CHS - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to Chico's FAS Second Quarter 2022 Earnings Conference Call and Webcast. All participants will be in listen only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today’s event is being recorded. I would now like to turn the call over to Corporate Controller, David Oliver. ahead. go Please

David Oliver

welcome conference and Chico's second FAS Good and to webcast. XXXX call quarter morning, the

For earnings the speaks industry, at regarding and www.chicosfas.com date. Today's reference, projections our today's will only our under on our comments business plans, press as release current can about expectations, of releases estimates, forward-looking our which on include Investor assumptions, page. found Relations statements be judgments website our and

except actual results should non-GAAP otherwise by by our factors this We GAAP included cause the Relations to the You update call. or included disclaim earnings may revise measures this to is unduly Chico's posted FAS that from release, materially any and these rely today's our call, earnings made may law. SEC our non-GAAP are required implied as events information Important statements. call. are any Certain in those referenced presentation not this on discussed statements in in or obligation differ be schedule today's on A comments page. filings to on could reconciliation be projected morning Investor forward-looking on

Now, call President, Langenstein. our over CEO I'll Molly and to the turn

Molly Langenstein

morning, good and David, you, Thank everyone.

gross XX.X% momentum digital and outstanding posted store sales to Our sales rate EPS, and XXXX. both by margin our year-over-year quarter expansion. driven income year, comparable continued, highest to strong in another and XX.X% with operating last of up We quarter ever meaningful second growth,

pleased considerable achieve goals. portfolio, to-date the strategic Six three-year in pillars. our consistent confident we strategic our performance of our to with of ability progress Our successful months implementation of the evidence long-term remain power are and is and our the into our plan,

sales We resilience pillars XXXX. of brands by $X.X remain in three million this environment. Our strategic have on delivering over focused power proven and in

of comparable driven some year. results newness, second was store performance significant diluted enhancements gross was margin and over exceptionally greater me growth line Consistent digital with and last growth, AUR. XX% Let nearly highlights This sales bottom $X.XX, allowed selling expansion. sales with product for and quarter. higher of of strong by the generated strong price innovation and We EPS combined XX%, which drove full cover

sales customers our to return comparable products. XX% to delivered product higher-quality XXXX. product sales last and deliver our Black sales XX% and XX% exceptional sales. fashion comparable generated AUR XX%. to responded exceptional of of with with greater than and dressing, outfit and Market Chico's comparable sales Black meet full-price seasonal customers sales. higher continues entertaining fact, newness, with solution-oriented Black and full-price full-price growth fabric, for to second second the building traveling and to growth and White were than to nearly Market continued of Market gain responded White of versatile quarter XXXX, Compared gain from and House Chico's year, Chico's Compared anywhere In results, sales more House comparable higher of sales occasionwear. XX%. XXXX, of to XX% our and results to more sales a and House innovation, AUR also the higher delivered returned generated quarter needs work to deliver White

second cozy category. posted in and sales lounge X% the second comparable versus largely year's a While quarter Soma by in decrease last driven slowdown quarter,

and quarter Soma’s was fiscal year up of of and overall comparable demonstrating power well controlled compared the XXXX. brand. sales XX% second to long-term and Inventories strength XXXX, grew the AUR last are to the

the opened with additional over Soma path, fiscal this innovative XX open and its we second positioned stores three stand-alone time. plans and continue quarter, competitively believe on we share during to year. solution-based over are continues successfully to stores market Soma capture We new to

more traffic per younger. to and to customer last driving our elevate second average marketing, customer our rose to digits. Total the year-over-year brands. We over continue and of targeted continuing year's up count age Spend trend is digital customers and is customers allocating quarter, to mid-single resources new

to by by rose XXX elevated rate XXX leverage, higher sales, material last exceeding margin and gross and by This driven second occupancy XXXX average retail points quarter and XX.X%, basis year's basis was with improvement quarter combined full offset unit price raw Second by costs. points. freight

second of XXX XX% quarter of an and margin X.X%. margin operating last above operating than well sales point more nearly XX%, growth delivered margin expansion Our basis year's

plan. deliver clearly strategic and pillars defined digital excellent being of our guide product strategic four first on to customer-led, obsessed, Our to us three-year operationally continues

Let pillars. me these on each update of you

and We our are value. of a through three growth community and customer platforms, fueling and creating is unique connections lasting customers in increasing us powerful seamless relationships forming manner. focused experiences, three on lifetime our to memorable power enabling brands The engagement customer-led, interact creating and extraordinary with customer

