Earnings call transcript Q1 2024

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Operator

Good day, and welcome to the JOANN's First Quarter Fiscal 2024 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Jason Wood, Vice President Strategy and Corporate Responsibility. ahead. go Please

Jason Wood

cause Please good speak the and which like remind current that to subject differ results Thank from of materially made statements afternoon. events, update forward-looking statements today that any risk management's could uncertainties and and company comments significant These new or statements, company's may in everyone earnings today, actual information revise the to the cautionary to with undertakes the statements you press expectations. risks I'd or the no as SEC. review include future contained are forward-looking factors release circumstances. reflect and recent obligation subsequent the the to company's to filings and

financial can reconciliation financial posted Relations which SEC the website and non-GAAP to found GAAP be was measures. the Investor A earnings During management filed certain today, call press measures between and our the may at in company's refer with release, investors.joann.com. JOANN’s today non-GAAP section to

On from JOANN Executive co-leaders Financial the Chief Office and the the Sekella, Vice call Interim Customer President CEO, DiTullio, And President Executive Vice Chief today and of of Scott Chris Officer. the Officer; are

Will, we Chief During the question-and-answer of by President also Merchant Vice call, portion joined be Rob for the JOANN. Executive And will

I comments. will Chris to now prepared turn the for his call over

Chris DiTullio

in as CFO I Officer Chief Miquelon Jason. JOANN serving you, Wade at start to want President today Wade before XXXX. call. President quarter Good retirement spent becoming and by Executive earnings of Officer. Thank afternoon, the years XXXX and first welcome and JOANN’s as Executive fiscal seven acknowledging recent Chief to JOANN’s

thank growth his and behalf him JOANN including to helped COVID-XX wish to this our and to I challenge, on Wade offering On initial his During our for chapter. his as he during time Wade next moves and time JOANN, like leadership best pandemic. navigate here the the would response as public of periods CEO, of

commenced has replacement is Directors a Our a effort Board search underway. and permanent of that find well to

mindset Officer While To that our office have search are in our have shareholders. deliver This is significant crafts competitor appointed been line nation's leader strong and in the that strengthening in ongoing, excellence on and [indiscernible] arts of a in and Financial cash online made top sewing our fundamentals driving our fabric approach lead this, remain role focus efficiency. fiscal interim strengthen Officer. JOANN year space. emphasis the leading sewing on we Scott experience core in-store our we to emphasizing by our for value high-quality Executive do delivering In Chief and and focus XXXX is and on I in the Chief this improvement which crafting office, to basics focused winning Sekella, flow represents the with operational category and to back categories a and our

approach, customize direct To can is national supply and in By product using first of assortments this on margins efficiency. we value improve our lens, we strategic partner are piece and delivering a support brands. significant this leaning our owned of owned, with innovative strategy investment A mix continued a sourcing brands. chain brands, a owned of through over quality product while portfolio all our building control greater engineering, assortment exercising and customer in

Owned nearly nearly quarter represent in and Place delivering years by Time, fiscal the and also to year Owned X% this back between half in gross value. of & brand increased Our as build with margin which points, sales, basis half we Pop! investment of in total our balance quarter first the total first owned the basis such already trend few Twist, points the than over XXX the is products. past brand brands company XXX to Notch XXX Big outperformed basis of impact in the higher points sales penetration Top XXXX. our expect

continued move in we brand both partnerships selling strategic combined and craft our brands assortment core owned will national position forward, enhance categories. and with our investment of in we our products believe strengthen As our innovative

we we refresh categories. better where experience, or our utilizing we sense to how of brand This look creative store makes help part customer provide craft we including core that only productivity. As selling a involves one holistic at physical recognize opportunities a differentiated space next in-store experience. space That on in-store improve location identify or where for and focused are said, stores can is and our at the a look experience, store driving developing approaches new to relocated great

As a result, great team make we friendly who members everyone service and our our to for allies be easier it continue truly in deliver to to look clever for shops stores. ways to

