Chico's FAS, Inc.

Welcome to Chico's FAS fourth quarter and fiscal year and 2022 conference call and webcast. All participants will be in 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 end 22 conference call and webcast. For reference, earnings release can be found on our website, at www.ChicosFBS.com under press 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 our forward-looking statements are included in the day's earnings release or 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. Certain non-GAAP measures may be referenced in today's call. A GAAP and 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. We achieved strong results across all key financial metrics in fiscal 2022. We delivered strong store and digital sales growth meaningful growth margin expansion, and solid expense leverage, which produced outstanding operating income, cash flow, and earnings per share. These results demonstrate the power of our three brands and our product performance and reflect our team's steadfast commitment to our four strategic pillars of being customer-led, product-obsessed, digital-first, and operationally excellent. Q4 finished strong. Revenues and ETFs exceeded the expectations that we provided in early January after the nine-week holiday selling season. Actual fourth quarter sales came in $9 million higher than the high end of our projected range, and ETFs exceeded the high end of our expectations due to strong January performance. Across all three brands, customers responded to new spring product offerings, which drove full price selling in the quarter. Now I'll cover some highlights for the fiscal year. We posted another year of very strong bottom line results with diluted EPS of 88 cents and nearly 140% increase over last year. This performance was driven by total sales growth of 18%, meaningful growth margin expansion and solid expense leverage. We also delivered operating income of 142 million or 6.6% of sales more than double last year. Our apparel brands continue to deliver exceptional revenue increases, with Chicos posting comparable sales growth of 31% and White House black market generating a 26 comparable sales gain. Chicos customers overwhelmingly responded to our elevated product and fashion newness, building complete outfits with solution-oriented product. White House Black Market customers responded to our versatile dressings, seasonless fabrics, and product innovation to meet her work-from-anywhere needs and special occasion wear. According to NPD, during the last 12 months, Chico's and White House Black Market grew four times faster than the market average for apparel customers over 45 years of age with household incomes of over $100,000. Summer performance improved throughout the second half of the year, with particular strength in our foundations business. We continued to innovate and have best-in-class bra and panty offerings. Those categories continued to outperform to last year, indicating the overall long-term power and strength of the brand. Customer behavior remained healthy, and innovative products strategic marketing, and our relaunched loyalty programs drove more customers to our brands. In fiscal 2022, customer count was up 5%, spend per customer increased 12%, and the average age of new customers continues to trend younger. Our lean inventories fueled faster sell-through rates, higher average unit retails, and more full-price sales throughout the year for all three brands. Fiscal year-end on-hand inventories were down 6% from the prior year. We strengthened our balance sheet, ending the fiscal year with $178 million in cash after repaying $50 million of debt in 2022. Let me give you a brief update on how each of our strategic pillars drove performance last year. We are customer-led. focused on community engagement and creating extraordinary and memorable customer experiences, forming lasting relationships and increasing customer lifetime value. The power of our three unique brands is driving growth through three powerful platforms, creating long-term connections and enabling our customers to interact with us in a seamless manner. Our physical stores are community centers where our customers experience our products in the most exciting way possible. and the knowledge and enthusiasm of our stylists and bra experts drive sales and brand devotion. Digital is often the first impression of our brand and is a community hub for content and a great way to teach, share information, and inspire. Finally, our social stylists can expertly connect customers to our brand and drive growth within both of these avenues. Store sales grew by 20%, and digital sales through 16% for the year. Chico's FAS has a uniquely strong foundation with some of the most loyal and dedicated customers in retail. Our loyalty programs, relaunched in 2022, are continuing to exceed expectations in customer sentiment and redemption rates. We are strengthening our already strong customer relationships and adding new customers through these elevated programs. We are product obsessed, focused on delivering best-in-class merchandise to our Chico, White House Black Market, and Soma customers, offering beautiful solutions that inspire confidence and joy. At each brand, we are focused on elevating AUR and driving full-price sales growth. At both apparel brands, customers continue to respond to our elevated fashion and product offerings in nearly every apparel category. demonstrating that product enhancement and innovation are moving the brands forward and that customers appreciate higher quality and are receptive to paying for value and solutions. At both Chico's and White House Black Market, customers bought complete outfits and accessories instead of single items, increasing AUR and basket size. At Chico's, style, fit, comfort, and solutions drove revenue increases throughout the year. Customers responded to our product innovation and fashion, including mitts, sweaters, and woven tops, pants, denim, and dresses. Sales of our Travelers, Zenergy, and Black Label collections also continued to grow. She responded to novelty and focused on completing her head-to-toe look with easy-care, wrinkle-free, climate-right fabrics. At White House Black Market throughout the year, Versatile tailoring with feminine details in seasonless fabrics drove the business in key categories. For the shoes looking for casual or dressy pieces, customers responded to our newness in pants, denim, jackets, woven tops, and dresses. We are fabric first and continually innovating and adding new fabrics to our assortment. We added four new White House black market fabrications last year. which has further expanded our customers' options for even more versatile dressing. At Soma, we continue to make investments in cutting-edge product and innovation and comfort solutions in panties, sleep, active, and especially bras. We are the destination for all her bra needs, and we have had remarkable success with last year's launch of our game-changing smart bra, Spotify. That includes proprietary technology that adjusts to a woman's individual body measurements as they fluctuate throughout the month. We are digital first, leveraging technology to engage and deliver to our customers across channels and brands. Last year, digital sales represented 41% of total company revenues. Over the trailing 12 months, we grew our total customer count by over 5%. Chico's grew 10%, White House Black Market was up 12%, and Soma was flat. Spend per customer rose 12% over the last 12 months. The new customers we are attracting to our brand are younger than existing customers by 10 years at Chico's, 3 years at White House Black Market, and 4 years at Soma. Each digital touchpoint inspires the customer to find solutions and build her wardrobe across brands. and we are driving frequency of visits online and in-store. Our customized digital styling tools, My Closet and Style Connect, continue to drive sales, and engagement is growing. These tools further nurture and grow the multi-channel customer who is so valuable to us, spending more than three times the single-channel customer. Our mobile apps continue to exceed our expectations, with downloads and engagement growing month over month. and driving higher average order value and conversion than the site average. Apps are becoming the hub for our loyalty program, and early indicators are that our most loyal customers are highly engaged with the app. We are constantly investing in technology and talent, enhancing AI-driven customer engagement and science-based marketing. Our digital evolution continues. And last, we are operationally excellent, We are continually focused on diligently managing our inventory, cost of sales, supply chain, expenses, and real estate, generating healthy cash flow, and delivering a strong bottom line. During the year, we had exceptional gross margin performance, a 240 basis point improvement driven by strength in full price sales, higher AURs, and improved leverage of inbound freight and occupancy costs despite increases in raw materials. We constantly strive to improve our sourcing, logistics, and operational processes to drive efficiency and reduce expense. We have carefully managed our calendar and inventory flow to assure product will be available to our customers in a timely manner. Now, I'll turn the call over to PJ to update you on our financial performance. PJ.