Chico's FAS Inc (CHS) 2018 Q3 法說會逐字稿

Good day, and welcome to the Chico's FAS, Inc. Third Quarter 2018 Earnings Conference Call.

美好的一天，歡迎來到 Chico's FAS, Inc.。2018 年第三季度收益電話會議。

(Operator Instructions) Please note, this event is being recorded.

（操作員說明）請注意，正在記錄此事件。

I would now like to turn the conference over to Julie Lorigan, Vice President of Investor Relations and Corporate Communications. Please go ahead.

我現在想將會議交給投資者關係和企業傳播副總裁朱莉·洛里根 (Julie Lorigan)。請繼續。

Thanks, Nicole. And good morning, everyone. Welcome to Chico's FAS Third Quarter 2018 Earnings Conference Call and Webcast.

謝謝，妮可。大家早上好。歡迎參加 Chico 的 FAS 2018 年第三季度收益電話會議和網絡廣播。

Joining me today at our National Store Support Center in Fort Myers are Shelley Broader, our Chief Executive Officer; and Todd Vogensen, our Chief Financial Officer.

今天與我一起來到位於邁爾斯堡的國家商店支持中心的是我們的首席執行官 Shelley Broader；以及我們的首席財務官托德·沃根森 (Todd Vogensen)。

Our earnings release issued today can be found on our website at www.chicosfas.com, under investor relations, press releases.

我們今天發布的收益報告可以在我們的網站 www.chicosfas.com 的投資者關係、新聞稿下找到。

Let me caution you that today's comments will include forward-looking statements about our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry, which speak only as of today's date. You should not unduly rely on forward-looking statements. Important factors that could cause actual results or events to differ materially from those projected or implied by our forward-looking statements are included in our earnings release issued this morning, in our SEC filings and in the comments that are made on this call. We disclaim any obligation to update or revise any information discussed in this call, except as may be otherwise required by law.

讓我提醒您，今天的評論將包括有關我們當前對我們的業務和行業的預期、假設、計劃、估計、判斷和預測的前瞻性陳述，這些陳述僅截至今天。您不應過度依賴前瞻性陳述。可能導致實際結果或事件與我們的前瞻性陳述中預測或暗示的結果或事件存在重大差異的重要因素包含在我們今天上午發布的收益報告、我們向 SEC 提交的文件以及本次電話會議中發表的評論中。除非法律另有要求，否則我們不承擔更新或修改本次電話會議中討論的任何信息的義務。

And with that, I'll turn it over to Shelley.

有了這個，我會把它交給雪萊。

Thank you, Julie. And good morning, everyone.

謝謝你，朱莉。大家早上好。

As you saw from today's press release, performance in the quarter was mixed across our 3 brands, and consolidated results were below expectations. I want to emphasize 2 key points right upfront: first, we are absolutely not satisfied with these results; and second, we are acting with resolve to address the performance at the Chico's brand. Chico's FAS has a long record of disciplined cost management, but we know we can't grow our business through cost management alone. Our attention is keenly focused on establishing a similar record of consistent top line growth across all 3 of our brands, Chico's included. We have a very loyal customer base, an advancing omnipresence, solid financial footing and enthusiastic and committed teams within our company. These elements all give me confidence that we can improve the top line and reignite customer excitement for Chico's apparel.

正如您從今天的新聞稿中看到的，我們三個品牌本季度的業績參差不齊，綜合業績低於預期。我想先強調兩個要點：第一，我們對這個結果絕對不滿意；第二，我們對這個結果絕對不滿意。其次，我們決心解決 Chico 品牌的業績問題。Chico 的 FAS 在嚴格的成本管理方面擁有悠久的記錄，但我們知道僅通過成本管理無法發展我們的業務。我們的注意力主要集中在我們所有 3 個品牌（包括 Chico's）上建立類似的持續營收增長記錄。我們擁有非常忠誠的客戶群、不斷前進的無所不在、堅實的財務基礎以及公司內部熱情和忠誠的團隊。這些元素都讓我相信我們能夠提高營收並重新激發客戶對 Chico 服裝的熱情。

On that note, let me start with the Chico's brand. What happened? And what we're doing to improve performance.

關於這一點，讓我從 Chico 的品牌開始。發生了什麼？以及我們正在採取哪些措施來提高績效。

As you will recall, we launched a refresh for our Chico's brand in February of 2018. The launch emphasized boho styles, bold colors and original print that reflected the brand's artisanal heritage. We saw a strong response from target customers who connected with this look and feel. However, we took the associated merchandising, marketing too far. We did not have the appropriate balance in clean, classic, polished silhouettes or depth in the key basic items that appeal to our polished and our traditional customer. Actions are underway to turn around the brand's performance.

