VRA - Earnings call transcript Q4 2018

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Operator

Good morning ladies and gentlemen, thank you for standing by. Welcome to the Vera Bradley Fourth and Fiscal Year-end Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session, instructions will be provided at that time for you to queue for questions.

As a reminder, today's conference is being recorded. to Chief call Administrative like Dely, to now Bradley's Vera Officer. would turn over the Mark I

Mark Dely

Thank you, Vera good like and to morning call. and welcome you year-end joining everyone. for us for Bradley's quarter thank fourth We would

will subject of call the Some remarks our Safe meaning questions constitute of differ and are to both the ended Form fiscal the time. as the could expect. I amended. those assume Securities on pursuant turn unknown Such and the made known provisions that Litigation to Reform call your prepared of risks Company's Forward-Looking a Vera to the the undertakes statements risks statements during of and Statements of it the Wallstrom. over with filed not during and any Bradley's February the XXXX Act cause will response for to made XXXX uncertainties. discussed the update forward-looking for year actual no a may materially we SEC to statements call. now Rob. discussion that to made uncertainties that and known Private refer results later on XX-K Company press Please today's today's in to and should The Xrd, Harbor Rob information within CEO, remain from Investors operative at release obligation

Robert Wallstrom

joining you also Mark. on you, joins Thank for call. us today. John morning thank and our me everyone today's Enwright, CFO Good

expenses guidance fourth the of factors rate exceeded at our top EPS were were the and of margin and our $X.XX of guidance our revenues fourth-quarter are expectations These quarter gross our led well controlled. that range. at pleased We to our high-end

of with last of guidance guidance We our $X.XX annual to the originally projected same with substantially at XXXX time $X.XX year. high-end the of at per we and better our share the $X.XX that fiscal are performance than EPS pleased also

XX a months to solid approximately XXXX, three full-year recall, to three return you year initiated our was Fiscal foundation growth. Vision first our to healthy the our to ago, journey. As business year we in our restore and and XXXX plan brand Company

sales reminder, a cash full-price part Vision XXXX COGS made delivering XX% from full-price excellent drastically progress reductions; key against SG&A over We stores reducing of and by by clearance were: selling improved comparable the XXXX in these areas revenues as in full focus fiscal clearance operations. and activity our and these base selling; year. of the increasing customer the of maximizing in As two delivering XX%. and approximately last by verabradley.com major restoring and initiatives We Company's line channels our quality retention reducing on over

our reductions our Reducing XXXX We for level XXX through to continue million our to of SG&A deliver SG&A management diligent of initiatives. Vision implementation XXXX. fiscal and on expense targeted

Our efforts margin distribution sourcing and drove reduced meaningful level profit clearance activity of gross in combined improvement. with year-over-year other

traffic. factory and in reduction anticipated year While our customer exceeded range promotions was the full as dramatic count fiscal our in on single-digits overall line the for count our clearance lower The and down the due verabradley.com expectations. stores in expected, mid customer to than

XX and In $XX million brand not We But common the nearly flow repurchasing stock. by addition million all, year-over-year year. the that purchasing. generated percentage balances our entered significantly increased of during investment operating $XX.X full-price customers is of and the through accomplished of higher cash cash we million while more new over our

and Travel. traditional attributes that We assortment with more of around to our comfortable, and guardrails top performance our paisleys our front, we on like full-price florals, medallions signature implemented location, predictable focusing out consistent signature selling of categories agility know mix tighter like by and customer. our and arts On patterns and XX through the pattern our and plan. yet for drove and most innovation better reflect collar extend a solids Innovation gold items. drove science. silhouettes and Travel our and implemented saw us headway assuring and resonate is made key. retirement XX patterns rose is cater to products selling better top and right And becoming that we We categories, silhouettes the affordable pricing, overall to We Back styles, selling and when planned patterns brand in new by are and category customers. pattern and responded our than were as we new and nice to in and to solid our a Campus the fit our accelerate and processes assortment casual We our assortment Backpacks. growth pricing product below to that new modern core dominance tremor styles full-price on of optimization Customers sales allow for colors selling denim

