Signet Jewelers Limited Common Shares

Q4 2021 Earnings Conference Call


spk_0: the morning everyone and welcome to the internet jewelers fourth quarter of fiscal twenty twenty one earnings call all participants will be analyst and only mode the need assistance please you know countered specialist by pressing the starkey our guys zero after things you know the opportunity to ask questions to ask a question you mean press star and one guy your questions you may press star in two thousand and three is event is being recorded at the time and like to turn the car dollar if you've any any three sep of through relations and treasury sir please go ahead
spk_1: thanks very much jamie and good morning everyone welcome to our fourth quarter earnings conference call on the call today or signal ceo jenna joseph and see if oh joan hilson during today's presentation will make certain forward looking statements and a statement that are not historical facts are subject to number risk and uncertainty than actual results may differ materially we urgently read the risk factors cautionary language other disclosures on our annual report on ten k quarterly reports on ten q and current reports on form ak except as required by law we undertake no obligation to revise are publicly update forward looking statements in light of new information or future events during the call will discuss certain non gaap financial measures for for further discussion of the non gaap financial measures as well reconciliations of non gaap to gap that most directly comparable investors to review the news release we posted on our website at www dot cigna jewelers that can flash investors also please note that we plan to hold a virtual investor event on april twelve registration details will be announced soon and without her in the call over to the jenna
spk_2: thank you getting and thank you all for joining us today let me begin by sharing our results for the fourth quarter and then core elements of our strategic path going forward i want to say first and foremost how incredibly proud i am of our signet team and to thank them not only for their achievements this past year that also for the amazing dedication and agility they've demonstrated throughout our three year path to brilliance journey we've put our culture of agility and efficiency to the test time and again and signet people have demonstrated that we're continuing to transform this company and are well positioned to deliver sustainable long term growth q for is a good illustration of the capabilities were continuing to build same store sales growth seven percent with over seventy percent growth in ecommerce sales we delivered non gaap operating income of more than two hundred and ninety three million dollars up nearly nine percent versus year damn
spk_3: while covert created significant headwinds in the first half we regain momentum and delivered as strong second half with nine point nine percent same store sales growth both are bridal and fashion businesses continue to be healthy and are strong ecommerce performance complimented the real opening of our stores
spk_2: our ability to pivot successfully three the pandemic and to deliver the back half performance that are team delivered it's rewarding especially if i look back at what we've achieved in the past three years in two thousand and sixteen and seventeen the company was losing share to smaller stuff
spk_4: salty jewelry stores to non specialty retailers and to online and pure played digital retailers the industry with changing fast and customer expectations for quality service value and personal engagement were constantly increasing and especially big change with
spk_5: how quickly people were growing comfortable with ecommerce and digital technology in the jewelry category a friend that accelerated dramatically
spk_3: this past year
spk_2: as we want path to brilliant we committed to make clear strategic choices and cultural changes that would build a strong foundation enabling us to pivot to growth
spk_3: when i look back over the last three years and compare it to where we are today i see three very significant differences first our culture is stronger we're more agile more innovative more efficient and truly unified behind an inspiring purpose second much more data driven today than we were then with a deeper insight that enables us to create highly personalized customer experiences and move with greater speed and precision
spk_2: and third we have a broader and stronger set of course during that create sustainable and growable competitive advantages each of these differences is reflected in the results achieved over the first three years of our transformation
spk_3: we eliminated three hundred million dollars and expensive benefiting gross margin and a three and a above our initial goal of two hundred to two hundred and twenty five million dollars we reduced our store footprint by more than twenty percent decreasing are exposure to low performing mouth and achieving higher than expected sales transference in our new connected commerce model meanwhile we grew our ecommerce they have to twenty three percent penetration above our initial goal of fifteen percent and more than four times the ecommerce penetration that existed before we started path to brilliant this transformation has been fueled by our strategic choices customer first omni channel and culture of agility and efficiency and by the investment we may behind those priorities in technology productivity and culture