您可能還記得，我們​​於 2018 年 2 月對 Chico's 品牌進行了更新。此次發布會強調波西米亞風格、大膽的色彩和原創印花，體現了該品牌的手工傳統。我們看到目標客戶對這種外觀和感覺產生了強烈的反響。然而，我們在相關的商品推銷、營銷方面做得太過分了。我們在乾淨、經典、拋光的輪廓或吸引我們的拋光和傳統客戶的關鍵基本單品的深度方面沒有達到適當的平衡。我們正在採取行動扭轉該品牌的業績。

First, we announced today a leadership transition for the Chico's brand. Diane Ellis is departing as brand president, and the search is well underway for her replacement. In the interim, I will personally lead the Chico's brand. I am confident that our flagship brand will have the support it needs while we complete the search for a new brand president. Secondly, in terms of product, we have adjusted a portion of the spring assortments to appropriately balance the brand's merchandise architecture with a greater emphasis on clean, classic, polished silhouettes. We have reduced planned receipts accordingly, and we have invested into basics. We have also chased more classic styles that are performing well. Third, on the marketing side, we have repositioned our visuals to be more inclusive of all of our target customers. This includes adjusting in-store merchandising and display, print and digital media so that no singular look dominates. Our marketing will feature a better balance of both classic silhouettes and novelty style. Fourth, changes have also been made to planning and allocation to improve in-stock and stronger penetration in basics and top key item performers which did not have the necessary depth to maximize sales in the third quarter. For example, our Juliet pants and no-iron shirt programs continue to be customer favorites with strong sell-through, but we lack the inventory to fully capitalize on demand.

首先，我們今天宣布了 Chico's 品牌的領導層過渡。黛安·埃利斯 (Diane Ellis) 即將卸任品牌總裁職務，目前正在積極尋找繼任者。在此期間，我將親自領導 Chico's 品牌。我相信，在我們完成新品牌總裁的尋找過程中，我們的旗艦品牌將獲得所需的支持。其次，在產品方面，我們調整了部分春季品類，適當平衡品牌的商品架構，更加註重干淨、經典、精緻的廓形。我們相應地減少了計劃收入，並對基礎設施進行了投資。我們也追逐了更多表現良好的經典款式。第三，在營銷方面，我們重新定位了我們的視覺效果，以更加包容所有目標客戶。這包括調整店內的商品陳列和展示、印刷和數字媒體，以免單一的外觀佔據主導地位。我們的營銷將在經典廓形和新穎風格之間取得更好的平衡。第四，還對規劃和分配進行了更改，以提高庫存並加強對基本產品和頂級關鍵產品的滲透，這些產品沒有足夠的深度來最大化第三季度的銷售額。例如，我們的朱麗葉褲和免燙襯衫系列繼續受到客戶的喜愛，銷量強勁，但我們缺乏庫存來充分利用需求。

We believe these actions will enable us to better meet expectations for all customers who shop the Chico's brand. We do expect to see some immediate benefit from these actions in the fourth quarter but given the timing of the adjustments that are being made, we expect it will be spring of 2019 before meaningful improvement to the Chico's brand performance is visible in the company results.

我們相信這些行動將使我們能夠更好地滿足所有購買 Chico 品牌的客戶的期望。我們確實預計第四季度這些行動會帶來一些直接的好處，但考慮到正在進行的調整的時間，我們預計要到 2019 年春季，Chico 的品牌業績才會在公司業績中出現有意義的改善。

Next, I'd like to discuss our performance at White House Black Market.

接下來，我想討論一下我們在白宮黑市的表現。

The brand repositioning we began last year is underway, and we are making progress. White House Black Market merchandise margins improved significantly during the quarter, driven by better full-price selling. In addition, we saw strength in digital sales in the third quarter. From a merchandise perspective, we continued to watch and learn from our customers' response and to clarify our brand positioning. We saw strength in workwear, petites and dresses in the third quarter and will build upon those categories as we plan forward. Missed opportunities were in polished casual, particularly in August and September. Our assortment lacks the feminine detailing and aesthetic that our customers expect from us. We have also incorporated these learnings into our merchandise planning process for next spring. In addition, since our customer is responding so favorably to fashion, we plan to increase penetration in our overall assortment.

我們去年開始的品牌重新定位正在進行中，並且正在取得進展。在全價銷售改善的推動下，本季度白宮黑市商品利潤率顯著提高。此外，我們還看到第三季度數字銷售的強勁表現。從商品角度來看，我們繼續觀察和了解客戶的反應，並明確我們的品牌定位。我們在第三季度看到了工作服、小禮服和連衣裙的強勢，並將在我們未來的計劃中以這些類別為基礎。錯過的機會是穿著精緻的休閒裝，特別是在八月和九月。我們的產品系列缺乏客戶期望的女性化細節和美感。我們還將這些經驗教訓納入明年春季的商品規劃流程中。此外，由於我們的客戶對時尚的反應如此積極，我們計劃增加我們整體品類的滲透率。

Turning to Soma.

轉向索瑪。

Notably, our intimates business continues to deliver solid results. In fact, Soma reported positive comp sales of 2.4%. This better-than-expected performance was primarily driven by the ongoing success of the Enbliss collection, which offers superior soft comfort and support and our perennial favorite, Cool Nights sleepwear. We are also pleased to see strong customer demand for our core Vanishing collections and momentum from our recently reimagined Style Essentials, which replaced loungewear.

