Chico's FAS, Inc.

Welcome to Chico's FAS Fourth Quarter and Fiscal Year End 2021 Conference Call and Webcast. All participants are in a 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. Oliver, please go ahead.

Good morning, and welcome to the Chico's FAS Fourth Quarter and Fiscal Year 2021 Conference Call and Webcast. For reference, our range release can be found on our website at www.chicosfes.com under Fresh Releases on the Investor Relations page. Today's comments will include forward-looking statements regarding our current expectations, assumptions, plans, estimates, judgments, and projections about our business and our industry, which speak only as of today's date. You should not unduly rely on these statements. Important factors that could cause actual results or events to differ materially from those projected or implied by approved looking statements are included in today's earnings release, our SEC filings, and the comments made on this call. We disclaim any obligation to update or revise any information discussed on this call, except as may be otherwise required by law. Our comments and discussions of Board Court and full year 2021 financial results will be on an adjusted or a non-GAAP basis. A GAAP to non-GAAP reconciliation schedule is included in our earnings presentation posted this morning on the Chico's FAS Investor Relations page. Now I'll turn the call over to our CEO and President, Molly Langenstein.

Thank you, David, and good morning, everyone. Our 2021 performance clearly demonstrates the extraordinary progress we have made against our turnaround plan We delivered robust sales growth across all three brands for both the fourth quarter and the full year and produced our best growth margin and EPS performance since 2017, evidence that our strategy is working and we have strong momentum. Key accomplishments for the year. This year, all three brands Leveraging our powerful shared platform contributed meaningfully to sales growth, gross margin expansion, and significantly higher operating income. We posted 37 cents EPS for the fiscal year, the best performance since 2017. Throughout the year, our sales growth was driven by increases in both our store and digital sales channels. and was boosted by meaningful enhancements in product and marketing, which significantly drive full-price selling. Chico's continued to deliver sales improvements, as demonstrated by the 33.2% fourth quarter comparable sales increase and 37% sales increase for the year. White House black market also continued to deliver exceptional sales gains in fiscal 21. posting a 45.6 comparable sales increase in the fourth quarter and 37% sales increase for the year. Both Chico's and White House black markets benefit from elevated quality, styling, and product enhancements. Inventories remained lean, which fueled high productivity and increased full-price sales throughout the year for both brands. Soma posted its sixth consecutive quarter of strong comparable sales growth and increased total sales over 30% since fiscal 2019, fueled by a pipeline of product innovation that customers are responding to. Data from market research firm MPD shows that Soma's growth is outpacing the market in non-sport bras, panties, and sleepwear. Soma is well-positioned to capture additional market share and grow into a billion-dollar brand, becoming one of the largest intimate apparel brands in the U.S. And finally, our enhanced marketing drove both digital and store traffic, as well as new customers to our brands. We further elevated our marketing efforts, allocating more resources to digital storytelling, influencers, and other social efforts. fueling total customer count growth of 17% over last year. We began our turnaround in 2019 and have made significant progress despite COVID and supply chain challenges and have emerged a stronger, more focused company. Let me update you on our progress on our five strategic priorities. First, continuing our ongoing digital transformation. Over the last three years, we made key investments in talent and technology. As store revenues have continued to rebound in each brand, digital sales have also continued to grow year over year in all three brands. Digital now represents over 40% of our total revenue base. Our proprietary digital tools continue to fuel sales and engagement is growing. Combined digital tools grew quarter over quarter and represented approximately 25% of total digital sales. Customers using these tools, like Style Connect and My Closet, are more engaged and have higher conversion rates and average order values. Multi-channel customers spend more than three times a single-channel customer, and this group continues to grow throughout the year. Multi-channel customers grew in customer count, sales, and spend per customer. We successfully launched our SOMA app during the fourth quarter, and the results have exceeded our expectations for downloads and engagement. Afterpay has also proven to be a terrific UPT and sales driver, and Q4 revenues nearly doubled versus last year. Second, continually elevating our products. At Chico's, denim more than doubled for the quarter and grew 14% from 2019. Every category in Chico's grew, significantly over last year, demonstrating that product enhancement and innovation are moving the entire brand forward and that customers are responding to better quality and paying for value in each garment. White House black market denim also continued its explosive growth from Q3 into Q4, and the business almost doubled from last year and was up nearly 60% from 2019. New comfort features in jackets and pants led to category growth of 50% compared to last year. Soma finished a record year of growth. adding more than $25 million of sales each quarter compared to 2019. This growth was fueled by our pipeline of innovation, and the fourth quarter delivered growth across key categories. Bras, Panties, and Sleep grew against last year and 2019. Soma continues to make investments in cutting-edge product innovation. and is well-positioned with replenished inventory to drive growth. We are most excited about our newest game-changing bra innovation with our Botify launch introduced last month. Three years in the making, Botify was influenced by 1,500 customers and is the very first smart bra in the marketplace. The patented $68 bra includes proprietary technology that adjusts to a woman's individual body measurements as they fluctuate throughout the month. Our commitment to innovation allows us to build a pipeline of beautiful solutions for our customers. Third, driving customer engagement. Customer counts grew in each brand for the quarter. Spend for customer was up in each brand and each channel compared to last year. The marketing and product momentum fueled customer growth in all three brands and the file grew from Q3 to Q4. All of these efforts are helping us acquire new customers with year-over-year customer growth in each of our brands and the average age of our new customers continuing to trend younger than existing customers. We launched our new SOMA loyalty program in the fourth quarter and plan to launch revamped loyalty programs for our apparel brands, in the first half of this year. Our existing loyalty programs already have some of the highest participation rates in retail at over 90%. Customers are responding to digital storytelling, Facebook and Instagram live events. Each touchpoint supports the customer to find solutions and build her wardrobe. During the year, our apparel brands had over 10 million views across social selling live videos, and reels. We are elevating our social engagement efforts, including using more organic and user-generated content, and we are enabling our store associates to create social content. Next, maintaining our operating and cost discipline. One of our strongest accomplishments is the gross margin performance. Our full-year gross margin rate rose to 36.7%, the company's best performance since fiscal 2017. This improvement was driven by strength in full-price sales, higher AURs, and improved leverage of occupancy costs on higher sales, despite increases in raw materials and freight costs. Sales leverage and ongoing cost discipline efforts resulted in our best SG&A rate performance in several years. And lastly, delivering higher real estate productivity. Store traffic was very healthy in fiscal 21. and we once again delivered strong store sales growth during the fourth quarter. Stores remain a core part of our growth strategy, as data indicates that digital sales are more robust in markets where we have strong retail presence. We have successfully opened 73 Thelma shop and shops inside Chico's stores, which are exceeding expectations, driving new customers to those brands, lifting store productivity, and further expanding our digital business. and we plan to open up to 30 new SOMA standalone stores in the back half of this year. Now let me turn the call over to PJ to update you on our financial performance. PJ.