Chico’s shores up finances, strengthens liquidity

Chico's FAS said its amended and extended $300 million senior secured credit facility has closed. 

The facility consists of a $285 million asset-based revolving credit agreement and a $15 million "first-in last-out" term loan, maturing in Octoer 2025.  Wells Fargo & Company is the lead lender. The amended and facility replaces Chico’s prior $200 million credit facility,  scheduled to mature in August 2023.

The retailer last week announced a “digital transformation" to modernize and personalize the digital experience for its customers across its  Chico’s, White House | Black Market, and Soma brands.

"We are pleased to announce that the company has significantly strengthened our liquidity and enhanced our financial stability for the foreseeable future,”s said Molly Langenstein, CEO and president,” Chico’s. “As well, this new credit facility demonstrates the confidence our lenders have in Chico's FAS and the sustainable, long-term success of our brands. We also are continuing to benefit from the aggressive measures we initiated earlier this year to streamline the organization and reduce operating and occupancy costs. 

As previously reported, Chico’s debt at the end of the second quarter of fiscal 2020 totaled $149 million, and there were no new borrowings on the facility prior to its amendment.   

Based on its projected cash flows, Chico’s  does not expect to make additional draws on the credit facility this or next fiscal year, said interim CFO David Oliver.

“Our leaner expense base will allow for increases in sales to meaningfully improve profitability as the business returns to a more normal environment,” he stated. “We plan for a major component of our 2020 expense reductions to roll through to the bottom line in 2021, and as business continues to grow, we expect to generate increased profits."  

PJ Solomon acted as the retailer’s exclusive financial advisor for the transaction.