值得注意的是，我們的內衣業務繼續取得穩健的業績。事實上，Soma 報告的銷售額為 2.4%。這一好於預期的業績主要得益於 Enbliss 系列的持續成功，該系列提供卓越的柔軟舒適性和支撐力，以及我們一直以來最喜愛的 Cool Nights 睡衣。我們還很高興看到客戶對我們的核心 Vanishing 系列有強勁的需求，以及我們最近重新設計的 Style Essentials（取代了家居服）帶來的動力。

Strength in Soma is gaining traction, with October being the fifth consecutive month of positive comps. And we believe that we are well positioned for success this holiday season. Our assortment will prominently feature an enhanced selection of cozy and comfortable sleep sets, including pajamas and bras. We have also expanded our most popular Cool Nights separates to include multiple prints and colors. Our Enbliss collection is in stock and includes extended sizes and new colors. And there are plenty of options for giving and for self-indulgence. Overall, we are excited about our customers' growing demand for our innovative solutions at Soma. As such, we have a number of product launches planned for next year, focusing on fit, function and the ultimate answer for her everyday needs. We are continuing to invest in the Soma brand's rapid growth.

索馬的實力正在增強，十月是連續第五個月出現積極的業績。我們相信，我們已做好充分準備，在這個假期取得成功。我們的產品系列主要包括精選的溫馨舒適的睡眠套裝，包括睡衣和胸罩。我們還擴展了最受歡迎的 Cool Nights 單品，包括多種印花和顏色。我們的 Enbliss 系列有現貨，包括加大尺寸和新顏色。奉獻和自我放縱的選擇有很多。總體而言，我們對客戶對 Soma 創新解決方案不斷增長的需求感到興奮。因此，我們計劃在明年推出一系列產品，重點關注合身性、功能性和滿足她日常需求的終極答案。我們將繼續投資 Soma 品牌的快速增長。

Beyond the brands, we are also making strong progress and seeing positive results from our omnichannel investments. For example, our digital endless aisle and our shared inventory system have been connected to all stores, enabling customers to purchase online and ship from store. The benefits are exceeding our expectations, with increasing demand. And we are leveraging our data analytics to optimize shipments and moderate the associated incremental costs. In addition, we are further advancing our omni capabilities with the launch of Client Book, which is a platform that provides digitized clienteling tools to store associates to further personalize the customer experience. Client Book is the next generation of our company's original customer book. This new technology provides innovative omnichannel applications for store associates. We can now offer our customers personalized online storefronts and style boards of customized, curated merchandise based on their attributes, their prior purchasing behavior. Customers also have the opportunity to interact online with a personal stylist, allowing us to digitize our Most Amazing Personal Service. We are on track to fully roll out to stores early next year.

除了品牌之外，我們的全渠道投資也取得了強勁的進展並看到了積極的成果。例如，我們的數字化無盡通道和共享庫存系統已連接到所有商店，使客戶能夠在線購買並從商店發貨。隨著需求的增加，帶來的好處超出了我們的預期。我們正在利用數據分析來優化發貨並降低相關的增量成本。此外，我們還推出了 Client Book，進一步提升我們的全方位能力，該平台為店員提供數字化客戶服務工具，以進一步個性化客戶體驗。客戶手冊是我們公司原始客戶手冊的下一代。這項新技術為商店員工提供了創新的全渠道應用程序。現在，我們可以根據客戶的屬性和之前的購買行為，為客戶提供個性化的在線店面和定制、精選商品的樣式板。客戶還有機會與個人造型師在線互動，使我們能夠將最令人驚嘆的個人服務數字化。我們有望在明年初全面向商店推出。

Looking ahead in our customer journey. With our shared inventory, our Locate Tool, which enables us to ship in-store orders directly to the customer and personalized styling all in place, we are now closing the loop with this last addition of buy online and pick up in store. BOPIS will be live early in the second quarter of '19, driving and giving our customer the ability to shop wherever, whenever and however she chooses.

展望我們的客戶旅程。借助我們的共享庫存、定位工具（使我們能夠將店內訂單直接運送給客戶以及個性化造型），我們現在正在通過最後添加的在線購買和店內提貨功能來關閉循環。BOPIS 將於 19 年第二季度初上線，推動並讓我們的客戶能夠隨時隨地以她選擇的方式購物。

Touching on our channels of distribution. We are meeting our objective of driving stronger customer awareness and consideration. QVC, ShopRunner and Amazon are driving new customer growth and exceeding our expectations. Although not yet financially significant in total, performance across each has been strengthening.

談到我們的分銷渠道。我們正在實現提高客戶意識和考慮度的目標。QVC、ShopRunner 和 Amazon 正在推動新客戶增長並超出我們的預期。儘管總體財務狀況尚未顯著，但各方面的業績都在不斷增強。

ShopRunner continues to gain momentum, with sales increasing sequentially. Gross average order value continues to be strong and remains higher than our average customer order. Our collaboration with Amazon continues to build, and our performance is trending in line with expectations. We are pleased with the results of our first Black Friday and Cyber Monday, as we showcased a broader selection of our tried and true winners. You can also find our Chico's no-iron cotton trim tunics selected as one of Oprah's favorite things among our curated merchandise assortments. Our Soma brand will be back with additional segments on QVC, beginning in January of 2019, as we further build upon this successful relationship.

ShopRunner 繼續保持強勁勢頭，銷售額環比增長。平均訂單總價值繼續強勁，並且仍然高於我們的平均客戶訂單。我們與亞馬遜的合作不斷加強，我們的業績趨勢符合預期。我們對第一個黑色星期五和網絡星期一的結果感到滿意，因為我們展示了更多經過考驗的真正獲勝者的選擇。您還可以找到我們精選的商品類別中被選為奧普拉最喜歡的商品之一的 Chico 免燙棉質鑲邊長袍。隨著我們進一步鞏固這一成功的關係，我們的 Soma 品牌將從 2019 年 1 月開始在 QVC 上回歸併增加更多細分市場。

In airport, we're in the final stages of preparing to open our first Chico's concept in the Baltimore airport in the spring of '19, followed by our first multi-store concept in the Philadelphia airport in early Q2. And lastly, for cruise, we currently offer a Chico's brand merchandise assortment on over 20 cruise ships, with plan for continued expansion.

