CHS - Earnings call transcript Q2 2018

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Operator

Good morning and welcome to the Chico’s FAS Second Quarter 2018 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Julie Lorigan, Chico’s FAS Vice President of Investor Relations, Public Relations and Corporate Communications. Ms. Lorigan, please go ahead.

Julie Lorigan

Thanks, Anita and good morning everyone. second earnings FAS webcast. call Chico’s to quarter conference XXXX and Welcome

Todd Financial me Store Chico’s today’s Broader, session. are Officer; National at Brand our our Center Executive Joining be our question-and-answer Myers President Support who today participating Ellis, and Officer; Diane in will Fort Chief Vogensen, our Chief in Shelley

our under Investor www.chicosfas.com earnings issued release at today Our Press can Releases. website be found on Relations,

plans, of our estimates, today’s that comments include current you our expectations, about and speak assumptions, and caution industry, me Let business judgments forward-looking will about today’s projections which statements our only date. as

and should included or We comments statements. Important over events in issued with any this except our You our call. our law. required made disclaim projected or to factors on results discussed by materially on any as in differ in by this actual those revise that turn it earnings update call filings I will this from release cause unduly otherwise not in to information or to morning, rely the Shelley. are that are SEC maybe statements that, forward-looking obligation implied could And forward-looking

Shelley Broader

and in brands in and responding improvement digital basis. merchandise solid had everyone. sales sequentially morning up were year-over-year showed the quarter sales with quarter we Digital quarter. in are Customers second and channel. initiatives in our channel growth results All our a and new double-digits in in on Thank We favorably promising second Julie both line comparable the you, expectations. good our new with a are to seeing also

units conversion. continue we was in traffic challenging, see and to positive transaction While per trends

initiatives customer. and effectively efforts brand building to with last existing and to reach balancing between our our marketing transaction We and are customers more carefully new engage both driving

improvement We reactivation. in in customer particularly our seeing trend, are

increased shared customer for over be are contributors and progressing omni-channel driving awareness Sales Our that ShopRunner, combined which channels And is and leverage proving distribution these are the to inventory, we including growth are earnings ability to sales new meaningful consideration, channels long-term. indicator effective positive of confident and be our a nicely. strategy. increasing are to our partnerships, QVC with our in will Amazon.com these and

to basic at may our offered we work of research second quarter. Chico’s, brand, workforce, we results demand, as turning Now, surprisingly knits by wear, you in denim our that recall, many in increased the and are Travelers, saw as no-iron indicated customers including an not the more

was component softer fashion our However, in than primarily and novelty anticipated. pattern knits,

have with We adjusted have options and our this modern this are include and and clean to assortment forward. print appropriate we more moving addressed reemphasizing fall elevated work fabrics

Our length, perform generation and and to next will included pants course-corrected shape in be with the category our entered of more not season leg have expectations fall the and assortment the and variety have denim. our in of So pants Also, style. popular did we technology fall Slimming

innovative than very Our positively ever. is our historically Slimming technology this responded offering and customers have better So to

In anniversary. honor September, collection. with pieces. artisanal are associates of brand by pay especially to heritage and will collection we this tribute We to special We and our a in-store distinct recognize want our that loyal longstanding unique beautiful XXth both its this recognition, proud Chico’s in online, so fall our customers and edition celebrate will offering our and

and washes Lastly, denim fit our in augment sizes and October, Daughter’s Your formerly collaboration mid will with we innovative Chico’s in colors through a XX. an Jeans. that exclusive denim Not has collection NYDJ, pleased formed This with traditional to offering. current will Beginning offer that new X are product we announce incorporates technology

overlap those love that and our the demographic significant NYDJ a brand. with identified target research Our existing

a to customers host excite this view a to brand. we to our opportunity introduce unique of current new and So, as our customers

Turning polished trends in sales by wear. in to Market, quarter strength the White a Black driven comparable saw work in we improvement healthy House

to have occasion We driving growth opportunity categories of significant casual dressing. polished a sales popular continue in and special the

had we response category dresses. casual, were on to a in in polished but special dresses, improved were the customer and nice we under-penetrated well, we our operating our overall While light occasion performed

