JOANN, Inc.

Welcome to the first quarter of fiscal 2022 earnings call for Joann Incorporated. My name is Adrienne and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question and answer session. During the question and answer session, if you have a question, please press star then 1 on your touchtone phone. Please note this conference is being recorded. I'll now turn the call over to Ajay Jain, Director of Investor Relations. You may begin.

Thank you, operator, and good afternoon. I would like to remind everyone that comments made today may include forward-looking statements, which are subject to significant risks and uncertainties that could cause the company's actual results to differ materially from management's current expectations. These statements speak as of today, and the company undertakes no obligation to update or revise any forward-looking statement to reflect subsequent events, new information, or future circumstances. Please review the cautionary statements and risk factors contained in the company's earnings press release and recent filings with the SEC. During the call today, management may refer to certain non-GAAP financial measures. A reconciliation between the GAAP and non-GAAP financial measures can be found in the company's earnings press release, which was filed with the SEC today and posted to the Investor Relations section of Joanne's website at investors.joanne.com. On the call today from Joanne is Wade Nielsen. Mickelon, President and Chief Executive Officer, and Matt Sues, Chief Financial Officer. I will now turn the call over to Wade Mickelon. Wade?

Good afternoon, and thank you for joining us today. I would be remiss if I didn't start by welcoming A.J. Jane to the Joann team. A.J. will be leading our investor relations efforts and is an extremely talented leader with an extensive background in the financial markets. I know you will really enjoy getting to know him as we share the Joann story to current and potential stakeholders. Relatedly, it's truly gratifying to be part of Joanne's return to the public equity markets. Many of you may already be familiar with our company's history going back more than 75 years from its humble origins in a single location shop in Cleveland to what has become the nation's largest fabric and crafts retailer. For those who are new to our story, at Joanne, our mission is to inspire the great spirit in each of us with a strong legacy as the nation's category leader in sewing. We are also one of the fastest growing retailers in the arts and crafts category with a robust omnichannel platform. Our vision is to be the inspirational leader that helps everyone find their happy place through superior assortments, strong merchandising execution, and a relentless focus on customer service and experience. Our first full quarter as a public company was a successful one and exceeded our internal expectations. Our sales trends remained strong, growing at 15% over last year's first quarter, with that strength spread broadly across our merchandise categories, customer segments, channels, and geographies. We also drove gross margin expansion and controlled expenses to increase net income to $15.1 million and expand adjusted EBITDA margins by 570 basis points to 10% of sales, resulting in a $35.8 million or 165% increase in adjusted EBITDA versus last year's first quarter. While Matt will provide more detail on our financial performance, I want to also briefly highlight our momentum in debt reduction over the past year. Driven by our many balance sheet initiatives and $77 million in net proceeds from our recent IPO, we've reduced our long-term net debt by $570 million from the same period last year to $760 million at the end of our latest quarter. And we anticipate further debt reduction to a level of $600 to $650 million by the end of fiscal 2022. Over the past several years, we've been on a journey to truly transform Joanne and define a differentiated customer experience. that will lead to sustainable growth and value creation. While the pandemic dealt all retailers, including Joann, many challenges, over the past several years, we've been laying the foundation to elevate the Joann experience across several key initiatives. For us, the pandemic crisis was the intersection of opportunity, meaning preparation, and this in turn has made us one of the fastest growing store and online retailers over the past year. Our initiative to refresh our store base continues to show enormous promise as we are literally stepping out of the traditional sewing arts and crafts space into one that is future relevant and far more experiential. We believe the impressive top line and bottom line lifts we are experiencing in large part is because for our many customers, we truly are their Disneyland, the place they go to be inspired to connect and to create. We believe that our extremely strong net promoter scores further validate our success in driving repeat visits and attracting new customers. When we get it right, we expand share of wallet with traditional customers and attract new customers as well. As it relates to our real estate initiatives, we are now beyond the pilot phase of our store renovation program and are ramping to the execution phase. In this new phase, we will be significantly enhancing our assortments and improving our customer experience across the vast majority of Joann stores over the next 7 to 10 years. and are targeting a four-year overall payback on total capital and project expenses invested. It's part of our store refresh program. We'll also do a significant number of relocations as part of the overall real estate strategy. We further reinforce our relationship with our customers through our data-driven digital capabilities. Customers can interact with our brand whenever and however they want. Customers connect with us through our newly redesigned mobile-first