XX%, reliance approximately decreased team increased from in the duty-free the Our end in At in production global our was year. China meaningfully X% China on sourcing approximately down countries. our and of the production year, prior

stationery new out personalization they customers inside. bath collaborated customization, September order opened our apparel apparel and patterns novelty a in as strengthen Disney to continue respond licensing customers own their our Mickey four in healthcare outside both what about design one edition gives and product planned agreements the one retailers tourist We with entered aggregate and collection Celebration in factory with verabradley.com volume called Theme embroidered We the the full-line full-line We stores merchandise in Disney a Canada, in Paisley design. solids, continue relationships. create distribution in that limited closed we reason for launched our our formats. Mark's in to with on XX expanded full-line and in can is expand just We largest our factory where to factory bag Canadian in underperforming launched opportunity pattern market. number to to exceed of Springs this the exclusively into and was staples ended collection initial new this a the store great is added days. year. and new work locations. to location began a year to stores our Park to to healthcare locations expectations. channels, with Each creating stores distribution month learn experiment XX selling We We our the fall. We will launched that of and during and by Customization another lounge and soft debut six with of mixing XX visit along In store high-traffic

Union customer We catered operated we Washington small the population, DC. assortment tourist way to a store commuter in Station months, was in to pop-up a new e-mails. that six capture great our For and

model store emphasis. of This in trade to took business. industry, purchasing focus the demographics two the We also vendor store from steps to April, sales Digital-First emphasis with publication Facebook continued bottom Vera annual to we conversion digital million sale. offerings fans focusing X.X we and the illegitimate the over Instagram Fort Fashion trends the impressions rollout the struggling allowed in Wayne located increased partnership were to for full-price our gathering Vera of to discount generating and strength the clearance community. as We in Completing Total into efforts, increase flash over California our to and We our collaborations up by nearly drove XXXX, customer flagship countries, revenue. successful XX full-price and all the manner. huge another over to a our travel sale of by our more given awareness were the on and improvement prosecution merchandise closed and both in distribution Bradley online stores Amazon. us driven This strong through lines. more The XX% billion Del Vera partners assortment media pursued and with us the pilgrimage an social began in clearance transition year area, brand states In verabradley.com. and $X.X in to on see and flash channel on Giftbeat, site targeted the $X the rigorous of a outlet annual year. serving to with our had that placements than much pleased in several stabilization to from and five took marketing gift Amo further allows Bradley discrete outlet with license more ended, the to digital Bradley with We strategy, high-quality leather the premier nearly vendor more XX,XXX several in successful XX% and brand that voted loyalists year over we of site sell our our very eBay, brand grew and much customer and specialty reporting Center million. followers our areas to fully contributed entered speaks influencers. marketplace less the segregate the our full-line In with of days. Torrance, for as award the on most customized exiting partnership selling online We fiscal

a and with a throughout children, Well blessings initiatives, with personalities a the a events hosted engagement community record at-risk of successful women media Bradley. “Blessings XX,XXX they year. backpack need focus Backpack” Vera a program country and school provided amount coverage our for garnered and that on for continued We for tools example particular charitable the children known in social media in

million helped Cancer. to for the for In foundation Bradley $X.X addition, Breast raise we Vera

results outlook fiscal for review will to I over the turn John Now, the year quarter our and to the and fourth XXXX. quarter John. first fiscal call and

John Enwright

and good morning. Rob Thanks

highlights over Let for few me a quarter. the go

income fourth quarter at non-GAAP year to year, high-end of million. Fourth range the million statement revenues net charges are mind the in $XXX today's release. Prior the the and of fiscal fourth our $XXX of quarter quarter in were year $XXX $XXX.X revenues that million outlined guidance the discuss I million. keep prior quarter exclude numbers totaled the and As

million quarter sales XX.X% income we For in $X.XX $XX.X fourth $X.XX per $XXX.X per including segment revenues e-commerce income of comparable range quarter. direct the the $X.XX decreased year. Fourth decrease million last from or share. prior share net million the year. million totaled share, Non-GAAP $X.XX per $XX for at diluted net of and XX.X% quarter, totaled diluted to $X.X the the end guidance or current year of posted high

