CHS - Earnings call 1 2024 | Chico's Fas, Inc.

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Operator

Welcome to the Chico's FAS First Quarter 2023 Conference Call and Webcast. [Operator Instructions] Please note, this call is being recorded.

I would now like to turn the call over to the company's Head of Investor Relations, Julie MacMedan. Ms. MacMedan, please go ahead.

Julie MacMedan

to Webcast. FAS welcome Conference Quarter and and Call morning, the First Chico's XXXX Good

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

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

on not statements. unduly rely these should You

or forward-looking events or factors are to materially this actual that Important earnings projected our could call. from filings comments today's implied in results by SEC and statements cause included those our made differ release, the on

referenced We this today's to GAAP reconciliation to call FAS update required morning call. obligation schedule disclaim may non-GAAP in page. our Chico's the is as this revise Investor be be posted otherwise any Relations non-GAAP any earnings on on except on Certain presentation by A information discussed law. included or may measures

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

Molly Langenstein

Julie, you, commitment to operating solid of our and We underscoring and Operationally Digital outstanding performance, and Obsessed; four execution Excellent. another Thank strategic Product and everyone. earnings being income pillars, our quarter First; demonstrating of good morning, Customer-led; delivered

outlook, First expense exceeded year quarter driven and last earnings performance by management. and per margin our gross share disciplined

For and share. all healthy. average remained year-over-year, three customer we brands, gained market full Spend unit up per price sales and retail was

growth of is top outsized celebrating brand, Chico's largest continued on its XXth comparable anniversary, X.X% our growth. sales performance, XX% Chico's, We for outstanding last demonstrated of positioned believe year. posting

to declined through sales prior trends White continued Black while fashion strong as Market demand. quickly sales improve we from sold customer quarters Soma to inventories due House

margin of led quarter. another quarter for expansion, income line strong results. cover We operating me meaningful some highlights bottom and the which Let to delivered gross

sales, over basis increased Operating $X.XX. improving income over year and year EPS last to of points XX% diluted last XXX to net XX% grew

stack of of comparable Our million X-year a sales and XX%. sales powerful portfolio together increase $XXX delivered total

the way to innovation led solution-oriented complete Chico's, brand, products, as responded and largest Our outfits. building customers

comparable X XXX over sales had and has in improving first the over year-over-year last with profitability improvement discipline quarter. drove points and performance Soma year's year's fourth quarter. last Innovation first quarters quarter of AUR double-digit growth sequential basis

and long-term panty indicating and the for brand. strength best-in-class outperform last bra year, continued the offering to power Our overall of

White X% were Customers House XX% basis. inventory newness quarter. a stack responded selling in our fashion Market Black the fabric, to quickly comparable our sales fashion and and fell levels up innovation complete during X-year outfits, down building on

with should by We half drive expect trend which back line demand to early in fall, have a inventory change. more

take for months, to this And White Circana over continued well. key as brands the fastest-growing XX during House Our gained market customers apparel the was share brand incomes household over to with market share. Market XX According in $XXX,XXX. Black Chico's last

customers share During household period, the with with Soma same over market incomes over XX gained $XXX,XXX.

Innovative impactful customers products, targeted to loyalty programs drove more marketing and our brands. our

brands a prior all value. long-term up, pricing count the health mid-single multichannel each total customer across is brand. our marketing innovation since of same opportunity customer customer quality the up spend were per spend file, than and XXXX, fashion This was for customer per Over count customer months, and and indicating XX and digits a customer increased on meaningfully has rather newness focused demonstrating and that and

share balance We cash million quarter. sheet, second up nearly and repaying the $XXX $XX million $XX further through of debt in the entering inventory We ended shareholders repurchases. with the with quarter returning positioned to well after quarter X%, customer-facing million ending our strengthened

update brief each a you of drove pillars our give on me how first quarter strategic Let results.