spk_2: two best understand why we're now capable of delivering sustainable long term growth and why the next phase of our strategy is right it's important to look at what these investments have delivered over the past three years i'll start with the significant and strategic investments we've made in technology we placed a huge priority on data analytics with a deep commitment to become a more data driven company we developed and higher top talent we started building the tech infrastructure required for a digitally enabled business and we acquire james allen which strengthened our digital and ecommerce capability substantially
spk_4: this emphasis on data analytics and digital technology has impacted nearly every aspect of our business
spk_2: for example we now have a much more granular understanding of customer behavior across banners and at every customer touch point increasingly in real time
spk_3: we reduced our inventory by nearly eleven percent over the past three years by implementing inventory discipline life cycle management and new technology tools generating meaningful increases in cash flow and improving working capital efficiency all this while our merchants significantly strengthened our core hartmut and new product pipeline we've moved our banner website onto a unified platform enabling a much more seamless customer experience that's improving conversion and increasing transaction values this gives us the ability to innovate and to add new functionality much faster
spk_2: and we've dramatically improved the effectiveness and efficiency of our marketing mix this is a particularly important point so well share just one brief example cage jewelers the largest advertiser among our banners have cut it's tv spend in half over the past three years wow
spk_4: more than doubling digital marketing this change in mic has been data driven we know with precision we didn't have three years ago which media provide the best incremental return to make media spend more efficient this capability combined with our scale is a meaningful competitive advantage we've shifted significantly toward digital which enables customize communication but we're still able to command a leading tv presence in the jewelry industry at the same time which builds awareness and brand equity
spk_2: it's a very effective combination
spk_4: these examples illustrate what i'm most encouraged about and we're just getting started we're continuing to invest in both technology and talent and our business is becoming more customer focused and data driven quarter by quarter holiday by holiday
spk_3: the second area of focus was improving productivity which is now an ongoing priority across our business in fact productivity is becoming a mindset that guy how we innovate and execute in everything we do i'll give you a few quick example first cause we've cut more than three
spk_4: three hundred million dollars and operating costs that customers don't care about over the past three years and we reinvested a meaningful portion of those savings into growth focused areas that customers do care about the technology example of i just shared or a good illustration we were able to make the highly
spk_2: strategic investments because we improved our costs structure and created new flexibility to involved
spk_3: that get cash or diligent focus on cash conservation has enabled us to pay down more than one point three billion dollars in debt which included the full pay down of our revolver as a result were in didn't a year in a position of strong liquidity with one point two billion dollars in cash
spk_4: third doors
spk_2: we made significant progress optimizing our store footprint while we've closed more than a fifth of our locations over the past three years we've also opened and reposition stores in the right trade areas and in line with our portfolio be on our strategy
spk_4: as a result we've dramatically reduced or exposure to lower traffic mall and increased our off more footprint we've also been improving the customer experience integrating digital and physical not as an isolated channel play but as part of a tightly integrated data driven on
spk_3: new channel approach we're already seeing the early benefit of these move we achieved higher total revenue in the second half of the school twenty twenty one up four point four percent despite three hundred and ninety five permanent store closures and we've delivered by
spk_4: brick and mortar same store sales growth in north america for two quarters in a row
spk_2: i'd also like to highlight the improvement we've made in our culture this company attract passionate skilled experience talent at every position that the challenge we face three years ago was to unleash all the potential are people had within them the culture had become truth i load transactional and risk averse we've worked hard to create conditions for a new culture to flourish a culture characterized by freedom to try new things to take risks they all fast and the learn to move with speed and agility and to be empowered to cut costs relentlessly if they don't benefit customers we've also invested in our people with move such as our commitment to a fifteen dollar minimum wage for all you have employees and are deployment of love take care appreciation bonus award for full and part time employees a gesture of our gratitude for their commitment in the face eighth of unprecedented challenges people arriving in the more invigorating culture we feed and our performance but we also see it in employed comment