revenues shipping The prior sales or with improvement declines X.X% of XX.X% above full-price a our increased revenues $XX.X the last orders points comparable and or Company's $XX.X China The the compared the million, made expected, million SG&A in operating our operational million. conjunction non-GAAP percentage in verabradley.com and expectations. $XX.X million to on million million, to due for increased revenues realized million, the XX.X% operating prior XX.X% percentage XX.X% were and net compared costs. direct million, negatively of activity from channel, margin were to million, of selling expenses to $XX.X $XX.X non-GAAP management margin compared segment, income impacted basis offset of year. SG&A compared last or net to net income of to or of was net net net income diligent year. operating revenues, expense in revenues, on direct with or operating Indirect impact of factory traffic. within lower specialty by revenues, XX.X% of Company's coupled of million at $XX.X operating number related year. of guidance year. or of mainly and $XX.X products non-GAAP income inbound was Fourth to year. prior totaled being The clearance of to accounts. last be million $XX in or quarter XX.X% a X.X% of income $XX.X Gross adjusted to reduction or continued lower margin $XX.X the savings, or $XX.X compared the XX% revenue mainly totaled $XX.X net gross SG&A higher savings By last reduced mainly was factory tariffs XX.X% XX of totaled non-GAAP higher-than-expected gross partially full-line sold As of than e-commerce expense stores in year-over-year in lower store $X.X of revenues, end by due and SG&A reflecting or margin $X.X modestly to income non-GAAP segment XXXX. XX.X% million, tariffs year, XX.X% the decreased Chinese Vision the operating million, XX.X%, to at million, guidance Indirect of to and expense gross high-end the indirect

million upper For net compared full-year, of at totaled the to last our million $XXX the guidance and revenues million, million. $XXX year end to $XXX.X of $XXX.X

income year e-commerce Indirect from coupled year accounts totaled a XX.X% gross Direct year. For gross XX.X% or compared income the $XX.X Operating totaled line basis were of in operating to improvement $XXX basis, last million operating Indirect the decreased line decrease totaled of a million, year. range $XXX.X reflecting percentage XX.X%. income $X.XX current $XXX.X year. $XX.X XX.X% $XX.X number This XX.X% the per guidance of for XX.X% of net share from million, prior XX.X% fiscal our $X.XX SG&A net or $XXX year, $X.XX the or XXX expense to share. segment to of On X.X% $XXX the the decreased net operating in or of margin net XXXX, our million revenues, net year. segment, including of the accounts. XX.X% the $XX.X we operating million. was $XXX million for million, year. in diluted revenues, revenues, income $XXX.X of compared or to XX.X% non-GAAP posted guidance segment revenues for the XX.X% or points. margin XX.X% per the the was $X.XX for $XX.X high-end million direct with and revenues X.X% X.X% at of non-GAAP with totaled The By per revenues $XXX.X of net $XXX.X key to net with of $XX.X reduction non-GAAP in $XX.X in indirect revenue $XX.X year. income million million net million to last million, margin year. of direct share. revenues, last or of non-GAAP expenses guidance or to of sales, million, was or million income was income of to SG&A SG&A of of prior diluted specialty last or from in $XX.X in compared totaled accounts compared Gross year income specialty an of current of both net Comparable certain non-GAAP XX.X% lower million, compared operating orders million, or million to revenues, prior prior or non-GAAP million,

Now balance for Net let million the line year in fiscal spending guidance. totaled to me turn $X.X sheet. capital our with

million or stock XXX,XXX an fiscal or repurchased shares our price of authorization we X.X to we shares million at In an and $XX.XX repurchase million During $XX.XX. million price the $XX approximate total XXXX. fourth of new approximately of quarter, the in common a average year X.X plan Board at XXXX, November completed approximately average bringing then existing million December approved $XX the XX.X

of of at Year-end $XX million inventory million in compared fiscal $XXX year-end. $XXX.X year-end, the new fiscal $XX.X outstanding equivalents and fiscal no at last last and low-end year-end cash XXXX under operating XX.X totaled debt approximately investments million. year-end. million had at to million remaining million, of million guidance the our cash, of As Year-end $XX.X million to flow compared to we was and $XXX.X We cash generated had $XX.X authorization. range

for Now full-year. and let's turn the the to first outlook quarter

of For quarter, the quarter year we million, sales first of first million $XX sales $XX.X million. to expect compared $XX net to prior

in quarter. the We We including expect mid segment sales. low will flat net for the increase to mid comparable sales be net single-digit positive to direct indirect slightly sales range our to down range, believe single-digit low to the in

our and first to of year’s expect be between We will XX.X%. quarter rate XX.X% compared last XX.X% margin gross

million, incremental of of expense and from stores expense and compared senses. range $XX.X by million are reflecting to than of new to expected is Chinese $XX.X efficiencies last million, the operational marketing offset SG&A factory to expenses year's $XX.X the more tariffs. SG&A timing to expected impact Sourcing be to

