"We're doing the right thing at the right time,"Kerstein says, referring to Soma's expansion and thestrength of the $12.9 billion intimate apparel market. Currently, there are 10 Soma stores in six states.

For several years, Columbus, OH-based Victoria'sSecret has lead the intimate apparel industry, whiledepartment stores have placed little or no importanceon bras and panties. But, Victoria's Secret's strategyis to concentrate on younger consumers. For example,it just rolled out its PINK collection, which targetsco-eds.

Indeed, Kerstein points out that Soma is alone in itsfocus on 35-year-old-plus female customer. "We'vefound that she's intimidated by Victoria's Secret,"she says, alluding to recent market research conductedby Chico's.

That same research shows that Soma is getting positivefeedback from consumers. More importantly, Soma salesare meeting Chico's expectations, says Chuck Nesbitt,senior vice president of planning & strategy forChico's, although those figures have not yet beenreleased.

With strong sales and favorable word of mouth, Chico's executives feel good about the competitive landscape. "Right now, there are extremely favorable market conditions," Nesbitt says. "We can make a real dent in the marketplace." He concludes: "We have a great concept that we're fine tuning… we're building a business for the millennium."