spk_3: in a recent internal survey for example more than ninety percent of employees expressed understanding of our business strategy and more than eighty percent said they are proud to work at cygnet and believe signet will emerge stronger from the pandemic
spk_2: for three years in a row signet have been the only special to draw are recognized on bloomberg gender equality and duck and just this year based on employee import they're it was recognized as a certified great place to work company our priorities and investment in technology productivity and culture war foundational figment of a much stronger company today than it was three years ago strategically and may actually and organizationally and as a result were better position to lead our industry
spk_3: and deliver consistent long term growth which the next phase of our growth strategy inspiring brilliant is designed to achieve the web turn now to the road ahead
spk_2: our own marching objective is to lead innovation that helps grow the jewelry industry while also increasing our share of the market in other words can make the pie bigger and get a bigger slice of the pie to do the were making clear choices about where to play and how to win
spk_3: let me start with our queer to play strategies first we will win in our biggest businesses we have the leading retail jewelry brown from their respective market cage rulers from the u s h samuel in the uk and people in canada all bridal gifting and felt purchase businesses are strong and growing will continue to win in these big core businesses with even sharper focus on data driven marketing proven levels of newness and strengthened core assortment and will continue to work we've done to
spk_2: align our banners with the customers they serve best blackout will accelerate services making it the glue that go from lifetime bond with our customers
spk_3: we will expand and improve existing services such as care repair and extended service agreement
spk_4: deep and relationship with new piercing and financial services
spk_2: and build on our fast growing marketplaces in ways that create even more opportunity to serve customers
spk_6: but you have access to new jewelry designers rental services and subscription offering
spk_2: third will expand accessible luxury and value are scale position in the mid tier jewelry market gives us the opportunity to stretch the traditional definition of the top of the mid market with greater focus on accessible luxury
spk_4: and stretch the bottom with greater focus on value these move will help us again share from independent mass market retailers and online retailers
spk_3: and for we're committed to read digital commerce and jewelry will serve our customers to ensure we're there whenever wherever and however they want to engage us this means increasing the percentage of our business coming through ecommerce increasing our share of jewelry eat
spk_4: commerce purchases and increasing our presence and social commerce with bespoke experiences and influencers we're confident in the strategic were to play choices they were bridge or scale play to our strength and are difficult for competitors to match
spk_3: given the journey we've been on will also confident in the evolution of are three how to win capabilities from foundational to inspirational from customer first to consumer and fired from omni channel to connected commerce and the continued enhancement of our culture to one of innovation and agility
spk_4: let's look first at of or consumer inspired when we began the path to brilliance journey we focused on lengthening our relationship with existing customers now we're growing our customer base with consumer inspired in fights and innovation this is leaving to stronger differentiation among our banners in fact with more bespoke product portfolio and personalized marketing k am veil delivered their stronger fourth quarter
spk_3: combined same store sales growth and prevails acquisition
spk_2: jared foundry concept is a good example we looked at converging trends the growing demand for personalization and customization technologies like three d printing that open up new design and production possibility and the desire of many customers to enjoy luxury experience so that were previously unaffordable too many mid market customers boundary concept emerge from our insights on the trends we're leveraging our existing network of one thousand four hundred skilled jewelry artisan and apprentices leveraging are scale to access metal diamonds in stone
spk_3: and the leveraging cad and three day printing design technologies in our stores and virtually to create an immersive experience
spk_4: customers are bringing unique and creative vision and the literally co creating jewelry they've imagine hand in hand with our skilled artisans we're expanding this concept more than fifty jared stores and online it's a highly differentiated offering that capitalizes on our mix of pro
spk_3: personalized services and scale
spk_7: next disconnected commerce we've been introducing new technology tools such a conversational messaging and hand tech search virtual try on an virtual consulting for some time in fact we added hundreds of new search browse and check out features in the second half of the for
spk_4: go year
spk_2: but what different now and going for is how we're connecting them to create a theme with customer experience across technologies and touch point
spk_3: the way we've integrated virtual try on into a more holistic experience is a great illustration of connected commerce at work