在機場方面，我們正處於準備於 19 年春季在巴爾的摩機場開設第一家 Chico's 概念店的最後階段，隨後於第二季度初在費城機場開設我們的第一家多店概念店。最後，對於遊輪，我們目前在 20 多艘遊輪上提供 Chico 品牌商品品種，併計劃繼續擴張。

In summary, this was a challenging quarter, but we are taking strong actions to address these challenges, and I am confident that we can successfully move forward. The entire organization is focused on execution and delivering the merchandise our customers want while maintaining the cost discipline that has long been ingrained in our company.

總之，這是一個充滿挑戰的季度，但我們正在採取強有力的行動來應對這些挑戰，我相信我們能夠成功前進。整個組織專注於執行和交付客戶所需的商品，同時保持我們公司長期以來根深蒂固的成本紀律。

I will now turn the call over to Todd for more details on our financial results.

我現在將把電話轉給托德，了解有關我們財務業績的更多詳細信息。

Thanks, Shelley. And good morning, everyone.

謝謝，雪萊。大家早上好。

We reported third quarter earnings per share of $0.05, which includes $0.04 of favorable tax benefit. While we're pleased with the sales performance of our Soma brand and other channels of distribution, Chico's and White House did not deliver the sales results that we expected.

我們公佈的第三季度每股收益為 0.05 美元，其中包括 0.04 美元的稅收優惠。雖然我們對 Soma 品牌和其他分銷渠道的銷售業績感到滿意，但 Chico's 和 White House 並未達到我們預期的銷售業績。

Moving on to the third quarter details. We achieved a 130 basis point improvement in merchandise margin, continuing with the positive trend we've seen over the past 4 quarters. This improvement reflects savings from the supply chain and sourcing initiatives that we've discussed previously and significant improvement in White House Black Market merchandise margins due to better full-price sell-through. We ended the quarter with inventory approximately flat to last year's third quarter. Although our sales were down, we are comfortable with this level and have entered the fourth quarter clean, reflecting our continued focus on strong inventory management.

繼續第三季度的細節。我們的商品利潤率提高了 130 個基點，延續了過去 4 個季度的積極趨勢。這一改善反映了我們之前討論過的供應鍊和採購計劃的節省，以及由於全價銷售改善而導致的白宮黑市商品利潤率的顯著改善。本季度結束時，我們的庫存與去年第三季度大致持平。儘管我們的銷售額有所下降，但我們對這一水平感到滿意，並且已經進入第四季度，這反映出我們繼續注重強有力的庫存管理。

Overall gross margin was down 80 basis points as our merchandise margin improvement was offset by deleverage on fixed expenses and on shipping costs related to our omnichannel programs.

整體毛利率下降了 80 個基點，因為我們的商品利潤率改善被固定費用和與全渠道計劃相關的運輸成本的去槓桿化所抵消。

Moving to SG&A expenses. Third quarter SG&A was in line with expectations, up $7 million compared to last year, reflecting planned investments in marketing and technology and in contract termination costs.

轉到SG&A 費用。第三季度 SG&A 符合預期，比去年增加 700 萬美元，反映了營銷和技術以及合同終止成本方面的計劃投資。

Our balance sheet remains strong, and we ended the quarter with $229 million in cash and short-term investments and $61 million in debt. We continued to generate strong free cash flow and expect to end the year with free cash flow greater than $100 million. This would mark our 10th consecutive year of generating free cash flow of approximately $100 million or more.

我們的資產負債表依然強勁，本季度末我們擁有 2.29 億美元的現金和短期投資以及 6100 萬美元的債務。我們繼續產生強勁的自由現金流，預計年底自由現金流將超過 1 億美元。這將標誌著我們連續第十年產生約 1 億美元或更多的自由現金流。

Third quarter capital expenditures totaled $17 million, mostly comprised of investments in existing store remodels and refreshes and in technology.

第三季度資本支出總計 1700 萬美元，主要包括現有商店改造和更新以及技術方面的投資。

We closed 13 stores in the third quarter, and we are on track to close a total of approximately 45 to 50 stores this year. We have been very successful in negotiating several short-term lease extensions and medium-term rent reductions. As such, we have great flexibility within our portfolio. As we look ahead to next year and evaluate further results from our omnichannel strategy, we will be taking another look at our store base to ensure we are optimizing and future-proofing our fleet.

第三季度我們關閉了 13 家商店，今年我們有望關閉總共約 45 至 50 家商店。我們在多次短期租約延期和中期租金減免的談判中非常成功。因此，我們的投資組合具有很大的靈活性。當我們展望明年並評估全渠道戰略的進一步結果時，我們將重新審視我們的商店基礎，以確保我們正在優化我們的車隊並面向未來。

Turning now to our revised financial outlook.

