Signet Jewelers Limited Common Shares

Q1 2022 Earnings Conference Call

6/10/2021

spk_0: morning and welcome to the signatures first quarter fiscal twenty twenty two arrange go all participants will be in listen only mode should you need assistance please ignore conference specialist by pressing the starkey followed by zero after today's presentation there will be an opportunity to ask questions please note this event is being recorded an hour to turn the conference over to the a nice and easy senior vice president investor relations and treasury please go ahead
spk_1: a great thanks very much jason and good morning everyone welcome to our first quarter earnings conference call on the called layer thing that ceo jenna joe so cynthia for john health and during today's presentation will make certain forward looking statements any statement that are not historical facts are subject to a number of recent uncertainties an actual results may differ materially we urge you to read risk factors cautionary language another disclosures and our annual report on ten k quarterly content you and current reports on a case that 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 get a financial measures for further discussion of the non get measures as well as reconciliation for of them to the most directly comparable got measures investor should review the news release we posted on our website at www that signature rulers dot com slash investors and with that are turn the call over to jenna
spk_2: thank you veni and thanks to all of you who are on the call with that today i also want to thank our signet team members who continue to inspire me with their relentless dedication to our customers and to each other we are embracing new capabilities and connected commerce with excellent as evidenced in the quarters result thanks to our team we dump on the momentum of a very strong holiday performance and delivered boat a strong valentine's day and strong mother's day by continuing to serve customers whenever wherever and however they choose to shop a half further to death we are unlocking our team members potential we know from listening and from our ongoing surveys that our team members are inspired by our purpose they're proud to be part of our organization and they're confident in the tightly integrated strategies that our guiding our growth our team members inspiration pride confident expertise and growing digital capabilities are the most important drivers to of my confidence in our long term success it is an honor to work at their side as i review cygnets perform and thankyou one i want to leave you with three messages number one we outperformed que one expectations and are raising our fiscal twenty two guidance today number two were making steady progress in all four of our clear to play strategic focused areas and all three of our how to win core strength consumer inspired insight connected commerce president and our culture of innovation and agility we are continuing to expand of a straw length because we know they are sources of competitive advantage where outpacing market growth and as a result were growing share i'll talk through each of these point but first let's look high level at the que one numbers total sales were one point seven billion dollars an increase of more than two hundred and fifty million dollars or eighteen percent compared to que one two years ago this is significant because two years ago we had four hundred and sixty seven more stores then we have today ecommerce is playing and increasingly important role with fails up more than one hundred and ten percent in the quarter vs last year and one hundred twenty four percent birth of two years ago cash flow from operating activities of one hundred and sixty one million dollar here to date with up one hundred and sixty nine million dollars compared to last year and fifty six million dollars compared to two years ago having already pay down debt and with one point three billion dollars of cash a quarter end we are continuing to invest in growing our business and of joan will discuss returning cash to shareholders ending inventory with two billion dollars three hundred seventy three million dollars lower than last year our inventory reduction efforts are now institutionalized laugh about rationalization and more about optimizing our merchandise mac and availability getting the right product to the right places to maximise speed of delivery and fails our digital capabilities give customers to access to virtually every piece of jewelry and our system no matter where it is which is unlocking new levels of inventory productivity so this has become more than a working capital story were increasing our ability to flow newness into our inventory pipeline bringing more innovative new products to more customers more frequently and with data analytics were sure and we have optimized assortments where we need them el que one performance demonstrate that we are off to a strong start implementing faith to of thing that transformation which we call inspiring brilliant on that note i want to transition now to taking a closer look at the progress we're making and each of before but your to play strategic poker theory of that we outline two month ago in our virtual investor event first we are winning and our biggest businesses are strategy for keeping our core strong and growing of holistic it begins with the work we've done to differentiate or banners including merchandise assortment privateers balancing self purchase and gifting and offering brands that are designed to a peel to each banners distinct target customer for example we're generating compelling and highly targeted content that tailored for each channel where we communicate with customers and for the moment in their journey when they are engaging with us our merchandise assortment