website, joann.com, and our widely used mobile application that has generated more than 12 million downloads to date. These points of differentiation are reinforced by our knowledgeable, friendly, and trusted team members, a significant number of whom are sewing and craft enthusiasts, who offer a service-oriented experience for our customers that we believe cannot be replicated by mass retailers or pure play online retailers. We have invested heavily in our Omni capabilities over the past several years, and this too has not gone unnoticed by our customers. In fact, Joanne was recently recognized as the number one fastest growing e-commerce retailer among a field of 1,000 by Digital Commerce 360 for the year 2021. And while we greatly value our 855 stores with nearly 100% of our stores cash flow positive, we continue to robustly invest in our rapidly growing, best-in-class, omni-channel business in which we serve our customers in a differentiated manner by offering several convenient fulfillment options, including BOPIS, curbside pickup, and ship-to-home offerings. Essentially, we never want to give our customers a reason to leave Joanne's ecosystem. Our omnichannel platform has now achieved significant scale with over a half a billion sales in the past fiscal year, with 70% of sales fulfilled directly by the physical store location and roughly 40% either picked up in-store or at curbside. In the latest quarter, omnichannel contributed approximately 13% of our net revenue compared to 4% in the same period last year. Importantly, our Omni platform is highly profitable and leverages central and third-party capabilities, as well as our efficient in-store fulfillment network. We are currently investing in additional fulfillment capability that will support both Omni growth and our overall supply chain network. We expect this additional fulfillment capability to ramp up throughout the fiscal year and be fully complete by spring of 2022. Our ability to effectively market to our customers is another critical component of our business success. We've leveraged our robust CRM data to segment and target customers, allowing us to be relevant and further drive customer engagement. We tier our customers based on total sales volume and frequency of purchase. In the latest quarter, roughly one-third of comparable store sales were generated by our top 3 million customers. These best customers shop at a high frequency and contribute strongly to our positive gross margin trends. Our recent success is also being driven by new customers. We also shop at a high frequency and generate strong average ticket size. Based on our customer segmentation, newer customers account for the second highest rate of sales growth and sales contribution across our customer tiers. Why have we seen this broad-based customer success? Well, we believe it's because we appeal to all skill levels. Whether you're a novice or an expert, we have an unparalleled overall assortment, most of which cannot be directly cross-shopped. And our team members serve as true, friendly, clever allies. including offering a variety of classes and services that help our customers on their sewing or crafting journey. We feel that the competitive backdrop remains favorable to Joanne, as evidenced by her continued market share gains and strong gross margin trends in the latest quarter. We are the leader in the vibrant sewing category with a 33% market share, and we are rapidly growing in the other half of our business, which includes arts and crafts, seasonal, and decor. Underlying this momentum is the fact that approximately 25% of our customers make to including on platforms such as Etsy, Shopify, and eBay, and those market exchanges continue to grow. These customers depend on us to provide the supplies that they need at the right price so they can operate their own successful and profitable businesses. Encouragingly, related favorable trends, including Joanne's sales of both sewing and crafting machines, which have also been growing, and even more so in the past year. These machine sales provide a good foundation for the business moving forward as the follow-on sales for these customers is significant. With sewing now reaching an entirely new, younger customer demographic, and based on the ongoing technical innovation across the craft category, we believe that the rise of technology combined with the coolness factor, when one can customize, personalize, share, or even sell, will be a major driver in our industry and our company for many years to come. We also have a series of several exciting growth initiatives in process, which we believe will allow us to tap into new and lucrative markets domestically and abroad. And I'll be sharing more about these over time during subsequent calls. While there are many things to feel great about, we remain vigilant on potential risks and ways to mitigate. Inflation is certainly a risk, but within that, the largest issue that we are encountering are in the area of general supply chain disruptions and increases in costs, particularly ocean freight. That said, for Q1, we delivered ahead of our internal plan for the fiscal 22, and for fiscal 22, we believe we should be able to deliver on the plan for the balance of the year. where these additional supply chain costs should be able to be offset by the continued robust product margin expansion. In summary, our strong first quarter results should set the foundation for exciting year ahead as a newly public company. Our team members remain true to our mission and vision to inspire creativity in ourselves and our customers, and to help our customers find their happy place. The Joann leadership team has never been more enthusiastic about our future. Thank you for all of your support along our journey. And with that, I'd like to turn the call over to Matt to discuss our first quarter results in more detail.