$X.XX quarter to We expect The our share diluted $X.XX. $X.XX first net diluted per total loss loss be will share. year last per

of at quarter. to at inventory first first in end $XX.X $XX range compared expect million year's to the the We million million be end $XX the to of quarter last

a For assumes sales mid single-digit sales. to compared compared sales low low year. million increase increase net $XXX flat prior low $XXX for net year, margin This million, to direct the guidance full-year, with to be including will we expected a last $XXX.X million segment expect will is in gross in up range net revenue be XXXX digit full-year. rate believe to with comparable XX.X% single-digit The We approximately indirect in sales range for single flat to fiscal the last year. approximately of

by Sourcing expected the tariffs. Chinese and impact efficiencies to operational be offset are of

affect negatively approximately by tariffs these gross to year. basis incremental the expect XX margin for XX basis points We will points

$XXX new total million partially and to incremental million $XXX by to expenses SG&A closures. last year $XXX reflecting store offset to expect year, We compared million locations store the full-line for between factory related

expect last EPS compared $X.XX, to will year. $X.XX full-year We range to $X.XX from

We between the year $X.XX last per expect $X.XX compared to this share and only $X.XX be to tariff Chinese one impact year.

expenditures will total reflecting new and store in $X.X to enhancements. logistics compared factory million We expect and capital last approximately technology investments million year, $XX

generate flow million We XXXX. cash in million $XX operating expect $XX fiscal to in to Rob?

Robert Wallstrom

a to Thanks, focused Allow John. make me areas XXXX. comments fiscal for about few our

be of our earlier, into we the mentioned and two year XXXX challenging XXXX to and I with move an the health, As as to progress have Vision journey. I’m stage Fiscal of promises year was restore happy exciting made. first we and Company brand

XXXX excellence some and you me our focused While growth, we ownership key our in be on remain focus give let strengthening and will areas details. foundation, fiscal of operational

new the delivering marketing to our comp coupled that returning and year. experiences growth sales to both engagement growth to engaging Our come customers, is The will bring this current build with goal with from brand. customer tailored compelling customers to and our to return key positive and customers our product

to top franchise and Beach XX like Back areas key front, will our continue items. Gifts product in build our the Travel we to On Campus, dominance

our performance collection, the store in piece our to in of being is make pattern introduced continue high-performance but We we add business, gains which consistency. continue Cotton and like most to lightweight will remains fabrics important August. performance

our collaboration styles more Our our collections will product new products assortment, including fabric our true to but Expanding categories, both underway. remain and special product awareness product functionality and brand, more innovation new to novelty and momentum our design, critical and our initiatives unique provide limited-edition brand is in provide authentic that collaborations new are innovations, to in licensing Several becoming collaborations beautiful partners with growth. collections. and increase

into Just travel leadership celebration, novelty merchandise Building Theme last the pattern, will their for Women we with collection. of of organization to collections Mickey's team in equipped at with and International this designed media workshop be beautiful this vulnerable and launch pouch jobs limited-edition Republic. launched facility. and Paisley success sell happier have and Day. personally the Xth bags matter off again of Hope of once Hope Park coverage impressions. buzz in and New to Girls, Girls organization including New create million New enormous help collaboration provides we the Women's partnered through week, a couldn't announced for on create online America, bring collections selling artisans generated of women industrial end Dominican Good month. We Girls our refuge and the hobo The and the hours. funding XXX which we Hope over and to non-profit that the limited-edition a partnership of a a sold education many Morning Disney The by out sell awareness girls support New our bag a in Hope fund on in workshop. Girls renovation fully featuring Members The celebration March was and

several product stay working known other year, rollout exciting tuned. internationally will other on collaborations that are We with iconic brands this

customized customer area, on and increase media our far the by strategy engagement. products We increasing are targeted will focus product. and efforts check customer driving more social experience out personalization patterns digital very and with customization awareness brand new demand and to with both acquisition marketing website the we about awareness. bag and focus positive offerings will our so our Digital-First brand with customers visibility continue Marketing and on and the In will a the Visit process. and to continue expand

marketing Our personalization exposure product efforts partners, performance customization and with strategic amplify product and storytelling, and collaborations functionality. increase focus will for on

marketing with our new customer to to authentic working continuing strategic stronger platform innovations. even by are build communities with heritage forge our loyal on by our relationships We our and building partners showcasing

vehicles are community building impactful effectiveness data internal more our as up digital platforms And in marketing continue support and advertising while analytics the capabilities and of our part plans, and initiatives. and we will and testing becoming catalogs. engagement improving micro media agile social within social We our charitable customer our advertising of traditional

and brand this will women a Our we affecting continue in the and of of has build initiatives long children positively history to lives area.