is also uniquely targeted for each banner including neil lane and adriana propel at k vera wang and disney enchanted veils lebanon and a tornado at jared and others across our portfolio perhaps most importantly we're focused on product or merchants are continuing to innovate and scour the market for emerging ideas in bridal that me into larger high quality diamond with more arabian and pfleger designed for the gift giver collections with meaning really help our customers it breath they're feeling and for the felt purchasing woman and man are most innovative collection reflect the style changes that we have seen this year yellow gold weird neck pieces and fully outfitted ears were finding that customers want to wear jewelry with all look including casual at leisure professional and they want to do so particularly now that they are reigniting their social life are differentiated banner proposition are working all of our us banners delivered double digit revenue growth compared to two years ago we attribute much of this to the success were having attracting new customers across our banners with our holistic marketing and customer experience strategies while maintaining the wealthy of existing customers as well for example roughly sixty percent of our sales growth and que one across k and veil came from new customers we've benefited from stimulus spending and other tailwind of course what we believe that we've captured more than our fair share of the spending by having the right targeted assortment with the right level of nuna differentiated by banner this is evidenced by cave strong growth and gifting
spk_3: and they authors in self purchase
spk_2: further increasingly optimized assortment for our target customers lead to an eighty v increase of nearly twenty percent in the manner vs two years ago when we combine our knowledge of product of a jeweler and our knowledge of customers as a retailer along with the scale of our data driven operations we win especially in our biggest businesses blackout we're making progress on our strategy to accelerate services which are returning to pre pandemic level services are especially important because they are a long term relationship builder the glue that connects a lifetime value of relationship and purchases but when a customer and are cygnet team we jump started services in que one in several ways we enhanced our financial services by expanding and strengthening payment offerings for customers we recently announced a new and more favorable agreement with too long term partners eighty or and genesis this gives us the ability to provide more payment flexibility more simply and more profitably then we could before were also continuing to expand customization services that remains a growing trend among recently engaged people thirteen percent designed to their ring from scratch you're offering customization tools across all our largest banners with the vera wang love configure raider they have customers can choose a diamond or a gemstone center k enables customers to create a completely customizable engagement ring with the create your own design tool or design a ring with neil lane forget that handcrafted hollywood glamour style just the way they want and at customers have a variety of ways to put their personal touches on jewelry whether adding an engraved rave to a ring or working directly with jarrod artisans online or in person at one of our in store foundry studios consistent with the customization sales are up low double digits in shared doors with a foundry we also continue to build on our investments and james ballon a specialist in the custom jewelry space and worth being strong result with more than one hundred thirty percent revenue growth to last year further we launched custom design and restoration of and across k they open jared in que one we offered customers a ten percent discount to bring an existing pieces of jewelry to be reimagine or restored to their previous brilliant the the them on their own enabled us to feed our goals for the quarter and we plan to continue hosting them they enter by banner going forward we're also moving into new areas such as jewelry rental subscription with the acquisition of rocks rock and were quickly growing brand awareness through cross promotion within our banners jarrod for example awkward customers a free to month subscription to rock bar when purchasing address repeat and then provided a bounce back coupon to anyone who activated iraq sparked the description will be offering a growing range of craft and promotion like the and the month ahead including or walks box rental offering partnership with and pagoda the summer we're building momentum and services which we continue to believe is a billion dollar growth opportunity on the path to the nine billion dollar overall revenue goal we laid out at our virtual investor event the third strategic focus area where we're making progress is the banding mid market accessible luxury and value we're focused sharply on growing the top end of the mid market with more intentional accessible luxury offering for example jared fastest growth this order came through higher pipe price point merchandise primarily above three thousand dollars this includes jarrod new premium diamond assortment with the oath of larger stones up roughly thirty percent to two years ago chosen platinum for nina turner a and royal asher were strong merchandise drivers piercing pagoda is expanding our strength of the value end of the mid market delivering his strongest quarter ever and que one just to emphasize ever mean que one fiscal twenty two with higher total revenue than any prior quarter for pagoda including fourth quarters customers are highly receptive to our new assortment with particular emphasis on gold which represent seventy five percent of pagoda failed pagoda now