Torrid Holdings Inc (CURV) 2022 Q3 法說會逐字稿

Greetings, and welcome to the Torrid Holdings Third Quarter Fiscal 2022 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Vince Adams; SVP Finance. Thank you, Vince. You may begin.

您好，歡迎來到 Torrid Holdings 2022 財年第三季度收益電話會議。 （操作員說明）提醒一下，正在錄製此會議。現在我很高興向您介紹主持人 Vince Adams；財務高級副總裁。謝謝你，文斯。你可以開始了。

Good afternoon, everyone. Thank you for joining Torrid's call today to discuss third quarter financial results for 2022, which we released this afternoon and can be found on our website at investors.torrid.com.

大家下午好。感謝您今天加入 Torrid 的電話會議，討論我們今天下午發布的 2022 年第三季度財務業績，可以在我們的網站 investors.torrid.com 上找到。

With me today on the call are Lisa Harper, Chief Executive Officer of Torrid; and Tim Martin, Chief Operating Officer and Chief Financial Officer.

今天和我一起打電話的是 Torrid 的首席執行官 Lisa Harper；蒂姆·馬丁，首席運營官兼首席財務官。

Before we get started, I would like to remind you of the company's safe harbor language, which I'm sure you're familiar with. Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, see our filings with the SEC.

在我們開始之前，我想提醒你公司的安全港語言，我相信你很熟悉。管理層可能會做出前瞻性陳述，包括指導和基本假設。前瞻性陳述基於涉及風險和不確定性的預期，這些風險和不確定性可能導致實際結果存在重大差異。有關與我們業務相關的風險的進一步討論，請參閱我們向美國證券交易委員會提交的文件。

This call will contain non-GAAP financial measures, such as adjusted EBITDA and adjusted EBITDA margin. Reconciliations to these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC and available on our website.

此電話會議將包含非 GAAP 財務指標，例如調整後的 EBITDA 和調整後的 EBITDA 利潤率。這些非 GAAP 措施與最具可比性的 GAAP 措施的調節包含在提供給 SEC 的收益發布中，並可在我們的網站上查閱。

With that, I will turn the call over to Lisa.

有了這個，我會把電話轉給麗莎。

Thanks, Vince. Good afternoon, everyone, and thanks for joining us for a discussion of our third quarter results. I'd like to start the call by recognizing the Torrid Team for their continued dedication efforts the business as we face a choppy macroeconomic backdrop.

謝謝，文斯。大家下午好，感謝您加入我們討論我們第三季度的業績。在我們面臨動蕩的宏觀經濟背景時，我想首先表彰 Torrid 團隊對業務的持續奉獻努力。

Despite external pressures, we remained steadfast in our goal to deliver exceptional product anchored on our world-class fit. I'd also like to officially introduce Tim Martin, who is joining today's call as our Chief Operating Officer and Chief Financial Officer. Tim brings a wealth of experience to Torrid and he will be instrumental in helping us deliver on our strategic priorities. I look forward to you learning more about Tim and Torrid as we move forward.

儘管有外部壓力，我們仍然堅定不移地致力於提供以我們世界一流的貼合度為基礎的卓越產品。我還想正式介紹 Tim Martin，他作為我們的首席運營官和首席財務官加入了今天的電話會議。 Tim 為 Torrid 帶來了豐富的經驗，他將在幫助我們實現戰略重點方面發揮重要作用。我期待著您在我們前進的過程中更多地了解 Tim 和 Torrid。

Now moving into our third quarter results. Despite the challenging environment in late Q3, our net sales and adjusted EBITDA were within our expectations.

現在進入我們的第三季度業績。儘管第三季度末的環境充滿挑戰，但我們的淨銷售額和調整後的 EBITDA 都在我們的預期之內。

During the quarter, we saw the customer response thoroughly, to new product introductions, including the launch of our Studio line of Wear to Work styles.

在本季度，我們看到客戶對新產品的推出做出了徹底的反應，包括推出我們的工作室系列 Wear to Work 款式。

However, similar to the trends experienced at other retailers, we saw a slowdown in consumer demand during the month of October that coincided with our Torrid Cash Event, which typically makes up a large portion of quarterly sales.

