Earnings call transcript Q4 2022

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Operator

Welcome to Chico's FAS Fourth Quarter and Fiscal Year End 2022 Conference Call and Webcast. All participants will be in listen-only mode. Please note this call is being recorded.

I would now like to turn the call over to Corporate Controller, David Oliver. Mr. ahead. go please Oliver,

David Oliver

welcome end Chico's webcast. ‘XX and and fourth fiscal year conference to morning, FAS the quarter Good call and

reference, Releases can at release page. our on For website our be www.chicosfas.com the on found Press Investor Relations under earnings

forward-looking only will our regarding date. as judgments of include plans, and our current our projections today's about Today's business assumptions, industry, estimates, statements comments expectations, and which speak

statements. You should on not unduly these rely

implied materially could our that or actual our may from included those are cause information otherwise or the SEC comments release, differ by factors Important made call. events in projected as to obligation be required discussed on revise results any update by and earnings any statements this forward-looking on this except law. to today's disclaim or We filings call,

be may earnings in included in the Chico's Relations referenced schedule A FAS this on today's our reconciliation non-GAAP GAAP morning measures Investor non-GAAP Certain to is release, posted presentation call. page.

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

Molly Langenstein

Thank being per excellent. strong These led, our operationally earnings produced across delivered all of expense product expansion which you, metrics performance four solid achieved income, strong product operating demonstrate sales We financial XXXX. morning, team's our and of results the good and obsessed, first and steadfast in fiscal power and meaningful David, customer gross three key and digital flow share. pillars strategic reflect leverage, brands results growth, digital our and margin our We commitment to cash outstanding store everyone. and

early January selling high-end brands, exceeded the higher price holiday responded expectations in end nine which EPS customers of the Across projected to exceeded quarter three all due quarter. to range $X drove the our spring the million finished full new strong in offerings that selling January performance. product and of EPS high our sales and provided fourth week patients QX the strong. in came we after than season. Actual Revenue

some of expense of cover This for line meaningful solid growth We expansion another year. increase year diluted I'll EPS leverage. by was and performance Now sales over year. $X.XX total posted XXX% bottom and margin strong with gross highlights of XX% very nearly fiscal driven the results last

operating last delivered more X.X% of or of also sales $XXX than We million year. income double

brands product innovation apparel deliver with sales oriented continued House Chico's fabrics generating fashion Market a and comparable seasonless House responded newness, solution increases Market special XX% to complete her versatile work growth posting occasion from needs and customers anywhere Our of gain. revenue dressings, exceptional overwhelmingly our with and outfits Chico's to Black product elevated comparable Black to product. XX% customers White sales to meet our building responded wear. and White

last months, for the fast According of customers XX Chico's average to years X $XXX,XXX. NPD, over XX during market House and grew income than times Market with age household Black the over White apparel of

throughout half particular of second with in Soma improved our foundations performance the strength business. the year

Customer outperform behavior our best-in-class marketing indicating We loyalty our bra long-term to power brands. panty and brand. of strategic strength the products, drove continue Those to and overall last remained customers more and innovate and continue categories year, have to offerings. the program for healthy innovative and re-launched

age up trend count X%, of per In XX% customer spend the and customers was customer increased fiscal XXXX, average younger. to continues new

debt sales the sheet X% year brands. million repaying strengthened higher down were fueled ending on in hand Fiscal all throughout our $XX unit more lean end the average cash retail the Our prior year sell-through and three $XXX year million fiscal in rates, balance with faster price year. after inventory for from XXXX. full of We inventories

our update performance brief each how on strategic a drove of you pillars last give me Let year.