We our will spring learnings planning to year’s and customers. incorporate expectations better the into cycle, summer these next particularly for meet of

a execution as we best assortment. the fall our continued quality to and focus Our positioning, of on the building is improving good brand turn better

seen season historically coincide refined with have work our customers the wear to back-to-school return rebuilds our closet. We she as

on merchandise positive assortment, we look and the showcase digital to includes and an investments in drive social marketing we that sales. place in experienced to traffic second and we forward quarter. designed program the To in strong integrated have improving customer are momentum assortments new circulation, building Our our marketing

the soft is in solutions and Moving the so In Soma in and is we momentum Brand second of to everything Soma’s the at and brand. We Bliss and second bra. is improved do team as exceeding soma, saw performance bra, the collections and quarter Soma Separate, In at anniversary our Cool Mary X-year repositioning President Bliss the has it in We core we Back strong Bliss only introduced our is Nights new In business to have superior July which our scale it offers Bliss our support. progress driven number and been expectation. in bestseller. comfort are of Offering Praag van made we tremendous approaching In vanishing the collection by of went every full in one Vanishing our and Mary innovative her core Sleep June Notably,

Essentials tops refer launched easy which recently and we effortless outfitting easy as with and Essentials, care on-the-go our Style to offers replaces flattering Style what loungewear wear pants also lifestyle. assortment. We with

Soma’s are on top exciting back forward half with believe opportunity we year. initiatives solution the stronger have in look this for growth with unique on has We improved we to in track customer new merchandise benefit Overall, specific customers. you a increased our demand We and X improving to each line provides a that created line updating bottoms future to the new key this a great calls. and of collection is drive

to updates to initiatives strong we special White sales on organization, generated $X Black in rolled be out in and in the extensive have petites in for Turning over Chico’s Market the other And incremental Chico’s, House across to continued sizes million our at quarter. stores. our XXX sizes,

the are While we are plan. trending pleased now which early with above results

in omni-channel Next, further to progress make we continued capabilities. our advancing considerable

on We our convenience customers and added the to enhance with are inspiration overall experience. focused providing

success most wherever customers and deliver our providing we intersection the digital to shop. of believe organization field bridging operating We however personal headquarters and have at tools, support and a training amazing We in experience our those innovation. road seamless, are the the and and shifted is necessary culture gaps the physical to to

a as We store a and are to customer uniquely return sales center. positioned service fleet center a to optimize center, our our distribution and

to and We digitize customer make in investments our satisfaction. and continued to drive future stronger technology proof sales services and

starting the our investment. are realize of We benefits to

initial demand For the new rollout the of end far And we September, to and across great from fast-tracked success quarter, We by and shared implementation and exceeded with end all functionality in Also be Sales outfitting. we saw a to response for mobile our the outfits have quarter, and purchase is over management significant in inventory our our our Frontline availability implemented XXX Locate customer following our expectations. systems product increase second connected outfitting our will the to our also shop-to-look stores in-store in of fully the And the exceeded capability plan. our ship-from-store. in Endless the Aisle expectations. to By this customers online customer. which was desktop tool, for designated enabling September. second shift of quarter, example, we directly generated tested especially have doubled all us love orders and stores online last customer

initiatives early stages to we we testing look In analytics. of data as personalization addition, the are more our leverage advanced in

We similar customers’ customer are needs, identifying and behaviors improving our segmenting journey.

of you on our great and keep initiatives updated front. will important are our we We across making all on omni efforts this progress

our a sales little bit on channel. turn I new to I it will Todd, Before over comment

Following our the segment. the Soma an generated premier on their sell-through August second were an in and in on plus we have first successful achieved and X minutes the fashion XX% appearance a increased buy. early in on performer air in We goal May QVC top

and We of result have the to see additional to year customer events continue increased a of our awareness and traffic planned for second the as half website these Soma events.