現在轉向我們修訂後的財務前景。

For the fourth quarter, we anticipate a mid-teen decline in net sales, which includes the negative impact of $29 million from last year's 53rd week and a high single-digit decline in comparable sales. The decline in net sales and comparable sales are driven primarily by the Chico's brand. As Shelley mentioned, we anticipate more meaningful improvement in our Chico's brand performance by the spring of 2019. We also anticipate continued strength in Soma. While we look for gradual improvement in White House Black Market, we expect fourth quarter sales trends to be similar to the third quarter as White House continues to refine their brand repositioning.

對於第四季度，我們預計淨銷售額將出現中位數下降，其中包括去年第 53 週以來 2900 萬美元的負面影響以及可比銷售額大幅個位數下降。淨銷售額和可比銷售額的下降主要是由 Chico 品牌造成的。正如 Shelley 提到的，我們預計到 2019 年春季，Chico 的品牌表現將出現更有意義的改善。我們還預計索馬將繼續走強。雖然我們期待白宮黑市逐步改善，但隨著白宮繼續完善其品牌重新定位，我們預計第四季度的銷售趨勢將與第三季度相似。

We expect gross margin rate to decline approximately 400 to 500 basis points compared to the prior year due to costs of our omnichannel programs and deleverage in fixed costs from lower sales. And we expect SG&A dollars to decrease approximately $10 million to $15 million compared to the prior year fourth quarter, primarily related to the 53rd week in 2017.

由於我們的全渠道計劃成本以及銷售額下降帶來的固定成本去槓桿化，我們預計毛利率將比上年下降約 400 至 500 個基點。我們預計 SG&A 美元與去年第四季度相比將減少約 1000 萬至 1500 萬美元，這主要與 2017 年第 53 周有關。

For the full year of fiscal 2018, we anticipate capital expenditures to be $50 million to $60 million to fund store reinvestments and technology enhancements. This compares to our previous outlook of $60 million to $70 million. The lower level of capital expenditures is primarily due to the timing of store remodels and relocations.

2018 財年全年，我們預計資本支出為 5000 萬至 6000 萬美元，用於資助商店再投資和技術改進。相比之下，我們之前的預期為 6000 萬至 7000 萬美元。資本支出水平較低主要是由於商店改造和搬遷的時間安排所致。

We expect year-end inventory to increase compared to the prior year due to the timing of Chinese New Year, a stronger penetration in basics and top key items as well as incremental inventory to support our ongoing channel expansion.

由於正值農曆新年，我們預計年末庫存將較上年有所增加，基礎品和頂級關鍵商品的滲透力更強，以及增量庫存以支持我們持續的渠道擴張。

We anticipate a fiscal 2018 tax rate in the range of 20% to 25%.

我們預計 2018 財年的稅率在 20% 至 25% 之間。

Now with that, I'll turn the call back over to Julie for Q&A.

現在，我將把電話轉回朱莉進行問答。

Thank you, Todd.

謝謝你，托德。

Operator, we're ready to start question-and-answer period.

接線員，我們準備好開始問答環節了。

(Operator Instructions) Our first question comes from Susan Anderson of B. Riley FBR.

（操作員說明）我們的第一個問題來自 B. Riley FBR 的 Susan Anderson。

I was wondering if you could talk a little bit more about the Chico's brand. Like what went wrong? And I guess, how do you see that improving by spring of 2019? What needs to happen with the product to kind of get it back on track? And then, I guess, for White House, are you expecting continued sequential improvement? It looks like it took a little bit of a step back this quarter on a 2-year stacked basis, despite, I think, some better product in the stores and the benefit from more polished workwear.

我想知道您是否可以多談談 Chico 的品牌。比如出了什麼問題？我想，到 2019 年春季，您認為這種情況有何改善？產品需要做什麼才能讓它回到正軌？然後，我想，對於白宮來說，您是否期望持續的連續改善？儘管我認為商店裡有一些更好的產品並且受益於更精緻的工作服，但在兩年疊加的基礎上，本季度似乎略有回落。

Sure. Thanks, Susan. So on Chico's, really, the big 3 things that we keep going back to are assortments. We did overemphasize the, what we're calling, boho and print-heavy assortment and are looking for a better balance with more polished, with more traditional assortments. And as we get a better balance across the store and are not too heavily weighted towards one particular area, we really believe and have heard from our customer that, that will make a difference. We also are repositioning the marketing to be more inclusive. So same type of thing where we cut across all of our customer segments. And then from a planning and allocation perspective, just making sure that we're better in stock on basics, have a better allocation of where exactly we need the inventory to be available to her. So merchandise, the marketing focus and the inventory planning and allocation are 3 areas we keep going back to. For White House Black Market, White House is continuing its repositioning. We agree with you that the merchandise is much more on target with the customer profile we're going after. We also, as we go through that process, are looking to make sure we're setting ourselves up for as healthy a business as possible. What that means is, from a near-term perspective, we're being much more selective on our promotions. White House had a significant increase in their merchandise margin rate this quarter, and that undoubtedly had some impact on sales. As you look over the year, our sales are relatively flat, and we expect that to continue going into Q4. And then as we get into next year, we start wrapping around on that brand repositioning, which should put us in good shape going into next year.