has more than one hundred thirty five doors on track to deliver a million dollars and failed this year and we currently have for pagoda location that already have more than a million dollars and fail to date that the school year a feat that took until august to achieve in fiscal twenty we're eager to keep pearson pagoda growing and highly relevant were taking who critical step in that direction by investing in advertising and launching a branding refresh the strong return on our additional investment in advertising with proven the quarter as we continue to increase pagoda banner awareness sales were up the real time to que one of last year and up eighty percent to two years ago on a smaller store base in both ears or second up obtaining branding if one that we believe will further accelerate our return on advertising spend our customer research indicates that the piercing pagoda name doesn't have the same modernity that our merchandise and banner experience bring so were kept the opportunity to freshen and broaden pagodas brand equity and attract new customers while retaining existing one our fourth strategy is to weed digital commerce in the jewelry industry our ability to combine digital and in store experiences at the gail we are able to is a significant competitive advantage and we're continuing to innovate and to invest in both for perspective k delivered nearly seventeen percent more brick and mortar sales per square foot of physical store space than in the first quarter two years ago and they off of delivering thirty five percent more in total que one ecommerce sales were up more than one hundred and ten ten percent compared to last year and brick and mortar same store sales were up more than one hundred and five percent as part of our growing connected commerce approach we are integrating or physical stores into the digital customer experience with data driven in store consultation by online pick up in store and curbside and increasingly theme with interaction across our website stores and inventory pipeline disintegration of making a different while physical foot traffic is still down compared to this time two years ago we've delivered growth through both higher conversion and higher average transaction value we believe this is because we are starting to provide a bath and klaus experience from the first touch point of the digital shopping experience all the way through in person store consultations and fulfillment we added more than one hundred new features and capabilities across our digital platforms and kill one to ensure every digital touch point is a moment of customer delight virtual try on for k drove over a one hundred and ten percent increase in it's add to cart rate and nearly seventy percent increase in order conversion and que one we also rolled out google business messages and apple business chat feature that allow customers to engage virtual jewelry consultant in real time or off line from search results or map applications like these are laying the groundwork for further enhanced month later this year as we build our agile team infrastructure and iterative innovation capabilities last year we implemented virtual selling at the end of que one and had around fifty thousand and virtual interactions with customers this quarter we had more than four hundred and fifty thousand virtual interaction and importantly conversion is also improving as our team capabilities continue to mature further are crowed to check out conversion rate is up and the rate of fight visit that turn into court view is up as well our digital development team or not settling for creating the best online jewelry experience they're setting the bar higher by finding and innovating the best online consumer experience with in any category and then bringing those experiences for our jewelry customers i'll share one quick example of how this integration and growing digital capability is working we recently worked with a customer who came to work through our virtual chat feature with a mission and the deadline he wanted to propose to his girlfriend the next day erica one of our virtual consultant noticed that urgency and of messages and she made it her mission to help him achieve his this customer soon to be fiance had a dream ring and mind a cushion cut to carrot thin pov a ring and white gold erica immediately began searching our virtual inventory to identify stores nationwide that had or could create the pc with looking for she found a store near him i'm that had the cushion cut with the color clarity and five that he needed erica connected him directly to the door the next morning he was greeted and person by are in store consultant yara who was ready to serve the customer love to the ring and bought it on the flawed a twenty five thousand dollar fail i might add the team that and five the ring while he waited he proposed that evening she said yes and he sent our team photos of the happy moment the customer told of he loved being able to start his shopping journey virtually look at people online chat with a virtual consultant have a do the shopping with him and then have the diamond and ring together for him to view and person that the power of signet conducting digital and physical alongside our mission of helping all people celebrate life and express their love then and twenty four hours or laugh when i hope you can see if that we're growing in each of our integrated strategic focused areas the best strategies are tightly integrated and create more value because they are mutually reinforcing if making a different of we've outpaced market growth over the last year and are gaining market share i also want to emphasize that we're delivering the performance i've outlined with a deep sense of purpose we're committed to ongoing leadership in corporate citizenship and sustainability and we view