然而，與其他零售商的趨勢類似，我們發現 10 月份消費者需求放緩，恰逢我們的 Torrid Cash Event，這通常佔季度銷售額的很大一部分。

As a result of the softness, the comparable Torrid Cash Event was down double-digits versus last year and prior quarters, which negatively impacted performance. As we work to right-size our inventory levels in the third quarter, we added incremental discounts and promotions, which pressured margins.

由於疲軟，可比的 Torrid Cash Event 與去年和前幾個季度相比下降了兩位數，這對業績產生了負面影響。當我們努力在第三季度調整庫存水平時，我們增加了增量折扣和促銷活動，這給利潤率帶來了壓力。

We were able to make headway clearing through inventory, ending the quarter with total inventory up 25% to last year. While this was a significant improvement relative to the second quarter, it is still somewhat higher than we would like, primarily due to the softer demand we experienced late in the quarter.

我們能夠在清理庫存方面取得進展，在本季度結束時總庫存比去年增加了 25%。雖然這與第二季度相比有了顯著改善，但仍略高於我們的預期，這主要是由於我們在本季度末遇到的需求疲軟。

We are focused on ending the year with clean inventory and expect to be promotional in the fourth quarter to end the year well positioned for 2023. We also continue to work on the priorities that I laid out previously. Key among these was enhancing our promotional and marketing strategies to better balance margin and sales growth. We are still in the test and learning stage of our promotional changes. And there continues to be significant opportunity for us to improve margins.

我們專注於以清潔庫存結束這一年，並預計將在第四季度進行促銷，以在 2023 年結束這一年。我們還將繼續致力於我之前提出的優先事項。其中的關鍵是加強我們的促銷和營銷策略，以更好地平衡利潤率和銷售增長。我們仍處於促銷變化的測試和學習階段。我們仍然有很大的機會提高利潤率。

Elevated inventory levels have limited our ability to pull back heavily on promotions this year. As we move into 2023, we expect inventory levels to be much more balanced, which should enable us to further adjust our promotional strategy with the goal of expanding margin. We have had an opportunity to test different types of margin-enhancing promotions that we will be able to implement more fully next year.

高庫存水平限制了我們今年大幅縮減促銷活動的能力。隨著我們進入 2023 年，我們預計庫存水平將更加平衡，這將使我們能夠進一步調整促銷策略以擴大利潤率。我們有機會測試不同類型的提高利潤率的促銷活動，明年我們將能夠更全面地實施這些促銷活動。

In terms of marketing, we are focused on driving customers to store and building the quality and quantity of our customer file. We know that stores are where the majority of new customers first discover and fall in love with our brand. And we view stores as a critical acquisition and engagement vehicle.

在營銷方面，我們專注於推動客戶入店並建立我們客戶檔案的質量和數量。我們知道商店是大多數新客戶首先發現並愛上我們品牌的地方。我們將商店視為重要的收購和參與工具。

For example, during the quarter, approximately 30% of the customers shopping in new stores were new to the Torrid Brand. And these customers typically spend 25% more in their first year compared to those acquired on the web.

例如，在本季度，大約 30% 在新店購物的顧客是 Torrid Brand 的新顧客。與通過網絡獲得的客戶相比，這些客戶在第一年的花費通常要高出 25%。

Stores and store acquisition is clearly an important strategy of growth for us. In order to build a healthy customer file, we are focused on the reengagement of lapsed customers and improving retention. Our marketing efforts to reengage lapsed customers continued to show promise and we generated another 500 basis point improvement in reactivated customers on top of the improvement seen last quarter.

商店和商店收購顯然是我們增長的重要戰略。為了建立健康的客戶檔案，我們專注於重新吸引流失的客戶並提高保留率。我們重新吸引流失客戶的營銷努力繼續顯示出希望，在上個季度出現的改善之上，我們在重新激活的客戶中又產生了 500 個基點的改善。

On social media, we're more focused than ever on product. We saw 160% increase, in product conversation versus the prior quarter, largely driven by the success of our Studio collection and the strong reception to the launch. We also executed an influencer campaign last quarter focused on jeans, which highlighted our world-class fit.