當然。謝謝，蘇珊。因此，在 Chico's 上，我們一直關注的三件事是品種。我們確實過分強調了我們所說的波西米亞風和印花品種，並且正在尋求與更精緻、更傳統的品種之間的更好平衡。隨著我們在整個商店中取得更好的平衡，並且不會過分偏重某一特定區域，我們真的相信並且從我們的客戶那裡聽到，這將會產生影響。我們還重新定位營銷，使其更具包容性。同樣的事情，我們跨越了所有的客戶群。然後從規劃和分配的角度來看，只需確保我們在基礎上有更好的庫存，更好地分配我們需要的庫存到底在哪裡可供她使用。因此，商品、營銷重點以及庫存規劃和分配是我們不斷關注的三個領域。對於白宮黑市，白宮正在繼續重新定位。我們同意您的觀點，即商品更符合我們所追求的客戶群的目標。當我們經歷這個過程時，我們也希望確保我們的業務盡可能健康。這意味著，從近期的角度來看，我們對促銷活動更加挑剔。白宮本季度的商品利潤率大幅上升，這無疑對銷售產生了一定的影響。縱觀全年，我們的銷售額相對持平，我們預計這種情況將持續到第四季度。然後，當我們進入明年時，我們開始進行品牌重新定位，這應該會讓我們在明年保持良好的狀態。

Great. Okay, that's helpful. And just one follow-up, if I could, on the gross margin for fourth quarter. I guess, how should we think about the merch margin rate versus third quarter? It looks like you guys are maybe expecting it to be down. And then also, what's the impact of the 53rd week, I guess, on the gross margin? Is that what the big step down is too from the third quarter?

偉大的。好的，這很有幫助。如果可以的話，我只想對第四季度的毛利率進行一次跟進。我想，我們應該如何看待第三季度的商品利潤率？看來你們可能期待它會下降。另外，我想第 53 週對毛利率有什麼影響？這也是第三季度以來的大幅下降嗎？

I -- the 53rd week is certainly a good-size chunk of it. In terms of merchandise margin, I'll start there. I -- we had clearly bought towards a higher level of sales as we went into Q4. Q4 can be very price sensitive, so we expect that we will have to be more aggressive on clearance in the fourth quarter. We do still expect merchandise margin gain but not maybe to the extent that we've seen it over the rest of this year. The really big impact is, as we look at sales, we are going to generate a significant amount of deleverage against our buying and occupancy costs. And then ongoing, I -- as we wrap around on implementation of buy online, pick up in store and the impact of ShopRunner, there's just going to be pressure on those outgoing shipment costs. So the combination of those 3 things is really what drives that gross margin decline. The 53rd week does have an outsized impact this particular quarter.

我——第 53 周無疑是其中很大一部分。就商品利潤而言，我將從這裡開始。當我們進入第四季度時，我們顯然已經朝著更高的銷售水平進行了購買。第四季度對價格非常敏感，因此我們預計第四季度必須更加積極地清倉。我們仍然預計商品利潤率會增加，但可能不會達到今年剩餘時間的程度。真正重大的影響是，當我們考慮銷售時，我們將對購買和入住成本產生大量的去槓桿化。然後，當我們圍繞在線購買、店內提貨的實施以及 ShopRunner 的影響進行討論時，這些發貨成本將會面臨壓力。因此，這三件事的結合才是毛利率下降的真正原因。第 53 週確實對這個特定季度產生了巨大的影響。

Our next question comes from Brian Tunick of Royal Bank of Canada.

我們的下一個問題來自加拿大皇家銀行的布賴恩·圖尼克。

This is Kate on for Brian. I guess my question will be honing in a bit more on the omnichannel part of the gross margin guidance for 4Q. Certainly, I understand buy online, pick up in store, ShopRunner's, these have incremental costs associated with them. Should we think about 4Q being the worst of the brunt of those expenses? And just when we're looking out to 2019, what work is being done in order to maybe mitigate some of the incremental costs associated with these programs?

這是凱特為布萊恩代言的。我想我的問題將更多地涉及第四季度毛利率指導的全渠道部分。當然，我知道網上購買、店內提貨、ShopRunner 的這些都會產生與之相關的增量成本。我們是否應該認為第四季度是這些支出中首當其衝的支出？當我們展望 2019 年時，我們正在開展哪些工作來減輕與這些計劃相關的部分增量成本？

Kate, it's Shelley. First of all, I think it's important to remember that we sit in a bit of a unique position because we are a commission-based retailer. So we pay our sales force commissions. So when we do online sales, that commission is subtracted from that particular transaction or mitigated by a lesser commission rate, so we do have a little bit of a different financial impact, a little bit of a cushion compared to others. And when it comes to mitigation, we are just continuing to learn through our data where best those orders are fulfilled. And in an omni world, when you have your choice of coming directly from the distribution center, directly from the closest store location or from the store location where the product happens to be in stock, what is the best financial return for the customer to deliver that product? And we're working through all of that now.

凱特，這是雪萊。首先，我認為重要的是要記住，我們處於一個獨特的位置，因為我們是一家基於佣金的零售商。因此，我們向銷售人員支付佣金。因此，當我們進行在線銷售時，佣金會從特定交易中扣除，或者通過較低的佣金率來減輕，因此我們確實有一點不同的財務影響，與其他公司相比有一點緩衝。當談到緩解措施時，我們只是繼續通過數據了解這些訂單在哪裡得到了最好的履行。在全方位的世界中，當您可以選擇直接從配送中心、直接從最近的商店位置或從恰好有庫存產品的商店位置購買時，為客戶提供的最佳財務回報是什麼那個產品？我們現在正在解決所有這些問題。

Great. And then just one quick follow-up on the Chico's brand. When we think about the repositioning here in 2018, certainly, it's been a lot more volatile that -- than you guys had anticipated. I guess, just how should we think about open-to-buys for spring? Or just what work is being done, particularly on the lead-time side or chase, in order to make sure that you guys can be appropriately positioned from a speed standpoint to chase into what is actually working kind of come spring?