Recognizing ready customers looking our execution our delivering team hours includes our to store at periods, support This simplifying the of the to and ways engage to merchandising and available are our strategic selling and way labor optimize people points with training assortments also broader tactics so our brand working key compelling omni-channel and members that make visual engaging in XXXX to to our JOANN the through continues touch digital drive ubiquitous evolve, offerings. sales. also and include shop that fiscal the priorities seamless

customer to by more all We stores fill and rates fulfillment efficiently e-commerce reducing and our customer. delivery committed optimize our maximize are points to of to leveraging friction accelerate time which touch customer working network to centers distribution across includes

Additionally, our as or up Way we Your buy and love Shop to in model. curbside pick customer continues service options online store the enable our

initiative. year possible. is Launched starts improvements. we our Our evidenced this with to cash effort Underlying downloads over responding is effectively. a is provides as through is and increasing omni-channel as fully focus which our has back and of drive grow effetely initiative as million in continued tool strategic reduce focus, engagement flow and and simplify This by app, operate critical and a and shopping customer efficiently look this fiscal to our the XX costs half XXXX, mobile

utilization decision strengths making in reinvesting growth on our of driven for build data driver simplifying of growth focused an ongoing strategies. as efforts, and important infrastructure, When combined our efficiency such with other is core the continued by to a future operational our ability emphasis and

simplify approximately focus, to three of in savings million supply as initiative in of fiscal for early approximately $XX our year costs. planned buckets, general these of XXXX. and goods completed SG&A million Our chain a including $XXX costs, cost million annualized and Initially, $XX in in by cost savings $XXX reminder, the be identification had grow we another cost sold targets,

in begun back in some capturing our through cost and increases and will have have While the to savings international decreased vendor come. negotiations goods Scott inflationary of more clawed to through freight detail, speak domestic greater specifics cost supply chain with we significant our

our efforts Additionally, leaving brands Through expenses, stone to continues to unturned SG&A our help and have for product million reductions. reduce as no ongoing investment now further we total in full reduce well. $XXX of we cost are work owned look and sight line the this as to costs

$XX anticipated, As significant move of back cash these cost fiscal savings in fiscal first XXXX. EBITDA year-over-year improvement year our adjusted million levels supported XXXX the in in towards quarter of have flow and historical improvement free will help

efficiency near effeteness. in-store and term long customer that foundational the that believe experience on by in operational ubiquitous and to will these channels create reinvest things term strategic JOANN to well We across drive the be making will a brand growth. differentiated in creating priorities, the drive positioned continuing JOANN and delivering value

company. center detail our getting performance, all to first I across Before want recognize not the quarter The work more members our into corporate distribution take our to and omni who members. about fulfillment of be aspects a are in offices do our stores, our our professionals prouder I centers, greatest team asset. truly moment could across dedicated team

more everyone team With and require approach to XXXX find ourselves creativity they work provide as happy a I members some As fiscal priorities year through a our in XX,XXX passion, flexibility forward fiscal from their customers our we strategic known our first than XXXX with are place move to and quarter now performance. as inspire JOANN. implementing commitment this year for and will foundation, display we will highlights help our

GAAP delivered we first compared million, of sales line in fiscal the started of Top of sales of in XXX strong year. same X% net the increase basis a $XXX.X the quarter compared was an period quarter first the on decline March. XXXX. basis points For last Gross to margin February quarter, early to XX.X%, and

saw rising over potential as moved decrease other through a deceleration into coincided we and like accompanying continuing consumer However, This retailers inflationary the decline the confidence driven we in concerns interest rates recession. April. and many with by pressures,

necessary. to discretionary of portion We economy is adjust on monitor and will strategically sentiment consumer the putting it pressure continue will the we and the as obviously

That remain optimistic. we said,

engagement customer on will Scott our focus a We to will in reductions. categories baseline full healthy be due and which our our to year and able craft few on cost deliver through core sewing minutes, walk outlook, in strategic

merchandise across the Our performance category was quarter mixed.

our craft and On businesses core the well the sewing side, performed quarter. first positive during