在社交媒體上，我們比以往任何時候都更加關注產品。與上一季度相比，我們看到產品對話增加了 160%，這主要是由於我們的 Studio 系列的成功以及對發布的強烈反響。上個季度，我們還開展了一場以牛仔褲為重點的有影響力的活動，突出了我們世界一流的合身性。

Customers consistently note that our fit is what compels them to shop at Torrid. And we continued to see low return rates, which speak to the integrity of that set.

客戶一直注意到我們的合身性是迫使他們在 Torrid 購物的原因。我們繼續看到低退貨率，這說明了該系列的完整性。

Turning to merchandising and products. We introduced new growth categories within the product assortment, starting with the launch of the Studio collection in September, which was executed with a full 360-degree integrated marketing campaigns that span all channels.

轉向銷售和產品。我們在產品系列中引入了新的增長類別，從 9 月份推出 Studio 系列開始，該系列通過涵蓋所有渠道的完整 360 度整合營銷活動來執行。

Given the shift in customer preference for wear to work style, this was the ideal time for the launch. The collection was very strong and drove a 30 percentage point improvement in workwear sales growth versus the prior quarter.

考慮到客戶對工作風格的著裝偏好轉變，這是發布的理想時機。該系列非常強勁，推動工作服銷售額較上一季度增長 30 個百分點。

We also launched a new collection called Betsey that was announced to the iconic trends that defines the 2000s. This collection featured classic styles, including baby Ts and retro graphics. And we saw our most loyal customers respond to the product with a VIP customer penetration that was more than double our typical VIP penetration across other categories.

我們還推出了一個名為 Betsey 的新系列，該系列符合定義 2000 年代的標誌性趨勢。該系列採用經典款式，包括嬰兒 T 恤和復古圖案。我們看到我們最忠誠的客戶對產品的反應是 VIP 客戶滲透率是我們在其他類別中的典型 VIP 滲透率的兩倍多。

As we move through the quarter, we offered new fashion and color, including cozy and cold weather product and novelty fabrics and print. We are encouraged to see the response to new products. And we have even more newness slated for the fourth quarter.

隨著本季度的推進，我們提供了新的時尚和色彩，包括舒適和寒冷的產品以及新穎的面料和印花。我們很高興看到對新產品的反應。我們在第四季度有更多的新鮮事。

Our holiday assortment features an expanded breadth of products focusing on (inaudible) [00:07:16] for all of our holiday occasions. Our most loyal customers respond well to our special collection. And we have many planned for this fourth quarter, including a retro sheet collection, a new curve assortment with holiday colors. And we've added another drop of our Betsey Johnson collection.

我們的假期產品種類更加豐富，專注於（聽不清）[00:07:16] 我們所有的假期場合。我們最忠實的客戶對我們的特別系列反應良好。我們為第四季度製定了很多計劃，包括復古床單系列、帶有節日色彩的新曲線系列。我們還添加了另一款 Betsey Johnson 系列。

In closing, our team remains focused on making products and operational improvements that will position us to deliver sustainable long-term growth. We're seeing giant strategy refinements are working. And we're excited about what product is lean as we continue to capture her interest with relevant fashion and perfect fitting basis.

最後，我們的團隊仍然專注於製造產品和改進運營，這將使我們能夠實現可持續的長期增長。我們看到巨大的戰略改進正在發揮作用。隨著我們繼續以相關的時尚和完美合身的基礎來吸引她的興趣，我們對什麼產品是精益的感到興奮。

The positive feedback and momentum that we received with our Studio launch is carrying forward into next year as we bring our customer compelling assortments anchored on an exceptional fit. Our new product launches and seamless customer experience build relevancy with our customer, which would lead to increased visit frequency and higher conversion rates. We are excited about our changes and how they build going into next year.

我們在推出 Studio 時收到的積極反饋和勢頭將延續到明年，因為我們將以特別合身為基礎，為客戶帶來引人注目的產品組合。我們的新產品發布和無縫的客戶體驗與我們的客戶建立了相關性，這將增加訪問頻率和更高的轉化率。我們對我們的變化以及它們如何進入明年感到興奮。

And with that, I'll turn the call over to Tim to provide more detailed financials on the quarter and our updated guidance.

