Torrid Holdings Inc.

Q4 2022 Earnings Conference Call


spk_0: reading spoken to toward hoping to incorporate it fourth quarter of fiscal twenty twenty two earnings conference call at this time all participants are no that's the only mode a question and answer session will follow the formal presentation at any which require operator systems during the conference please press start zero under tell them cheaper please note is confidence being recorded i will beltre the conference over to pull them see senior vice president of finance and best relations think you may begin
spk_1: good afternoon everyone and thank you for drawing board called for they go with fourth quarter and to pull your financial of awkward money on each year would move really the proper new and can be found on our website and in rafters got poor and dot com with me to they on the call or leave for barber chief executive officer i'm bored and ten martin chief operating officer and chief financial officer before we get started i would like to remind you of the company a portal of language which i'm sure you're familiar with management may make forward looking thing than including guidance and and
spk_2: your line of themselves
spk_1: forward looking statements include but are not limited to pigment containing the word fact been the plan will may should ask them it and some other expression all forward looking statements are based on current next patient than a function of up to date march twenty third twenty twenty three these payments or a bad rep inadvertently that could cause actual results to differ materially for further discussion of drug related forbidden the are filing with the the the good call will contain non gap financial measures such records with either reconciliation should be mom dad measures to the most comparable get measures are included in the early relieved further study ftp and available on our website with that i will turn the ball over khalifa think vala good afternoon everyone and breakthrough for join you know for discussion of our fourth quarter an old year we both were it again i'd like to thank the toward paying for their dedication and providing art of the murder of exciting new products and the component of north korean we've navigated a year breach or eligible new leadership in many parts of the organization elevated literary very levels resulting in a higher promotional environment and the customer good mercenary burned despite all of the between have become good to great deal in a short time i believe that the changes we've made have been essential to reignite profitable long term growth i'm not i'm very happy to announce return of margiela go to toward a she commercial look sir mark previously served that could shoot operational up your toward back into and fifteen and prior to that interpret keep piling up with her about hot topic and tore it he brings a wealth of experience and expertise in retailing and weird for i did that happen rejoin the team mark will be reading all aspects of margin optimization inventory planning on buying as well as working with vivian l horn or chief marketing officer or marketing and ecommerce activity essentially focusing on often but drug product failed for the company you believe that would work munoz focus on the line libya that for keep the marketing and ecommerce my involvement and product election as well as large leadership of them and tory planning murdering a calmer and planning function we have a strong team focused on delivering the very best product for customers
spk_3: now moving on to our fourth quarter performance we delivered met failed at the upper in the or guidance range customers responded favorably trouble at for of love or money of them for you the pressure off toward us later in the quarter or gross margin began to stabilize in the fourth quarter of the red cross origin decline that the nipper country
spk_1: the lower than the third quarter the sequential improvement gross margin enable them to feed the upper in the delivering an instructor the either of sixteen million our primary focus for twenty two with on and pantheon the organizations poker in order to reignite sustainable long term growth liberal on from martin energy bubbling up with your in chief financial officer on or shoot that knowledge you offer good loot zetterberg cheap human report without the turn to legal officer we promoted libya now horner to marketing officer and we have now brought on martin of go of virtue commercial officers
spk_4: leave new leader have a wealth of experience from public and private retail and the humor peyton company
spk_1: the evening and they will be instrumental in bringing our came into alignment and driving our strategic initiative we all go under to the new technology o'clock with of know that will enable it to the like cut the murder of i'm working in love libertarian moving forward and the distribution center we put them both new technology that has increased capacity and allowed to deliver product or of them are faster than ever before much improved over last year or new european system provides the foundation of board improve shopping experience on the website and in him data immigration across the organization
spk_4: with an inventory and product we prioritize right by your inventory with the goal of entering to twenty twenty three without a quick level to support demand and the environment