Our And experts. Digital physical our celebration a of our community content, first and for stores are the way an community uniquely and to and interactions FAS connect inspire. stylists customers retail. bra centers in dedicated a is strong most two. introduction, brand for a and and efficient loyal teach with brand Chico's hub with customer the impression social foundation expertly key can brand ambassadors has our some of

redemption are are programs in they expectations shopper Our newly customer and increasing and launched rates, loyalty frequency. exceeding sentiment

and coordinating enhancements At At pieces special occasions demonstrating customers items, fabrics AUR these the premium seasonal beautiful best-in-class product solutions energy our are fit, value. both relaxing size. our on she enthusiastically both outfits customer looking confidence are every grew to to and our single last just to woven, these At Customers customers strengthening drove year, increases. elevated denim. quality and and we paying responded and growth. sales And weekend. nearly the business jackets, product And category customers dresses, solutions customers White on appreciate or that pants revenue in Chico's new driving details accessories instead innovation driving our relationship for and our inspire for At are travelers whether apparel each delivering brands, focused House categories, joy. product that Black programs. offer continually in feminine and innovation fashion, which denim, adding Black brand brands bought including are dresses, increased brand, goods our we through and and each over House the that obsessed, White are style, loyalty AUR Market, our with dressing full Customers responded pants and outfits key of and And or of innovative strong already versatile and collection. Chico's, power elevated shirt and receptive and At elevated are Market, comfort hallmark. our significantly woven forward. We basket for price and and are and elevating moving entire was

make solutions push in to as product up in continues which and strapless innovation, Soma our the Bodify including bras Demi, newness new successfully launched and investments in cutting-edge as well quarter in panties.

are inventory chasing and to growth. the categories we drive to, are We overwhelmingly positioned with customers responding replenishment are well

leveraging strong. and We by brands. double-digits deliver our channels to also are store to quarter, which and across customers Digital were for outpacing sales, engage digital-first technology the sales grew

point brands, during solutions we and new the visits by growth frequency multi-channel the limited and We on count touch build inspires find our as are a our spend of features XX% customer driving Each customer total online digital evidenced edition in increase by collections. trailing a like customers to growth are XX across adding capsule and months. growing X% focused forward

sales branded customized tools Our StyleConnect growing. drive and finance continue MyCloset digital is like to engagement and

and sight order month-over-month than Our value conversion driving engagement the are is and conversion. times Sales are our site apps And higher the average. growing exceeding mobile higher more and over apps XX expectations, the average downloads than generated from with average. XX%

Combined grew quarter. our XX% last over are become to apps tools year's key designed program. loyalty digital hub being Our second for over the new

times of All nurture single-channel further spending so growth. actions fueling more to a digital who overall than and grow customers multi-channel and valuable us, these customer is three

marketing, of is that and We key she are marketing will be but of held years XX deep Leana experience, with valuable are expenses data-driven Leana And strong drive agency joining Marketing. With line program, managing and of sales, Coca-Cola thrilled performance focused experience delivering prudently as of on CRM personalization, top which Chico's will cash estate, at generating has next roles her and FAS a month a we cost Aveda. bottom only and continually growth. understanding loyalty real chain, supply excellent, digital and inventory, Lauder's has e-commerce last, Estée SVP flow not operationally our expert line. help us Less healthy

by occupancy costs, higher in strength despite gross freight inbound During sales, raw improved AURs leverage and price we full had quarter, materials. performance, increases margin the and in driven exceptional and

efficiencies logistics We are and operational processes on lower our improving to and sourcing, costs. constantly help drive focusing

a will timely flow inventory and calendar to our managed carefully our in to be product available have customers assure We manner.

last prudently the also year. cost reducing of our approximately compared realized benefit, cost ocean sell year. which mix overall air XX% air year, by XX% have last approximately for back second half freight be into the of we the the goods quarter, We With freight less the versus as will controlled than to

call our financial Now let on PJ performance. the turn you to me over to PJ? update

PJ Guido

morning, and Molly, everyone. you, Thank good

quarter plan. to Our and the XX% last our growth growth of driven EPS second and for over strong earnings share. the our expansion. We strategic This power posted quarter sales EPS second performance and quarter highest portfolio ability per margin diluted quarter, second ever gross performance further $X.XX execute by of our company's the diverse demonstrates was year's