有了這個，我會把電話轉給蒂姆，提供更詳細的季度財務數據和我們更新的指導。

Thank you, Lisa, and good afternoon, everyone. I'm incredibly excited to be joining the company as Torrid's Chief Operating Officer and Chief Financial Officer. Torrid is an amazing brand with strong potential and I look forward to being part of its success.

謝謝你，麗莎，大家下午好。我非常高興能以 Torrid 的首席運營官和首席財務官的身份加入公司。 Torrid 是一個具有強大潛力的驚人品牌，我期待成為其成功的一部分。

We have a significant opportunity for growth. And I am happy to be working with Lisa and the Torrid Team as we strive to consistently deliver on the company's potential.

我們有一個重要的增長機會。我很高興能與 Lisa 和 Torrid 團隊一起工作，因為我們努力始終如一地發揮公司的潛力。

I will begin with a detailed discussion of our financial results, followed by an update on our outlook for the rest of the year.

我將首先詳細討論我們的財務業績，然後更新我們對今年剩餘時間的展望。

Starting with the third quarter results. Net sales came in at the low end of our guidance at $290 million, which was down 5% compared to $306 million last year. Comparable sales in the quarter declined 8% compared to a 14% increase in the third quarter of 2021.

從第三季度的結果開始。淨銷售額為 2.9 億美元，處於我們指導的低端，與去年的 3.06 億美元相比下降了 5%。與 2021 年第三季度增長 14% 相比，本季度可比銷售額下降了 8%。

As a further comparable, we were up 9% to 2019. Similar to trends reported at other retailers, we experienced a slowdown during the month of October. This coincided with the timing of our quarterly Torrid Cash Event, which negatively impacted our third quarter results.

作為進一步的比較，我們到 2019 年增長了 9%。與其他零售商報告的趨勢類似，我們在 10 月份經歷了放緩。這與我們的季度 Torrid Cash Event 發生的時間相吻合，這對我們的第三季度業績產生了負面影響。

However, we were pleased to see our customers respond favorably to new product offerings during the quarter, including the Studio collection and demand early in the quarter was more in line with our expectations.

然而，我們很高興看到我們的客戶對本季度的新產品反應良好，包括 Studio 系列，本季度初的需求更符合我們的預期。

Gross profit for the third quarter was $92 million or 31.6% of net sales. This compares to $125 million or 40.9% of net sales in the third quarter of last year.

第三季度的毛利潤為 9200 萬美元，占淨銷售額的 31.6%。相比之下，去年第三季度為 1.25 億美元，占淨銷售額的 40.9%。

During the quarter, we continued to focus on rightsizing our inventory levels, which resulted in an increase in discounts and promotions over the last year. Approximately 850 basis points of this decline, was due to higher discounts and promotions to clear inventory.

在本季度，我們繼續專注於合理調整庫存水平，這導致折扣和促銷活動比去年有所增加。這一下降約 850 個基點，是由於更高的折扣和促銷活動以清理庫存。

The remainder of the decline was inflationary and related to higher product and transportation costs, partially offset by price increases.

下降的其餘部分是通貨膨脹，與更高的產品和運輸成本有關，部分被價格上漲所抵消。

Selling, general and administrative expenses in the quarter were $59 million compared to $66 million for the third quarter in the prior year. As a percentage of sales, SG&A decreased to 20.4% from 21.7% compared to the third quarter of last year due to higher private label credit card income and lower performance bonus expense.

本季度的銷售、一般和管理費用為 5900 萬美元，而去年第三季度為 6600 萬美元。由於自有品牌信用卡收入增加和績效獎金支出減少，SG&A 佔銷售額的百分比從去年第三季度的 21.7% 下降至 20.4%。

As a reminder, the terms of our new private label credit card agreement provide a benefit to SG&A expense compared to a year ago. This benefit was partially offset by higher store and web payroll, primarily caused by inflationary pressures, including higher wages. Excluding the benefit from private label credit card income, SG&A as a percentage of sales increased 70 basis points, driven by the deleverage in sales.