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

Our our inspire. great our the in to physical and And exciting hub and stylist centers possible. knowledge information often Digital and and enthusiasm share way is our experts first of impression our sales for a stores the products brand the where most customers teach, and community drive way experience brand are bra devotion. of community content and is a

drive Finally, connect avenues. growth stylist our these social within our of expertly to customers both and can brands

sales XX% the and some XX% retail. the year. loyal and with uniquely dedicated Chico's foundation has most customers grew in by grew for digital of strong Store FAS sales a

are Our loyalty in rates. in redemption and sentiment re-launched customer XXXX expectations program continuing exceed to

through are strengthening customers these We elevated strong new adding relationships programs. customer and our already

fashion growth. that best-in-class to to we We elevated Market Chico's At product to are joy. AUR price every and higher Black solutions. obsessed, and quality our on inspire apparel focus White and apparel value sales driving delivering our paying focused elevating product appreciate each brand, demonstrating are solutions product the moving customers, offering Soma for customers confidence and beautiful both full are and nearly forward continue customers brands merchandise At House in and to and brands, are on category, that respond enhancement that offerings innovation receptive and

completing and easy pants, our and bought woven collections product to She focused fabric. Black wrinkle head the free, of care, dresses. At solutions single Black drove and our and basket style, outfits fashion, tops, and At including items, Market, Label also to mix, accessories increases climate-right both sweaters Customers House on Chico, looks innovation of year. to size. complete comfort and and grow. Sales Zenergy fit, Chico's continued with to responded and her Travelers, increasing and revenue denim toe AUR responded White instead customers throughout novelty

seasonal denim, she key versatile tops, for jackets, with Market that business fabrics pants, in At so White and Black or in Customers dresses. House looking drove throughout pieces. the to the responded our woven year, newness in dressy feminine categories, was detail casual tailoring

to four even new added dressings. customers' We We are Black our White new fabric Market assortment. our and versatile House further has which last first more year, adding and continually Fabrications options fabric innovating expanded for

we cutting Soma, make comfort edge panties, especially to sleep, in in active continue and innovation and solutions investments and bras. product At

We are her last they for we our had bra launch success woman's Bodify. as needs. month. That to changing individual of have all with Bra, proprietary Smart the that game the year's a body And remarkable measurement adjusts destination fluctuate throughout includes technology

and to revenue. year, and first digital total to Last our across brands. are sales technology customers represented digital channels XX% We company of engage leveraging deliver

the XX by XX%, Black the rose Chico's White brands customers are House we was solution wardrobe grew by three Black and Spend in-store. And are trailing we X%. and XX%. count Chico's, White four younger for years at online per Soma the Market we than The customer customer attracting over years at our built customer frequency XX total Soma. years months. to inspires flat. House Over point are was existing over at up across last XX% XX months, touch fine our and Each and grew customers, new driving digital visits to Market brands. of

us, single nurture These times engagement tools, customer, drive is growing. multi-channel styling sales MyCloset customer. channel and is digital customized X StyleConnect valuable continue the grow who spending and the to further so and tools to than more Our

for expectations engaged program order App the value are customers early app loyalty hub site our mobile engagement app. the and exceed that average indicators with month-over-month average. our higher to are downloads conversion the becoming our and are most continued driving highly than Our loyal and growing and with

customer and We AI enhancing science-based marketing. investing in driven constantly are engagement technology and talent,

continues. evolution Our digital

operationally excellent. are we last, And

estate We generating continually our delivering are cost focused supply diligently a cash and healthy flow and sales, on line. strong of bottom expenses managing real inventory, chain,

During AURs strength and freight full the basis point and improved XXX sales, costs, increases higher raw exceptional had A year, performance. materials. leverage gross of we driven price occupancy despite improvement by in in margin inbound

drive We operational sourcing, constantly and expense. improve and to our logistics reduce efficiencies strive to processes

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

P.J. performance. Now over financial P.J? to our the on update I'll you to turn call

PJ Guido

in and AUR in- sales EPS selling, quarter prior by store complemented compared Thank We diluted driven on the total an up good comparable price by you, dollar quarter X.X% year X% Fourth higher were and year. basis, average sales both $XXX and everyone. Molly, last fourth sale, $X.XX to morning, higher million of full $X.XX a online over posted of traffic.