spk_4: customers use visual search to find a fantastic ring from veil okay or jared on instagram or pinch rift they upload a photo and using virtual try on to see how the ring looks on their unique skin tone and fingers i've from there they easily book an appointment in
spk_2: door or with one of our more than seven hundred virtual console them and when they're ready they can buy in store or by on online and pick up and store or shipped directly to their home com commerce technology enhances the customer experience celebrate cook customer diversity on the of our inventory nationally and helps drive sales and higher spend while also reducing returns in fact with connected approach i just described using visual search try i on virtual appointment and messaging is gaining traction and increasing conversion accounting for more than one hundred and twenty five million dollars in revenue in the back half we're testing they've connected tool on a wide range of fk use right now and expect to roll them out more broadly across banners this spring the last how to win strength i want to touch on his culture of innovation and agility we're creating a culture that power by our purpose inspiring love and that thrives on innovation and agility
spk_3: building on the lightning fast wave we've made decisions during covert we're looking to unlock faster paced iterative learning to empower agile work came and to bring divine thinking approaches to problem solving
spk_2: we're working hard to turn innovation diversity speed and transformational productivity into signature characteristics of our culture we saw the characteristics and grow during the past year and especially flourish in the fourth quarter the twenty twenty holiday with approved point it was a data driven holiday fueled by innovation and supported by precise execution on all fun
spk_3: for example we reinvented how we plan labor in our stores using real time data analytics to model every store hour by hour every day of the holiday season
spk_2: we were able to predict which stores had the greatest potential to drive failed by staying open later and which could be closed earlier to maximize the return on our store labour investment
spk_4: we scheduled appointment before and after hours and youth curbside filling and pick up to accommodate various customer needs including health requirement
spk_2: and our new configures capability maximize the efficiency of store work flow kept customer wait time down and enabled faster by online pick up in store services
spk_4: we equipped are jewelry consultant with clientele and tool and technology that they can now use no matter where they are at home in a store or elsewhere creating zero difference between them and their best customers
spk_2: we reduced customer care volume with an online order tracking tool that freed up our care team to focus on customers who were ready to buy which more than doubled phone and chavistas sale and finally on peak days we used every bit of the five fold increase in ecommerce distribution capability we built between april and october resulting in over ninety percent ninety eight percent of econ orders fulfilled on time as promised
spk_4: this is to illustrate than in every part of the company we were ready with capabilities and distribution that did not exist three years ago
spk_2: it's how our team delivered a strong holiday and back half in the face of unprecedented challenges when i hope you can see if the tight interdependence have the strength
spk_4: when we discover inside inspired by consumers
spk_2: ah no the insight into theme look experiences through connected commerce and when with customers through a culture of innovation and agility we develop competitive advantages that enable sustainable long term growth
spk_8: with the strategic choices we are committing ourselves to be an innovation leader of the jewelry category which is a vision that inspires the very best alone
spk_4: i'll close on the point didn't it exists to inspire love and our jewelry products and services are designed to help people celebrate life and express their love
spk_3: the power of love is not an abstraction if the heart of our business
spk_2: in infused with our work with meaning and purpose it's a standard of responsibility and an enormous motivator of performance
spk_4: you see every time we help someone express their love we make the world a little better every time we stand up for love
spk_3: we make our so and those we love a little stronger and every time the love we inspire inspires love and others we fulfill our purpose of a company
spk_2: this is what inspiring brilliant means to us we want to be and how we'd the change that we want to see in our industry and in the world our path to brilliant journey has been an invigorating experience for all of us and we're are not letting up now with our moment to lean in and to keep accelerating the work we've begun it's a threshold moment as we take figment from the able to growing to great