提醒一下，與一年前相比，我們新的私人標籤信用卡協議的條款為 SG&A 費用帶來了好處。這一收益被更高的商店和網絡工資單部分抵消，這主要是由通貨膨脹壓力（包括更高的工資）引起的。排除自有品牌信用卡收入帶來的收益，在銷售去槓桿化的推動下，SG&A 佔銷售額的百分比增加了 70 個基點。

Marketing expenses in the quarter came in at $13 million compared to $15 million last year. As a percentage of sales, marketing expense was 4.4% and decreased approximately 50 basis points compared to 4.9% in the third quarter of last year.

本季度的營銷費用為 1300 萬美元，而去年為 1500 萬美元。營銷費用佔銷售額的百分比為 4.4%，與去年第三季度的 4.9% 相比下降了約 50 個基點。

As we navigate a difficult macroeconomic backdrop, we've remained disciplined in our marketing investments and made the strategic decision to allocate expenses towards customer reactivation where we are seeing better returns. As a result, we've been able to drive improved spend efficiency versus the prior year.

在我們應對困難的宏觀經濟背景時，我們在營銷投資方面保持紀律，並做出戰略決策，將費用分配給我們看到更好回報的客戶重新激活。因此，與上一年相比，我們能夠提高支出效率。

Turning to profitability. Net income for the quarter was $7 million or $0.07 per share compared to a net loss of $59 million or a loss of $0.54 per share for the same period last year. We did not have any adjustments to net income in the third quarter of '22. But for comparison purposes, adjusted net income last year was $28 million or $0.25 per share.

轉向盈利能力。本季度淨收入為 700 萬美元或每股 0.07 美元，而去年同期淨虧損為 5900 萬美元或每股虧損 0.54 美元。我們沒有對 22 年第三季度的淨收入進行任何調整。但出於比較目的，去年調整後的淨收入為 2800 萬美元或每股 0.25 美元。

In addition to the GAAP measures, we believe that adjusted EBITDA is an important measure that we use to evaluate and manage our business. Adjusted EBITDA came in at the low end of our guidance range at $32 million or 11.1% of net sales.

除了 GAAP 措施外，我們認為調整後的 EBITDA 是我們用來評估和管理我們業務的重要措施。調整後的 EBITDA 處於我們指導範圍的低端，為 3200 萬美元或淨銷售額的 11.1%。

Turning to the balance sheet. Our cash and cash equivalents at the end of the quarter totaled $19 million. Total liquidity at the end of the third quarter, including available credit, was $159.4 million.

轉向資產負債表。本季度末我們的現金和現金等價物總計 1900 萬美元。第三季度末的總流動資金（包括可用信貸）為 1.594 億美元。

Total debt at the end of the quarter was $327 million compared to $341 million in the third quarter of 2021. Our net debt to adjusted EBITDA was 1.9x at quarter end. Inventory at the end of the quarter was $200 million, an increase of 25% compared to $159 million in the prior year. This is a significant improvement compared to the 64% growth at the end of the second quarter.

本季度末的總債務為 3.27 億美元，而 2021 年第三季度為 3.41 億美元。本季度末我們的淨債務與調整後 EBITDA 之比為 1.9 倍。本季度末的庫存為 2 億美元，與去年同期的 1.59 億美元相比增長了 25%。與第二季度末 64% 的增長率相比，這是一個顯著的改善。

We continue to focus on reducing our inventory levels and expect to clear through any remaining seasonal inventory by the end of the year. While we plan to end the year with inventory up to last year, it will be clean and comprised mostly of basics and early spring receipts.

我們將繼續專注於降低庫存水平，並希望在年底前清理掉任何剩餘的季節性庫存。雖然我們計劃以去年的庫存結束今年，但它將是乾淨的，主要由基本款和早春收據組成。

We opened 5 stores in the third quarter, including 2 Curve stores and we closed 3 stores. We have opened 14 stores year-to-date. We now plan to open approximately 27 total stores for the year, including 8 Curve stores.

我們在第三季度開設了 5 家門店，其中包括 2 家 Curve 門店，我們關閉了 3 家門店。年初至今，我們已經開設了 14 家門店。我們現在計劃在今年開設大約 27 家門店，其中包括 8 家 Curve 門店。

Turning to the outlook. Given the challenging macroeconomic environment and the volatility in our demand trend, we are updating our outlook for the remainder of the year.

