We are a specialty retailer of private branded, sophisticated, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing gift items operating under the Chico's, White House | Black Market ("WH|BM"), and Soma Intimates ("Soma") brand names. We earn revenues and generate cash through the sale of merchandise in our retail stores, on our various websites and through our call centers, which take orders for all of our brands. The company operates more than 1,100 boutiques throughout the U.S. and via direct-to-consumer channels.

In 1983, Marvin and Helene Gralnick returned from a stay in Mexico with a truckful of Mexican folk art purchased with the last of their devalued pesos. With this haul (and a few cotton sweaters for variety), they opened a small store on Sanibel Island, Florida. Searching for a name, they looked no further than their friends' bilingual parrot, Chico. Shoppers liked the folk art, but the loved the sweaters. Marvin and Helene quickly realized that they were in the sportswear business. From the beginning, Chico's built its success on friendly, personal service - right down to Helene's hand-stenciled shopping bags.

Today, Chico’s primarily sells exclusively designed, private branded clothing for women 35 years of age and older, with moderate to high household incomes. For more than 25 years, Chico’s has served women - millions of women - with a high level of customer service, offering styles that yield a wardrobe that is fashionable, unique, relaxed, figure-flattering, and comfortable. Chico’s currently operates 599 frontline boutiques and 44 outlets in 48 states, the District of Columbia and Puerto Rico. Chico’s also publishes a popular catalog about once a month and offers round-the-clock shopping at www.chicos.com.

White House|Black Market (WH|BM) In 1985, The White House, a tiny women’s boutique exclusively offering white and ivory apparel and accessories opened its first retail store in Baltimore, Maryland. Continuing to leverage the elegance and simplicity of a monochromatic theme, Black Market opened its first store in 1995. With the success of both concepts, the two were combined in 1997, when the current White House|Black Market brand was launched. Acquired by the Company in 2003, WH|BM offers chic, sophisticated apparel and accessories in timeless colors of black and white and occasionally related shades, focusing on women 25 years of age and older, with moderate to high household incomes.
White House|Black Market currently operates 334 frontline boutiques and 17 outlets across the U.S. as well as the District of Columbia, Puerto Rico and the U.S. Virgin Islands. WH|BM has direct-to-consumer sales through its popular catalog and Web site, www.whitehouseblackmarket.com.

Soma Intimates (Soma) Launched under the Chico’s brand umbrella in 2004, Soma initially consisted of ten boutiques, each dedicated to offering supremely comfortable, high quality bras, panties, sleepwear and activewear in a welcoming environment. Its missions was and remains to design and produce merchandise that flatters the body. With a U.S. target market size of approximately 25.6 million, Soma Intimates caters to women 35 to 64 years of age with average household incomes of $75,000 or greater.
Soma Intimates currently operates 95 boutiques and 5 outlets. Soma publishes its own catalog and includes inserts in selected Chico’s catalog editions. Women can also shop Soma Intimates at www.soma.com.

Most Amazing Personal Service (MAPS) Friendly and expert personal service is an important element in the Company’s strategy for success, so much so that “Most Amazing Personal Service” is a valued company trademark. In pursuit of this goal, the Company provides store associates with specialized training in providing customer assistance and advice on fashion and wardrobe needs, including apparel and accessory styles and colors and the coordination of complete outfits. Sales associates are encouraged to know their regular customers’ tastes and buying preferences and to assist those customers in selecting merchandise best suited to various occasions.

Customer Loyalty Another key success strategy is building customer loyalty through preferred customer programs. Our customer tracking database allows us to more sharply focus our design, merchandising and marketing efforts to better address and advance the desires and needs of our target customers.

Chico’s and Soma Intimates    Chico’s preferred customer club is known as the Passport Program and is designed to encourage repeat sales and customer loyalty for the Chico’s and Soma Intimates brands. Features of the club include discounts, special promotions, invitations to private sales events, including personalized phone calls and emails alerting club members new Chico’s and Soma Intimates merchandise offerings.

A Chico’s or Soma Intimates customer signs up to join the Passport Program at no cost, initially as a “preliminary” member. Once the customer spends over $500 in any time frame and on either brand, the customer becomes a “permanent” member and is currently entitled to a 5% discount on all apparel and accessory purchases. She also receives advance sale notices and other benefits, subject to certain restrictions.