ios see initiative as an important growth driver this path quarter we really the company's first ever corporate citizenship and sustainability report this reflects our continued leadership prioritization and board oversight of he have three initiative we announced or twenty thirty corporate sustainability go through our three love love for all love for team and the love for our planet and product as we enhance our corporate citizenship and sustainability goal we believe in prioritizing our own team this quarter we launch cygnet first team member experience which is focused on providing team members with an exceptional and inclusive place to work while also providing a row both that of learning and crew career development opportunities having been named a certified great place to work company last year we aim to keep our high engagement and discretionary effort momentum going and we are active in the communities we serve as advocate for change we made the first donation from our cygnet levin fire foundation to the equal justice initiative as their have much to be done to fight systemic racism and in line with our mission of celebrating life and expressing love for all the company is celebrating pride month across the net banners and have endorsed the human rights council given a statement on anti lgbtq poor the legislation as a global company with a long standing partners and vendors around the world we donated to the good a charitable trust in india with the intention of support for covert relief effort we believe the purpose inspired actions are attracting even more top talent who are highly dedicated team and are attracting and appealing to customers who are voting with their wallet in support of companies and brand that share their values and take a stand in summary be inspiring brilliant phase of our transformation is off to a strong start we outperformed expectations and que one and we're making progress in all of our strategic focused areas we're growing our core strength and a meaningful competitive advantages and most importantly we are outpacing the market growing share and fulfilling our purpose of a company we still have plenty of hard work to do to sustain our performance and deliver long term growth but we're encouraged by the momentum that the building and inspired by the opportunity to serve our customers and help grow the jewelry industry i'll now time the call over to john and anc jenna hello everyone
spk_4: inspiring brilliant a good vamping our transformation and hedrick dollar rated r grow to deliver a strength fourth quarter perform our top line is outpacing the us specialty jewelry market and we believe we are winning share particularly in the mid market there are four key highlight of quarter for our financial performance with strong in the quarter as we grew our top and bottom line on a lower store base we grew our top line through higher conversion an average order value despite lower traffic top line throwing with complemented by or continued cockpit for plan and leveraging of are fixed pork base gawker or balance sheet a strong efficient use of working capital through inventory reduction and spend management delivered an increase in liquidity to last year third we could faithfully executed new credit agreement resulting and benefit to our customer and favorable economic the figment reflected in our rave of park leaving garden lacked we were committed to and broken figure grope and are raving our capital expenditures for the fifth career we are investing in our cowan banner differentiation and technology we are all go pleased to announce today the reinstatement of a common dividend demonstrating our confidence in cash flow and with performing despite our conservative view of the back half turning to the quarter first quarter total failed grew ninety eight point two percent over last year on a lower torbay or failed growth with broad base we've talked strong performance across for mac region channeled and category while overrode jewelry category trans remain healthy we continue to outpace america grow according to master card data the us specialty jewelry margaret grew over seventy two percent for the three month ending in april compared to about market growth our you have banner grew total feel more than a hundred and nine percent of quarter are integrated strategic choices including new connect to combat capability of modern marketing strategy and enhanced product before it meant are all enabling a more than two hundred and fifty pay for point increase to our brick and mortar conversion rate within our biggest businesses birth of two years ago moving on to gross margin we delivered approximately six hundred and eighty million dollars of quarter or forty point three percent of fail what about rate of a significant improvement to last year when we look back first of two years ago because they five hundred and forty base of porn improvement with bandit or gross margin rate through a combination of factors for our top line performing allowed to leverage big car and we are benefiting from cost paving within gross margin second services revenue carries a more favorable margin and profile and of growing importantly compared to two years ago in programs such to extended service agreement lastly through in ham pricing discipline and new capabilities we improved our merchandise margin during the quarter flexible fulfillment and ship from store provide our customers nearly all of our product a proper channel while more effectively managing your inventory throughout his life cycle for the first time shift from shore automation is now available across all of our banner turn a deaf dna actually name of approximately five hundred twelve million dollars or thirty point three percent of failed here again the rate reflect a significant improvement to last year but it