轉向前景。鑑於充滿挑戰的宏觀經濟環境和我們需求趨勢的波動，我們正在更新對今年剩餘時間的展望。

For the fourth quarter, we project net sales to be between $285 million and $300 million and adjusted EBITDA to be between $9 million and $14 million. The outlook for our gross margin rate will remain pressured as we continue to reduce inventory to bring levels in line with demand.

對於第四季度，我們預計淨銷售額將在 2.85 億美元至 3 億美元之間，調整後的 EBITDA 將在 900 萬至 1,400 萬美元之間。隨著我們繼續減少庫存以使水平與需求保持一致，我們的毛利率前景將繼續承壓。

For the full year, we are forecasting sales to be between $1.244 billion and $1.259 billion. For the adjusted EBITDA, we are now projecting it to be between $145 million and $150 million. Capital expenditures are projected to be between $27 million and $30 million for fiscal '22, reflecting infrastructure investments and approximately 27 new store openings. We are also planning to close 13 stores this year.

對於全年，我們預計銷售額將在 12.44 億美元至 12.59 億美元之間。對於調整後的 EBITDA，我們現在預計它在 1.45 億美元到 1.5 億美元之間。 22 財年的資本支出預計在 2700 萬美元至 3000 萬美元之間，反映了基礎設施投資和大約 27 家新店開業。我們還計劃今年關閉 13 家門店。

In closing, we are facing an uncertain and dynamic environment, and Torrid is certainly not immune to these challenges. While I've only been at the company a short time, I have been impressed with the strength of the Torrid Brand, its relationship with the customer and the Torrid Team.

最後，我們面臨著一個不確定和動態的環境，而 Torrid 當然也不能倖免於這些挑戰。雖然我加入公司的時間很短，但我對 Torrid 品牌的實力、它與客戶和 Torrid 團隊的關係印象深刻。

I believe we are putting the right strategies and priorities in place to deliver consistent long-term growth. In the near term, we are going to focus on controlling the controllable and setting the company after success going forward.

我相信我們正在製定正確的戰略和優先事項，以實現持續的長期增長。在短期內，我們將專注於控制可控的並在成功後設置公司。

With that, I will now turn it over to the operator for questions.

有了這個，我現在將把它交給接線員提問。

(Operator Instructions) Our first question is from Oliver Chen with Cowen.

（操作員說明）我們的第一個問題來自 Oliver Chen 和 Cowen。

Lisa and Tim, on the inventory situation, now, what are the main strategies to clear through it? And also, is there a risk in terms of the depth of promotions you may need to take? What are you seeing in the consumer environment that gives you conviction you can get through it?

Lisa 和 Tim，關於庫存情況，現在主要的清倉策略是什麼？而且，就您可能需要採取的促銷深度而言是否存在風險？您在消費環境中看到了什麼讓您堅信自己可以度過難關？

As we look ahead to modeling inventory in the new year; I would love your take on how you see that in terms of the growth rate relative to sales? And then, the second question, Lisa, zooming out, what's your hypothesis for driving greater consistency in terms of what the brand and/or strategies may need to take place for that to happen?

當我們展望新的一年的庫存建模時；我很想知道您如何看待相對於銷售額的增長率？然後，第二個問題，麗莎，縮小範圍，你假設要在品牌和/或戰略可能需要採取什麼措施方面推動更大的一致性是什麼？

And Tim, lastly, on the debt that what's your target ratio, we'd love your refreshment on your priorities in terms of the debt level and the debt-to-EBITDA ratio you seek to maintain.

蒂姆，最後，關於你的目標比率是什麼的債務，我們希望你能在債務水平和你尋求維持的債務與 EBITDA 比率方面更新你的優先事項。

Okay. Thanks, Oliver. I'll start with the inventory question. Our aging on our inventory is actually very, very positive, meaning we have very current inventory. There's a lot of moving pieces with inventory, particularly the only bulk of inventory that has a long trajectory in terms of clearing is basics. And that's primarily basics in bras and denim and other bottoms.