We textiles in support also categories are effectiveness space. core the our in along our supplies is focus and and activities. seeing strength on that demonstrates craft winning that businesses, it is sewing those illustrates related important the in with of the critically as customer reengaged our This our strategic core

at in by This into joint age brings JOANN and both remind to pattern stages locations the is business Singer, launch innovative gallery sewing in with across PFAFF. of everyone, which also with was supported early SINGER, product its country. enthusiasts gaining DITTO digital XX-XX and rollout It the DITTO, Viking, first attention of quarter. is our venture Viking the the is the

to side, On craft do our see challenge sales. primary comparable the merchandise headwind technology continue to we as positive

from sales in quarter, the industry, While XXX a outperforming basis points. sales accounting for craft our pressure comparable significant in decline we're data technology indicates was of the

fiscal headwind this deeper move expect to as XXXX. continue year we into We

made a also the higher headwind overall strategic to Additionally, currently risk company higher line profitability. we in while supporting categories is gross have margin and and top pullbacks seasonal

in business. also continue our strength to see We e-commerce

overall, year. to point accounted of XXX the period in sales comparable craft over basis In while craft quarter, and for compared rate sales first the technology, our year. for rate company headwind first of Overall, XX.X% across business, Much we increase declining sales a quarter, penetration in e-commerce a point sales a our overall XX our positive revenue that at outpaced e-commerce saw in last the in the highly same categories the basis sales. terms walk-in primary is of X% quarter, in the was decline year-over-year business sewing accounting online core moderate last change like the e-commerce more penetrated in and performance growth

we With this mind, to work all in is be of done. recognize there

we our flow simplify cash and improvement, focus, performance While shareholders. today, along macroeconomic focused to also on Through driving including outlook. our sight remain I've control priorities of on the initiative, executing uncertainty, first our XXXX will gives outlined we not with to strategic value of our execution can't hitting for only but line year year-over-year grow clear significant delivering fiscal quarter us full the

confident our the With great forward. I'm on and results quarter commitment JOANN for of first team capabilities, moving long build our success we can and term passion position members,

Sekella rundown of With detailed look that, XXXX our to give our I a fiscal answer results first will questions. it more wrap and at with CFO, to forward turn up before over financial a we your Scott quarter

Scott Sekella

Thank you, Chris.

our of believe these strengthen more levels. JOANN line, a expanding adjusted his that possible. By help able find priorities we our XXXX, sewing, As craft begin which efficiently continuing great operate we winning XXXX remains improve online to top fiscal category our providing and the customer will remarks, categories, new and fiscal and cash strategic as historical meaningfully leader in course flow, make fundamentals, Chris emphasizing over experience be and in year as towards the on nation's our centered stores to to core discussed sewing EBITDA in ways in in

$XXX.X also March to April. of first quarter, I'll first details In that X% mind, with decline comparable the provide X%. provide sales net and in totaled XXXX. year million, in Through our but our and year decreasing strong a of full for in deeper decelerated quarter, With February sales sales outlook about by quarter recap last compared total fiscal results were today a the

which macroeconomic optimistic customer with engagement our customer and coincided cadence to XXXX in Chris the uncertain to businesses, confidence, due ability increased discussed consumer an our this of face we on our about healthy outlook sales emphasis our the our sewing and declining remain demand priorities While fiscal to environment. promotional strategic crafting meet core optimize in

X.X% positive basis, basis On profit excess quarter point a quarter $XXX largely increase in million, from year first import of increase improvement benefit of import This recognized market. impact which the to year. margin. of in costs our $X.X by $XX was gross a our freight million last on to during improving reflects driven continuing year-over-year same XXX GAAP conditions quarter. freight was from first decrease period the cost an in had as last we We first the figure the gross This spot continue million the the a

fully basis, fiscal treated import On a as costs, of year anticipate than non-GAAP QX be excess million our $XX a end are by out second On year-over-year free in freight XXXX, we full in cash benefit $XX.X one back cash the measures This was the the we from rates. cycle last the an freight add million ocean to the which year and for for of approximately of less flow year-over-year quarter. cash drivers improvement $XX basis, realized quarter. million lower of