Gross customer order. We of with than to continue the the doubling XX% order with be quarter. average last continued value be sales higher average to our performance nearly over ShopRunner, pleased

XX% or customers addition, In total new are ordered have through ShopRunner who reactivated. of

prime slightly results day, ahead is progressing nicely Amazon.com successful. we with highly had line our was We first collaboration Amazon’s our in our expectations. to of have Lastly, which achieved and

items of In fashion Tee day. on sold ranked prime fact, the as our Slug Chico’s one top

process We increasing results are second to further for with introduced SKU we pleased the count our more in line drive In new are of and top the making our the thoughtfully for to events customers planning and brand. other additional summary, quarter. the investments

success positioning future-proofing, omni are personalizing we are We for our and and our experience. brands digitizing

more on We are in call our I to pleased about with long-term. company now the creation brand. remain details our over those for know results. and our we drive turn optimistic sales momentum and the areas to continue to on ahead profitable the for Todd road invest will value and We and our over focus top line for financial will

Todd Vogensen

the and the and as as we in basis This improvement we initiatives impact flat and as outlook management. the inventory including first have quarter in discussed X.X% the supply our good compared our a believe Those negative omni-channel improvement provided from fixed to reflects Overall, the last implementation Overall, shift savings sourcing consistent sales. improvement merchandise margin growth Shelley quarter the that pleased our improvement of We initiatives, in XXX trends down results well was results on traction. second offset X.X% second of ended beginning margin that associated rate that margin morning approximately we quarter clean gross achieved to gain Aisle. previously Locate Thanks, with year was point on and We initiatives XXrd our call. ShopRunner, to We effective were sales deleverage have inventory, were last quarter. by with with the year. everyone. week and Endless our reflect with the are of chain expenses merchandise reported in cost

expectations, or expenses, X.X% partially both continued was reflecting technology year, to expense shared stores in million quarter Moving offset marketing and in investments and $X.X in last SG&A planned to our line SG&A second control with compared up services. by

new cash facility investments the and during note, This senior and greater $XXX enhances quarter, Our we we quarter in with and and balance strong a sheet with debt. million borrowing is our $XX ended the Of asset-backed flexibility, $XXX announced liquidity. in remains new effective strong short-term us cost which credit million secured provides million facility. already

technology. in expenditures quarter $XX comprised and of million Second capital existing investment totaled mostly stores

approximately For where million of total taking possible. are approximately closed we stores capital to $XX advantage XX $XX anticipate million. lease short-term year on while close we track the continue second expenditures stores extensions to quarter year, In XX select a of and and we medium-term this XX reductions to the stores of to rent

continued We to more our terms. pursue negotiate enhance favorable actively to portfolio opportunities and

Turning first financial are XXXX, in the year XXXX outlook our for provided release. for full as and our previously press third year reaffirming to quarter full our outlook quarter we

we be the net single-digit single-digit to anticipate and range be in mid the excluding XXrd to sales to expect down week sales comparable impact the in low mid range. down of the We

gross approximately be XX approximately flat guided expect of basis margin points we which XXXX. rate to previously dollars SG&A within is fiscal expansion and our to expect We range

half experienced the back we in momentum the given than As the in stronger we the half. of look initiatives, expect we our first year trends omni-channel at sales

which associated the anticipate our quarters. third the offset improved the in sales initiatives However, we of outlook also with implementation additional and roughly fourth omni-channel costs should

low sales to last year. of the hurricanes, For last compared comparable from year year’s last down sales benefit compared single-digit we percentage net lost third be expect includes down low quarter also – also to compared we year be which single-digits to the expect to sales last a to

and expect points the initiatives. rate with to dollars due implementation impact omni-channel SG&A growth chain We partially million advancements margin associated initiatives third customer range million due supply of to XX gross improvement of and up enhance in continued the offset quarter merchandise technology as by approximately costs margin the $X of basis our sourcing We from as in of well $XX marketing. to in investments to in to be our journey the anticipate

Q&A. for the to Julie Now I will turn back over call

Julie Lorigan

take to Anita questions. will your Thank time back begin will At the you, be to it process. Todd. over we this happy I turn to

Operator

first Please ahead. now question Greenberger session. [Operator Morgan question-and-answer Stanley. Our begin Instructions] with comes today We Kimberly the from will go

Kimberly Greenberger

able you going, omni-channel to initiatives Thank wanted these the you ShopRunner, the so that I in think of morning, Great. initiatives how particular Amazon same scale wondering be about when Thanks I more much. you question with with am partnership ask and Good these initiatives might to some QVC total revenue, of and quickly to have got you be as Soma? percentage meaningful so say let’s initiatives expect might a much. the

Shelley Broader

Kimberly, are how Hi you?

Kimberly Greenberger

Great. Thanks.