好的。謝謝，奧利弗。我將從庫存問題開始。我們的庫存老化實際上非常非常積極，這意味著我們擁有非常新的庫存。有很多帶有庫存的移動件，特別是在清算方面具有較長軌蹟的唯一大部分庫存是基礎知識。這主要是文胸、牛仔布和其他下裝的基本款。

And we are, of course, not promoting that heavily and not burning down that inventory. But we'll land the plane on that and feel comfortable that we can manage that appropriately. The other increase in inventory is actually receiving our spring product in the correct time table because last year, we consider a resort, which just set the stores to be a spring line.

當然，我們並沒有大力推廣也沒有燒毀庫存。但我們會將飛機降落在上面，並為我們能夠適當地管理它而感到自在。庫存的另一個增加實際上是在正確的時間表中收到我們的春季產品，因為去年我們考慮了一個度假村，它只是將商店設置為春季產品線。

And so we count that in our spring inventory. So we received that on time. And we're receiving Spring 1, which will set the end of December on time as well. And so last year, those lines were late. So I'm not worried about the timeliness of managing the inventory.

所以我們把它算在我們的春季庫存中。所以我們準時收到了。我們正在收到 Spring 1，它也將按時設置 12 月底。所以去年，這些線路遲到了。所以我不擔心管理庫存的及時性。

We are just very committed to making sure that we stay on top of it and that we turn it quickly. I think actually the -- the opportunity for us is we are much cleaner than we've been all year. And the inventory is very current and that we can moderate promotions as we move forward.

我們只是非常致力於確保我們保持領先地位並迅速扭轉局面。我認為實際上 - 我們的機會是我們比全年都乾淨得多。庫存是最新的，我們可以在前進的過程中適度促銷。

So I don't actually expect in the first quarter to have to accelerate any more than we have. And I think that we have some possibility of being able to moderate that as we deliver new product and have the customer respond to that.

所以我實際上並不期望在第一季度必須比我們更快地加速。而且我認為，在我們交付新產品並讓客戶對此做出回應時，我們有可能緩和這種情況。

But overall, with inventory, I'm comfortable with the aging. It's actually quite clean. There's moving pieces associated with it. We're just committed to making sure that we stay on top of it and keep it as current as possible, so that we are not kicking a problem down the road.

但總的來說，有了庫存，我對老化感到滿意。它實際上很乾淨。有與之相關的移動件。我們只是致力於確保我們掌握它並儘可能保持最新，這樣我們就不會在路上遇到問題。

On my hypothesis for consistency, if I understand what that means? So I've been here a few months. And one of the things that we've really focused on aside from building the right team and building the right operational foundation for the business is the process for developing our product assortment flow and those assortments by channel.

關於我的一致性假設，我是否理解這意味著什麼？所以我已經在這裡幾個月了。除了建立正確的團隊和為業務建立正確的運營基礎之外，我們真正關注的事情之一是開發我們的產品分類流程和按渠道分類的過程。

And some of that discipline had been lost over the pandemic time period. And we've reinstated processes that are very straightforward, that are very typical and well known in this environment and moving more of our analysis and development earlier in the process. Meaning a template for the development and then being able to really test and react more appropriately as we move down the path.

在大流行期間，一些紀律已經丟失。我們已經恢復了非常簡單的流程，這些流程在這種環境中非常典型且廣為人知，並且在流程的早期階段移動了更多的分析和開發。意思是開發模板，然後能夠真正測試並在我們沿著這條路前進時做出更適當的反應。

So we've changed the process for development. We're -- and we're also have reinstated our chase mode. Our chase capabilities in the business and we're being able to chase as we go into the first quarter. And just basically put some core disciplines into place, particularly in assortments by category and by channel, the new stores versus online assortments.

所以我們改變了開發過程。我們 - 我們也恢復了追逐模式。我們在業務中的追逐能力，我們能夠在進入第一季度時追逐。並且基本上將一些核心規則落實到位，特別是按類別和渠道分類，新店與在線分類。

So I feel very comfortable with the disciplines that we've put in place that will help deliver some consistency as we move into spring and throughout the balance of next year. Putting chase back in place, leading liquidity and our inventory will allow us to react to the customer more appropriately and help build some of that consistency.

因此，我對我們已經實施的紀律感到非常滿意，這些紀律將有助於在我們進入春季和明年餘下的時間裡提供一些一致性。將追逐放回原位，領先的流動性和我們的庫存將使我們能夠更適當地對客戶做出反應，並幫助建立一些一致性。

And I'm turning the last one over to Tim.