Second that combined by nearly of over breadth quarter product, XXXX. full-price XX%, sales the of marketing sales increased drove and quarter XX% selling. over Comparable for last year efforts greater year-over-year increased XX% nearly million $XXX enhanced and with depth driven

strong quarter, Although throughout sales business the sales. see both outpaced growth channels digital continue to and the traffic store

XX%. brands, White and strong. over Market Relative grew XXXX, Black and Chico's grows apparel comparable were Chico's increased House Market XX% grew the at White XX% XX%. Black to sales House Looking

second quarter, comparable XX%. X% nearly were to relative the quarter, up by For declined year's but last Soma’s from XXXX, sales

slightly and of by million compared quarter just the last reflected XXX quarter to year's elevated XX.X%, customer raw with Second The expense to of margin or moderating which ongoing than more year. for basis primarily quarter as offset sales, material leverage, growth as drive management. higher higher improvement, was labor costs partially unit XX.X% $XXX last gross reflecting totaled second costs, costs. average investments combined than offset elevated freight higher marketing well XX% retail, expenses point occupancy SG&A XX.X%

of more $XX of an generated XX% we increase million quarter, the than year. operating over For last income,

cash $XXX for generated we million, the close to for the growth for EBITDA of was and sales and half sales, gross above higher XX%, evidence powerful clear portfolio operating of an which of equally produced strength focuses our of margin the last on X.X%, fiscal of model, than which full flow. first margin year's quarter XXXX. what and million higher margin $XX over earnings the over was well business was Our expansion and year

turn let's our Now overall strength. and sheet to balance financial

and in-transit Our total in-line quarter, XXXX inventories up with expect We growth. on Through propel the to compared we business basis, flow against $XXX of we end more million end is that the were total total X% sales second remained and strategic very and the strong, year. inventory our with to approximately million, on credit to hand as remain liquidity operating of Adjusted liquidity us us or our guard cash entire providing $XXX last and cash early this one supply cash and of ended manage second and to to make inclusive capacity was disruptions, growth. million has early were year's quarter, the of inventory On second facility. the last deliveries ahead down quarter the for XX%, levels. the At above inventories this the flow customer-facing levels position, total end this to well further a products demand potential decision served with of $XXX compared of million year total chain flexibility of $XXX at investments quarter.

the to quarter, last to our ability price fourth in end inventory sales than move full are healthy year. and we assortments to confident XXXX and we As lower expect levels our maintain with

positioned are inventories any material this plan. markdown margin the we assorted of anticipate back to and in a half sales our relative year not and As risk appropriately result, believe or do

for on and showing up service both our some stores for assortments showing third quarter growth give as full Traffic well. track and that both conversion XXXX. outlook the of supporting color depth for by up and the and levels product, year full digital experience and higher remain are short, the we lifestyle for and both customers breadth them are and In loyal point channels their us expectations. on overall our are third year. me line in and strong and strong of We our on delivering for quarter let new remain Now the top with the are

sustain to selling, XXXX. annual our to believe are the by in occupancy down XX% confident We are and leverage reach we product healthy chain path mix, target through cost and supply margins, full-price well management gross our of margin ability

Regarding expenses, pressure we to continued SG&A related on labor. due store are to forecasting inflation, particularly

remain ability the highly environment. structure in focused we to on However, profitability flex the in response shifts underlying cost for performance have our maintaining and to

Our customer three our sales that and well as strong channels. and investments and capital supporting growth bucket are continuing as all Also, are we customer higher in store across labor, make given conversion, cash expense our performance growth. traffic investments in flow, to will fuel biggest retention

stores as platforms, million Soma as fiscal $XX fleet stores. for still upgrades million expenditures to out existing our to in capital planned Our invest of are Chico's digital between total new and to marketing $XX build our to XXXX well and expected

our side, across the XX to offer actively the during integration build On our given and commerce technology prime And will the plan to standalone competitive our view We customers strategic portfolio personalized US. real during opened experiences. we manage enhance footprint a balance into our connected digital advantage digital three partnerships over open and of to stores, entered store which company estate with current stores year. a of seamless, and in-person we and the continue regard overall to out to platform locations Soma quarter profitability more the as have

base this from highlight up we our continued renovated productivity And quarter, by base, million. financial strengthen growing target of XX original Chico's EBITDA and approximately most we is would are of have position and will year, improving here. boutiques that down I every year-end. profitability the we addition, store from to store expect of our due estimating now to to $XX cash our our closures In XX also our productive flow