偉大的。然後是 Chico 品牌的快速跟進。當我們考慮 2018 年的重新定位時，當然，它的波動性比你們預期的要大得多。我想，我們應該如何考慮春季的開放購買呢？或者正在做什麼工作，特別是在交貨時間方面或追逐方面，以確保你們能夠從速度的角度進行適當的定位，以追逐春天到來時真正起作用的東西？

Yes. So Kate, one of the things that we've been very focused, especially as we go on through Q3, has been those levels of purchases that we have in the spring of next year and what the mix of those purchases are and our receipt plans. Q4 is tough because that's just awfully quick to respond to that level of receipts, so you're seeing the impact in Q4, but then as we get into next year, we have had time to adjust at least some of the assortment and to reduce receipts where possible to get us back to more in line with where we expect sales to be. So the level of receipts has certainly come down. And then we have left a little bit of chase. We've actually started seeing where that might come through for us through basics, through our collections businesses. And we've gotten ahead of that, but there are certainly receipts that we're leaving open to be able to chase into fairly quickly.

是的。因此，凱特，我們非常關注的事情之一，特別是在第三季度，我們在明年春季的採購水平以及這些採購的組合以及我們的收貨計劃。第四季度很艱難，因為對這種收入水平的反應非常快，所以你會看到第四季度的影響，但隨著我們進入明年，我們有時間調整至少一些品種並減少盡可能提供收據，使我們的銷售情況更加符合我們的預期。所以收入水平肯定下降了。然後我們留下了一點追逐。實際上，我們已經開始通過基礎知識和我們的收藏業務來了解這對我們來說可能會帶來什麼好處。我們已經領先了，但我們肯定有一些收據是開放的，以便能夠相當快地追索。

And I think it's important to think about it in a couple of different ways as well. One of them is, as we have brought on each new brand lead, we look for a real area of expertise that they can share with the remainder of the brands. And in bringing on David Pastrana, who has a very fast market cycle background, we're continuing to look to speed up our cycles across all 3 brands.

我認為從幾個不同的角度來思考這個問題也很重要。其中之一是，當我們引入每個新的品牌領導者時，我們都會尋找他們可以與其他品牌分享的真正的專業知識領域。通過聘請具有快速市場週期背景的 David Pastrana，我們將繼續尋求加快所有 3 個品牌的周期。

Our next question comes from Paul Trussell of Deutsche Bank.

我們的下一個問題來自德意志銀行的保羅·特魯塞爾。

This is Gabby Carbone on for Paul. So you mentioned that the endless aisle program is exceeding your expectations. Was wondering if maybe you can talk about how it impacted gross margin in the third quarter and kind of what your expectations are for the impact of that program moving forward.

我是蓋比·卡本 (Gabby Carbone) 替保羅發言。所以你提到無盡的過道計劃超出了你的預期。想知道您是否可以談談它對第三季度毛利率的影響以及您對該計劃未來影響的期望。

Yes, thanks, Gabby. So as we look at Q3 and going forward into Q4 -- well, Q3 is probably a good example for you. We had substantially positive merchandise margin, up 130 basis points but ended with gross margin down that 80 basis points. Most of that decline is really driven by shipping costs and other costs related to the omnichannel programs. So the shipping costs has been significant. And that has been as we've gotten going on the program. We're already in the process of optimizing how we're doing those shipments so that it -- the impact declines as we go forward, ratably. The good news for us, really, is also how we're aligning that buy online, ship from store to make sure we are getting the most in sales out of it. That's been -- one of our key parts of our initiatives this year is how we do drive sales through these omnichannel programs. And without a doubt, we are exceeding what we had planned for this year, so that's a very positive sign for us as we go into next year and know that we have time where we're still going to be wrapping around on that for the first couple quarters.

是的，謝謝，加比。因此，當我們回顧第三季度並展望第四季度時，第三季度可能是一個很好的例子。我們的商品利潤率大幅上升，上升了 130 個基點，但最終毛利率下降了 80 個基點。大部分下降實際上是由運輸成本和與全渠道計劃相關的其他成本推動的。所以運輸成本是很大的。這就是我們項目的進展情況。我們已經在優化我們的發貨方式，以便隨著我們的前進，影響會大幅下降。事實上，對我們來說，好消息是我們如何調整在線購買、商店發貨的方式，以確保我們從中獲得最大的銷售額。我們今年計劃的關鍵部分之一是我們如何通過這些全渠道計劃來推動銷售。毫無疑問，我們超出了今年的計劃，因此，當我們進入明年時，這對我們來說是一個非常積極的信號，並且知道我們仍然有時間來完成這一目標。第一個幾個季度。

That's very helpful. And then just a quick follow-up. Just wondering if you can discuss plans for store closures next year, if we should be expecting a similar cadence. So if you can just remind us what percentage of the store fleet is coming up for lease renewal over the next few years?

