified or registered mail, return receipt requested, of any process required by any such court shall constitute valid and lawful service of process against them, without the necessity for service by any other means provided by statute or rule of court.

        (i)    Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be considered an original, but all of which together shall constitute one and the same instrument.

        (j)    Waiver and Delay. No waiver or delay in enforcing the terms of this Agreement shall be construed as a waiver of any subsequent breach. No action taken by the Indemnified Party shall constitute a waiver of his rights under this Agreement.

    IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.

                        CHICO’S FAS, INC.




                        By:    /s/ Molly Langenstein  
                            Molly Langenstein
                            President & Chief Executive Officer



                        By:    /s/ Patrick J. Guido  
                            Patrick J. Guido
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IMAGE_0.JPG
Exhibit 10.5

August 20, 2021

Wendy Hufford
XXXX
XXXX



Dear Wendy:

It is with great pleasure that we offer you the opportunity to join Chico’s FAS, Inc. As you are aware, we are a respected organization within which this position is a key driver of our success. As one of the top specialty retailers, we offer tremendous opportunity for personal and professional growth. Please let this letter serve as an offer to join Chico’s FAS, Inc. and your acceptance of that offer. The following will outline the specifics:

Position:            SVP, General Counsel & Corporate Secretary 

Reports to:          Kristin Gwinner, Chief Human Resources Officer

Start Date:         September 13, 2021

Base Salary:     $350,000.00 annually
Bonus Plan:
Annual target of 50% of base salary earned during each fiscal year performance period, with target bonus for FY21 (January 2021 to January 2022) which is contingent upon the achievement of corporate and brand financial objectives, prorated for time in position. The terms of the bonus, including eligibility, payouts and objectives are subject to the Management Bonus Plan and may be modified from time to time. All payouts are based on fiscal year business results and can vary from 0% to a maximum of 200% of your target bonus potential (100% of base salary earned). Bonus is typically paid in March, after the conclusion of the fiscal year.
Equity Grants: 
Following your start date, you will receive a new hire equity grant of Restricted Stock equivalent to $250,000 in value if the stock price is trading above $4.00 per share on the grant date or 62,500 shares if the stock price is trading at or below $4.00 per share on the grant date. The Restricted Stock shares will vest ratably over a three-year period.

You will be eligible for annual equity grants delivered in a combination of 50% Restricted Stock and 50% Performance Share Units (based on target for the Performance Share Units). The amount of such grants is established by the Human Resources, Compensation and Benefits Committee of our Board of Directors on an annual basis and may change from year to year. Annual equity grants are typically made in March.






Chico's FAS Inc. · 11215 Metro Parkway · Fort Myers, Florida 33966 · (239) 277-6200

IMAGE_0.JPG
Ms. Wendy Hufford
Page 2

Annual Review:
You will be eligible for the FY21 performance appraisal process in 2022.
Time Off:
You will be eligible for 23 days of Paid Time Off (PTO) for each full calendar year of employment. This is an accrued benefit that you start to earn on your start date. In addition, Chico’s FAS, Inc. currently observes seven paid holidays and one floating day of your choice.
You will also be eligible to participate in Chico’s FAS, Inc. comprehensive benefits program outlined below:

Group Insurance Program:
Medical/Dental/Vision Plans
Eligibility Date: Effective your first day of active employment

Life Insurance:
The company provides term insurance equal to 1X your base salary as well as accidental death and dismemberment insurance equal to 1X your base salary ($500,000 maximum). Supplemental insurance is available for purchase.
Eligibility Date: Effective your first day of active employment

Short and Long Term Disability:
The company provides short and long term disability benefits.
Eligibility Date: Effective your first day of active employment

401(k) Plan:
You may participate with an eligible deferral of your compensation (subject to an IRS maximum). Your 401(k) contributions may be subject to additional limitations under federal regulations.  You will be able to roll over existing qualified funds immediately. 
Eligibility Date: After 6 months of employment

Employee Stock Purchase Plan:
You will have an opportunity to purchase Chico’s FAS, Inc. common stock at a discount directly from the company, four times a year, based on quarterly Offering Periods.
Eligibility Date: First Offering Period following 60 days of employment

Executive Benefits
Disability Income Protection:                                                                                    
As an officer, you will be eligible for Chico’s FAS, Inc.’s Supplemental Disability Insurance program after 90 days of employment. This program provides an increased level of income protection should you become totally disabled. Full details of the program will be provided by the Benefits Department.