first quarter, of the last the quarter comparisons. gross an Our of trend gross on improvement basis GAAP continued in This a from basis our was sequential year-over-year margin margin of first basis in year. the points XXX increase GAAP XX.X%

a improved the by improvement costs in described benefit The last to primarily which the higher partially from XXX high point carrier increase basis freight capitalized XX stores, previous were from offset from improved XX XX clearance due the basis a sequentially decline cycling As year-over-year the increase decline improvement our ocean increases has ago, extremely and a our partially improved year. basis timing of in domestic activity. and we offset point points margin, ocean point point that we to continue faced quarter. moment from by was costs, costs by XXX freight rates XXX of driven a point These basis continuing a basis cycling basis shrink, freight and in merchandising

of experienced year. of quarter points merchandising To year first compared provide lapping of cost the the XXX margin, can some prior the our during decline continued we to additional color the attributed the inflationary on be to last same basis period increases

year reap average these inflationary Our average unit and We our the the comparisons as year to period. expect retail improve negotiated compared sequentially X.X% were do costs up grow with year. unit cycle our the initiative. cost benefits period X.X% part simplify of last of throughout the to cost reduction and the of we to to the prior and vendors sold course unit focus, of Average increases same the as goods begin increased relative

Turning to expenses.

more stores ability said, labor management increase other quarter particularly actions by from incentive lower fiscal last our driven to XXXX despite incremental our locations of we as stock of compensation increased advertising costs quarter such in pressures as With Our with by through as our shift well that were expenses pleased expenses first these pressures as SG&A optimization the costs. SG&A based of spend as at and related X.X% the first being our and and This inflationary year. benefit costs. we was channels well hours continued labor, on strategic to digital to medical manage as store

opportunities and for of will optimize and on simplify I that as growth initiative, focus, our more cost assess to shortly. part to color expenses reduction continue We give our SG&A

quarter net $XX.X to of in compared the $XX.X loss Our year. same was the in $XX.X the of EBITDA million a last first quarter $X.X period in the first quarter in first net was Adjusted last million year. compared million to million loss

on our Moving balance to sheet.

first the quarter. were cash of Our cash million end the equivalents $XX.X at and

and credit freight of efforts, As to million cycling which our to receipts. lower lower had base import April we our actions tied a costs optimization our XX, inventory due of strategically higher including facility, on $XX.X revolving availability XXXX, excess to borrowing inventory is

relative increase quarter times end of face year facility the last measured of trailing fourth billion. This period the net reflects million finance at $XXX.X credit X.X leverage same $X.XXX net and of from cash basis. the on XX obligations a EBITDA and debt adjusted of was ratio debt Our value a an of by as month to lease

strategically inventory the down capitalized as was million compared This allowed year-over-year same reduction our by excess in reduction, Our costs, emphasis XX% $XX.X Fueled that crafting our inventory can inventory low the by quarter de was first approach and of areas, to lean plan X% part right core a businesses. risk inventory categories less receipts. at than receipts we primarily continue on sewing well the to us last to seasonal total. year. receipt of freight import so lower period the support we to our driven winning This as end in in the on strategic in our to a maintain in decline clearance of

environment inventory demand us react in well and read capitalize remains positioned Our position leverage evolving capabilities. to we clean as test, the leading

all on improvement year this XXXX. with focused laser cash we fiscal conjunction work, In in remain meaningful