spk_1: although we had to be more promotional the movie unit last year we were successful and pepper and then that the year with inventory of only six percent compared to prior year would be here over year increase coming solely from basics and early spring wifi normalizing for the categories we were down by percent to the prior year representing the most efficient levels with them and tory we have painted them fun we know that new product consistently drug customer interpretation and demand we delivered new collection for her this year with with except for real onto our studio collection launch of perfume and other to operation would that be john him and refine focus on delivery more colored and fashion forward people that role frequently and a of them are loyal club movie and finally we focus on expanding our customer file through reengagement a wealth of them are a new customer acquisition we shifted our marketing efforts toward customer retention bringing back while doctor and we're burned our commitment to attract new customers and who are brand to our store channel we've got birds allow them to deliver an increase in our actual customer by others year overall twenty running through a year of new learning transformation and laying the groundwork for the brand continue to supplement phantom we believe that the changes we made the past year were critical to set up for future growth as we look ahead with twenty twenty three we will continue to standard for oprah driving customer filed wrong will ever exciting working like the fill every new governor harbor and enhancer customer relationship but the key area mind and we will keep investing an optimizing and growing our store footprint to acquire new coke murder them to the brian and expand our customer file our door neighbors profitable and they remain our primary new customer acquisition channel move towards drive never get one fails from newly acquired customer and the net than of the got the the first year as approximately twenty five percent higher than that of web acquire customers in their first year customers developed connection with our product and brown by interacting with that in are stored we are committed to bringing up the went into our store or we believe a compelling and were like experience will increase engagement and loyalty we planned open between thirty and forty years doors and twenty twenty three of dorner proven competitive advantage for different business we understand the customer loyalty is determined by your ability to provide her with new and innovative products and increase your frequently of purchases and twenty twenty three we plan on launching them valley stream of new products across multiple categories to pique your interest and increase her engagement with the brand new product clean energy generated positive feedback into from are untrue and was your gold on the throughout the year in terms of marketing and promotional strategy we're focused on improving our promotional caden we were an hour or more computer float mahler exciting event to get your customer and drive and frequency and part of that we're we're designing our toward cash promotion from a quarterly about the smaller and shorter events throughout the year this change will reduce or reliant on large toward cash of them at the end of every quarter well there's a lot of pressure in the retail industry about the natural environment we will remain laser focus on what we can control we believe that the product and operation on per with made will condition of for success and i'll i'll have to focus on key areas that we know will drive the business that has been have any pick up my experience
spk_5: driving productive growth in our customer file and delivering exceptional product i am thrilled to see our team continue to provide our customers with world class that and products that are truly like changing as well have been rushed into a customer experience that that alternate all over the term will provide more detailed quarterly an annual financial but you will come in good afternoon you lord again i'd like to recognize before june for how much they've accomplished more navigating through uncertainty decision an arbitrary riddled with this past year we implemented operational future uk you of determine the foundational hope of our business and we focused on controlling that we can control i believe the betrayed we made will allow us to increase your great value of the long term growth would like to begin by highlighting the accounting policy change that you may have been in today's press release in the fourth quarter of fiscal twenty twenty two we made a voluntary change in our accounting policy regarding the classification of private leg or credit card funds historically we recorded p l c t thugs as a reduction desk in a expenses under the new policy we record plc c and that sales and all metrics supported using net sales will be impact we will lead the recognition of the plc the funds in that sales is preferable because it will enhance the comparability of our financial statements with those money of our industry for years and provide greater transparency into the performance metrics related to our industry this reclassifications been retrospectively applied to all period disgusting to date her remarks i will now provide a detailed the special other financial results followed by our outlook starting with the fourth quarter results let sales came in at three hundred and one million compared to three hundred and eighty million dollars last year comparable sales in the quarter declines five point four percent we had a strong start to the quarter as customers were eager to shop to a black friday and cyber monday events which took the pressure are torn cash about later in the quarter goes kaput for the fourth quarter was ninety six million or thirty one point nine percent of that sells the burgle hundred