presented allowing strong challenges uncertain environment retailers. of an us fund for all flow that strategic a to addition In will allow investments has to navigate to cash us host

outlook that, with our and year So revising for upwards. XXXX, third the full quarter we are

range. $X.XX. percent For million percent of diluted to tax as approximately now margin be rate the $XXX in of sales the of XX% expect XX.X% sales to XX.X% to an $X.XX to XX.X% third SG&A we the XX.X% sales quarter, $XXX in a million. and EPS rate rate be a of of Gross to range, total effective as to

positioned our the XX% remain to $X.XX both and confident strategic posted and forward we our look our of diluted to rate sales we SG&A In progress. XX.X% in as shareholder fuel year, of on create full effective $X.XX. the of For to XX.X% are sales rate and as of keeping term. sales an to well percent be billion to momentum plans We existing closing, to ability $X.XX EPS now to margin over of percent approximately billion, expect in rate gross a and total in the you $X.XX be tax the XX.X% to three range. our to now value, long a range, XX.X%

back the over turn to the operator. call I'll Operator? Now

Operator

this at Instructions] would question from Today's At to you. time, Dana Group. ahead. Please comes first [Operator Telsey take Thank go your happy be Telsey we questions.

Dana Telsey

morning and the a in season. Good raise, and on this real beat congratulations differentiator earnings

it by outpacing spend? stores. you Is it brand? it does difference reduction you it digital year? think you. Soma which you a Thank expect As Secondly, with is stores? the the forward? you going growth higher through seeing tied do customers? then you the average interesting planning are of What freight moving the half And How and differ is Lounge, there? about how that Cozy into digital on And that was the see versus do are more obviously back business, Is impressive. in What

Molly Langenstein

you good Dana, so supporting our much and morning business. for thank

for and product by are We what are the in we and year, connect also remain customer, confident August. our seeing outlook and to ability our QX, evidenced deliver but the in

months. one note the for quarter, still experienced it continue to to to market relates bras X% we that As is thing that trailing NPD, the panties in we decrease XX Soma non-sport in to and the according and the outpace other

our we share to and we solutions-based competitively to over confident market are So innovative we in continue time. path, capture positioned remain believe

investments Demi solutions including in Votify the bras We and also make the new we seeing [ph] strapless quarter. continue in in panties. We're successfully and to launch, in newness product launched innovation, push-up which cutting-edge

So we overwhelmingly are are customers chasing these are categories and well-positioned growth. that inventory responded with we replenishment to, drive to

continue want freight? that close in the our to the forward, So our customer propel take staying we brand Soma to will growth to a you believe and time track and remain point listening this brand. we trajectory PJ, in on is with and

PJ Guido

Sure. the to off. calendar back our move And in in freight weeks by paying decision our now XX half, Hey up is Dana. on the back XXXX

far and using less are started than benefit into costly freight, We to We that see is QX. ocean. continued as a you much more know, big air which, QX, in has

raw In a freight freight our we fact, reflected That tailwind be of We usage a air is expect cost costs. to supply back it's expect do overall as the offset whole half, or do in airfreight lower our there. cost in most and and guidance. material higher

Molly Langenstein

driving three grew customers also And new ability these single by that on in customer. us been multi-channel program tools the grow seeing, per is pleased was to able stores. omnichannel MyCloset, year-over-year. for ground together, strategic. what and Dana, and that XX% of also remain launch And engagement, up saw all focus and customer frequency And spend all loyalty we tools customer that this these X%, including our are I'll our more of with is times digital StyleConnect, we're that And overall And working XX%. quarter digital all that than past launch our by take tools what very single multichannel to and spend customer, has are We the channel count particular being app valuable customer AOV. things customer XX%. But grew together our of the channel work those for to versus for customer is the up a and our

in experiencing digital. bigger frequency to driving higher growth also we baskets So which helping outpace are continue really AUR, and but our in us is channels, both

Operator

[Operator Wonderful, Please Retail Instructions] comes from question and with Marni you. Tracker. thank the next go ahead. Shapiro Today's

Marni Shapiro

Hey, clarify Can absolutely beautiful. stores just can one talk look The – guys. thing. Congratulations. you you

to going full you for close think just that is said confirm rest or that for to Was I wanted I year? of year, XX that the stores. right. you're I the heard the

PJ Guido

Hi, the for it's XX Marni, It's stores PJ. year. full

Marni Shapiro

Okay. Fantastic. That's a nice reduction.

along I lines, good like not openers, to to but rent want reductions right-size relocate that know So you're store you aggressive be ability to things fleet? and those still seeing just you the stores, the where are very and further them

PJ Guido

space competition higher. getting Marni, actually Well, premium the for mall is

So rents. necessarily productivity we're reductions. is seeing pick we up those to not are rent What leverage store seeing

So and about store less store about it's rent more productivity.

