Financial Data and Key Metrics Changes - The company reported adjusted earnings per diluted share of $0.28, down from $0.34 in the same quarter last year [19] - Total sales for the quarter were $545 million, a decrease of 2.4% from the previous year, with a comparable sales decline of 3% [25] - Gross margin was 39.8%, down from 41.4% last year, indicating a normalized margin with steady inventory flow [26] Business Line Data and Key Metrics Changes - Soma experienced a net sales increase of 2.1% and a comparable sales decline of 0.5%, marking a sequential improvement over the last four quarters [5][25] - Chico's saw a 2.5% decline in comparable sales, while White House Black Market's comparable sales fell 5.7%, both on top of significant two-year stacked growth [7][25] - Average dollar sale and units per transaction increased across all brands, although transaction count decreased [25] Market Data and Key Metrics Changes - The company gained market share among customers aged 45+ with household incomes over $100,000, with Soma significantly outperforming the market in the same demographic for customers aged 35+ [8] - Total customer count grew by 1% over the past 12 months, with spend per customer increasing by 3% [11] Company Strategy and Development Direction - The company is focused on being customer-led, utilizing stores, digital, and social platforms to enhance customer experience and drive sales growth [10] - The strategic pillars include being product-obsessed, digital-first, and operationally excellent, with ongoing investments in technology and marketing [15][18] - The company plans to replatform its websites to improve customer experience and conversion rates [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving trends in the second half of the year, particularly in response to fresh fall assortments [22][23] - The company anticipates flat to low single-digit revenue growth for fiscal 2023, with expectations for a rebound in the fourth quarter [22][34] - Management highlighted the importance of controlling inventory assortments and expenses to navigate the changing environment [23] Other Important Information - The company ended the quarter with $151 million in cash and total liquidity of $386 million, with only $24 million in debt [9][27] - Inventory levels were down 11%, with on-hand inventory down 0.3%, indicating a healthy position entering the second half of the year [9][31] Q&A Session Summary Question: Can you expand on inventory and its implications for the fourth quarter? - Management noted that total inventory was down 11%, with fresh fall inventories up 12%, indicating a healthy position for sales in the upcoming quarter [31] Question: What are the trends in the outlet business and customer reactivation? - Management reported a rebound in outlet store performance, with positive foot traffic and conversion, while customer reactivation efforts have been strong [38] Question: How is Soma performing and what are the expectations for the back half of the year? - Management expressed optimism about Soma's performance, particularly in bras and sleepwear, with a balanced inventory position for the upcoming season [40][47] Question: What is the promotional environment like in the intimates business? - Management indicated a strategic approach to promotions, focusing on hard markdowns rather than widespread discounts, which has helped maintain market share [57][58] Question: Is there a trend back towards casual wear? - Management clarified that the trend is more about proportional changes rather than a shift towards casual or dressy, emphasizing versatility in wardrobe choices [59][61]
Chico’s FAS(CHS) - 2023 Q2 - Earnings Call Transcript