JOANN, Inc.

Good afternoon and welcome to the JOANN second quarter 2024 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Jason Wood, Vice President of Strategy and Corporate Responsibility. Please go ahead.

Thank you and good afternoon. I'd 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 statements 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 the recent filings with the SEC. During the call today, management may refer to certain non-GAAP financial measures. A reconciliation between GAAP and non-GAAP financial measures can be found in the company's earnings press release which was filed today with the SEC and posted to the investor relations section of Joanne's website at investors.joanne.com. On the call today from Joanne are the co-leaders of the interim office of the CEO, Chris DiTullio, Executive Vice President and Chief Customer Officer, and Scott Sikella, Executive Vice President and Chief Financial Officer. During the question and answer portion of the call, we will also be joined by Rob Will, Executive Vice President and Chief Merchant for Joanne. I will now turn the call over to Chris for his prepared comments.

Thank you, Jason. To those of you joining us today, good afternoon, and welcome to Joanne's second quarter fiscal 2024 earnings call. In what remains a dynamic consumer environment, we were pleased with our second quarter results, highlighted by continued progress and strong execution against our strategic priorities, which enabled us to deliver sequential top-line improvement, gross margin improvement, and register solid operating performance. Although we remain cautious due to continued uncertainty in the broader retail environment, the strategic shifts we implemented in the second quarter, combined with our ongoing cost reduction strategies, give us confidence we are on track to deliver on our full year outlook. These strategic shifts were focused on building a new foundation for how we operate to better deliver short-term wins, mitigate potential risks, and set up Joann for long-term growth. This foundational approach is anchored on a read and react system for the business to respond quickly and action opportunities or challenges as they evolve, using advanced data analytics to shape and support our decision-making process. This coincided with the return to operational retail fundamentals, our continued focus on winning in our core categories while leveraging and capitalizing on the unique opportunities for Joann in the consumer marketplace. In the second quarter, these opportunities translated into improved results through the deliberate pull forward of our Halloween seasonal product offering, the strategic execution of our make room campaign, and continued investment in our assortment, breadth, and depth, particularly in our textiles related categories. Through these strategic actions, we delivered innovative assortments and more targeted promotions that resonated with a broad range of consumers. These efforts, coupled with our focus on delivering a great experience for our customers, whether they shop in our stores or online, and identifying ways to operate our business as effectively and efficiently as possible, sets the stage for continued progress ahead. We saw signs of this progress in the second quarter with continued sequential improvement, not only on top-line sales, but also in our gross margin. Importantly, our comparable sales performance during the quarter ended on a high note, with July representing our strongest monthly comparable sales result in over two years. While we remain cautious and monitor the ever-evolving consumer environment, we believe this momentum and the ongoing implementation of our strategic actions leave us in a good position to seize on opportunities and adapt to challenges moving forward. As an example of how we are already leveraging this approach, we utilized our data-driven Read and React capabilities to deliberately pull forward our Halloween seasonal product assortment. This pull forward was enabled by our strategic approach to optimize our seasonal assortments through directing investment into the seasons where we win across a number of our product categories. Halloween is a season where few in retail can offer a more complete solution. From decorating the inside and outside of your home, crafts for kids, and the materials needed to make custom costumes and seasonally themed textile projects, we appeal to customers of all ages and interests. As we planned for this year, we read the market trends on Halloween and strategically invested and pulled it forward in a way that was disruptive. This meant pulling back on spring and summer seasonal buys, which allowed our inventory position to be cleaner and enabled us to free up the space and get more Halloween product, most of which comes from our own brands in stores and on the selling floor up to four weeks earlier. Customers responded immediately to the shift and are making purchases with less promotional activity and at a variety of price points, including our 8-foot animated skeleton with a manufacturer's adjusted retail price at $499, resulting in higher margin sell-through for the entire category. Additionally, as we look to leverage the unique opportunities that Joann has, we distorted our inventory and merchandising presentation to capitalize on the changing consumer marketplace and launched our Make Room campaign. Make Room is our uniquely curated collection of many of the products students need to decorate their dorm room or apartment as they return to college. Our Make Room campaign was a valuable strategic play for multiple reasons. First, it allowed us to market a broad assortment of our basic products, including textiles, in a new way and without deep discounts, creating a low-risk, high-reward touchpoint that appealed to current and new customers alike. Additionally, Make Room leaned into social media trends, where students across the country found creative ways to design their own physical happy place as they head back to campus, and then post and share their creativity with their followers. By leaning into these trends, we were able to establish Joanne as a destination for these important products, expose them to a broader assortment of our offerings, and increase the relevance of Joanne to younger customers. We are excited by the success of this event as we saw unit lifts across multiple categories of basic products included in our make room set. Moving forward to our e-commerce business, we continue to see growth and an increase in profitability from our digital channels. In the quarter, e-commerce sales outpaced store walk-in sales and the company overall, growing at a rate of 3% compared to last year. accounting for 12.1% of revenue in the second quarter, a 60 basis point increase in penetration rate over the same period last year. This growth is being fueled by multiple factors. First, we continue to refine and expand our online product offerings and are particularly encouraged by the growth in our textiles-related online businesses. Second, through data analytics, we updated our paid media allocation strategy. and increased our investment approach, which drove additional traffic to our digital channels with corresponding increased site conversion. Lastly, we made technology improvements to our website and mobile shopping experience, which produced immediate benefits. As we go into the back half of the year, we will continue to emphasize a shop your way, seamless and engaging digital experience, focusing efforts on improving the customer journey and driving additional growth. To conclude, we are encouraged by the top line sales results, gross margin improvement, and the progress on the ongoing implementation of our Focus, Simplify, and Grow initiative, which Scott will discuss in detail momentarily. Based on the dynamic consumer retail environment, we remain laser focused on continuing to use the strategic foundation we are building to capitalize on growth opportunities and mitigate risk. This includes continuing to use our read and react capabilities to drive quick business decisions, leveraging advanced data analytics, getting back to running the business using sound fundamental practices, and focusing on winning in our core business categories while capitalizing on the unique opportunities Joanne has in the broader competitive marketplace. As I wrap up, I would like to take a moment to recognize our team members. The positive results we delivered in the second quarter, including the forward shift of Halloween, the development and implementation of our Make Room event, and the ongoing execution of our strategic priorities would not have been possible without their hard work. With these new initiatives and strategic priorities, we challenged our team members who work in our stores, distribution centers, Omni Fulfillment Center, and across our corporate offices to deliver new approaches to drive value and position the company for long-term growth. They responded with creativity, commitment, and agility that our team members are known for, and I could not be prouder of the dedicated professionals who work across this company. As we look to build on the positive results and weather any challenges presented by the uncertain retail environment we face, We will need them to continue to step up, and I have absolute confidence they will. With that, I will turn it over to our Chief Financial Officer, Scott Sackella, to give a more detailed rundown of our second quarter financial results and our year-to-date performance before wrapping up with answering your questions.