spk_9: all now hand over to john and then we'll be happy to take your question thank you drama hello everyone we delivered a strong quarter and and to our fiscal year by continuing to execute and crew from for we drove the top line you bring in hand and new channel capability that allowed to serve our cry from earth and bear turn seem to have strengthened product before meant second we continued to drive operational efficiency in the form of expect control and inventory management these discipline allowed of the anger year and a provision of financial strength with one point two billion dollars in cash we're prepared to fuel the next phase of or strategy for long term sustainable growth fourth quarter polo field grew one point five percent over last year and famed dorothy of grew seven percent ecommerce failed grew more than seventy percent to last year north america delivered ten point four percent famed for feel for driven by continued strength in both bridal and fashion categories north america ecommerce failed route sixty six percent international fame fame for failed declined twenty eight point three percent which have a three percentage point negative impact to segment fame for feel for the quarter are you pay for the record for most of the quarter of a result of governmental lockdown that fed our international team delivered long one hundred and fifty percent ecommerce bro reflecting are only channel focus before we continue down the piano i'd like to provide a real fate update have continued optimization on our physical footprint remain a cool priority and complimentary to our digital footprint we permanently closed three hundred and ninety five story for sure
spk_2: we also repositioned thirty three traditional mall in for new off mall location
spk_9: you have a grandfather now if it had provided our cream with data driven him five and be deeper knowledge of how to best optimized for physical and digital fat and and a given trade area in addition to our store closures we identified opportunities for new store leaving through the opening of twenty peer thing for go to store and fiscal twenty one moving forward we plan to close over one hundred sure than physical twenty two as well as open up to one hundred location primarily and highly efficient piercing pagoda key off we continue our testing of a variety of formats such of k fail and jared j brown combination forth as well if prop up the door to continue along the piano we delivered gross margin of quarter of approximately eight hundred and seventy million dollars or thirty nine point eight percent of fail this is two hundred and twenty five point below last year excluding restructuring charge of due to a combination of strategic promotion relating to inventory up innovation and reduced levels of thirtieth revenue related to lower through traffic
spk_2: as she in a with approximately five hundred and seventy four million dollar down about fifty million dollars for last year
spk_9: driving a three hundred and twenty base of point rate improvement the improvement with driven by structural car fading and redo flavor level nunca operating profit with two hundred ninety three point eight million dollar up over twenty three million dollar to last year and a squirrel one point nine million dollar an effort impairment and restructuring charges related to the path to brilliant transformation plan fourth quarter nine gap apia with four dollars and fifteen fun from three dollars and sixty seven cents in the prior year turning out of the balance sheet we continue to focus on inventory life cycle management and strategic clearance upfront all of which contributed to a nearly three hundred million dollar reduction in our inventory to this time last year the flexible for filming capabilities that we haven't place are helping to minimize stranded inventory and to drive a higher fulfillment rate on customer orders our focus on cash conservation and expect control has been a clear priority for up you'll remember that we also extended repayment term food vendors and negotiated rent for with landlord these efforts in combination with our failed performance are largely what contributed to our strong and in cash balance of approximately one point two billion dollars this quarter we paid down the remaining balance of our revolver as well as paid off the one hundred million dollar file alone turning for cost saving having now reach the three year mark of our path to brilliant transformation we eliminated three hundred million dollars of cumulative cough well above the goal we initially for three years ago these efforts were largely derived from efficiencies in labor store operating and inventory related costs and direct or thing turning the financial services recall that we had been originating accounts and for second quarter and we ended this fiscal year with seventy two million dollars of receivables on our balance sheet that have allowances but both account are performing better than expected in january of two thousand and twenty one we signed an agreement with and bathroom and which they will now by newly originated sub prime account through june of the sheer we are currently evaluating available options to determine the most effective way to structural provider of and services to best meet the needs of our customers now i'd like to the our fiscal two thousand and twenty two financial guide him we have that stronger failed performance in the first half of the fiscal year as the vaccine rollout progressive there could be a shift of consumer discretionary spending away from the jewelry category toward experienced oriented categories the magnitude and timing of which is difficult to predict further we expect categories with pent up demand to be promotional in order to capture discretionary span as such were planning for increased mark an expensive to continue to prove fuel momentum in the front half as well as pro actively manage against changes in consumer spending as the year progressive while our transformational initiative continue to gain traction were conservatively planning for same store sales to be negative in the second half of the fiscal year we have targeted further cost saving this year expected to benefit both as she and and gross