Looking the gain. Market Black with again for at posting performer XX% a quarter the House sales comparable sales apparel leading once the X% brands, was Chico's comparable and White generating increase a

brand Soma of with showing improvement comparable sales X% fiscal we quarters the from XXXX. prior closed fourth out as posted a quarter decline

in Continued margin much resulted and AUR last active higher management stronger year. gross innovation than and inventory

reflected to compared impact of higher occupancy year. growth basis raw leverage, XX.X% the XX.X% top investments sales The to compared needed XX.X% the gross of XXX of customer other quarter year. improvement revenues. partially offset store costs. in basis airfreight, $XXX and quarter by and was deleverage million expense The point traffic, SG&A prior AUR the less totaled XX.X% higher reflected and expense, spend for Fourth margin drive or line material marketing to higher XX last points

share, full sales an the full the $X.XXX the year. we over $X.XX per year, Comparable for year of nearly the For nearly posted totaled in for EPS a prior XX% Sales billion over billion, $X.XX the increase year. XX% prior rose XXX% increase year.

basis resulting the X.X% Our gross of points $XXX than year, margin SG&A and million basis operating income XXX or more from strong XX year-over-year for doubled points performance our leverage. to expense of of sales sales expansion fiscal

of million fiscal focuses XXXX, sales from last on indication clear of We of model over growth. over the and year, operating earnings EBITDA which of $XXX also our a continued strengthening just XX% in increase generated an both

providing that In flow in us flexibility, with cash are is invest to higher the much more addition us giving fuel to working. strategies generation

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

fiscal further growth. the of capacity inclusive repaying Our and providing manage million make and of our year with and million fourth debt our last operating quarter, total repaid the million flow strong, $XX with us million $XX $XXX approximately remains ended was liquidity of credit the cash which of $XXX investments to the flexibility propel cash liquidity facility. to of cash on in position, business year, total we After

inventories well inventories disciplined year-end, in chain $XX a totaled year. demand. $XXX the or XX% global delays as to in million compared extended supply in-transit of inventories last $XXX consumer with At fiscal management reflects to related year, The million to our as align million last $XX decrease million decline

At the XX%, were turns inventories full fourth is inventory a that hand price year full of us for indicator hard were our end working clear on while down strong the X% with sell-throughs. sales up quarter, and

XXXX, XXXX building store capital we We upgrades. generated Now, spending. believe as our totaled fiscal spending e-commerce shift well cost million, investment above of stewards as of capital on and stores are platforms, Fiscal return we capital. digital capabilities $XX and our investment, capital investment a well to marketing which new let's included and in and in good

investments Our system, digital capabilities, order user in data brand of mobile experience XXXX enhancing and improving our our upgrading our applications. website the management included overall and analytical

In with X,XXX we to financial and regard store We terms. base. boutiques. Chico's, our closed we stores locations XX we we this to ended We have to estate, target and accretive Soma position, the Market original these our year to more Class up leases highly locations locations improving XX from to have with XX new real and may closed stores XXX of been Since Soma negotiate boutiques. refreshed down to of productivity White lease and has our renewed our due able year, House strengthened and most and profitability year. favorable productive XXXX, XX been our last due close standalone P&L much XX, opened Closing of underperforming additional

to going profitability believe deliver is incremental our growth fleet well forward. and right positioned sized We and

our We enhance customers will our important engage estate actively we It communities and continue to to portfolio higher brands digital have our profitability. the note real markets sales they to love that live where presence. trend much with and in to in physical store company where manage is overall our a

deliver in and to strong for will both digital stores We believe the continue elevated our company. returns investment

customer and both investment now capital directly the toward ultimately line conversion growth long incremental overall and is which Our across top driving translates channels, growth over into term. strong geared strategy traffic

sales growth Now color continued some for all increase we fiscal XX% our planning are let XXXX, on for with XXXX. fiscal me line outlook last sales our growth for On in three top year, give brands. top of

and new existing the for up expect. are both we innovation, will that uniqueness us are and We our because show customers delivering confident that customers style, quality

count. were For are Recall, originally lower due year. we Market Black sales XXXX, based the store a more modest driven locations. forecasting to first a mostly stores House store inventory on productivity, the purchase last ago fewer improving we that quarter White than This growth year than of full closed decisions is made by year planned for XX

and sales additional the into that we move with as have we balance As count. to second secured store expect year, we improve of trends quarter our receipts the align inventory