through We three powerful with customers are driving and growth connecting our customer-led, platforms. long-term

our stylists and our enthusiasm, share brand loyalty. experts driving bra where product, and they showcase centers, sales and community and their stores, physical Our knowledge

our often expertly social the hub brands Digital our connect the to and brand, drive customers offering and channels. within and stylists growth for impression both can our product is first our of

first XX health the was of up per X%. our grew customer brands. count X%, customer overall months and X%, Spend the quarter, count customer ended the grew with demonstrating For the multichannel

number us customers have for to very also each pipeline have This customer that of significant reactivated with. within a in months demand our to a XX us are shopped not for our back more engage file means of We and coming captive brands. that with segment the

continued programs, exceed customer loyalty summer, expectations last launched rates. sentiment and to we in Our redemption

on and focused confidence and customers, Chico's, our obsessed, House product solutions to are that and merchandise offering beautiful White Soma Black best-in-class of joy. continual innovation delivering Market We a inspire elevated, pipeline

full All is higher AUR. activity, and lower price bigger promotional selling, more delivering of this basket sizes

all brands, enhancements product value and they quality, fashion Customers the to moving that solution-oriented receptive products, appreciate to respond continued and demonstrating to customers higher three and for forward. At our and are are brand paying solutions. innovation elevated

product head-to-toe new and and are fit, responded At bottoms our attracting newness driving revenue comfort in expanded her innovation She look and customers proportions new including fashion, on and Zenergy with wrinkle-free, Chico's, easy in care, fabric. Customers focused we dresses, right to increases Travelers and solutions. tops completing our through with collection. climate

with customers White clothing, polished newness look. fabric layering and tops casual At Market, easy fluid, responded new both and in bottoms and jackets to bottoms, for Black proportions House in paired a

our fashion favorably Our offerings. to customers responded

much the quarter. So fact, of sold fashion well, our through inventory in during we

the with offering by the rebalance fashion the the our goal enhancing to half of second complete are We year.

newness responded of launch bras Vanishing sizes. At collections and expanded of sales and and categories last the our assortment to included in Bodify and of that year. expanded ahead our stretch and a range including Soma, customers cup lace unlined This bra drove these And wider panties. bra panty

healthier lower inventory, Soma of While margins at of year. levels markdown to this we due declined significantly sleepwear sales had

technology and and to engage to our are digital-first, leveraging channels across We customers deliver brands.

company sales XX For revenues. months, XX% total the last of digital represented

Over total up X%; Market X%. trailing and was XX down count was House the X%; Black was Chico's months, was White up X%. customer up Soma

younger House Market; at X inspires and and existing mobile find are brands. our Soma. wardrobe attracting at build touch our our customized and The years customers customer including tool, across solutions MyCloset point, brands Connect and by Each styling Chico's; years at app, Style for to years than to new Black customers White digital digital XX the we X are

leverage more continue We'll digital to grow multichannel Xx tools customers. the single-channel engagement, than spend and our drive to program enhance customer our loyalty We customer.

experience We recommendations, enhance customer us product and attribution our continue providing to areas service. our customers will digital better This by digital as and personalization allow search, serve best-in-class marketing, such management. customizing order user and enhancing to

bottom we and healthy a generating real excellent, And diligently chain, managing operationally expenses sales, focusing cash line. on supply finally, inventory, estate, and delivering are strong of constantly cost our flow

margin operational quarter, gross lower freight our had and drive we performance continually driven reduce logistics outstanding and to we and by AURs, higher sourcing, areas. in the efficiencies expenses and For work

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

Patrick Guido

margin you, to by Thank outstanding demonstrates an our marked solid portfolio. performance Molly, gross great variability sales good quarter brand topline environment and morning, We and complemented active posted overall to that expense and everyone. uncertain management by operating within improvement, another adapt flexibility our

million last For a quarter, last over X.X% the strong and very from we $X.XX a of $X.XX of on Sales EPS XXXX. a compared year down basis. down $XXX X% were year, generated comparable sales increase XX% diluted to

our and stores both three low existing demand single For brands very healthy up new This digits customers. indicates that for traffic. in strong sales on remain performance and were the outpaced of quarter, and digital all