margin in the range of fifty million to seventy five million dollars to help mitigate increase levels of investment with a cost saving goal of one hundred and seventy five to two hundred million dollar over the next three years we'll continue executing on our strategic strategic priorities which we see contributing to an accelerated first quarter that include total failed in the range of one point four two to one point four six billion dollars and non get even of forty perfect three million dollars are preliminary que one thing for sale through march fourteen were up approximately sixteen percent and we expect first quarter same for sale could be in the range of eighty percent to eighty four percent as we anniversary temporary door closing from last year for the fiscal year we expect total failed three in the range of for five point eight five to six billion dollars with same store sales in the range of fourteen percent to seventeen percent and non gaap ie bit of two hundred and ninety two three hundred and twenty four million dollar if you recall that we cut capital expenditures for eighty three million the past year to focus on cash conservation in response to the pandemic for f y twenty two capital expenditures are plan to be a one hundred and fifty to one hundred and seventy five million with a focus on digital and technology investment to further strengthen our competitive advantage and long term positioning we've also made the strategic decision to target a duck leverage ratio of below three times even car over time our long term capital priorities remain to invest in the business pay down debt and return capital to our shareholders a large amount of uncertainty still exists and will continue managing the factors under our control as well as anticipating and reacting to changes in consumer behavior as the year progressive depending on the timing and extent of potential changes in spending future result could differ materially from current guy them before reopen the call for q and a i'd like to take a moment to recognize our cygnet theme there have been a cultural shift in our company over the past three years as a result of our team average commitment to our transformation strategy and our purpose we have momentum and we're excited to em for the next phase of our growth strategy
spk_0: and now from the call over to the operator to begin the q and a session ladies and gentlemen and will begin question he wasn't going to ask a question a product or and men one using a touchdown telephone to withdraw your questions you may prefer are here to it are even speaker phone with you at the hands before partner to ensure the best quality again that a star and then one to join the question to you
spk_10: are frequently than a compound all weekend i'm going to with your question
spk_0: north america transaction to have cameras and courage we could talk a little bit vulgar look like girl he cumbersome stores were awful jury how big
spk_9: mine pick up and store was her the quarter and and beer whatever you might be able to share their months revolution jersey or more about the marketplace the that he spoke about or were you now with that and this and how you see that evolving over the next year so after paul on from other maps matter question that you had our ecommerce performance you know as we talked about traffic was up our conversion worth up our a tv was was strong as well online when you look overall at the store if what we saw on the lower traffic are conversion with also very strong and we were able to drive transaction so overall we feel very good about the team respond to the corridor that we went through in terms of capacity of constraints the uncertainty and the agility that the team really demonstrated with respect the fuck are flexible fulfillment and your ship from through opportunity
spk_6: but it really helped mitigate of capacity constraints
spk_3: and paul high as jenna i'll jump in on iraq by on one pick up and store and marketplace questions you know we only are got by on line pick up in store really running in the fourth quarter and so it's a nascent capability for us that our team execute a brilliantly and we had very high customer satisfaction very high online on time fulfillment in fact i'm eighty six percent of the order
spk_2: they were picked up and stores within three hours of receiving the order in the month of december so our teams were really all over you know bringing that new capability to life and one of the interesting customer dynamic says we typically see a customer who we call the late inspiration seeker on typically male
spk_3: who buys a late in the holiday season on here with an over user of the buy online pick up and store technology had more than six thousand items
spk_4: picked up in our store in the last couple of days before christmas i'm primarily men so if you know it's really proving out i think to be a strong technology for us
spk_3: the other one on flexible fulfillment i'll just mention a ship from store so we had turned on capability to be able to ship directly to customers from our stores in veils pre holiday where now turning that on across our other banners and that a real our inventory opportunity for us it online
spk_11: lot stranded clearance inventory as an example across our store network and also allows us to out to have a very broad ecommerce offering for a customer so flexible fulfillment is benefiting up in a couple of ways in terms of marketplace you know we have a very successful marketplace and our business or
spk_4: the with james allen dot com