Chico's FAS Inc. · 11215 Metro Parkway · Fort Myers, Florida 33966 · (239) 277-6200

IMAGE_0.JPG
Ms. Wendy Hufford
Page 3

Annual Physical:   
As an officer, you are eligible to have one company paid physical per year at the Mayo Clinic in Jacksonville, FL as part of our Health and Wellness program.

The items listed above are covered by various benefit plans. Such benefit plans may be modified from time to time. In the event this offer letter conflicts with the terms of a benefit plan document or summary plan description, the terms of the plan document or summary plan description will control.

Child Care:  
Chico’s FAS, Inc. is pleased to provide an early education and child development center located on campus. The center is operated by Bright Horizons Family Solutions Inc., a best in class childcare provider. The center accommodates children from ages 6 weeks to 5 years. Summer program options are also available for children ages 5 to 12.

Chico’s Clinic:
You will have access to Chico’s Viva Verna Clinic, which is available to all associates and their spouses. The on-site clinic offers no cost and low-cost appointments for wellness checks, sick visits and lab work. Marathon Health operates the clinic with a staff of nurse practitioners and other providers.
Associate Discount:
You will be eligible for the Chico’s associate discount, which is generally 40% off the retail price for all Chico’s product at all 3 Chico’s Brands (Chico’s, WHBM, Soma), whether purchased on-line or in store. This discount may not apply to all products and all purchases.
Relocation Benefit:  
In order to ensure a successful relocation, you will be provided relocation assistance as detailed in the attached Tier I Relocation Program within the next 2 years.
By accepting our offer of employment, you acknowledge the at-will nature of our relationship. This offer is contingent upon the successful verification of references, background check, in addition to your execution of our attached Restrictive Covenant Agreement.
Additionally, you represent that you are not a party to any agreement that would bar or limit the scope of your employment with us.
We hope you view this opportunity as a chance to have a positive impact while enjoying a challenging and rewarding career. Nonetheless, please understand that Chico’s FAS, Inc. is an at-will employer. That
means that either you or the company are free to end the employment relationship at any time, with or without notice or cause.

We are looking forward to having you on our team. Let me be the first to welcome you aboard! We are sure you will find it a challenging and rewarding experience. If you have any questions, please feel free to contact us at the number indicated below.




Chico's FAS Inc. · 11215 Metro Parkway · Fort Myers, Florida 33966 · (239) 277-6200

IMAGE_0.JPG
Ms. Wendy Hufford
Page 4


Sincerely,

  /s/ Kristin Gwinner

Kristin Gwinner
Chief Human Resources Officer


 
Contact Information

For questions, please call:
Kristy Knupp
Senior Director, Recruiting
239-346-2043




I accept the terms and conditions of the offer as outlined above:

Please return a signed copy



/s/ Wendy Hufford                 
Ms. Wendy Hufford



8/21/21                 
Date


Attachments
Chico's FAS Inc. · 11215 Metro Parkway · Fort Myers, Florida 33966 · (239) 277-6200

1

Exhibit 10.6

RESTRICTIVE COVENANT AGREEMENT

THIS RESTRICTIVE COVENANT AGREEMENT (this “Agreement”) is made and entered into this 13th day of September, 2021 (the “Effective Date”), by and between Chico’s FAS, Inc., a Florida corporation, having a principal place of business at 11215 Metro Parkway, Fort Myers, FL 33966 (the “Employer”), and Wendy Hufford (the “Executive”). In consideration of the mutual covenants herein contained and intending to be legally bound hereby, the parties hereto agree as follows:

1.Employment. Employer desires to employ Executive in the position of SVP, General Counsel and Board Secretary (the “Position”), and Executive desires to accept such Position. In the Position, Executive will assume a key role in the organization that will require confidentiality and trust and will acquire information, knowledge and experience with Employer that is proprietary, confidential, unique and hard to replace. It would also place Employer at an unfair disadvantage, and Executive at an unfair advantage, should Executive use this information, knowledge, and experience to further the interests of anyone other than Employer. As a result, Employer desires to protect its rights in its proprietary, confidential and trade secret information, and, as a condition of employment and for the consideration set forth herein, Executive is willing to and has agreed to abide by and faithfully observe the obligations and restrictions set forth herein.

2.Loyalty During Employment. While employed with Employer, Executive will remain loyal to Employer and will not engage in any activities that create a conflict of interest. Executive understands that it will be a conflict of interest for Executive to pursue business activities that compete with Employer while employed with Employer or to engage in material preparations to do so. Executive will promptly inform Employer of any business opportunities related to Employer’s line of business, and will not pursue any such business opportunities independent from Employer without advance written authorization from Employer to do so.

3.Confidential Information.

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

(b)Definition of Confidential Information. “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, Executive in connection with Executive’s past, present or future employment with Employer and that relates to the business, products, services, research or development of any of Employer 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,

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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 Employer’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.

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

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

(e)Return of Confidential Information and Materials. Executive agrees to return to Employer either before or immediately upon the termination of Executive’s employment with Employer 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 Employer in the possession, custody or control of Executive which was obtained by Executive during the course of or as a result of Executive’s employment with Employer whether confidential or not, including, but without limitation, any copies thereof which may have been made by or for Executive. Executive shall also provide Employer, if requested to do so, the name of the new employer of Executive and Employer shall have the right to advise any subsequent employer of Executive’s obligations hereunder.

4.Non-Competition. Executive covenants and agrees that during the term of Executive’s employment with Employer and for a twelve (12) month period after the date of termination of Executive’s employment hereunder for any reason (the “Restricted Period”), Executive will not, directly or indirectly, perform any job, task, function, skill, or responsibility for a Competing Business that Executive has provided for Employer (and/or its Affiliates) within the twelve (12) month period immediately preceding Executive’s termination date within the Restricted Territory. For purposes of this Agreement, a “Competing Business” shall mean any direct competitor of Employer 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. The “Restricted Territory” means where Employer’s products are marketed at the time of Executive’s termination.

This covenant on the part of Executive shall be construed as an agreement independent of any other provision of this Agreement; and the existence of any claim or cause of action of Executive against Employer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Employer of this covenant. Executive expressly agrees that the restrictions of this Section 4 will not prevent Executive from otherwise obtaining gainful employment upon termination of Executive’s employment with Employer.

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5.Non-Solicitation of Customers, Suppliers, and Business Associates. For a period of two (2) years after the date of termination of Executive’s employment for any reason, Executive shall not directly or indirectly induce, solicit or encourage any customer, supplier or other business associate of Employer or an Affiliate to terminate or alter its relationship with Employer or Affiliate, or introduce, offer or sell to or for any customer or business associate, any products or services that compete with an Employer product, service, marketing item, or other item which presently exists, or which was under development or active consideration during Executive’s employment with Employer.

6.Non-Solicitation of Employees. For a period of two (2) years after the date of termination of Executive’s employment for any reason, Executive shall not, directly or indirectly, induce, solicit or encourage any employee of Employer or its Affiliates to terminate or alter his or her relationship with Employer or its Affiliates.

7.Non-Disparagement. Both during Executive’s employment with Employer and thereafter, Executive covenants and agrees that Executive shall not, directly or indirectly, disparage Employer, 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 entity which is intended to or has the effect of having any negative impact on Employer, its business or reputation in the marketplace or otherwise.