was have a This did more and to end through more Traffic we at sensitive and to locations Chico's strong, March impact price-conscious still White decline quarter. late a continuing in the also the Market House that outlet for material an frontline did Starting traffic in April, conditions. stores economic the our our had customer, and for on inconsistent sales a and but of experience impact Black cater quarter. at sales

having However, complement strength sales. store another. two not brand the platform lower portfolio, having diversified digital demonstrates but of our the strong only that channels further our This one power offset of helped also

to see continue which higher to across store the sales quarter, all We supported relative and offset digital. three brands sales throughout lower also total AUR

sales call XX% first that we posted quarter. would a in last out I year's comparable increase

level So our sales healthy. overall of remains

for quarter, leading was the increase. posting Chico's X.X% brands, a the at sales comparable performer Looking the

Soma quarters. the continued improvement showing posted a comparable brand quarter trend a the X sales over decline first of with X.X%, last sales comp

White to House last occupancy selling at Gross primarily compared year. up through to to lower partially freight significant Gross year. reflected margin X% offset costs, by margin proof an substantially last margin another compared raw expense point sales and point trend comparable than fashion was XX% planned. was costs. faster year, also material upward AUR higher XX.X% is that higher due inventory fell on corporate Black a and over Soma from benefited where Soma The increase last Market XXX basis savings, improvement

year. prior SG&A XX.X% XX.X% basis of deleverage expenses spend points. in resulting totaled Year-over-year essentially dollar XX to the or flat, was sales modest in SG&A compared of million $XXX

in We and are in investing and and managing expenses to disciplined areas strategically productivity thoughtful and growth. like growth, long-term while remain store customer marketing store support topline will payroll lean

SG&A was brands income or income expense three margin strong of represented and XX.X%, operating drive driven growth. contributed million double-digit over of current operating EPS XX% end improvement which expansion to The by XXX basis consolidated helping sales, continued rate our outlook below the points well year low of control. of year, All of and last to gross $XX

and to cash indicative of of flow support last for strong million EBITDA strategic year, the growth. plan quarter, to XX% investment ongoing in $XX generated an our We increase ability over our generate

Now and to rock sheet balance let's overall financial solid. which is our turn strength,

us total Our growth make remains investments manage cash the propel shareholders. excess and to providing liquidity to with flow further cash operating strong, our business, to and return cash position, flexibility

basis a an debt, X.Xx. ratio quarter we year. first million by of the repaid $XX During XX-month on our brings quarter, $XX just debt-to-EBITDA last trailing This our the since balance additional million of to reducing

In on million and with liquidity ended cash of After of to includes credit committed through multiyear we buybacks. facility. addition, share this, $XX million, which $XXX shareholders our we nearly the approximately still all total capacity $XXX million returned quarter

were that lower primarily in chain up XX% inventories. $XXX reflects a At return significantly quarter pacing with X% year. customer-facing conditions normalized totaled decline inventories last $XXX end, Inventories in-transit supply compared The to sales. million to million resulted generally

renewed with and to shift position, to has deliver to fleet our our In X been our real in growth the highly is locations And new forward. optimize estate. more negotiate and Closing leases financial closed profitability accretive been quarter desirable to first with let's We positioned with incremental strengthened going our quarter, and our to boutiques. X,XXX longer-term believe P&L. portfolio, well locations. terms stores due rightsized and strategy favorable more able the Now our focus in to consistent we we've

year, portfolio open may we the upgrade up to will continue This right We actively if to opportunities to and XX store boutiques, approximately to manage enhance company boutiques and Chico's overall develop. expect we our profitability. high-return XX Soma

are actively for and far We have so looking additional identified X stores locations.

provide me for our XXXX. sales for let Now topline XXXX. our we last top fiscal planning XX% for total company low are of increased On growth updated outlook year, single-digit fiscal

traffic digital additional consistency. based sales some expect and on in have incorporated channel our to frontline remain strong store and outlet We traffic and and recent risk

portfolio, at improvement continued expect and Chico's we Soma. Looking continued the strength from brand in

we long-term fiscal XXXX our that second Black in growth However, Market Market brand. are X back track we to target in brand House White of so growth and the year. Black meet recalibrating on we expect half demand year, the achieved its be revenue White in sales to were X-year for the for the trajectory that just House growing exceptional

our and to long-term remain in We expense expect to flow will cash invest manage as strong growth plan. continue we

prudent make growth will for our traffic, investments channels come. and conversion, We also business years will across customer to all many revenues in drive that