it was also a two hundred and ninety based and point improvement to two years ago were effectively you think they they analytic to create a labour model that integrate for new capabilities resulting in a sixty percent improvement in labor productivity birth of two years ago er nu labour model coupled with are enhanced product performance and marketing strategy resulted in the fifteen point two percent increase in our north america average shrimp jack transaction value to last year in addition to labour productivity improvement we are continuing our cost savings effort including technology harmonization optimizing are will have a portfolio polio and overall and management non gap operating profit with one hundred and sixty eight point nine million dollars compared to an operating loss of one hundred and forty two point five million in the prior year first quarter non gap deluded vpn up with two dollars and twenty three phone up from a loss for share a dollar fifty nine in the prior year turning to the balance sheet we continue to drive working capital efficiency we reduce their inventory by three hundred and seventy three million to the time last year accounts payable also remains an important component of are working capital management and we continue to effectively manage payment terms within our network of vendor we ended the quarter with two point five billion dollars and liquidity up over one point two billion dollar to last year recall we have no drawing under our revolver and are longer term application mature and calendar two thousand and twenty four turning out a financial services and have recently announced weep for night fine alive agreement to restructure our credit offering we've extended and expanded agreement with who have our longstanding credit partners through calendar year two thousand and twenty five the term for the new agreement will help to dream or the profit for customer as an example eighty of bull originate a wider array of customer profile janitor will expand our second look program to do the same i'd note that all banner will now harmonize i've to offer our customers no down payment from the and thing with a minimum monthly payment structure beef agreement which are effective july for also provide favorable economic to signal as these agreements were more favorable than originally contemplated were raising our physical twenty two caught savings guided by twenty million dollars to a range of seventy five to ninety five million dollar and we now expect humor to have three your car failing to be in the range of two hundred and twenty two two hundred and four
spk_5: the million dollars
spk_4: recall our current agreement with third party non prime receivable perch of birth are in place until the end of june we have find a nonbinding letter of intent with them and are currently working toward a definitive agreement and the term would remove consumer credit riff from our balance sheet now i'd like to discuss our fiscal two thousand and twenty two financial guide him we continue to expect stronger failed performance in the first half of the fiscal year as the vaccine rollout progressive we continue to believe there could be a shift and wallet share away from the jewelry category poured experience oriented categories the magnitude and timing of which of difficult redact f that are planning for increased marketing expensive to continue to fuel momentum in the front half as well as pro actively manage against changes in consumer spending of the year progressive as a result week continue to conservative really plan for fame for failed to be negative and the second half of the fiscal year additionally india continue to see the tragic impact of a pandemic and while we've pro actively managed again disruption to date supply chain riff could increase later in the here we expect second quarter total fails in the range of one point six to one point five billion dollar with fame store failed in the range of seventy six to eighty two percent and non gaap a bed of a one hundred and eighteen million to one hundred and thirty million dollars for the fiscal year we now expect total failed to be in the range of six point five to six point that five billion dollars with same or failed in the range of twenty four to twenty seven percent and non gap a bit of four hundred and ninety two five hundred and forty five million dollar alert we remain on track to open up go one hundred locations and close at least one hundred locations with nine opening and nine closing the sheer this includes the thing a format that are quick the fed up and require significantly lab inventory on hand as well as for format that contain multiple banner will continue using format have thing the sheer to determine the best way to offer our customers or breath of capabilities of efficiently and effectively of possible our long term capital priorities remain to invest in the business pay down debt and reek time capital to our shareholders for in keeping with the of priority and as a result of our performance and cash generation we are increasing our cap backed by twenty five million dollar if to investing growth initiative
spk_6: the spring got to go twenty two capital expenditures to a range of one hundred and seventy five to two hundred million dollars with the continued focus on digital and technology investment to further strengthen are competitive advantage and long term positioning
spk_4: that can recall that we paid down the balance of a revolver and file alone and queue for of fiscal twenty one and our remaining maturity of which carry favorable interest rate come do and calendar two thousand and twenty four and third on capital return as we now today we are pleased to return cash to shareholders through a common quarterly dividend which have been reinstated at eighteen pounds per share before we open the call for q and a i'd like to take a moment to thank our signature team were proud of the result we deliver this quarter and we're proud of our team execution a commitment to each other and to our customer
