CHS - Chico's FAS: A Chic Turnaround Underway Potential Substantial Upside

• Chico's FAS is undergoing top-to-bottom transformational change -- one that provides a compelling investment opportunity -- which is under the radar given minimal analyst coverage.
• The new senior leadership team has positioned Chico's FAS to be a "digital first, customer led" retailer with higher merchandise quality and stronger customer engagement leading to margin expansion.
• The company's real estate optimization strategy over the next two years will close approximately 200 of its worst-performing stores (roughly 16% of the fleet), which will materially improve its operating performance.
• We expect nearly 250% upside to $15 over the next 18 months, as free cash flow growth accelerates rapidly, leading to debt reduction and return of capital to shareholders.
• With shares trading near support level (approximately $4.50), we suggest there is a limited downside and a favorable risk/reward profile.

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