one million or thirty two point six percent on that sales and the fourth quarter last year seven days to prepare his point decline as banana like your about marshall events and higher inflationary cost partially offset by the higher t l c c funds selling general animation which that's what mcwhorter was seventy eight million the per the seventy million for the fourth quarter in the prior year as a present sales as today increased from two twenty five point eight percent from twenty two point zero percent burger the fourth quarter of last year the increase of three hundred and eighty days response was primarily driven by higher wages one time expenses related to employees separation agreement and disposal of assets and other miscellaneous items i should note that approximately one hundred and and their spots where increase is related to unusual items with seventy this response really the someone's which is in are adjusted ebitda add that and forty basis points related to disposable bastards because you need to be focused on controlling the controllable and leveraging es una with as we see sales volume increase going forward marking expansion in the quarter kinetic sixty nine compared to seventy million dollars last year as a percentage of sales marketing expensive relatively flat last year at five point three percent compared to five point five percent in the fourth quarter of last year no loss for the quarter was four million or a loss of zero point four cents per share compared to a net loss of twenty three million or a loss of twenty one cents per share for the same period last year
spk_6: he did not have any adjustments the net income in the fourth quarter twenty twenty two but for comparison purposes adjusted net income last year was ten million or nine cents per share
spk_5: image up in addition to the damages we believe that adjusted ebitda is an important measure that we used to evaluate the manager business adjusted to the and above archives rage at sixteen million or five point four percent of net sales compared to twenty eight million in the fourth quarter of last year or eight point nine percent net sales now turn into a casual two thousand and point you results for the phone year not sales were down one percent to one point two nine billion and were the one point three billion last year and topical sales were down three point four percent last year although we delivered an increase in transactions and unit so we saw lower average oregon has been impacted our total sales or total customer great base grew by two percent in fiscal two thousand and twenty two to three point nine million customers and lectures per customer was down three percent to last year the size of our loyalty program or customer loyalty program grew from three point five million customers and twenty twenty one point seven million customers and twenty twenty two as the representing ninety five percent of our total sales we continue to be focused on to live in product and to a compelling fit with we believe in industry leading return right and speech to the quality of our fifth an assortment as evidenced by our ten percent return as mentioned empire cause we we negotiate a private a new private they will credit card agreement this year and continue to see growth and positive reception to the program it's y twenty two over thirty percent of our sales came from the private label credit card and we saw higher and to share rates coming from our most valuable vip customers and new customers shop and brand are pretty little credit card has been instrumental in helping drive frequency and retention from our customers as evidenced by a credit card older spending more than two times more than on credit card holders this past year
spk_7: we open sex toy stores and six percent worse in the fourth quarter and we plans to porridge doors will open a total of inching toward stores and eight person or as and fiscal twenty twenty two and with was eleven towards doors
spk_5: our source can choose to be our primary acquisition child to bring customers into the brand and cost required your stores are more likely shot at both channels and become army general customers this behavior strengthens our channel next contributing to a sixty one percent ecommerce penetrance limitation really twenty twenty two hundred sixty three percent me to live with last year bombshell customers also shot three point four times more than a single child after months and your over half of our total sail across the violent gross profit fiscal twenty two was four hundred and sixty million or thirty five point seven percent of that sales adjusted leave out with one hundred and fifty two million or eleven point eight percent of nutshells compared to two hundred and forty cents or nineteen point zero percent of net sales and twenty twenty one although we were promotional already the clear i am enjoying what we the what the retail industry is referred to as a difficult macro environment we still deliver double digit adjusted ebitda margins with speech to the strength of our brand and it's ability to drive profitability
spk_7: that in company knows fifty million or forty eight cents per share compared with not lost a thirty nine or twenty seven cents per share for the same period last year