spk_0: and as we look ahead we remain focus on our continued transformation under inspiring brilliant and now i'm from the call over to the operator to begin the q and a fashion but you will now begin to question and answer session
spk_7: chassis question you may per store than one on your touch tone phone if you're using the speaker phone please pick up your hands before pressing the key to withdraw your question please post store and to first question comes from polish way from city leave your home i drove abortions one arm remind us what person your product comes from india what you're saying currently in terms of delays fuck am you mentioned and putting an increase in marketing spent years that forrestal award when comparing that to when you say or in increase i'll have a look person hundred ninety levels and then laughter
spk_2: share the performance of stores that you've got that share a center with another one of your better or worse and though that stand alone in it and the center like i paul am i'll start out on the india question we we haven't actually given a percentage of merchandise that comes from in a different country but let me answer your question and a different way so first and foremost on were very concerned about the family and teams of our india partners that one of the reasons why we made a donation to the goodyear at raf that i offered earlier or talked about earlier we've all had been a very close touch with our vendors on their production planning we've actually pulled forward significantly our holiday or than what this does that give thereof vendors the opportunity to better plan their production and as they do that they can create more social distancing thing keep their employee safe that kind of thing as we look at their capacity even if some of them are running in the fifty percent range or and seventy percent range of capacity he believed that we have secured sufficient capacity to deliver the orders that we need between now and holiday are part of the come because we've really strengthened our relationship with strategic vendors over the last couple of
spk_4: years we've narrowed that vendor bay and as with worked with hundred they've diversified their production capability so they're not thing only you know in india for production many of them have expanded to other market whether that china or thailand or vietnam and so were able to accept those production side as well so any disruption that we might be i'm from this year we've already factored into our guide
spk_6: and paul with respect to marketing our our expense marketing in korea for both band are reflected as well in our guy them fund i would remind you that as we said in the past weekend
spk_4: leverage are are caught based on a slightly positive effect with plate with positive cop so that than are thinking of well in que one you can see that we were able to leverage are costs significantly and you know that of well haven't an incremental marketing them fail marketing for us is an effective mill mix of in a digital and social and we are working that on a day by day week by we both have with our marketing team so we feel very good about her ability to be flexible and were holding on the other marketing than within our guide and because of of of the year progressive than the relative and for envy of the back half and the potential shift of cough customer behavior to travel and other experience oriented categories we believe that are very important for us to maintain that flexibility with respect to real estate in multiple be on earth in pacific mall as we said in the path to our data analytics we look at our real estate on a trade area basis and so we do have clearly location with multiple banners the pagoda of the old an a k a jared a james allen and what we find a bad it's based on the market we don't see a distinctive different
spk_7: between banners within a specific mall and as i mentioned in my remarks we saw
spk_8: the strong performance across category geography real estate for we're we're really not seeing a distinctive of different stronger crop all
spk_0: gotten pretty good luck
spk_9: thank you again if you have a question please press star than one the next question comes from in and healthy front of the advisory group please go ahead
spk_10: congratulations on the night progress
spk_2: as you look at the average transaction value up both obviously in north america in international what are you a how you thinking about pricing and worth it in any particular category where you think the change and any any other particular category call out particularly for go into the back half of the year and any product and marketing initiative we should be watching for thank you hi dana thanks so much i'll start on that one of the atp and creepy that were saying are actually broad based off so we saw them both and brick and mortar and an ecommerce and we saw them across our banners the and we thought and both bridal and fashion what we would credit that who a couple of things one a of i think we're doing a better job getting the right customers to the right banner based on all of our targeted marketing and our new more distinct a banner value proposition and then we're better targeting the assortment that we have available in those banners we anticipated or that there would be some tail when from the amulet and tax refund checks and we actually broadened the earth sort meant to reach more price point so that when we had customers either interact with of online or in store we could get higher conversion rate that's what we saw and particularly when we have account for sale so for example in a calm when someone interact with one of our virtual console vs joking now