Shelley Broader

Thanks for alternative bit will little channels I question. a turn then the I over of it the to asking will start and idea about Todd.

and within portfolio QVC sort in alternative of said been specific very have selecting Soma. one and them our have each play before a we have that starting careful just partners we As with role our channel of

at about is that at at the that this the have Soma, understand Soma. brand look we Soma more us huge the opportunity incredible loyalty brand awareness understand we of and we As for and customers a

the we have new some is anticipate through partnership So will the we awareness. the are today coming and we into and today QVC brand familiar being And with its seeing of having the the brand opportunity primary customers brand QVC. tremendous with success is and heard brand volume already purpose that great store although drive and

monitor exciting events in and that ShopRunner in our and with was said to demographic in target got continued customer of was future. and the We have today lack as the very QVC we customer us between and test House at strong low. of is again we the the White and Soma ShopRunner to overlap script especially overlap the although planned customer customer ShopRunner the additional because

a only seeing And continued with we can us. and access customers a have today. shopped not was to that that it’s do our access to customers brand prime new of for which understand to again our more even even terrific but So was also a fiscal to as brands, reactivate partnership have market is awareness, and number and source significant had really Amazon great that opportunity to with it once to who build a tied both of opportunity our we us that are relationship for partnership, wouldn’t we two-fold was that today the plan. to consumer, it also customers

learning specific and to return can that necessarily and and fact items the be to has So, are don’t everyday and for us you It pyramid. base even and Amazon of adding that opportunity purchase have on just fashion We Amazon continues to us fashion. we great is our a SKUs or a purpose. basic in-store the carefully variety adding it

driving are new we reorder and introduction site Amazon the really On consumers. consistency that to and

channels. So we happy our very new are with

alternative launch and to are like Cruise partnership continued continuing our NYDJ. which additional as We explore with grow ones Airport and to we brands well as like

Kimberly Greenberger

Thanks so much.

Todd Vogensen

customers ourselves we had material big those that will and specifically part get in for that too we go, just sales what really sales doing. learning far number is year. are are where you sure too to new We growth, we I talked gaining the ways that get make is this ahead year this about traction, about of process to consideration break of not But will a specific we we we because with wouldn’t on this showing we we just carry are want we talk a as out starting don’t are probably quickly. a

some. be are And it’s over we So our into build seeing good will and meeting something then growth, we expectations time. that we

Kimberly Greenberger

much. Thanks so

Todd Vogensen

you. Thank Alright.

Operator

FBR. The Please ahead. go B. next with Riley Susan comes from question Anderson

Susan Anderson

improvement a occupancy could update for on improvement more was of if the or if on just the bit the us for give quarter across the you half thoughts some more on of gross little you this a what the for Thanks all taking that nice the impacted need because half, quarter leverage to could Todd also in assuming the shift. guess morning. then if the second wondering new question. dig And It’s see the the more am I on that beginning from was bit line Thanks. improvement. the I back remind year? is you on us and negative margin you And this comp it costs color could, the just your maybe what’s of I brands maybe and good omni-channel that impact drivers versus my calendar to Hi, little

Todd Vogensen

with Alright. margin you, gross I Susan. start will Thank improvement.

of on $XX can very with is supply overall costs to sourcing. and are of freight we consistent make we in leverage have really focused and that a taking amount. vendors, savings with in drive are things drive that been chain our are what ever sure that overall and we leverage One focused right lot to very will those gross our We we year help those we sourcing we that we things is vendors to can that working million this also so sourcing advantage have track where million we fabrics are a margin. of us help $XX for fact company that savings more of have we types is really goods does our our shipping cases the X-brand are than targeted and are the that and on base And

are would some of the omni-channel is costs. mentioned strong a to We tell expected really you though start. have It is we what off I

is initiatives. that for seeing ship that the a news strong store the line. with to is top start from So There costs also we come extent that great are fulfillment

gross also something So and the those with we packaging the logistics come are cost everything that’s other you initiatives, to in considering that margin. all so from have

XXrd We single-digit occupancy that leverage comp continuing To still that. see we because difficult are we your leverage get at look that the do be still did off calendar That in down the sales lower it just rate the little at bit the artificially. we to when For occupancy X%. to of shift almost have down occupancy to we low get and the same stage. makes point are particular, to sales fixed of a and causes week are is

partnership in are So and negotiation, good good cost past range. occupancy with savings, story we that landlords single-digit the leverage good our that as that low keeps same seeing

Susan Anderson

quarters? what’s third the it. And shift and Got of calendar the the in impact fourth

Todd Vogensen

meaningful. It will less be

quarters. quarter biggest second and the really quarter First are

will We QX, shift through we chunks should the calendar have of impact. biggest small be a that amount in but

Susan Anderson

Thanks helpful. Good Very luck Great. much. so next quarter.