We simplify and this cost includes of categories Chris of another year-over-year million $XXX multiple million in a initiative, in flow. SG&A. approximately and these $XX efforts three and targets free quarter business, million million of have focus, focus supply significant This our actions mentioned, costs, growth initiated to which, $XX $XXX approximately cash first supported across support of our have product areas improvement reduction of chain approximately cost our including all annual million broad reductions $XX as costs

of focusing now on reductions build cost these in targeted possible, to have reduced year have the identified significant proactive that in Since cost freight implementing ocean effort three safely all steps late to reductions This initiatives. as and and impact taking this implementation we $XXX We launching full and on buckets. are of we costs. worked the million we fiscal executing diligently solidify can say XXXX, identify annual includes positive

benefit to cost target. and million agreements include rate, over these ocean in with $XXX putting from our supply us vendors continue contract to favorable strong deliver We that new finalizing potentially position chain freight are a our savings

are our continue about process, confident we year. inflationary our cost in but to saw savings. the we Many RFPs increases ability identify product we are to of last claw still Additionally,

to In terms drive to and labor our top through SG&A, activity. This reducing efficiently administrative are and mix support hours. ways value we line more four our resources work optimizing creation of simplifications, identifying labor store wall deploy optimizing includes

in technology well our spend. information As driving greater as efficiency

not As our a customers gains we members take delivering looking identifying deliver costs, to grounded in service but easier this by approach, priority are it at lower strategic experience for of that team differentiated efficiency in-store we in-store our staying make our quality the expect. only

reductions $XXX cost targeted already have and now of annual we implementing initiatives. the identified While million these are

we potential savings. we unturned Chris leaving additional as look As are no for stone said,

these significant year-over-year With free on the cost in first we believe of reductions, operational our a have clear identified flow line and the year in XXXX quarter saw a first improvement sight results delivering cash quarter, full fiscal outlook. we to we

which X%. sewing our healthy continue the uncertain that customer This to In will we line to is terms XXXX will down fiscal anticipate inclusive of is worth buffer range relative sales in a in and top We in customers approximately year face. challenging light week be net XXXX, seeing line between core X% fiscal environment and to X%. performance, a year of macroeconomic fiscal in believe of we the top our categories and our our engagement craft providing are aid XXrd

mentioned, improvement driving one previously focuses fiscal year XXXX. our we key is As of for meaningful cash

we additional in delivered improvement free year-over-year we as quarter, a first full the improvement year. through fiscal In the anticipate flow, we move cash significant and

and forecasted drivers year of this well between the simplify year-over-year as flow million working and million. initiative, in we capital reduction continued include implementation free The the improvement XXXX, actions. improvement our optimization as significant a cost fiscal projecting are that cash $XXX We see will capital expenditure of over full growth focus, $XXX

projecting $XX net XXXX we between contributions million. capital landlord million For $XX fiscal expenditures year are of

which Note $XX With fiscal sheet. headwind year P&L fiscal benefit do and for of takes from simplify $XX cash the anticipate to program by until week. heavily the felt and a due costs time in XXXX we adjusted that offset is includes year EBITDA our will focus, the be through fiscal fiscal that, mostly will incentive XXXX, annualized While million. balance the XXXX being XXrd said, benefit million reinstituting realized grow compensation partially our initiative be related the benefit between of inventory to cycle it

delivering conclusion, remain on our In for focused we shareholders. value

nation's the and As by XXXX, and year assortments we largest our significant move top delivering JOANN emphasizing and have fiscal sewing with cash are crafts flow through we one on of the made the fabric category leader that line arts fundamentals products. strengthening in improvements of focused

executing Based While uncertain our facing environment, free we year-over-year an simplify grow cost flow, macroeconomic fiscal factors our operational of we us that a reduction line are of today, on on to strategic priorities we cash series performance year initiative on the help first have focus, significant in discussed implementation will clear including have outlook. the quarter, value. still the and of delivering that continued improvement our sight a we in and our deliver XXXX believe the full

With your be Operator? to happy that, take we'd questions.

Operator

you. Thank

[ will I Difficulty] I him. begin We session. Technical still I hear can't next the muted. move believe David's on the now to Instructions] question. question-and- Can [Operator line is

Chris DiTullio

Yes. Please.

Operator

Our comes with go [indiscernible] next Please from question ahead. Guggenheim.