spk_4: navigating a fully on their own were saying that a tv is up substantially for that consultation really make the different to give customers confident in the product that they're buying so so broad based and i think also reflective of them the new strategy that we're putting in place
spk_9: and then with respect her their product marketing initiative the that i would have fit on here dean of of genocide it a point five and our biggest banner we were able to attract fifty percent of our growth was related to new customers so i think that speak to the strength of of marketing and and reaching out to her customers
spk_4: at the right time and having the right offer for them to support that your average transaction value growth on it just one follow up inventory level how are you planning inventory levels in the second quarter and balance for the year so what we're really pleased with a nerve that we've been able to continue on are working capital plans and a life by go management and is jennifer and image where management of now institutional live and as we think about that that mean the flexible fulfillment the ship them for automation by on line pick up in door and than having our inventory all of our product nearly all of our product available to our across all of our customers irrespective of she and
spk_2: all is what we're going to continue to work through and drive our our assortment and and driver inventory efficiency importantly this is opening up our ability and that product team's ability to bring in a more frequent flow of new product and in particular important as well when we think about
spk_11: out the shelf purchase for and and the fashion customer so i'm really pleased with how the inventory of being managed by the team i get the one thing i would add on that his life cycle management were also because were accessing product across the
spk_0: no our store bay nationally were able to move more quickly through a down cycle and so were saying that happen and in a higher margin way which is also benefit from bonus
spk_12: thank you
spk_13: the next question comes from tim beer go from north coast research please go good
spk_12: good morning and member you taking requests you
spk_14: i was wondering if are you go
spk_12: walk you through your october
spk_4: you either
spk_15: increase their and maybe an hour and a longer term from your for the or where you pure your arm maybe to your before how do you were eating your interview with me you wouldn't be good to are known to you
spk_4: there things go with respect to our our capital investment in our in creative it really about continuing to drive on digital and technology innovation and we spoke about it our and after day the are or harmonization process of still underway we believe we have from time to go on add another year or so and then the digitally of digital investment the are ongoing and we are pulling forward and accelerating the thing that we believe have the they the greatest opportunity for growth and can better serve our customers and remove friction and of integrate connected commerce
spk_2: in a more powerful way so that our focus on that will continue you know throughout the next couple of years and really of support our our vision they add in inspiring brilliant that we're we're looking to connect our customer wherever and whenever and however they want to shot him and i think i in terms of the longer term question that you asked you know what were we are of company who is hungry and believe when continual improvement so i think no matter what faith of the transformation we were in i would say third inning
spk_16: you know that because we we feel good about the progress that we're making we will leave a strong foundation we believe that we are building competitive strength that are enduring
spk_12: and can lead to long term sustainable growth but we always think about the in a hard work ahead to really make that a reality and and never lose sight of the goal which of course with winning the world theory bloody opportunity of or your about you have a regular or grieshaber term average of one row little bit you mentioned or merchandise murdered during the quarter jews or growth at retail retailers are are getting the prices they want to limited commercial mercury to new walk through whether euros promotional throw you changed your views beam the demand you search
spk_4: the shorter or longer me from indicated that manages to you know to recapture you better still brigades walk through hundred regular water pure thank you from the perspective of merge margin the life cycle management of valve is helping to really improve or margin is benefiting from the life cycle management activity but from where promotional perspective what we found is that we are because of that we are able to a have been are marked down a and able to you you can see that in or average transaction value though promotion were not necessarily pulling back but as it's not as widely caf when we do run a promotion that number one to be assortment of valve is
spk_0: and the new know is really the customers responding to it feel the need for promotion is is laugh and we're really pleased with that and in origin of that earlier be on leave at a t v or the the assortment live that we're seeing as broad base so it's good for cross fashion am your core product unbridled so it's really a healthy inventory a great life like a management by the team a and you know continue to valuation of where we need to take our price point
spk_17: thank you again if you have a question please post or than one
spk_15: the next question comes from lorraine hutchinson from bank of america please go home
spk_4: thanks good morning on i wanted to follow up on the the commenter on the enhanced relationship with your credit portland