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

remain strong, EBITDA from position financial our expect our As and very flow strengthen here. to we only cash

us any to over funding In addition allow that will cash to may the quarters. flow coming strategic shock economic investments, arise navigate

$X.XX $XXX and we approximately million; and be of expect per to of million rate to effective EPS XX% $XXX $X.XX in So of for XX%; gross rate the margin range; rate to in second quarter, share. SG&A XX% tax to the sales diluted to be to range; to XX% XX.X% XX.X% total

which billion approximately $X.XX per gross share. of in an to and XX XX.X% the sales now to the XX% rate of to $X.XX to range; EPS margin be diluted has total in XX.X% XX.X% tax of $X.XX the For rate range; weeks, SG&A year, effective XX%; $X.XX to full expect we to billion; rate be

environment, Looking further on customer ability react a optimistic strong and dynamic in our demand ahead, cautiously by we sheet. this remain to supported balance

the lean growth We and over digital, investments both inventories are strategic long technology our initiatives line bottom on progressing managing stores and topline and to in key term. deliver and

our progress. on We you keeping look to forward posted

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

Operator

question from [Operator Telsey Instructions] from Telsey Group. comes Our first Dana the

Dana Telsey

are of are? the color brand? impact the forward? of on each consumer Can the by the how you in the the to for given you're percentage exiting does assortment [indiscernible] state you levels brand? margin? going planning comments inventory the seeing? or And quarter, expect the brand. Chico's overall how what on What give second reception any the the fashion of into solid And How And progress Nice you see the promotional side, that fashion do quarter

Molly Langenstein

Thank Make sure all got these. you, Dana. I of three that

I'm just three going were to brands. sales reiterating had healthy. price quarter start all an with we that Full for outstanding

one our share up Our gained strategy all we AUR proof working. in in our market each is three was and that points brands, of brands,

was you by X were first we X%, When that X%; and per count And by What less the look ]. a now quarter. Chico's X%. look even promotional and the X%; count in our quarter, as increased at one [ ] grew the grew basis year customers was positive very with done our our the did customer last [ what running at spend the X% positive. by right Soma brand. not XX-month brand by with count customer X for in because being customer their we're this though the the down up spend nearly multichannel stay that we And up total And customer seeing customer is for House in this drove White

is it has than much in file healthier been overall, customer past. our the So

'XX from file 'XX. to customer spend to is 'XX customer. us point data of spend are their that on we per like quarter customer time, dug at when seeing to into that's per I'd look over to year-over-year customer Another 'XX each brand 'XX the to we the that every reference we growing When to coming segment first in

were So on in promotionality the we dependent margins and full less is is the customer is why less quarter. quarter, which we price, buying strong such the and she delivered promotional for

exiting was and -- Dana? inventory. about think was of was what I our question -- Is related second the in to, that Your quarter terms plan that it

Dana Telsey

Yes, exactly.

Molly Langenstein

not position. do not our in do have a Okay. our liability We We're confident inventory have inventories. in -- we believe any we

year's very facing of Our lean. is very Customer X%. inventory up are lean top on last

health White able continued the add have in brands We we to all brands. in continue is appropriate of . And assortment, amount and brand opportunity particular, have in three basics and the the an Soma. of opportunity where three more the be to then into manage to profitability more Health and sleepwear the to fashion to

break assortment your was to the be forward. going where you which percent fashion third that move question that's we down, and When about as

in customer buys apparel Our both outfits. brands complete

corrected the -- -- fashion starting and her complete that year. the need that of half we in be That's inventory next will basics position we back for where basics of fuel And of opportunity by White to this core So the the rebalanced the and in in particular. to in believe stability complements House we that outfit. we see the the have that