spk_2: are we also have stood up a more of a wholesale kind of a marketplace to serve independent jewelers leveraging are scale in diamond bombing and that is a very early but proving to be on a good new business for off and then we believe that with our scale we have the opportunity to bring and some new capabilities to life you know these are these are not yet the you a ready to do more and more dreams than the you know anything but we're we're looking into customers desire for rental jewelry for subscription jewelry
spk_3: customers desire to access new designers that they might not be able to find anywhere else and for example unveils we've already begun a process of discovering these new designers who don't have the scale to be in store but we can help them with our vendor relationship
spk_10: you develop their product lines and then they can start out in in our website you perhaps in a more marketplace you know oriented environment so we think there's some real applied for us over the next couple of years with we begin to on flush out those ideas and bring those capabilities to life
spk_0: thank you to look know are going to come from my important and bank of america
spk_12: with your question
spk_13: thanks good morning
spk_12: the a good question about the the long term margin opportunity it look like a guiding crumpled out to learn the five percent are colluding managing with the few is a good level that we should you as be on upon which your inbox to grow more could cheer or do see any other
spk_14: big lovers you can pull can move ball margin number higher
spk_9: thanks for the question the rain and was you know there our guide and range and penciled out at you know five percent to five point four percent which i'd note on the higher end is an improvement to of physical twenty at that said and long term growth remain for focus and our strategic the fish and then continued investment always consider sustainable long term share and share gain longterm long term sustainable growth and share gains and assuming a way to think about both of assuming and your flat the
spk_12: a slightly positive topline growth we can gradually and overtime expand our margins yeah largely due to our continued optimization efforts particularly with our fleet as well as other costs efforts that we consider within our car failings program thank you and then
spk_9: just give a few more comment on the fourth quarter grief margin decline and what your outlook is for the first half of your on that one of them well we've really don't give pacific island foreign are gross margin in terms of the outlook for this year but i would just reference you a gun back to the operating margin the and that we'd have book about arraigned but in the fourth quarter the we had strategic promotion of i mentioned and we have very strong he fell down activity the life cycle activities that for strategic supported are you selling strategies and the inventory management bad we believe have been a very large piece of our are thrown cash flow position so we will continue to the effort that would advantage of months and with respect to flexible fulfillment chef from store in a minimizing stranded inventory were rolling that out in the first
spk_0: quarter and a fourth quarter here for on k and jared bevel also know really help with our margin our merchandise mart and so on we remain village and very focused on turning our inventory faster and leveraging the new tools that we've put in place thank you
spk_15: in on a question comes from like work
spk_13: how come low fargo quick your head with your question
spk_16: the morning or this is will on for ike
spk_10: on can you talk about little bit about the parables it will put your it
spk_9: you know rudy booth but the not help to free cash flow or your from operation monsieur you to talk a little bit about you know will cause that sport
spk_15: yes ah thanks for the question well i would say that we have a a continued effort throughout the year two
spk_9: manage working capital much more efficiently and we've worked very closely with our vendor partners and have lengthened are terms we also had on from to for all of grant which
spk_10: we worked with our landlord gone know of course that will be paid here in f y twenty two but it was a concerted effort for us to manage are working capital more efficiently
spk_9: and it's you pick up to normal was going forward a we have our focus on cash flow generation for fiscal twenty two as i mentioned and will continue to have a focus on inventory payable and just overall cash management because know as i said we've been a positioned are plan conservatively we expect negative failed in the back half of the sheer and we keep that in mind if we manage your balance sheet
spk_15: your on the top floor and commuters from wonder what's gone with the possibility profile corners versus brick and mortar
spk_9: well we haven't really given that got him per se what we sat in fact it's not materially different what i'd share well as that when you think of the activity of fat agenda mention through virtual falling and ship from store you're going to the a higher concentration continue to the a higher penetration of econ failed and they out we moved through more of a and of them and tory and you know we would expect that to impact margins from on an econ and over time as that position normalizes a weekend know expected her to return to know we're everything today looks great and just sort of just what just one more for me can use can you talk about any plans to the the comfortable bed