8.Reasonable Cooperation. Executive acknowledges and agrees that, during the course of Executive’s employment with Employer, Executive was 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, Executive agrees to cooperate fully with any investigation into, defense or prosecution of, or other involvement in, claims to which Executive has personal and relevant knowledge that is or may be made by or against Employer. This agreement to cooperate includes talking to or meeting with such persons at times and in such places as Employer and Executive reasonably agree to, as well as giving truthful evidence and truthful testimony. Employer shall reimburse Executive for reasonable out-of-pocket expenses actually incurred in connection with such assistance. Executive also promises to notify Employer within five (5) days if Executive is subpoenaed or contacted by a third party seeking information about Employer activities.

9.Remedies.

(a)Injunctive Relief. It is agreed by the parties hereto that any violation by Executive of any of the covenants contained herein would cause immediate, material and irreparable harm to Employer and/or its Affiliates which may not be adequately compensated for by money damages, and, therefore, Employer and/or its Affiliates shall be entitled to injunctive relief (including, without limitation, one or more preliminary injunctions and/or ex parte restraining orders) in addition to, and not in derogation of, any other remedies provided by law, in equity or otherwise for such a violation including, but not limited to, the right to have such covenants specifically enforced by any court of competent jurisdiction and the right to require Executive to account for and pay to Employer and/or its Affiliates all benefits derived or received by Executive as a result of any such breach of covenant together with interest thereon, from the date of such initial violation until such sums are received by Employer and/or its Affiliates. The Restricted Period set forth herein shall be extended by any period of time in which Executive is in breach of the covenants contained in this Agreement and for any period of time which may be necessary to secure an order of court or injunction, either temporary or permanent, to enforce any of the covenants contained in this Agreement.


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(b)Executive Acknowledgment. Executive acknowledges and agrees that the periods of restriction and geographical areas of restriction imposed by the confidentiality and non-competition covenants of this Agreement are fair and reasonably required for the protection of Employer and its Affiliates.

10.At-Will. Nothing in this Agreement is intended to alter the at-will nature of Executive’s employment.

11.Severability. In the event that, and if for any reason, any portion of this Agreement shall be held to be invalid or unenforceable, it is agreed that the remaining covenants and restrictions or portions thereof shall remain in full force and effect, and that if the validity or unenforceability is due to the unreasonableness of the time or geographical area covered by said covenants and restrictions, said covenants and restrictions of this Agreement shall nevertheless be effective for such period of time and for such area as may be determined to be reasonable by a court of competent jurisdiction.

12.Integration. This Agreement contains the entire agreement between the parties regarding the matters covered within it. To the extent other agreements cover the matters contained herein, the provisions of such agreements shall be read together with the provisions of this Agreement to afford Employer the greatest protections allowed by applicable law.

13.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without reference to its conflict of laws provisions.

14.Binding Effect. This Agreement is binding upon the parties hereto and on their respective heirs, personal representatives, successors and assigns. Executive agrees that the obligations contained in this Agreement will survive the termination of this Agreement.

15.Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Nothing in this Agreement prohibits Executive from reporting an event that 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. 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.

This Agreement shall be considered made on the date signed by Executive below which shall be the effective date of this Agreement unless Executive is entering into this Agreement as part of Executive’s original hiring, transfer or promotion into a new position in which case the terms of this Agreement are understood to be effective as of the first day of Executive’s employment in such new position (whether reduced to writing on that specific date or not).


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EMPLOYER:


By: /s/ Kristin Gwinner  DATE: 9/16/21


EXECUTIVE:


/s/ Wendy Hufford                    DATE: 9/10/21
Wendy Hufford




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 October 30, 2021;

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: December 1, 2021
/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, Patrick J. Guido, certify that:
 
1.I have reviewed this quarterly report on Form 10-Q of Chico’s FAS, Inc. for the period ended October 30, 2021;

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: December 1, 2021
/s/ Patrick J. Guido
Name: Patrick J. Guido
Title:   Executive Vice President - Chief Financial Officer


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 October 30, 2021 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: December 1, 2021


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, Patrick J. Guido, Executive Vice President - Chief Financial Officer 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 October 30, 2021 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/ Patrick J. Guido
Patrick J. Guido
Executive Vice President - Chief Financial Officer
Date: December 1, 2021