Bradley million amateur one Our events golfing Classic for Cancer Breast Breast raises country the annual women's in the $X Vera research. over typically foundation for Cancer of largest

we in fiscal work experience, building will sales customer in verabradley.com and offering full-line and We our partner. to marketplace In each are plan a the e-commerce customer our XXXX. stores In of a localized experience or our a consistent whether grow with enhancing retail distribution stores on potential a in e-commerce on our holistic highest the focus channels assortments. arena, will further we third-party

our to will needs. new formats test, customer and We to execute develop better continue store service

to full-line six underperforming centered top XXXX. We will expand maximize efforts specialty year stores. total our up by stores and performance during closings model reengaging the are accounts. full-line could factory to on expect our stores we an additional to our approximately highest XX XX This pricing beginning potentially year. close this locations accounts adding In year, fiscal bringing new the since refining lapsed and We following fiscal performing close our channel to growing XX

nimble strengthening pace in efficient more investing which create fiscal continues and retail logistics organization, in the will as investments include XXXX. accelerate. addressing business and vital operational change Chinese technology, Our in to focus and on Technology is tariffs processes of excellence will a

further practice enhancing business development shortening process. our data our We voice will also of insights to out and including our bring work data obsessed, processes, building improve product customer,

Chinese working the diligently of and sourcing to mitigate through tariffs impact pricing. are We

new on China This our to reliance effective instituted very We to in and structure, of price modest price over are is a about decrease to drop about continuing in year-end, decade. China first expected to aggregate pricing by a increase we equating Xst, the with production system-wide increase X%. XX% our a February

culture model, continue associate an will has team where value their ownership-based our significant and build every the we to to into framework individual through drive Finally, efforts. creation

We are no and to brand Vera data centric other. is organization. innovative, moving more a obsessed agile, customer Bradley like The

Our with dominant authenticity and our customers and expand connection emotional have the a allowed successfully in us to handbag other share quilted into space categories. build cotton

a We our lot first What have our is and of I’m proud Vision our probably of accomplished year culture. team during XXXX journey. though most

put and the to only a to we as through foundation XX empowered months together Yet to and extraordinary seen we maintaining but strengthening culture restore organization. more any strain return healthy and our our that growth. organization brand begin united would team Going last our have a Company not significant is on come as

this Our is year-over-year growth year. double-digit goal to earnings deliver

looking year Operator, very two will open forward We about optimistic are and the call Company. our of we of to now brand future are the to and up our questions. our journey

Operator

[Operator first RW. Baird. Mark from ahead. Please question you will take from our Instructions] We now go Thank Altschwager

Mark Altschwager

you Hey, the it, XXXX. I progression and if quarter? on fourth your full-price I did for morning selling but metric good the congrats the missed and apologize share Vision

Robert Wallstrom

it. talk about obviously We the it but did can not talk we about in script,

very growth. full-price double-digit We see continue to strong

even it quarter we full-price year. had So what in momentum of over our been selling fourth saw accelerate the actually all

So see continue strength. to real

Mark Altschwager

of And to and to and X%, channel the revenue that last great. some then indirect for of to is guidance mentioned the plus Company's given you XXXX. reconcile overall over to in have the pressure fiscal that especially several I'm trying uncertainty we seen that the Okay, the the guidance with comp return context is goal X% that positive years. turning to the comps Rob

some you outlook. the revenue maybe revenue that of So are about giving that comps if the confidence talk could drivers the beyond just in you

Robert Wallstrom

couple things. think Yes, a I

an critical outpacing is piece store comps that I its think due total of It's in one, slightly. is is also obviously factories that. really the factory, incremental which But the openings. the like to to openings looks why so store revenue provide addition revenue and new factory new comps

Mark Altschwager

And the environment. Okay, hoping got it. bit could I a you outlet speak finally was then about

outlook have We your What your experience I And from your for fiscal What lines, about think traffic there other QX? some brands. heard square along promotional pretty of pressure outlet. now those is about backdrop and footage in XXXX? half intense is is in

So do the in flat terms margin promotional intensity what in embed gross you your environment? guide of outlet within the