forecasting currently through price strategic lean supply occupancy selling, control lean gross on price are highly mix We continued expansion a and full cost inventories, leverage. We chain remain margin adjustments, management, cost have disciplined and structure. product expense

investments and We expenses will labor, necessary support marketing fiscal sales the XXXX store in and growth. customer make still in to other further

continue in We and to revenue our channels. prudent all conversion, will growth drive make investments that business across customer traffic,

inclusive capital are expected expenditures $XX for planned Our investments. $XX and cloud to XXXX between million million fiscal total of based

connected traffic marketing digital digital year drive platform years this our to This and will used The come. digital our out to to be and positioning, our majority conversion and will our of for channels. tailwinds commerce building investment strengthen create across first seamlessly augmenting further systems investment

to also in approximately this upgrade White House Market expect the We Chico's XX boutiques year. Black

we to addition, up In boutiques XX targeting year. this are Soma new

The are the generate can focused highest opening returns. real market believe in we and locations we estate where stores we on tightened has

financial to As our cash expect EBITDA base position and to strengthen. grow, our flow we continue

allow In base EBITDA permitting pressure investment our to growth. us investments, plan expect addition profitable funding cash will are seeing future we Growing support strong SG&A, and to in strategic and strategic flow macroeconomic uncertain ongoing navigate some ongoing on is flow our the to cash environment. term long we although invest to us

the diluted for to in total share. million. sales per to of a to expect in XX.X% as be and XX.X% percent to SG&A XX.X% approximately $X.XX $XXX margin the to of as tax the rate of we that, effective sales So sales of rate of quarter, million first XX% $XXX to be a range, range. with EPS percent an Gross XX.X% $X.XX

be margin year year, percent to to of SG&A to $X.XX to tax a $X.XX billion as to be sales per XX.X% a full of XX.X% sales is in billion. XX.X% approximately range. the diluted and of we XX% rate of rate EPS effective total expect $X.XX which the For XXXX, Gross share. XX-week $X.XX of a percent range, for sales the to in an XX% as

over shareholder long we to are towards progress. closing, our keeping to achieving our now both In in growth on We posted to and term. ability value continue plans create forward confident and work our the look you

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

Operator

Thank you.

We comes The will first the [Operator begin question-and-answer session. Please now Our Group. ahead. Instructions] Telsey question from from Dana go Telsey

Dana Telsey

congratulations on Good nice progress. and morning, everyone the

and about holiday As Market, the in of Was you tougher which how any forward? you the release, had the did in very see House think strong. was by going Black it promotions in bit What level improvement January of there you're a brand? mentioned call in little season sounds January and thinking I like White the

the those the and for investments marketing were or you Thank just breaks out and you investments, of how it then tech year you And spend? about talking this investments some planning highlight the others on how you. you're just P.J., SG&A think marketing can where

Molly Langenstein

the Dana, January good strength you, Thank brands. morning. see and in three did We across

you categories asked December shared. House to tops, saw in we a the dresses. knits needed also and business Specifically, what clean back to care went and wovens, We responding We and including to January. and Market we we and White pop we in jackets, came into took customer did responding inventories with career the January Black in about see in as for of in

and results. a the was pleased that that, very in believe time we're point we So with

as And in our then out well moved spring as our to we We strength solution customers Chico's holiday as see categories. period. with delivered deliveries of Soma, based time responding continue we a to in

tummy in continue We some categories new newness We (ph) to had invest categories in some vanishing like the of bras. and shapewear new a launches. tong

regular customer price, we're that respond spring about innovation. out saw season the to how and starts to excited So the product really with we AUR we the higher more and

relates of on about As directly question to not terms a we the promotion. continue in backwards of level to be going promotion, steadfast it

loyalty consumers throughout going program their spend to our tier to is we're their front and we to that move strategy the year. and based level continue upon forward leverage entice on Our as at

PJ Guido

And and majority competitive. DC invest file continuing the that drive Dana, pursuant conversion as we we're remain then, SG&A continue The IT balance is mentioned, customer the incremental marketing as do deleverage customer projects long-term of investment in and to XXXX and due ultimately we've new move the elevated an into to inflation be showing, will and to labor to XXXX, drive cost growth. our we're and business to for on then related traffic needing plan. Store in be build our to us SG&A due modest And XXXX. labor is which through will our to investment