這非常有幫助。然後進行快速跟進。只是想知道您是否可以討論明年關閉商店的計劃，我們是否應該期待類似的節奏。那麼，您能否提醒我們，未來幾年將有多少比例的商店需要續租？

Absolutely. So first, in terms of what's coming up for renewal, at this point, it's over 2/3 of our fleet that comes up for renewal or some sort of lease action kickout over the course of the next 3 years. So we do have an awful lot of flexibility. And we're in the position where, as we've launched buy online and ship from store, as we launched our other omnichannel programs, it just allows us to take a fresh look at what our overall fleet should look like. And so we're in the process of that. We've closed about 50 stores a year, about 3% of our fleet every year for the last 4 years. And that's a good starting point for you at this point, going into 2019. And as we have more information, we'll certainly share that.

絕對地。首先，就即將更新的情況而言，目前我們超過 2/3 的機隊將在未來 3 年內進行更新或某種形式的租賃行動。所以我們確實有很大的靈活性。我們所處的位置是，當我們推出在線購買和從商店發貨時，當我們推出其他全渠道計劃時，它只是讓我們能夠重新審視我們的整體機隊應該是什麼樣子。所以我們正在這個過程中。我們每年關閉約 50 家商店，在過去 4 年裡每年關閉約 3% 的商店。這對你來說是一個很好的起點，即將進入 2019 年。當我們掌握更多信息時，我們一定會分享。

(Operator Instructions) Our next question comes from Janine Stichter of Jefferies.

（操作員說明）我們的下一個問題來自 Jefferies 的 Janine Stichter。

I just want to ask about sourcing benefit. You made a lot of progress this year so far on driving IMU. And I just wanted to ask about the fourth quarter. I think that the IMU [benefit], that's actually [built] into the fourth quarter. Could you give us a sense of how we should be thinking about those product costs going into 2019? And then just any update on Chinese sourcing and how you're thinking about maybe mitigating the impact of potential tariff?

我只是想問一下採購效益。今年到目前為止，您在 IMU 驅動方面取得了很大進步。我只是想問一下第四季度的情況。我認為 IMU [好處]，實際上是在第四季度[構建]的。您能否讓我們了解一下我們應該如何考慮 2019 年的產品成本？然後是有關中國採購的最新情況以及您如何考慮減輕潛在關稅的影響？

Sure. So I'll start with the sourcing benefits. And you're right. We have been seeing benefits across the year. And we do expect that part of a good sourcing organization is we are going to continue to have opportunity. The biggest chunk, the initial chunk, was this year. And we had said $30 million to $40 million of savings. That's absolutely still the target. We are well within what we had expected, and so that has been a great benefit to our maintained margin. As we look at our China exposure, the team has been working very actively with our vendors on how we continue to diversify our sources of production. We've entered the year with slightly more than half of our receipts coming from China. That is down to 40%, going lower than that, really, on an ongoing basis as we work with our vendors. We'll always have a fair chunk of receipts that come out of China just based on the nature of the types of things that are manufactured in China for the entire industry or the types of things that fit the quality that we're looking for but continuing to mitigate that impact and diversify our overall mix.

當然。所以我將從採購優勢開始。你是對的。我們全年都看到了好處。我們確實希望良好的採購組織的一部分是我們將繼續擁有機會。最大的一塊，最初的一塊，是今年。我們說過可以節省 3000 萬至 4000 萬美元。這絕對仍然是目標。我們完全符合我們的預期，因此這對我們維持的利潤率有很大好處。當我們審視我們在中國的業務時，團隊一直在與我們的供應商積極合作，研究如何繼續實現生產來源多元化。進入今年，我們的收入略多於一半來自中國。在我們與供應商合作的過程中，這個比例實際上已經下降到了 40%，而且確實比這個數字還要低。我們總會有相當一部分來自中國的收入，這只是基於中國為整個行業製造的產品類型的性質，或者符合我們所尋求的質量的產品類型，但是繼續減輕這種影響並使我們的整體組合多樣化。

This concludes our question-and-answer session. I would like to turn the conference back over to Shelley Broader for any closing remarks.

我們的問答環節到此結束。我想將會議轉回給雪萊·布羅德 (Shelley Broader) 發表閉幕詞。

Thank you.

謝謝。

So in summary. Our results did not meet our expectations for the quarter. However, we are intensely focused on making the important changes to our core Chico's brand that are necessary to improve performance. We are seeing progress and strengths in other key areas of the business, including our Soma brand and other channels of business. White House Black Market is moving in the right direction. And we anticipate a stronger spring season, as learnings have been incorporated.

綜上所述。我們的業績沒有達到我們對本季度的預期。然而，我們非常專注於對我們的核心 Chico 品牌進行重要改變，這是提高業績所必需的。我們看到了業務其他關鍵領域的進步和優勢，包括我們的 Soma 品牌和其他業務渠道。白宮黑市正在朝著正確的方向發展。隨著經驗的積累，我們預計春季會更加強勁。

I am confident that all of the actions underway will enable us to deliver the merchandise our customers want and ultimately allow us to deliver a stronger performance and value for our stakeholders.

我相信，正在進行的所有行動將使我們能夠交付客戶想要的商品，並最終使我們能夠為利益相關者提供更強大的績效和價值。

Thank you for joining the call today.

感謝您今天加入通話。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。