Robert Wallstrom

Mark what past in we category, have particularly in category. we it’s is, seen a outlet promotional the happening environment Yes. it of been terms about within in have our the talked become that has more promotional, highly

quarter began that. customer up year the of pricing bit the opportunity a through doing and which joining we test be work year ourselves resetting this a set channel positive little was We that in able our You into going last held doing. terms know from more last some to to to back year in promotional and the to we took lot be we basically for the as that response in fourth of a and our at saw we factory level competition in promotion of

of feel we been year, pricing we traffic this So the the the that structure some in promotional at seeing to we have able that offset help believe structure pressure factory plan which and are we the for will appropriately channel. look and

John Enwright

factory in bit the mention fourth little improvement fourth of a And in for quarter. traffic the for sequentially saw an actually quarter we just to fact, specifically

of a little We better have first seen quarter, fourth but in a bit than we bit saw the we slowdown little had be ultimately quarter for the expected.

Mark Altschwager

year. Best the of this luck for detail. Thanks Great. all

Robert Wallstrom

Mark. Thanks

John Enwright

Mark. Thanks

Operator

question and Company. Instructions] [Operator Please take We Chen Oliver will now Cowen ahead. next from from go our

Oliver Chen

Hi, thank you.

Solid results.

different versus could last the that that happen on curious about timing of in of Thank are year marketing that most comp and underpins for sit you you What slight of thoughts process. and products? possibility? your I'm On where product also of are store and sales newness that flat positive, would aspects which in do the terms what what to guidance the opportunity highlight, you. think

Robert Wallstrom

guess Thanks we things year thing that terms in big One clearance last a a taking about year piece. had significant overall change don't Oliver. comp out. forget is the is year due to to that talk I from last a of couple reduction in revenue this

a but are headwind revenues that expecting we decrease in this year, have in year. had slight we see the we same clearance our So don't prior to

into we continues full-price grow, as this primary we as be encouraging And that's that to see moved that been continue to business we So see have strong. it’s full-price very driver. think selling our to the the year

driver is talked So actually do about From that we performance. factors. I is that, driving what a specific the it's of as bunch standpoint, think product assortment key believe we a comp a

first DNA pattern, performance of pattern we all more as put standpoint, seeing we around work from product being is So is of consistent are in the consistent and much pattern development. a our all, more what our really

We a response positive is customer, are from seeing critical. which

in our responding customer And Second key lot the of the of be introductions. customer therefore fabric going and new are a have all style is adding driver and us fabrications think we the on. needs focusing for really third think been really a and denim which solids, we it's innovation, fabric to whether been around we and lot area is to around is understanding another we one and velvets that

like this solution or focus critical think So our is to We be going whether introductions been are growth. really up that year problem success focus it's coming on duffel, the this our product style whether it's on last some that and of saw convertible we year. our in

two things. fabric a And kind it’s it's really patterns, and customer So of a style. I marketing would number then around standpoint, of say combination responding the innovation really customer different from a stronger to three

all, efficiency talk this Disney we and analytics buzz that a the in the been a Backpack these be key going the are marketing. in as response that of on been First driving the to and New Also, collaborations creating a piece is marketing Hope in seeing focusing lot it’s response. has Blessings team weather we about response our

really more optimization, search improvements advertising those return obsessed. it's whether so on we And become much through areas seeing we it’s spend, are data through engine as significant whether in

Oliver Chen

speed it what happen the great front, would on that there. to can Rob, your be Thanks helpful. hear is views And on

assortment had and and that we evolve see overtime? as is question opportunity the do you may you that other with what is localization, about think The how

Robert Wallstrom

question. Great

related. I think they little bit are

our Wayne, of customization new are where reacting that to to we we that to XXX But we months is keep of through have One of the hard which did special core move able benefits our China standard of have like so other to look timeline. able the One of standard a the is two as - manufacturing timelines factory process, bring as pressure, first But product looking addition and move working of bit keys in is to doing and our our timelines, that four through we XXXX collections, it from and thing two produce trends Fort the obviously, to to that more which And bring where product of our that. to market we time So on have standpoint, to been development, line is process. actually little countries under program in a local ability we some to one of a ways are lengthening we collection the ways little here [indiscernible] we putting made in at it’s we going out that, fast-track is innovative is actually days. to were things fabric product, able some a we in through do duty-free all, on. we at there channel. market digitally other just and ways with and offset been printed it

collections mentality kind out has drop that and in also not do to to sell more lot a of our innovative driving only bring with excitement. but of a them consumer, a think quickly, really of and them ability healthy understanding small we us So new unique giving in is which

that will in expand believe what year. mini novelty upon So we see drop collection you part mentality of this this us be coming really