spk_15: what can make them field from each type of credit at that point and keep compare the profitability of will to your beer with payment option
spk_4: oh what we what we can be is that the customer right now lorraine is really there's a mic shifted in bank card you vs plc fee birth of an elite thing and we're seeing the customer you know being able to make a choice which is what's really important for us of for them to have a choice in
spk_15: you have opportunity to buy jewelry through whatever works best for them
spk_4: so with the change and provider of what we're seeing or the the change in the agreement and the new agreement we just find we're seeing that the economic benefit is that a bf and janitor through the second look program with jennifer and eighty yeah
spk_18: if you know the prime provider they hit their they're able to offer that to a wider array of customers
spk_4: would have been purchased through
spk_2: the the non prime provider in the path so that's where the benefit of coming from a and we're really pleased with the opportunity to harm and i thought program as well across our our customer base for with phone it the it the a country where benefit that we can all go offer more promotional program i'm with them and the other benefit that i would your highlight of i mentioned in my remark is bad with their nonbinding letter of intent on that would as we move forward and get to the definitive agreement that would remove consumer credit risk from our balance sheet importantly
spk_0: the other thing i would just add is from the consumer perspective the variety of finance options that we are now offering is highly appealing
spk_7: it was a much more narrow that in the past but for example i'm online attachment rate for financing alternative historically has always been a lower but we're seeing that grow dramatically and particularly among jan the customers were seeing our farm what hey product grow but sixty percent of the usage of that product is jen the so we're really thinking more strategically about having a mix of financing options that appeal the customers across channels and across demographic
spk_12: and you
spk_7: the last question come from like burrito from will forgo go home
spk_19: and your morning everyone is to questions for me on the back her palm garden for you to coverage maybe give us some insight into on how you thinking about the negative call me trafford are expected to worsen i'm just gonna cure it was going to your thought processes because the big as long as you dumb doing so well in real time
spk_4: jobs you if you talk of are so any hope they're be great and then maybe joan just on inflation and clearly due to inflation and of they are key input your gold silver diamonds you can talk about that the do get impacting you wish you good more with one twenty two dynamic of you need to keep in mind is to the anything there would also beautiful great bank like as you noted that back half of the year is it yeah remained hard to predict for the reason that i detailed but we think are both had when van halen trade and fell as we think about the the tail when consumers coming back to the author actually and the shopping that might entail may you included for thriving as well we we feed your point on on gold wifi continued strength and gold and believe that that is it without college trend and that and it also a passion
spk_20: and trend and of go from a fashion perspective we we think that there's their strength fair but every think about the head when the larger headwind the pent up demand for experience make fun experience a factor of like vacations and restaurant the movie
spk_4: you that the unknown that were just prepare for and of we mentioned were prepared to we have marketing and place in our and is reflected or guide and to you do are do what we can do to control that and as also you mentioned we did have a backup complex show that was a pocket of camper fun so so we believe that we need to conservative conservatively plan be realistic but you know do the things that we can do within our was within our strategy to on drive our business and be at we are having traction if we've of with every mentioned with are inspiring really and strategy so we're saying that come to life to our marketing your product and our new capabilities and as we mentioned were going marketshare so will been into the a good thing that were doing and control the things that we can
spk_20: i don't push him
spk_4: on and on inflation what we're seeing is it very interesting bear if for electricity in gold and or the franklin gold is something that were able to work through from uprising perspective and really work with our vendor bay
spk_0: to prevent product your customers that enable them to continue to buy gold even with yeah rising prices so that that bad and then if we look at the vendor networks that we do have our relationships are very strong and more able to work with our vendor teams to put product together
spk_2: the to your fair fire customer thing continue to drive the if the economic that we need to drive to support our business are you have one another you that will give the inventory turkey burgers slow so the inflation we're seeing now is really going to come through next year to do anything for money you see perspective that we should to keep in mind that you'll be coming up against the your four months from now
spk_0: and what we're seeing if that were able to navigate currently and fail and out for buying and a buying through our product now that we're able to work our way through it and will continue to do so as we progress through the air and if we see anything different will will be sure to know work for that comment on it in the future
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