Todd Vogensen

you. Thank

Operator

question next Hutchinson America/Merrill with of Lynch. ahead. Lorraine The comes Bank from Please go

Lorraine Hutchinson

Thank that you. just GM Understanding sourcing margin, the a hit bit wanted of savings more the point to guidance there huge are Good of through, for little because up lot XX XQ a tear year. I guess morning. of quarter cadence a step fourth about in implies the coming I total the XX basis gross to

if could in to wondering see margin So point help line? on of you the fourth I the just was opportunities you quarter that gross some the

Todd Vogensen

Absolutely.

So, are there. going a there in few on things

is change. trend and sales foremost really that First

So, expect we sales see improvement. continued do to

you sales comp quarter, certainly went down us to from X.X%, see all healthy brands that second gives X.X% down look improvement first across If confidence. to at to a that’s

margin fixed just is margin So, that an are costs element in plain in leveraging of occupancy there particular. that the gross is

helps so continue in that margin Also, improvement. expect we the certainly And to rate.

position perspective. an We inventory in are from good

us that us that for much we an help purchase should expectations range more be that gap with year. and where our to solid to plans promotional also sales this from expected a gets balanced We and really have align overall

So…

Shelley Broader

focused was sales was year on first and mind to is those, driving. the issues, been have year Lorraine, second of very our year this fixed really thing operationalizing the we was third keep another the identifying And plan, X-year that in the

at for tail gross between and So our you are fabric, lot look end front look new resulting really margin the the manufacturing, our house end. outcome that when streamlining work base, house, vendor have expansion, the us processes rationalizing sources done the more at can three finding positioning you of brands a in back profitable the of in we a of of that that that also of

Lorraine Hutchinson

Thank you.

Todd Vogensen

you. Thank

Operator

JJK with The next question go ahead. comes Research. from Please Janet Kloppenburg

Janet Kloppenburg

improvements from And a know is the the my gross than would light am quarter higher but that the wondering the I gross everybody. in if in to than the had expected. Hi, third question second – the And the third is margin was sorry, seem quarter. be there was first is I I spend Chico’s, it in not higher, there expectation third, higher flat much any expected. shift quarter Shelley came on on your but in Todd, I an guidance plan SG&A, have expectations on my higher for on us you where basically quarter, product well does the just was the to Thanks. margin, bit marketing give you it and a I the to the here said resonating question of the idea maybe Could is that come? August. very have second

Todd Vogensen

Absolutely. Brand and I President SG&A have Ellis, we with will Chico’s for Diana our with start us. do

planned So, SG&A and we are basically to rolled and has it QX out. perspective we merchandise. really we had go wardrobe. refresh and give QX way looking From a as with QX turnarounds perspective, biggest from customers clearance bounce to their QX about in sales Diana through back the a talk chance an

out in and also she out there looking is not for So, when a things like by get to back-to-school. getting natural of her front from time us crowded it’s attention

range are that those what really it the times expectations marketing, to the out our year. falling marketing, and look we more the had So, do of is natural do within look more to expected so with across to balances customer-facing

Diana Ellis

was – second to brought my were no it benefits no to the that SG&A there quarter Todd, expectations? And in like one-time there

Todd Vogensen

this quarter things savings in the investing no certainly in are shared we significant, expenses overall control Nothing we both we saw behind very across no, are store we exception, to our then strong confident and always were looking – expenses services. and

Janet Kloppenburg

you. Thank Okay.

Diane Ellis

as Zenergy performance we to products, in business, on core is of which And Janet right as question as our strong our one your With particularly now the for we of top regard mentioned fall for regard very franchises business, thanks top of woven our business hi our assortment tops. continue what’s forward. to in very well category our knit in are see resonating pant seeing within in be well woven non-iron pyramid we our as customers have with as Shelley the in going there. to activewear strong our strong which Opportunities are resonating business, earlier travelers that all – the with addressed

We have our increased pant shapes.