Operator

next The Riley from comes Jeff B. question Financial. from Lick

Jeffrey Lick

were gross of how better the if in just the you there? basis XXXX. QX you're through rest of or I speak was margins gross your I to XXXX. take, than margin. I looks merchandise of but or you year, X,XXX flow looking that thinking It the your quarter. we -- gross this that on like margin kind probably than could know wondering give what just don't points and Great endorse in as relative into sustainability your statistic, I at I'm back about you kind was to margin wondering you're of

Patrick Guido

one. Yes, PJ. take that Jeff, I'll it's

is gross strong our specifically forward XXX higher cost. over average So is always the first AUR. up on AUR in QX, off, benefit point we on saw And fundamentals. margin algorithm a ensure unit that to basis going outpaces that And

to we to forward. keep And expect so And again, QX. AUR healthy growth continue elevated going AUR in in

We in raw while. for been costs embedded have also gross have a margin that seen higher material

costs, I will down which more inbound Now offset that say than freight have that. come have

continue expect remainder the the that to for also relationship of year. And we

So higher on is so management, the lower over points offset expense. XX costs, raw that's expense we And embedded cost freight leverage structure generated costs. material just good balance corporate gross margin. of in in basis by our then And leveraging QX

the which and big a is So term, margin those our growing occupancy gross leveraging over are puts takes. costs, the XXXX. why But long reason store that also we're on AUR. and focused We're really up since on is also productivity focused

Jeffrey Lick

Just the if pandemic Soma. the I may, most it is one had follow-up, on probably that few Soma quick noise the think, a Molly, years. obviously, brand, I last in

data, kind embedded as curious just kind as sizzle to you can of in optimistic the your if at elaborate me you're maybe in to some I look thoughts you you of little Soma. gave elaborate. script, if little you why if but a the a kind is much just of that give story the more, in know So Soma of the of you some Chico's of I'm maybe can more.

Molly Langenstein

Jeff. Absolutely,

capture. because quarter, our of for lot core a go and gained components performance and And the And space you in bras at of for trend is when we -- full are the Soma. we for brand we we this encouraged forward through Soma the as to We the turn at balance remain the year. we panties. the to this white bullish And to positive segment market not move by as the continued of each consistently to able on expect be look us . We look improvement is do And more year. of crowded. long-term have that there opportunities out

pipeline of and a the of you repeat brand. consumers of loyalty So brand is so are we into lace. consumers. that you fueling in quarter, the the long-term of we get customers, had is front online That where this new in bras And get putting our have that innovation constantly stretch health is, been this indicator of to there the the big newness me, we

Vanishing cup franchise We our had our Bodify and in expanded in also abandoned sizes collection.

us us innovation important you of that and panty on fuel is growing pipeline that journey to So consumer. continue our menu, to that and customer repeat will see file to continue expanding so which bra be and and the

this The there gross that lean last other by segment we Jeff, business, have improvement promotion is that a exists the significant thing to a us AUR and total very highly very, to confidence, in of promotional margin that being environment gives in were able compared on out year. very

So the brand is to of good very the pivot overall health a and able profitability for to in us growth. to situation be

Operator

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

Molly Langenstein

you. Thank

IR I enjoy to very to new Julie pleased wealth with want us MacMedan know of sector, I within team Investor our to our the and analyst Head the community a Before close, engaging of She welcome experience her. note, to with comes investor we and retail Relations. as we're will

We be us will tell at great it. Julie have Chico's, helping instrumental to and amplify story a to

So welcome, Julie.

into team company clear for customer-led; the believe excellent profitable path operationally organization obsessed; we powerful digital first; a brands transformed product a Our has have that three with growth.

enhance sheet confident performance, our value to ability are term. meaningful and shareholder in our the strengthen our over long We generate balance operating further

call. for interest forward again your Thank second with We during and quarter conference to our speaking time. you look you

Operator

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

You now may disconnect.

Chico's Fas (CHS) 6 Jun 232024 Q1 Earnings call transcript