Chico's FAS, Inc. (NYSE:CHS)

Barron's 09-14-2013:

The Activist Spotlight

Chico's FAS (ticker: CHS)

Business: specialty retailer of privately branded casual-to-dressy clothing, intimates, and accessories
Investor's Avg Cost: $13.93/share
Stock-Market Value: $2.5 billion ($16.24/share)
What's Happening: Blue Harbour Group acquired a 5.6% position for investment purposes.

Key Numbers:
$250 million-$300 million: estimated sales of CHS' Soma intimate-apparel stores
$10 billion: size of intimate-apparel industry yearly sales
$2.5 billion: annual sales of intimate-apparel leader Victoria's Secret

Behind the Scenes: Blue Harbour Group is run by Clifton Robbins, a former partner at KKR. It applies a private-equity model to public investing and avoids adversarial situations. Chico's is a retail clothing company with four brands: Chico's, White House/Black Market, Soma Intimates, and Boston Proper. The Chico's brand has 722 stores and generates most of the company's cash. WH/BM, Soma, and Boston Proper—with 468, 235, and two stores, respectively—are where the growth opportunities are, and particularly at Soma, which competes with Victoria's Secret, the intimate-apparel industry leader that in turn competes primarily with department stores and superstores.

Taken together, Chico's has the brands, management, and balance sheet it needs to fuel growth. David Dyer, CEO since 2009, was CEO of Tommy Hilfiger until it was sold to Apax Partners in 2006, and prior to that was CEO of Lands' End until it was sold to Sears Holdings . So, he has a history of fixing, growing, and selling companies. With its $302 million of net cash and $384 million of Ebitda, Chico's has the ability to grow substantially while still executing on its $300 million share-repurchase program.

-- Kenneth Squire