We in pyramid. knits, They of elevated worked to leaning more probably and assortment product ourselves little make improvements position in have that to back of elevate those again made so broadened matronly we our styles. good basic have too the got a a pant, as that in is shapes as were Princess our sure and quality leg hard the or there that on our mature top fabrics. shifts And then well we have at with very

the we going we and assortments the to products are feel So really that fall. good excited about have really customer into our how about is responding

Janet Kloppenburg

so Thanks much.

Todd Vogensen

Thank you.

Operator

Group. question Please ahead. from with next The comes Research Paul go Lejuez Citi

Paul Lejuez

ticket what’s Hi. your Can curious the just right chain, also the and you is rest compared guys. Thanks. Thanks a to profitability now business little about metrics the of at comp of the outlook from in rest for about that traffic bit the talk Soma year? perspective, a

Todd Vogensen

quarter it really a in Shelly in overall tough bra and and had tale the back bra of second in July going comp been without overall really about if launch ramping two that much which launch. June very Absolutely, the year gives so full more response but so us behind Progression absolutely Soma and into quarters the case. got that its collection launch and a going that Bliss through driving talked soft new launches it bra new half. looking has then up Soma it’s We launch confidence the to Soma a best the been been towards was against And is second they QX customer has from as forward. within marketing collection, nothing was and went as remarkable into the mentioned given is newness of strong. for the that last better bra quarter

Shelley Broader

our introducing some individual past Soma we success we the bra is are we experience. we lounge at great launch Soma. and where in-store And of the seeing launches that, incredible resurgence our the pajamas in that Vanishing with we is our essentials match Joe, with fun Vanishing very signal are growth our and and seeing mirrored the having new the of one some pajama sort Vanishing seamlessly in-store just excitement continued customers And in in life just have the PJ customers now revolution don’t One to business to it’s that’s item. behind are collection in focus today that our Edge some with a the have much Note amazing rely is of but and QVC your we on the are with in through bra, digital same Soma personal mix can kind built had carry have where bar What talking coming matching heavily stores, on digitally in the service and fit of franchise of mixing most fit launch really to Soma of online new way panty, so whether and experience you Back the that today and with style not

but and We buy in, launch of sort there more bringing both to breaking Bliss people them is Soma. record and experience and much have at in-store online got that for

Paul Lejuez

Good guys. luck. Thanks

Todd Vogensen

Alright. Paul. Thanks

Operator

Royal Tunick ahead. Please Canada. Bank next with go comes Brian Your from of question

Kate Fitzsimons

wondering our for brands, three is are had am talked Thanks the just Brian. should the hurricane fleet, about leading this you. more be is Todd, year? relatively taking I or how Kate August, may all you seeing Thank a if just for from about Chico’s that the stronger you last should about Yes. think Hi, improvement on questions. in just start as we across we about And secondly we think think that consistent way. impacts then here

Todd Vogensen

Kate. Thanks, Sure.

First, I would more will July focus get started, what the on I’d finish. say is we

across gotten of a I are ago QX last and QX we you quarter-to-date very our reasons, of to hurricanes. improvement while but look us outlook that and yet Florida from And the we does comps is forward a look give lot particularly it trends have the fleet talking relatively a think Texas broad-based lot in our for did going see and from proportional and away into was obviously year. on QX the focused QX. really QX, in for going Southeast, to We was about QX hurricanes as included what overall of as the It impact terms confidence

fleet, our Southeast, across more look in can Chico’s but that overall broad-based really be pretty so spread. the be you relatively slightly when so And and it and skewed the impact to so is be tend will much

Kate Fitzsimons

great. then cost business? ending to ongoing you the saving $XXX one expense are million into guys out follow-up next potential just cleave as to year, Okay, there this just that And year, program looking any the are million out you quick are opportunities $XXX of

Todd Vogensen

expense particular that for ourselves ahead the across be It’s would far to, our core. just savings don’t efficient I the core we organization that ways business. part can should we run looking of part more looking and call too programs, everyone a core but want always is are we get and out the to is be of say how that of we ethos

