His Time to Shine

Through eight years of challenging transitions at Chico’s

FAS, Scott Edmonds has waited and worked his way to the top. He stood by—in

wholehearted support—as three outside presidential hires attempted to take the

company’s reins but drove the Fort Myers-based women’s apparel firm off-course,

bringing founders Marvin and Helene Gralnick out of retirement to restore

revenues.

Now, it’s Edmonds’ turn to take charge as president. His

honest, no-nonsense approach and knack for handling the operations side of the

business combined with the Gralnicks’ merchandise tutoring could help him

continue Chico’s recent run of success, particularly after the Gralnicks try to

retire again in 2004.

Edmonds “stands out for the respect he’s earned inside and

outside the company,” says Marvin Gralnick, Chico’s chief executive officer and

largest stockholder.

“We know we can count on Scott,” says Helene Gralnick,

voicing deep warmth for this man who understands “our cherished corporate

culture of respect and kindness.” As senior vice president of design and

concept, she likes to describe Chico’s as “a company of women with a few great

men ... like Scott Edmonds.”

Fully aware that he

lives in “a woman’s world, with my wife, two teenage daughters and 3,400

Chico’s employees,” Edmonds nonetheless manages to convey confidence in his

abilities as he discusses the future in his comfortable office of natural wood

and glass block at the retailer’s headquarters on Metro Parkway.style="mso-spacerun: yes">

For a man on the rise—and for a man of his fashionable looks

and disarming character—Edmonds displays a marked absence of oversized ego.

Perhaps it’s because the good life enjoyed by this humble country boy from

Virginia carries a price tag—23 years of hard work and long hours on the

road.

After 15 years running operations for Ferguson Enterprises,

a private electric and plumbing supplies wholesaler (eight as president of the

Southwest Florida branch), Edmonds joined Chico’s as operations manager in

1993, just as the company went public. He earned a vice president title his

first year, rising to senior vice president of operations two years later. He

won the title of chief operating officer a year ago. After seeing Chico’s

falter in the ’90s and having to rescue revenues, the Gralnicks decided to turn

to an inside guy, making Edmonds president last fall.

Since Edmonds joined Chico’s, the company has grown from 94

to 310 stores. Those numbers will bump up by another 60 to 65 stores in 2002,

and growth will continue at a 20-25 percent rate for the foreseeable future.

“We must grow to attract investors,” says Edmonds, who projects a saturation

point of 475 to 650 stores in the United States and Canada. After that,

diversification into new categories and concept dimensions will fill the bill.

“We’re not the same company that we were in 1993.”

Yet in some ways, Chico’s has returned to its roots, or at

least to its proven customer base, after several missteps meant to broaden that

base in the early ’90s. The retailer’s loyal customers are women ages 35 to 65

with a comfortable household income of $75,000 and more but a less comfortable

view of their bodies. Chico’s colorful free-flowing and figure-flattering

casual wear in forgiving fabrics such as rayon and jersey knits compliments

those customers. The clothing is also comfortable and generally travels

wrinkle-free; a typical item costs $50.

Under the direction of Edmonds, Marvin Gralnick and chief

financial officer Charlie Kleman, Chico’s has become a Wall Street sweetheart,

with two stock splits in the past three years. In a hard-hit economy, the stock

has shown good resilience. This year, the company matriculated from the NASDAQ

to the New York Stock Exchange and hit No. 1 on the Forbes 200 “Best Small

Businesses in America” list.

Those successes recognize the explosion of Chico’s sales,

which rose from $47 million in 1993 to $360 million in 2001. A Wells Fargo

research analyst tracking the company projects revenue of $485 million in 2002.

Since 1998, sales have soared an average of 50 percent a year. Earnings have

simultaneously climbed by an annual average of 112 percent, returning a 10.9

percent profit margin last year—1.5 to 2.5 times higher than benchmark

retailers Talbots and Ann Taylor. The Wells Fargo analyst predicts another 10.9

percent profit this year. “The last negative period Chico’s had—comparing total

sales for the month with those of the same month a year before—was February

1997,” says Kleman.

Last September, Chico’s temporarily substituted a weekly

update for its regular monthly sales report, tangibly assuring a widely

troubled stock market that faith in the company is well-founded. “One thing the

investment community doesn’t like is surprises,” observes Edmonds, who notes

that analysts wish more companies were as forthcoming about “the good, the bad

and the ugly.” His and Kleman’s honest, direct style is welcome at Wall Street

briefings.

“Sept. 11 showed that things can change very quickly. We can

never take our success for granted,” says Kleman. A loyal customer membership

base and a single promotion kept numbers up after the Sept. 11 tragedy. Healthy

September 2001 sales, up 1.1 percent over the same month a year before, put

Chico’s officers on Cloud Nine.

Chico’s refusal-to-run-with-the-pack mentality permeates

everything the company does. Even the balance sheet tells an unusual story.

Chico’s sees nothing awry in carrying as much as six times its debt in cash

reserves—$29 million cash versus $5 million debt—at last count. Prior to Sept.

11, business people wanted to know what Chico’s planned to do with all that

cash. Now they wish they’d made the same choice.

Chico’s continues to thrive in part thanks to Edmonds’

governing discipline of operating on a low-risk, high-reward basis. One of

Edmonds’ early moves was to formally define Chico’s operational departments,

heightening effectiveness and accountability. He relocated all the stores to

upscale malls, where he negotiated smarter three-year leases in place of

10-year agreements. He instituted testing of merchandise in Florida markets

between Thanksgiving and Christmas before a national rollout.

Edmonds excels at identifying and recruiting talent.

Employees are hired because their personality and character are tailored to the

team’s creative, entrepreneurial thought process. He builds support staff

around key managers, who include five people who report directly to him.

Robin Martin, Chico’s business manager, says she jumped at

the opportunity to work with Edmonds. “I’ve never met anyone like him,” she

says. “You always know where you stand with Scott. Just ask. You’ll hear the

truth in a way that helps you both address an issue and preserve your

self-respect.”

Edmonds also is known for building trust in a retail

industry that can be cutthroat and backstabbing. Owen-Ames-Kimball president

Steve Shimp, who built the new headquarters and who knows Edmonds through their

involvement in community organizations, calls doing business with him a “pure

pleasure.” “You can take his word to the bank. He makes efficient decisions,

fair and square,” he says.

In this large company with a small-business feel, Edmonds

has seen firsthand that it doesn’t work to have a presidential ego banging

around. What he believes in is taking time to ensure that all employees are

working in the same direction. His personal reputation reflects the good

feeling that permeates the organization. “We know that Chico’s culture is safe

with him,” says Martin.

Scott Edmonds

Title: President and chief operating officer, Chico’s FAS

Age: 44

Family: Wife, Mary,

married 20 years; daughters, Healy, 17, and Katie, 14

Residences: Home on 17 acres along the Caloosahatchee

River in Fort Myers; home on 85

acres in Caroline County, Va.

Vehicles: 1989 Porsche 911 Carrera with plates sporting

Chico’s former Nasdaq stock symbol—CHCS; 2001 Ford F250 4x4 pick-up truck

Outside the office: Enjoys fishing, boating, horseback

riding and rooting for the Florida Gators and the Atlanta Braves.

Civic involvement: Foundation for Lee County Public Schools,

Florida Gulf Coast University, YMCA, Boy Scouts & Girl Scouts of America,

Fort Myers Historic Preservation Fund, American Red Cross, United Way, March of

Dimes, American Cancer Society, American Heart Association