spk_17: oh that remains out there in fear two thousand and twenty four
spk_0: and it will attract that as we progress as well as i mentioned are our capital priority of our and initially number one and best in the business and number to have to pay down debt leverage oh recall i've i mentioned on the in i prepare remark that we fully paid down or revive her reply
spk_18: oliver as well as our hundred million dollar five alone and what we have remaining are convertible are the convertible it's a convertible that as well as the note pay of all or senior note out there for on two thousand and twenty four
spk_2: but don't you are possible or next question three come from ghana cafe from the advisory group or you know what your question the morning every one of the think about the wage hike i think that with announced earlier this year by spring twenty twenty two i believe that you had been
spk_3: hang above minimum wage anyway what impact of that have and are there any other put in take on the in a given them reduction that we should be noted going forward and then can we talk about with the store portfolio the opening one hundred and closing hundred is this what we should expect go forward going forward and hello the integration of the multi banner stores progressing thank you
spk_2: hi dana i'm i'll start on that show yes we recently made a commitment to a fifteen dollar minimum wage across the us this is an initiative that we had already be gone so we started it in fiscal twenty one as a conscious way to improve our employee experience and we've been interesting that not only in our store
spk_9: years but also or distribution centers and our fulfillment centers and you're right that many of our store south already make above a fifteen dollar minimum wage because their wages so the combination of a base wage and a commission wage though on average were above that fifteen dollars but it's tough for paid oh who come in and are starting out and haven't yet though that base of the you know of clients and so we think this is an opportunity to not only continue to attract great talent but to continue to elevate the employee experience across all of our customer care distribution center and store team the increase of i said started and fifth the school twenty one and it is reflected in the the fiscal twenty two guidance that joan just gave dana with respect her the as she and a if we look forward you know you recall and twenty one we had we have foreclosure that labour and those story will come out occupancy rate occupant thabo you know come down in terms of rant and then a permanent cost or remove all tougher
spk_3: we look forward now will continue to drive operational efficiency that our store we've managed are are operating hours and will continue to lean into those i did get guidance for the year of fifty to seventy five million dollars in cost saving but i also will indicate that we are in bad thing of the agenda mention the in technology and digital tools that will continue to further our traction in our omni channel
spk_2: journey to connect of commerce and then again i mentioned the marketing investment which we think is very important were thing and traction as we noted and are created our quarter to the top line failed and we think it's important for us to remain position to respond to what
spk_9: going on in the market and just they have that flexibility in are thinking and that is also included in our garden yeah i'm into to add one thought on the marketing so were you know through march fourteen cup sixteen percent same store sales across signet that over twenty percent in north america we've really leaned into the momentum that we saw coming out of valentine's day which with very successful for us we we know that only about a third of tax on tax refunds are out there so far we would potentially benefit from another round of stimulus and so are you know our planet to use are very targeted marketing to try to attract some of that spending and then we've we've also made sure we have a strong back half of marketing so that we can be proactive and trying to offset losses that we might see if customers potentially turn their spending toward travel and other experiences once the vaccine has been achieved herd immunity
spk_19: and then with respect to are real estate dana we get guidance that you know a two hundred stores
spk_0: and over hundred start closing up to one hundred for the opening and what we really like about we're thing and the is in the peer thing pagoda highly efficient he application we opened twenty and fiscal twenty one
spk_2: and we're looking to invest and up to one hundred in physical twenty two and based on the result that we're seeing and these new opening with respect to your our footprint as we go forward we intend to optimize footage at all and virtual footprint will continue to evaluate by trade area
spk_3: and you continue to refer to our greenfield analysis on updated as result progress
spk_2: thank you ladies and gentlemen without war we were generated a question and answer session i like and a conference call back over to management for any closing remarks
spk_20: well thank you all for your participation on our call today as we conclude i just want to reiterate my profound appreciation for signet team for their passion performance and commitment to our purpose and our customers and i especially want to recognize my exceptional business partner and signet cfl
spk_0: oh joan health and his two year anniversary is today

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