Unidentified Participant

the (ph) Marin] consumer This customers Curious million this afternoon. of place remainder on year? What Steve keep you X any for is from the in I for wanted if to focus Forbes. engaged learnings incremental to strategies year-to-date? discuss XXXX. the cohort can [Ray are reactivated this Good during on

Chris DiTullio

and seeing customer customer customer that Hi. strongest various year, -- within reactivated across also counts This known known That across customer take portion database database, been is last board year-over-year. really known our database the can have are seeing response sales now. We're the the including answer. right our Transactions, Chris. that we're up is of I our those good but those segments. engagement

Unidentified Participant

be is feedback Are the We versus your launch. customers? discuss my your in as engaging as much this new are for provide expectations? early can And and to with performing internal color DITTO on Thank how dealer would the helpful. additional customers stages, but additional core customer? you perhaps follow-up, initiative you. I the network you understand Any this color some touch from Great. is getting you wanted DITTO on Can

Robert Will

but our bit happy stores careful want with Rob. including over as is venture be I'm owned that that are of by in JOANN within we've This stores, the in Hi. to launched DITTO XXX a is little report this now days, Viking Singer, XXX galleries Singer. early to lease our a joint just I

seeing with We great to the is results so starting been individual of far the have averaging stars as results the and of DITTO really patterns about We're well downloads very on across with the reviews sites. dealer X.X network The on both happy engagement. subscription customer we're X.X service, our as to pick up.

XXX DITTO We picked just that dealers But about again, stores have ago. about months have in up launched as that's well. X.X

Unidentified Participant

Great. Thank you.

Operator

comes Sandler. Our with Keith Piper next question from Peter

Peter Keith

Hi. Thanks. context Good you putting some afternoon everyone. guidance. appreciate guys I out for

margin thinking sales a implied was [indiscernible] question a worse midpoint bit that to at in EBITDA same-store year-on-year is start going even I or EBITDA year, guidance, seeing looks like to the about of model sort year-on-year. our little than QX. kind even But really least the to I need So of kind of get run you just guess it around to up the that. the of of rest ask the maybe

us just I dynamic of shape kind hoping us if the year key help you drivers the that So understand And was of for the could progresses. as improvement.

freight to be everything. but to sure going in it's make the I think we're margin, merchandise I catching want

Scott Sekella

to we to point, as to goes. a we're places. to from that confident tailwind. on where continue number top that, is sequential One, But think Hi, forward. little potentially be the is better it's going Peter, a of a bit be a of line the think your freight on QX, as to improvement is continue it's it's Scott. top bit I get better margin and a we there, do in little coming year going Yes, saw I go merchandising bit little going

when But SG&A then that's XX the of talked real implement focus, savings traction to the the these we're where in is the some before to big we simplify from pieces the as I'm really with that most in to those days it's on going the gotten on biggest initiative, start some we last and SG&A on back you the see excited ideas. we we've grow area as of also about the And half, that that side touched initiatives.

going what to adjusted year full excited really outlook. to with that's EBITDA deliver So deliver -- our

Peter Keith

just guess versus be at unit retail, And Thank in I cost over that you -- X% Okay. of you. a I X.X% little to dynamic said then looking specific. inflation think average

been about point prices X%, be have and up is, that up cost the smooth your your but of longer progresses I only taken about will no guess you've by a the out And X.X%. kind So headwind? as year will costs the

Scott Sekella

Yes.

mind, So up. took we increasing first base, our in with started vendor when the price keep costs the

average So you saw the first unit increase retail last year.

this Now cycling sequentially that we're cost going goes, the we through product that. as higher is we now, last We But the to those year the sell absorbing increases. started as year. get lapping better start

than QX. half cost just lot in back in what we less a increases saw the unit will So our be average

Peter Keith

on then lastly Great. Okay. And maybe just that.

your sort pressures does year? from effect, during point the what out of at in inflationary smooth So AUR, the