Shelley Broader

think I the Yes. that’s key. And

so to think there now So, of just over will we that last I reducing that the have operation we are practices, cost a the that off we phase existing continue really months lever. talking can done what do can processes, entered are have reinventing you if X expenses have low about we and

add fact needs to to efficient the do while most effective any and anywhere right her the change at the that to continue side the changes, keep we business our what’s remainder we got reducing emphasis we to for business, when And business cost reengineer So, forever. low. us as to deliver of and that and have want want the the as right-size to of business, meet to consumer way the cost cost as time

that we that years of and over we So, will cultural continue that’s have sort embraced the a here forward. move last few to mentality

Kate Fitzsimons

of Great guys. Best luck.

Todd Vogensen

Thank you.

Operator

The ahead. with next Deutsche Please Paul Trussell go comes from question Bank.

Paul Trussell

time then on first there quarter were X.X the to this of encircling just to Wanted on thoughts and your color about the you driver around the are negotiations the relative to saw to dollar with Thank in morning. rates periods about can sales size and metric fleet? performance speak field metrics, maybe that Good just that I of over your you on touch back average concessions balance just year? can up you years, And today overall comp recapture for separately along your the if the and receiving you. stores, any or the prior

Todd Vogensen

Absolutely. Thanks the question. for

average up So we you right, quarter, which were sale with. metrics the very comp on happy are this dollar was

per transaction. units would you We and strong seeing both strong what actually performance on And we are tell conversion are per I seeing is performance on transaction. units

a buying for that addition sign pushing our units, that’s be something promotional looking in AUR product us is will to and and control forward. the for resonating to So she product. us, indicator buying is in, those an looked response our the comes we here for going effectiveness when that to we be to two she is long-term, to is metrics have And she

see desire able our with on In terms and to And seeing to on the on are on flexible landlords understanding give to to we just a ongoing for are working with our in landlords good is that is much from landlords is that savings. is paying particular term. little landlords a extent up more our a landlords sign some continuing on part that but there have now further this cost as partnership at willingness the gotten off length our longer very we point. of with term, we of That’s there short-term with bit overall that stay to what into we are in maybe stores, seeing we so extensions confidence market, work sites, are are of and of us volatility sustained parts leases term flexibility trends seeing even we of in that more most

Shelley Broader

and are they to winning great believe unique we experience. have dedicated have remember, fleet. and our an mean, brands their we have the Paul, digital have strong the and a manifestation and both are omni-retailer to brand I And and still physical differentiated brand of we that to

to estate have of in in and deliver exiting to flexibility a the Endless in in and been portfolio, so continuing also has And continuing want his a we as well to to Todd team centers these sales way for lot utilize don’t and service us the now our a we lean real be as out amazing our physical operate successful as with using as way center and and Aisle as as unique most to unique data personal customer Locate a them and return center. distribution sites

have with estate we we how service much man-to-man integral our what boutiques. that had brand to getting make experiment how a within size you is can that our flexibility played because very that the of the part amazing still service real So, more and our are and role at and much an profitable leases, most with can personal we strategic of within continue right important

Paul Trussell

helpful you and color. best luck. of That’s Thank

Todd Vogensen

Thank you.

Operator

[Operator from Simeon ahead. Siegel question Instinet. go Instructions] Please The comes Nomura next with

Julie Kim

brand? just and Good color or you you dynamics, if kind specific is our And taking the any channel component morning. trends the mentioned to and are on contentions in rent rent Can Thank traffic what in you give separately to Simeon. structure? you. on that’s Thank variable certain you versus getting fixed Kim This for to seeing of is are if on Julie question. more you quarter the relation there a the your reactivation change for you saw what customer

Todd Vogensen

Sure.

that. strong assortment know And and our them us, shop perspective have customers effort with the a traffic reaching to that seen getting a cross-channel. to and in brand are letting we from haven’t things response the maybe especially So of reactivation positioning new that behind, we while is the that the is perspective, in very use who really and lot are we a of put out evolving who

So gives broad-based it of a confidence forward. and lot that going is again us something

benefit like that brands. to are to ShopRunner that to will use two earlier to on able that to we I emphasis things areas be continue and to also We And increase are and drive continue traffic Shelley’s the awareness from where to that drive those front seeing on comments our increase think put consideration, and Amazon, we try leverage traffic. to

cooperation I of opportunity our up situations, In so say more rents is getting would variable comes terms not that providing focus in either really much but the it’s just leases positive the looking and tenure and again of landlords. our at length in on leases and on seeing options structure our good certainly and from on though partnership dynamics, plain or around rent rent

Julie Kim

thank you. Great,

Todd Vogensen

Thank you.