WH|BM     In 2004, the brand launched a customer loyalty program called, The Black Book. Similar to the Passport Program, The Black Book is designed to encourage repeat sales and customer loyalty. Features of the Black Book are similar to the Passport Program and include discounts, special promotions, invitations to private sales, and personalized phone calls and emails regarding new WH|BM merchandise.

A WH|BM customer signs up to join The Black Book at no cost, initially as a “preliminary” member. Once the customer spends a total of $300 on WH|BM merchandise over any time frame, the customer becomes a “permanent” member and is currently entitled to a 5% discount on all apparel and accessory purchases, as well as advance sale notices and other benefits, subject to certain restrictions.

Direct-to-Consumer (DTC) We currently mail a high-quality Chico’s and WH|BM catalog to current and prospective customers about every month. These mailers are designed to drive customers into the stores, as well as promote Web site and catalog purchases. Each brand operates its own dedicated Web site, which gives customers the ability to order merchandise online or through the call center. We occasionally send a stand-alone Soma Intimates catalog, but chiefly utilize Soma catalog inserts in selected Chico’s mailings, which also serve as highly efficient customer-prospecting vehicles.

Sales through the Web sites, together with sales from our call center’s toll-free telephone numbers, amounted to $98.3 million in 2009, or about 5.7% of total net sales.

We are targeting direct-to-consumer channels as currently under-penetrated and an opportunity for significant further growth. To this end, we are continuing our investment in new e-commerce systems and personnel.

Store Expansion  As of May 5, 2010, Chico’s multiple brands operated 1,099 retail stores in 48 states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico. We believe the ability to open additional stores will be a factor in our future success, particularly for the WH|BM and Soma Intimates brands. In 2010, we expect to open 18 -20 Chico’s outlets, 18 – 20 WH|BM  frontline stores, 3 – 5 WH|BM outlet stores and over 40 Soma locations. We also expect to close approximately 25 underperforming stores.

Capital Expenditures   During 2009, our investment in capital expenditures was primarily related to:
   Planning & opening of new, relocated, remodeled & expanded
      Chico’s/Soma and WH|BM stores                                                $25.1 million
   Systems upgrades and new software implementation                       30.8 million
   Distribution center                                                                              10.6 million
   Other                                                                                                     7.2 million
                                                                                                             _____
Total capital expenditures – 2009                                                         $73.7 million

We believe our strong balance sheet, which included $482 million in cash and marketable securities and no debt at the end of first quarter 2010, increases our financial flexibility and further reinforces our ability to successfully emerge from the current economic recession. For 2009, we generally expect to continue to generate positive cash flow to fund our operations and to take advantage of new growth opportunities.

Competition 
Chico’s Brand - Specialty retailers including AnnTaylor, Christopher & Banks, Gap, and The Talbots; department stores including Bloomingdale’s, Macy’s, Nordstrom’s and Saks Fifth Avenue.

WH|BM - Specialty retailers including AnnTaylor, Banana Republic, and New York and Co.; department stores, same as those named above.

Soma Intimates – Department stores named above, as well as independent boutiques and Victoria’s Secret.

Strategic Priorities

1. Rebuild the Chico’s name into a high performance brand;
2. Grow the White House | Black Market and Soma Intimates store fleet;
3. Accelerate our direct-to-consumer sales;
4. Improve our cost structure and enhance our information technology and operating systems;
5. Become an amazing place for our associates to work, learn and grow;
6. Achieve a level of profitability in 2011 comparable to that earned in 2005 when Chico’s FAS produced a record $1.06 in earnings per diluted share.

     
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements contained herein, including without limitation, statements addressing the beliefs, plans, objectives, estimates or expectations of the Company or future results or events constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements involve known or unknown risks, including, but not limited to, general economic and business conditions, and conditions in the specialty retail industry. There can be no assurance that the actual future results, performance, or achievements expressed or implied by such forward-looking statements will occur. Users of forward-looking statements are encouraged to review the Company's latest annual report on Form 10-K, its filings on Form 10-Q, management's discussion and analysis in the Company's latest annual report to stockholders, the Company's filings on Form 8-K, and other federal securities law filings for a description of other important factors that may affect the Company's business, results of operations and financial condition. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that projected results expressed or implied in such statements will not be realized.