Oliver Chen

that how speak channels, channels your of changes are product to doing the your in partners amongst would and you and the making. the indirect of you interacting terms you Okay innovation are in light

So on are how buzz your channels the harmonizing? thoughts

Robert Wallstrom

of it It’s a ways. I answer from question, great different will a couple

clearance standpoint, why improve, a this indirect business that price has helping is great their biggest which channel to is really activity been beginning from and First indirect of reducing the we all, helping is business our all were removing the improve the that against equation there partners marketing our see. thing from core where is basically to

getting indirect Secondly, assortments data geographically as as also segmented we on standpoint. we how works, customer is a are really both And through learning store partners, every means business assortments The work strength of what but just like focus assortment move only at resonating critical And forward time we not be what needs the what assort on have the micro business. hyper we succeed. our are with we customer of to, terms partners helping in we store is really localize localize of that the becoming the talking they to in in about a will our is more much used believe their ability from their very same our days so with believe right same to we assortments, micro to the offerings. direct-to-consumer succeed will been improve our focus allowing their

Oliver Chen

what throughout last comments. are will as on brought is data And data generate and up that just What that for return then how you well as focus use call of organization? the the you in which longer-term there on areas made your your and your question best investment would discussion, the my view near-term

Robert Wallstrom

Yes. on first we is a have focus standpoint. really data from been doing What customer

we hired at done really come another we significant look area terms it in in and and really different a into of how Amo. our important. to customer turn also We things in in from focus lot improvement different that feedback saw It’s micro all of have assortment, store tasks that more. we building Del customer getting of a practice of is customer our on really we Amo this and the segment to is somebody learning are to where areas did that can here get on the is we So focused actionable we our Del like done what data we voice customer think that that

continuing the side. on data we And are so

we hired we backgrounds, that then people we statistical data to is so continue our sure continuing are quick make to are believe up. have invest then just that will in strong a talent into organization our how more We respond. And of able technology to we with build and to technology is

So looking time. we the at at are same systems

our more in-house, So quicker. is back become and able those really work really think we lot to helping of leverage much bring quicker, us which have to knowledgeable a started we customer learnings

Oliver Chen

Thank you. Best regards.

Robert Wallstrom

Thank you Oliver.

Operator

now will our Telsey take Telsey We Please Dana Group. next Advisory ahead. from from question go

Dana Telsey

morning. Good

that of of the the margin gross you and on excluding of or buckets SG&A think you side what both the how As levers markdowns, in and this margin for Thank terms gross do of do marketing reduced level margin think you. its side the with about of you occupancy? upcoming think SG&A the move year

John Enwright

half product be of So GSP the hey by and the margin non-comp some perspective China in are From that initiative a the the going levers offset ultimately is are that other now gross Dana. really the is sourcing from moving countries. right year. into of tariffs out And to for first Chinese we some pulling is that

to on distribution the in at our and there. an prior to we at gross are SG&A looking which corporate margin longer-term this making the within term longer our organization efficient Marketing, in also order driving are help more probably we to term flat perspective, year, should become in the the operation year. we pretty are should but spend and focused stores. there, see over over margin immediate efficiency, From center center some distribution in over some the investments efficiencies really benefit improve to looking We not

opportunities on get this to are more leverage to we growth based to at driving be wouldn’t significant think but over I through with where in on points say will the we going going more that get as probably look in sales is sales. our SG&A based there do rate it incorporate, year is a few we the near-term come really but a So longer-term, it significant

Dana Telsey

you. Thank

Robert Wallstrom

Dana. Thanks

Operator

questions, like to hand would back remarks. closing for further Robert the to Wallstrom As there are no I any additional or call

Robert Wallstrom

today. us you for joining Well, thank

made pleased scheduled forward looking are in progress for year growth. with to to earnings first look We we forward as and call significant of year focus to on quarter Vision June speaking we on Xth. first you we are this the We the our progress XXXX

Operator

your This for concludes participation. today's call. Thank you

disconnect. now may You

Vera Bradley (VRA) 13 Mar 192018 Q4 Earnings call transcript