spk_5: for comparison purposes a job to get him from professional twenty twenty one was one hundred and twenty one million or dollar temperature turning into about you our cash and cash equivalents the end of fiscal twenty twenty one twenty two on fourteen million total quantity and year including available credit for the other than forty seven point eight million photo that at the end of the year was three hundred and twenty nine million to thirty three hundred and forty one in the and twenty twenty one or that got to adjusted ebitda was two point one times a year and a majority another quarter was a hundred and eighty million an increase of six percent compared to the hundred and seventy one million in the prior year the encouragement from early spring receipts and basis which have a longer life we're very pleased with the quality line toy and excluding the spring and basics are inventory levels with down five percent last year when he enough in a good position as we had to twenty twenty three bringing the outlook for the you are lucky based on our current understanding of the environment and business trends however we continue to operating on certain macro environment twenty twenty three and material changes beyond our control may have an impact or projections california which is a fifty three week for twenty twenty three we expect that sales to be between one point two six five billion and one point three to europe billion we anticipate the grow to be secure to the second half of the year on primarily than that new stores and fifty third week reporting period in the fourth quarter we estimated adjusted a video to be between your hundred and forty and one hundred and fifty two million on a we expect to see gross margin race stabilization for the on year we're planning a slight increase in a studio primarily you didn't set it up and session ones in the first quarter twenty twenty three we expect next sales to be between three hundred and five million and three hundred and thirteen or guidance incorporate deceleration of the ban transmission of the most recent quarters as we navigate through the caught by them we estimate that adjusted ebitda the first quarter to be between thirty five and forty million this assumes the same continued pressure on are gross margin raids we copy tighter comparison the last year capital expenditures objected to be between forty and forty five million for fiscal twenty three before in infrastructure improvements in investments and between thirty and forty new store openings
spk_8: our new stores and twenty twenty two year plan late in the third and fourth quarter with the majority of the store opening in the fourth quarter
spk_5: we are supporting the clothes five stores issue in closing we navigated another challenge and still delivered a double digit adjusted ebitda margins and probable net income per year as well as growth in our customer fall
spk_0: as we looked ahead and between twenty three we believe that the changes and then the past year position as to deliver positive long term growth rusher others the main focus on a result the we can control emphasizing the customer experience productive customer program and ensure and we are the best quality product without i will not turn the our would be operated the questions
spk_1: thank you you will they ask a question please press dar one and your telephone keypad a confirmation on indicate your line it's in the question kill you may press start to if you with a three move your question from the kill and for participant using speaker equipment and may be necessary to pick up your handset before
spk_9: wrestling with start he's our first question as from the rain hutchinson with bank of america please proceed
spk_1: good afternoon and to follow up on the changes you're making to toward pass up have you been able to test the you them and what's the customer reaction look like who have jumped up with are worth and the not helping first served in the first quarter so normally we would have the redemption road toward the end of the corridor the year we've had an earlier toward couch redemption time period about or guess ten days ago and it ended and we'll have another one toward the end of the quarter all of the shipping for the redemption it will happen and moon under the second quarter for our better indication of and or how we be that moving forward or and i would say that we're off said sort whole run of the torrent large program which on top and in the last year with other types of promotional stories from road helped him early and has been many of these over the past
spk_4: as i arrived to the company hampered a bit by the large inventory position that
spk_1: we have bust your but help a accumulated a lot of very positive learning than terms of how to promote and and then compel the customer and a much more power than help gross margin
spk_4: return on that and fell one of the reason you're bringing and very excited about bringing mark and to them and to the company or the oven an extensive amount of experience and
spk_10: and not just them into our newsroom planning but also love martin optimization through the promotional element so i'm more to come on know about what we've done that really does your mitigate the risk of the program a retired softening overturned by which you unit to fix smaller
spk_4: one time period and also augmenting that with other promotional activity that have been very marginal credo at this point in the testing stage
spk_11: thank you and then on the gross margin from can you speak a bit about the product costs inflation that you expect and any transportation saving that you think will flow through this year
spk_1: i'm sure so we do on
spk_4: the all that
spk_1: and had plan that we will have some recovery and gross margin this year as we are moving towards the back of the year were burning your people improvement and first call on product and we're starting to feed from improvement as we have been feeding and will continue to the and freight but that than and downgrade and out downgrade really