Molly Langenstein

category our Marni, remaining have our – ours specifically strategic per of digital region type in foot planning strategies to just we've had growing and put that each teams rigorous place a hit on to by the fleet. we've we we how store in stores one allocation to productivity in our grow by of and in the the the to add want stores merchandising and we are target been with productivity, while team, stores so grow is to that, and that

Marni Shapiro

for just level. touch while. wage like on just different I because been totally But store your a associates can know a associates. then we has wage, store a are And conversation not little great. They're regular the That's pressure

going your don't other keeping them you? a look balance versus like And part-time? your you guess, specialty average people to, so forward, do compared about retailer say, them what's from think that full-time steal so And how I

Molly Langenstein

Marni. without we associates. couldn't you, Thank what do our do We store

our of that. really some market. It able recognizing for to store be and with And part-time that associates our the we brands, our by longevity our ratio. manage and you thank to associates. store also varies really are full-time community leverage So loyal And to culture enjoy we

there their really that works, customers is week. person associates a and is of so like there day that days important. work that And the lot a to incredibly have know four We community a our

try that they really, to part-time quarter, stores do, want in we allowing guide help staying organization for actually to what which being us to that the make And down redid a has them, we learn really missed inspired turnover and store that from leadership allowed are So, coverage full-time, our really us sure to about associates they keep that, a us mix and get keep we happy. minimum. visits we've great at resignation sure pretty stores we they really our that just the able told I is that big in and to close store in to at really, more stores, the when experienced the looking something their attribute levels, overwhelmingly they a be and and which the standpoint. in community been them. to about we leadership COVID That's first fantastic. actually, we've realignment 'XX to And put people our wanted find in more nothing during see And it's that about make they do to leaders,

Now brands. over brand the the is for coverage the three

in if go now into is free. center, past be one So district where that the sales used you that to manager, a

because community, center more of fill community, we than to but and to we little of XX% being one community have the So, if to do that's between another our able we care boxes the a manipulate staffed the each not now we're stores, making quarter at of can a staffed now, sure and into take up fully have we today, able walk be Chico's the that customers plan really Right the and actually fourth appropriately. it's are needs. individuals it's hours, helping us notch just taking to also

Marni Shapiro

Is well you and House sick White day. is into pitch region, Soma to Chico's the out it just presumably somebody for somebody You enough or saying? at that had and hop -- trained what that in you're

Molly Langenstein

to XXX have been White we able can House and bra sure our Chico's Associate fit Black We've make That's on coverage. educated the correct. Market that actually and our

introduce And brand actually, it's working us able helping the is that to also be customers. for to to us. So

Marni Shapiro

Congratulations. for amazing. That's guys. of take I'll fall season that offline. luck the Best

Molly Langenstein

Thanks, Marni.

PJ Guido

Marni. Thanks,

Operator

our ladies turn And and gentlemen, session. to Q&A remarks. closing for End question-and-answer Langenstein this like conference to over back of the I'd Molly concludes

Molly Langenstein

XXXX. momentum deliver and you. our closing, for we Digital in summarize, sales Full Thank Chico's traffic We greater Thank are conversion want for customers to differentiation. again overwhelmingly our of were Thank you. confident business FAS. to than our store delivered in our look outlook. our In forward your third AUR, extraordinarily and the grew and are to I We interest higher during call. price and you ability responding product to sales XX% speaking the with quarter. you quarter

Operator

for And you, thank you We today's concludes presentation. thank today's conference ma'am. attending This call. all

lines, disconnect a may and You your have wonderful day. now

David Oliver	Senior Vice President, Finance, Controller & Chief Accounting Officer
Molly Langenstein	Chief Executive Officer & President
PJ Guido	Chief Financial Officer
Dana Telsey	Telsey Group
Marni Shapiro	Retail Tracker

Chico's Fas (CHS) 31 Aug 222022 Q2 Earnings call transcript