Dana Telsey

Got moderating an looking in -- that the year? raw through go go you're as of benefit of much any material is offset the it. you at And freight terms costs, then we the there year? what's just with And of through as the costs, how that how

PJ Guido

Yeah. that as to customers and allows will the remain slight chain will want pipeline positive impact price that's material outbound we is is to for but slightly are investment year to The keep said, ultimately shipping us an supply -- so freight year, costs raw And so be higher. the in an a increase. Inbound of but believe fabrics, innovation offset freight are for innovative drive AUR at net forecast. elevated that's there. in balance that invest that for costs we for our this There's least down you coming costs then what we

Dana Telsey

for would the no outlook guide? thing, change you given that XXXX your last I outlook assume XXXX, gave that to on one just And that

PJ Guido

No change, correct.

Dana Telsey

Thank you.

Molly Langenstein

Thanks, Dana.

Operator

ahead. Tracker. Shapiro Marni question comes go Our from Please Retail of next

Marni Shapiro

sorry, to through outstanding ran great the year. fantastic. closings new openings store on end and looked -- stores Hey, have Could The a the year guys. and the I'm start Congratulations you really an P.J., to quickly. so you

you were did year? or going think each XX upgrade many said you you XX how open Soma total? stores House, and XX you that White I to would this is Chico's And say

PJ Guido

So total. there's the XX upgrade,

Marni Shapiro

Okay.

PJ Guido

And function and expected in our had the rents. Soma’s returns The And stores XX for on XX disciplined generating getting real more is competitive. just targeting we is estate annually. to new it's to being more originally a there approach we up rents, pressure slowdown and of our the us is, reason in are market

So there's real we estate prudent to is we're want what -- make on sure the doing front.

Marni Shapiro

And Great. The upgrades on on I'm Black Market. – White think store, that. White the then new a I just already follow-up new your House, that, upgrades the the out outside of seeing House the there

along these As don't some modernizing anything want to in you're else upgrades a go this doing it of Are look. anything else physical upgrade? space to or store doing Are wise? changing you with branding and [indiscernible] just really is you the I

Molly Langenstein

Yeah. a Thank Marni. you, It's rolling change.

branding actually hang been We the over brands last inner making changes tags the two across beauty years. have to and

the on only forward move to the product, we to and continue not you'll the the So evolution as through environment. of that see but way store all

about excited we're to come. what So

Marni Shapiro

bit she coming you're down great. she It's just It in there in and Is one the brands? this Is then markedly customer? this anything little jump younger buying on more that customer that fashion question And on ask getting full a customer? looks quick price? cut, significant Just about Is first? different pretty a Chico's. can into I

Molly Langenstein

Yeah.

entry First in is we solution our the customers, three brands our terms it's find of of across our that all, point. new

marquee customers. to be use so new that to really our able And communicate to as we

service are she build upon to stores and out this how how have Second, head have and wardrobe. unbelievable can catered other buying that's our and based we our that is toe that finding as to the is in primarily what we is we her customer customers really

when we're discovered do how really our as with she kept So just her we brands this sharing us. talking to amazing and are customer others

Marni Shapiro

luck leave I'll can spring. else for That's of for guys. somebody it offline. Thanks, take Best fantastic. it

PJ Guido

Thanks, Marni.

Molly Langenstein

you, Marni. Thank

Operator

Molly Thank session. back for call like you. closing comments. This Langenstein I turn our over would question-and-answer to concludes to the

Molly Langenstein

team Thank want for terrific I another you. entire year. thank to our

our In a is our January, based time. our speaking build Our are first fueling results on we pillars and strategy for conference during we're will believe you forward our demonstrate off June. quarter with XXXX fiscal that great results to and strategy XXXX, and to your start. we you standout call on Thank We interest in again working. look our

Operator

concluded. has Conference now presentation. you Thank today's attending for

may disconnect. You now

Chico's Fas (CHS) 28 Feb 232022 Q4 Earnings call transcript