spk_4: i did and
spk_3: customer delivery is still growing and expanding so it off that have some level of that but we are seeing them improvement in
spk_12: and coughing up on a new p of product development and sourcing last year in his strategy there in terms of
spk_0: a new new vendor baker's and and new country of origin that have the quality that we that are being able to be integrated into are certain strategy the know are also helping her costs to good as we move forward
spk_13: thank you thank you
spk_1: our next question it from being a healthy with healthy advisory group please proceed good afternoon everyone and nice to see the progress that you're making can you give us an update on the studio line what you've seen from the studio line how it's reforming relative to your expectation and if you went to the fourth quarter how is the exit rate and lisa how would you define the help a bit of the consumer and then to lastly with the at una uptick slightly how do you think of that caden through the court do the year if you unpack the the better of the margin going forward thank you thank you dana i'm we're really pleased with how to the old performing or the core product there and at work for corp application of funky but we're hopeful out four to five other fabric that we've been have been and that will become part of the court court bergman or that line on we are expanding it up really forward and outing polished done on the studio denim him in that line some or what i would talk to the of street were so very happy with the any kind that we interviewed the new idea is very compelling sort of the are drugs a drugs conversion and a neat the need that she absolutely had
spk_14: so that that's exciting we have london minute now and not alone in blender not doing well in addition to that so
spk_1: great launch and more opportunity as we move forward oh i'm not quite sure you're burning questions about the fourth quarter can you are just kicked the bucket and for the quarter how you seeing the health of the not read as a quarter ended
spk_3: or any up the royal had to the consumer sure so what we what we've seen in i'm i'm positive momentum aware that the fourth quarter back to story which were buried fighting and at the beginning of the quarter we also on improvement and for traffic and has become sharpie and the last couple of weeks but we'd you know there's a lot of humility and lots of the
spk_1: for conversations that could be heard about that but some really nice nice green shoots and terms of the customers recovery and return to the stores that combined with our focus on the floor on customer acquisition and getting that customer to the dressing room little and tracking conversion rate from jordan in conjunction with trial but we're eating them nine and hooper there and focus of getting the customer to the dressing room the will the conversion rate almost doubles once you get a customer in the dressing room and so we've gone from additional training in the stores and on boarding on the sword that really focuses on that customer journey and murphy
spk_3: very positive on reaction from that both from customer acquisition as well as conversion again
spk_1: nice positive shoot the little bit choppy on the store return and actually we're seeing them now we had a little bit of darkness online i think of the lot of people to start them we're seeing a that more of a ship that's what online again we look at that the normally customer and we break them what we think are the the most likely scenarios with the here with the again one more year really having a lot of moving people's on the macro front that word could have an impact that at any time and though really managing the of terms of controlling the controllable then and doing them bowl and the growth of the earn and a multi turn on and are so
spk_5: happy with the most dangerous been looking for margin recovery this year i'm really thinking about that gun and shoot up on the on the merge margins on and then oleg kid who always love be talking about as you know how you about it today get data from an a a perspective of you're going to pull your bases we are going to use like the leveraging just because of the return of incentive compensation
spk_15: we're going to do everything we can mitigate that over time
spk_0: if you'll see that start to improve it's got it back after the years we expected the sales was mean the back would be darned gonna we are still get a lot of the same things didn't return talk about around wage pressure and stores and drink like that we are focusing on a lot of efficiency activity around house staffer stores how's that
spk_5: in one or distribution centers overall cost and programs and when you understand how resource were german i might need to drive and number downs we talked about controlling the controls and find a way to drive like region that number
spk_16: got it thank you
spk_7: dana our next question and friend mark us wagner with baird please proceed
spk_5: good afternoon baykeeper particular question i gets first with respect to the revenue guiding a total fly strengthening trend is with the through the year
spk_16: can you talk a little bit more about what's giving you the culprits their it that he drivers used to call out by advocates store opening that we did you as you mentioned and then is also on the record any any colorado underlying expectations on customer growth versus that per customer
spk_5: we do not get your own your hobbies your comparisons by the room in the second half and you're good news for growth will be an opportunity in were shooting that we're getting more more on receptivity to be prodded watching him a big we're excited about sort of what would that he dug into need over the course of the year so pounds
