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You've got to wonder what Chico's FAS is doing sitting on nearly $500 million in cash and securities on its balance sheet. After all, the company has no debt.
The Fort Myers-based women's retailer started paying a dividend earlier this year, suggesting to some investors that it didn't have better ideas to deploy its cash than return it to shareholders. In the past, company executives said Chico's was hoarding cash to protect itself against further economic deterioration and had no intention of paying a dividend.
But in a conference call with analysts recently, Chico's executives hinted for the first time that they are exploring the idea of acquiring another women's retailer in the next year or so. Rising same-store sales in the last three quarters has bolstered their position.
“We've had discussions at the board level, and they asked us to put together criteria for a strategic acquisition, which we did,” Chico's Chief Financial Officer Kent Kleeberger says. “Obviously I think it's in the women's business, probably within the age range of these we currently serve, and so I won't go into much more detail beyond that.”
Chico's is also spending some of its cash hoard to double the number of outlet stores. The company recently opened its 51st Chico's outlet store and plans to add another 20 this year. Chico's Chief Executive Officer David Dyer says the company will eventually have as many as 120 outlet stores where it plans to sell items specifically designed for its outlets.
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