Operator

ahead. The with from go next Dana Telsey Telsey Group. comes Advisory question Please

Dana Telsey

Good nice brands. morning improvement the to and across see

or you. the how You opportunity that jeans, mix, points to you going NYDJ relative Thank see mentioned Daughter’s with into it Jeans in do the Not other how what the do does the yours, price collaborations mean of Your for collaboration you margins? the see terms and

Shelley Broader

of Dana, pretty many with customer reactivation, that are acquisition. us. our hit customer. I crossover with they line, out Again, roadmap NYDJ NYDJ then with and will a of Diane. demographic margin turn that top same customer that sorry great with will grow our the over those aren’t start categories In new a to either specific purposes and customers that of new for we customers really select brand awareness, many we bringing Chico’s to partnering I with so brand to strategic it our have enhancement, and and help brand, partners the goes us for familiar many It’s brand

new we and our we a lifting that So an not with in very see exciting one had great customer franchise, franchise are interaction rest be it’s lot opportunity and Soma boat. talking customer a of bringing the about the loyal earlier particular for of and in for to It necessarily items Chico’s the selling where current enhancement. success like great will much

brand category necessarily focuses category had hasn’t the unbelievably or in great of launches it has But lifted the pant store. Brigitte some that pant the the pant in have Chico’s is we or Juliet. One in the

are the consider So hit and well. in finding like is NYDJ of all in as there that others bringing criteria if we those partners focuses that the our would right

customer. and We at a example that turn jacket add over to I names to match that an And with an new And and top, specifics. the our great entire in Soma it’s for have will item doing great a that that Diane with help will online. enhancement been successful brand other we additional existing to the in some category bras for it lift believe

Diane Ellis

the thanks also for stores Yes. question. collaboration to include Dana opportunity online to NYDJ the as excited the and about we XX the are Thanks on new at launches are – us well, initial Shelly. some us and unique have we and so terms to have boutiques palettes customers It the as in which And that one fit our for us XX for Chico’s. exclusive again customer the within prints technologies that the in their And will and about unique collaboration. is the great combine winning we NYDJ to that also of Chico’s. opportunity of key well combination this what’s of with new think benefits as again color

and importantly existing technologies we acquisition we So again, our XX% from point trade-off incremental point inventory. think and warrants of the than these price aspects as perspective we see both really it average denim. with a and our existing that sales perspective. are excited to about unique it’s it it from more don’t and higher a point a price business as exclusive But customer incremental we We about see do wise for think our price our typical

Dana Telsey

there are these anything store categories other are replace do you. with? you else this Thank partnerships looking and Does to the in that

Diane Ellis

a and see a unique At you. as Thank perspective, again a of point component. it assortment fit this we is didn’t layer perspective it from we that both incrementals design that have from technology

incremental to sales, not the opportunity our brand create equals brands see But unique call I to three where we two the drive to only like further attract would to but have consideration opportunity plus what partnerships acquisition of combination one we Shelly Chico’s of other said expiration brand. same it the new achieved where are So one as for customer we the incremental. together in the stages and as that

Dana Telsey

you. Thank

Todd Vogensen

Dana. Thank you,

Operator

our question-and-answer Shelley Broader now to turn to back over for any concludes I would remarks. session. This closing like the conference

Shelley Broader

Thank you.

we are the summary, in ahead. very about opportunities So excited

business, partnerships build those on omni-channel capabilities. We These we on the include that are momentum our our initiatives beginning growing our our assortment, strengthening will expanding and to advancing further see. channels focused merchandising are of

and experience business. the enhance and performance investing to customer of improved quickly drive are acting our We

for So joining and a nice day. thank have you

Operator

This conference attending today’s Thank is now you concluded. for presentation.

now disconnect. may You

Chico's Fas (CHS) 29 Aug 182018 Q2 Earnings call transcript