spk_1: nation walden ah should be easier to person been one of the news rastogi
spk_4: okay thank you on and then on and gross margin for the order on your results were a little bit better than that we were looking for it
spk_1: the that's your plan i know the quarter is really about clearing the inventory that yup are better twenty twenty three but curious what drove the upside or that the better trained maybe than expected and or order and if there's any any take away from some of the test the that you're doing on a new promotional tactic that you would call out
spk_17: am i think that was blood pressure to clear that there had been and third quarter number one i'm an academy
spk_16: we think mitigated at the end of the year we what he really had an hour early spring see that we have mentioned in the body of the comment and we also are starting to see them positive move in and gross margin effort can summon a promotional and marketing strategy that we had put in place or starting pay for my bridge and and
spk_12: and gross margin until i think the raid was slightly better than he anticipated and that just by nice but with film making better progress and lot of without your every year quarterly gross margin basis so am i going on the night news on that in some of her us internally some
spk_0: when we didn't have the a know accept them and worry that was overwhelming at at the level of business we were actually able to employ from of our strategies to see some margin improvement
spk_18: and that confident that we move forward
spk_7: they they give her all the detail
spk_5: thank you
spk_7: our next question and shrunk korea tyler which actually please proceed
spk_1: i good afternoon and thanks for taking my questions though lisa wanted to ask you on new customer acquisition the you had clearly emphasized that doors servant a great way to acquire new customers but i'm just curious over the last quarter what has worked from
spk_4: from a marketing or product perspective of if the outside of stores that has really helped to drive a new customers into the torrid brand
spk_9: are so we look at the fellow customer file and one of them big successes we have last year when customers and lap bringing them back to the brand and so that was a a growth area or up and the customer and scenario we've also just didn't really apply as much the last year but some of the night think that we're seeing early this
spk_1: terribly just switch to digital marketing agency with a very clear strategic and direction to build customer file throughout all categories reactivation new customers and then focus on retention and and frequency as well and with were feeling like or on right path in terms of doing that likely you're playing in reinforcing lightly said and the call what has really work for list of no silver many years if the customer experience but she has in the dressing room and sort of
spk_19: new customer hurt him version that you're not only or and the incredible on lifetime value that and dedication that customer has a very high retention rates and that is fundamentally the underlying philosophy of that didn't happen this organization definitely only the most effective most
spk_1: productive opportunity for us to acquire new customers we train them and don't frequent the it through the store experience or on are all of art data on the customers barreling toward in the higher than ever seen in retail environment and that opportunity get or and and dressing room and double the regular store conversion rate by getting her and there and then be longed
spk_3: felker ah
spk_20: marketing strategy to build frequency aren't really the strategy that we're moving forward and and need that partner quickly to and on the environment because they do than more as the anomaly customer
spk_4: so that simply the the story and by moving from i think when i walk in the door their that all of the focus on marketing with top of panel awareness and consideration movie not too much more robust three hundred and sixty degree focus that starts with the journey that the customer has primarily and store
spk_1: or so of start opening more stores this year and we will accelerate that as to move into a following years at we have all of the data that you need to indicate that the to have buried found
spk_16: didn't strategy for us as we move forward and we're going to go into the
spk_7: very
spk_18: think thought only strategically with the a test and react to mentality as we do the but i'm feeling excited about the opportunity the runway that we can build by reigniting the nothing that we view historically and and in the brand to drive the growth of the brand know the guy
spk_5: aig answer to your question korea title of i remembered why he wanted to hear yes thank you very much for three helpful and them to him we'd talked about controlling the controllable i know that that in your focus and i recognized there's a lot that you probably couldn't control and at the onset of code it and now there's probably a little bit more in your control now than there has been in quite some time am but as you think about what you can control and you think about prioritizing
spk_7: those actions that you need to take how do you think about ranking among of those aspects that your your that you have on your priority list