Scott Sekella

think through balance I see the out year. it smooth to going you're to continue of the

movement. a really been mix haven't of It's just increases. price any there -- sort there's of new bit So little AUR

start of So year. the smooth the for balance see to out you'll it

Peter Keith

you Okay. very good. much. Thank Very

Operator

ahead. comes go Our Capital. with next Loop question from Laura Please Champine

Laura Champine

Is Thank guide driving taking year? this my into what's we category down for it to this If for this macro? at look down Like sales it question. be Is more that is the so years or related? stage, three the decline, year, to of competition? the are at comp factor this kind be year

Chris DiTullio

of seeing right craft the is really We're headwind the primary component business Chris. it's now. tech Laura, that Hi, our

I think we talked about that in the well. last quarter as

basis be a XXX basis will points It in believe the it to headwind. upwards to And balance was continue of quarter. so, the We the for that's points year. be going of first XXX

So that's one factor.

we categories. and in And strength, are seeing improving our sewing then core strength great craft

the which the in know we that's us in. history there, best categories So have and really the best lean to are driving that

really and So businesses. core what core driving that's the and say, to market we're our seeing in I customer environment, but craft competitively. rational would pretty our really sewing Really

Laura Champine

it. Got

deterioration that called a the in So think that's the to to if say sequential given summarize, fair it improvement doesn't macro. is out? seem -- that you there's I And as

Chris DiTullio

would I right. that's Yes, say

Laura Champine

you. Thank it. Got

Operator

next Group. Our question comes Telsey Fernandez Advisory Cristina Please with go from ahead.

Cristina Fernandez

afternoon. Good Hi.

wanted I mentioned and like I the Laura's to mean, up points consumer positive are strong, tech. you question. follow they basis negative it then and XXX So from seems on core that were categories the

else there's just on seasonal a So I the comp? what seeing? gap. Or being that what else bigger the source you down? a of still reported Is is headwind the Like guess are

Chris DiTullio

our the historically that risk back The seasonal strategically business, most to Yes. inventory purchases because margin and has pulled we there sell-through. that is

we later now back. one That is, it's us. headwind, strategically current fiscal believe with this play more in reductions core did craft terms those news sewing that we've that is ability working are receipt good made be have significant be pull to as we offense won't those categories in The year. So and a that of in for seasonal, well we the -- but

Cristina Fernandez

competitive? That prices for on about you seemingly year there makes value-oriented, are sense. as then Do with opportunity And thinking to being the you is feel -- question the And lower pricing on? how goods? second is a the your consumer more goes

Robert Will

one. Rob. I'll It's that take Sure.

that is and success work see COGS doing our brands. simplify And focus, So as mentioned, with part continuing on across to the we've as initiative owned that been we had private our or we're well. grow of

on some the is of are assortment we which down, much good market seeing to side So those in will that those the categories. of in what bring allow us products of coming focused we and core to cost as better the price of

Chris DiTullio

in well. add one that thing other retail our The would $X unit bear is as I roughly average in is, just mind

of provide we tier we So economy. within environment really the customers believe stand the the income very in where regardless that or for a competitive they retail option do

Scott Sekella

Cristina, really to up internally react they're we've just the set processes looking able that it's meet add, read how here we Scott. and some consumer's at I would the right be where and them for point. price to behaving so can

and to able read in very trying environment to So we're be react. nimble to this stay

Cristina Fernandez

still or And end appreciate if the gave then year the to of for far on And good Any last Thanks. the year. financial last assumption for interest the as I expense comment you where is, interest expect guidance -- this you your $XXX number debt on question call, year? the a this that as million rate balance?

Scott Sekella

an then where takes that think We are rates we and account tick come little year. a later still to going in maybe right of around expense From hopefully start interest into up are. Yes. standpoint, back interest and that's that kind the to

years. of and see to a terms positive really meaningful in to start not giving cash our In year-over-year really net don't debt, year any the change we but get work guidance, as then flow this I out cash flow improve really really

Cristina Fernandez

quarter. of Best again. luck Thanks this

Operator

today's our and This is concluded. Thank also conference session, you concludes for presentation. now attending question-and- the

now may You all disconnect.

JOANN (JOAN) 5 Jun 232024 Q1 Earnings call transcript