spk_0: yeah i think we look at your biggest get best bang for our block and that's always going to be managing inventory and how we by rank and and and saw three the product it's always gonna be the biggest contribution to propagated reykjavik be nice i think overall we're also going to dig into every aspect within as teenage girl look at how we stop or
spk_1: doors our compensating arsenal associate how efficient we can be in the distribution center and how we can drive efficiency by bridges junaid i the as possible sales volumes possible so we're taking the looking pretty much everything how we by bags and stores our doing distribution in store supplies
spk_21: really ugly everything and anything that is dragging cost in the organization weren't of inflationary os pressure within a decade ago
spk_1: great at very helpful thank you very much and best of luck japan next question as friend johnny came with tv cowan please proceed
spk_3: thank you for taking my question just curious what you're in the in terms of the promotional environment in your garden
spk_1: and also a you continue to open your door have you noticed any in a difference in the store ram and performance of your new door for historical novels and how do you think about two or productivity as you continue to open to thank you
spk_0: so i would consider this year we realized we were coming off of a very aggressive promotional environment due to the inventory scenario that we have company so we're taking a measured approach we don't think we can just you know pull the rug out from under the customer that we have to be compelling
spk_7: from a national story but we're also on focus on that are getting that over time with smaller than and and more margin rich have an agreement forward and and then again of course and the tory management will help control that promotional environment as well so focused on all of those thing
spk_22: we don't how we have an open a lot of stored on the last four years so kobe to now only really haven't been open a lot of doors doors that we are opening them and the performer that was being for new stores are very very healthy or around we basically don't have a lamp are ramp is very very fast on stores
spk_1: as long as the of a limited number of news birth that we've open world how are they are heading are beating their performance the were happy with that and i thank you and kill our next question is from don carter with land blair please proceed i get on that one on the promo i mean are at a calm understand that a lot of margin to put back into the business for
spk_3: you know just stabilizing gross margin call or shall said in which the rest for your kind of after two years get that customer fully used to have more promotional business
spk_1: what we're pulling back this year to be clear on what i said as were pulling back and been more i would be a surgical about and i'm i'm and that because we don't have an inventory issue that we are not having to
spk_5: be highly promotional the other thing that's gonna make a difference for out that we move forward is really fundamentally how we byproduct by channel alleyway rank product and using all the analytic that we oven at at our disposal to make better inventory investment choice
spk_1: they've done on consumer behavior so the quality of the inventory the channel assortment of the inventory the overall and that man combined with much more surgical promotional qaeda in a combination of how
spk_5: how we keep moving forward so we think will have a level of recovery this year and then we should be back next year and in due time to some historical mark merge margin
spk_7: call it and we're not trying to get it all back in one year but we also are i'm colleen of different promotional stories them we had been telling and managing inventory more appropriately by channel which allow them to pull back on the promotional not which is a smile
spk_1: so the odds are graduates the kind of the the language around gross margin goes for the air would pee input inflation cost inflation
spk_4: i'm sorry it on at you can get that again
spk_3: yeah
spk_1: so i got the because margin culture is melissa stabilization of gross margin
spk_4: and so i guess if you are point back
spk_22: even to some extent on on promotional activity why you wouldn't expect to get why they wouldn't be more floated good argument
spk_4: there has been through the gross margin were just mitigating that to make sure that we're not
spk_16: that we are up again
spk_7: a highly promotional year we don't think we're going to get it all back in one year and we're dealing we're thinking about the recovery a two year period
spk_5: i
spk_22: question of how quickly that come up through and then and we all know i would say have factored in a variable related to an uncertain and an economic situation and sell their there there's a balance between while we conducted margin recovery and some
spk_1: ah i get some hedge against macro environment and economic issues he didn't happen
spk_23: it's a good heart and yeah i got my son or should the language around the commentary
spk_4: the plane on first margin expand this year we do tricks expansion and no aka operator offline
spk_24: question was more along the line detroit the topic third inventory to take pieces of the recovery this year in bed
spk_4: are you increase the frequency of newness how you think about catholic the architecture
spk_9: are coming out of those year let's your yeah
spk_25: the was similar to put the prior years
spk_1: the
spk_3: good breadth and depth that that new no clue
spk_4: okay
spk_5: might be slightly different shifted but in general we're not changing the rhythm like the burglar
spk_4: we're changing
spk_1: our buying a and the howard promoting that and just the basic level of them inquiry will help mitigate and shop and level promotion
spk_3: though not all the emperor and we know that the i'm just you know what grind with customer new ideas new product new fashion
spk_4: video will
spk_1: those type of thing and so were we have a calendar for the year of introducing new idea to the customer which isn't your thing that really think about of the been destroyed clinton customer acquisition related to that the drive to the omni and and the launch of new ideas she would suffer not always the fashion but core ideas as well and because we can provide everything you need to buy four hundred club and and spell
spk_26: we focused on note that as well as we move forward
spk_0: and last year's parts from a knicks fan point in my in my christian or my relatives were rescued more towards basics and and less occasion
spk_21: are we overbought everything like last year
spk_1: or certainly we're we're not worked out inventory was around out there is approach to bake it was we didn't we were not the of because of the longer shelf life of that product been so we have a bit more kind of the here to work through that i think that we got nature that didn't work a twenty that possible and any
spk_4: prior clinton talent and and that we started the year and it's possible i'm we good or fall holiday inventory of down potentially the increase in and inventory the blp of really related to spring early received or untimely people would like encountered that so i'm happy i'm happy with what where how we were able to get through the academic it's last year without like without taking the liability into this year thank you very much okay then
spk_1: our next question and friend brick rage with goldman sachs please proceed good afternoon and thank you so much for taking our question my question from a marketing i'll look for the year can you talk to any further changes that you see on the horizon to improve the customer engagement and do you need to reinvest some of the promotional recapture into additional marketing span to continue to fuel to businesses grow for a but thank you for your question i'm
spk_27: when i would tell you agree that engaged to a new digital marketing agency wine in them a more traditional approach on were on
spk_5: the that we have a strategy we would deploy the funds with than that strategy day
spk_28: optimized that and make the investment
spk_4: alchemy mean drill with the malaysian food that much more focused on retail and gentlemen and aren't really isn't and eight and he was we will and that the athletes are to he productivity and now we're also testing with the different agency things like connected to be very small very minimal
spk_0: it again given that the visibility how we should invest and we will continue to under as we move forward i think i'm multiyear faith in as we start accelerating door opening we will also supplement that a customer acquisition were more investment and marketing
spk_29: as we move through and not just marketing for a cup of the panel but marketing to actually up with dry customers to the store for that they can convert at a higher level there and become omni so i've been i'm very happy with a very quickly with the marketing team that we haven't played and their strategic approach to the book then and we're getting night know some progress there so
spk_5: two your in once repeat productivity we will continue to under than that to that productivity and then no longer term data we are anticipating a higher level and them that not particularly to support their the at work with and to both stored and digital
spk_7: thank you and i could just one more for him can you speak to your priorities for cashier including the got level and any plans for potential repayment monsieur thank you very much plan to any excess cash we have right now is going to be focused on growing the business in that store growth in be dark about it seems to be the best sushi
spk_5: generation born with new customers and return on investment so that the number one focus as them today and he the business obliged to the worst year where we are we're very comfortable from the liquidity perspective very cold war gas from a generation and would be like got enough to manage we need to do to grab his business and and you're not me we come back with the highest best use of who we are focused on that roof and you i will pass it on don't care who our next question as from alex strife and with morgan stanley please proceed
spk_30: are you think you're taking my question today i'm to for me post on as she may i'm trying to understand how much ah of the seven eight million dollar number this corner was unusual and how you think about that going into twenty twenty three and then second a bit related to the that question it looks like cash level
spk_31: at the lowest of the year down quite a bit your over your arms you got might be normal cadence for you but i want to understand about wide and kind of how you feel about casual that the moment thanks
spk_0: you're out your your second question first not comfortable with gas levels it is a seasonal thing we've run out of all day
spk_1: in also as we'd both of the inventory that we came through last year with they the opposite i'm not at all concerned about that
spk_5: low liquidity of invention joe morgan an apple now liquidity and rub against got to germany middle class would be right when a twenty three years cash one investment of the group vehicles printer little store thing we talked about from a as create a perspective in the fourth quarter of a kind of a try
spk_0: to address the my commentary while we had

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