我要把最後一個交給蒂姆。

So Oliver to also answer a little bit of a question you had on inventory. We believe our guidance appropriately reflects any of the promotional activity we'll need to do in the fourth quarter to keep that inventory as clean as Lisa mentioned and position us for success going into the first quarter of 2023, which kind of details into the conversation around debt levels.

所以奧利弗也回答了一些關於庫存的問題。我們認為我們的指導意見適當地反映了我們需要在第四季度進行的任何促銷活動，以保持庫存像 Lisa 提到的那樣乾淨，並使我們能夠在 2023 年第一季度取得成功，對話中的哪些細節圍繞債務水平。

We can generate as a business pretty healthy returns on operating cash flows when our working capital and inventory are aligned with sales and demand. As such, we're going to generate a lot of free cash flow in the future of this business. We'll look to invest that in the growth opportunities that we see.

當我們的營運資金和庫存與銷售和需求保持一致時，我們可以在經營現金流方面產生相當可觀的回報。因此，我們將在這項業務的未來產生大量自由現金流。我們將尋求將其投資於我們看到的增長機會。

We have a significant amount of incremental store opportunities both in Canada and the U.S. that we'll want to invest in and continue to grow this business at the appropriate times. And we also will look at investment in technology where necessary or other things to bring the customer experience to a higher level.

我們在加拿大和美國都有大量的增量商店機會，我們希望在適當的時候投資並繼續發展這項業務。我們還將在必要時考慮對技術或其他方面的投資，以將客戶體驗提升到更高水平。

As such, though, we are comfortable with our overall debt level at this point in time. And I don't see any need to do anything in the short term to do that. But if we have extra cash flow beyond our investment capability to grow the business, we'll look at doing something to that time.

儘管如此，我們對目前的整體債務水平感到滿意。而且我認為短期內不需要做任何事情來做到這一點。但如果我們有額外的現金流超出我們的投資能力來發展業務，我們會考慮在那個時候做點什麼。

Our next question is from Dana Telsey with Telsey Advisory Group.

我們的下一個問題來自 Telsey Advisory Group 的 Dana Telsey。

Can you expand upon the customer base and the improving retention? Where are you now in terms of retention? How does it look? Does it look different online versus in-store? And can you expand on the product conversion in the different categories?

您能否擴大客戶群並提高保留率？就保留率而言，您現在處於什麼水平？它看起來如何？網上和實體店看起來不一樣嗎？您能否擴展不同類別的產品轉換？

It sounds like the Studio collection got a strong response too, what are you seeing in the other categories? And lastly, with the impact of inflation, what are you seeing both on a channel basis and regionally with your core customers? How does it differ?

聽起來 Studio 系列也得到了強烈反響，您在其他類別中看到了什麼？最後，在通貨膨脹的影響下，您在渠道基礎上和區域核心客戶方面看到了什麼？它有何不同？

Thanks, Dana. I'll just talk generally. As we have an approach to our customer I spoke about it before. And we're maintaining a consistent approach here. As we have new customer acquisition that we pay attention to retention and frequency and reactivation. We talked on the prepared remarks that our reactivation campaigns continue to yield very positive results.

謝謝，達娜。我就泛泛而談吧。由於我們對客戶有一種方法，所以我之前談到過。我們在這裡保持一致的方法。由於我們有新的客戶獲取，因此我們會注意保留率、頻率和重新激活。我們談到了準備好的評論，即我們的重新啟動活動繼續產生非常積極的結果。

Our retention numbers are actually quite strong. And we do think we can improve that a couple of hundred basis points as we move into next year. And what we're trying to do in addition to retention is to build frequency. What we found and what we know is that every time we have a launch like Studio, like Betsey, like a new offering, that engages our core customer at the highest levels and drives them to build frequency.

我們的保留數字實際上非常強勁。我們確實認為我們可以在進入明年時提高幾百個基點。除了保留之外，我們正在嘗試做的是建立頻率。我們發現和知道的是，每次我們推出像 Studio、Betsey 這樣的新產品時，都會在最高級別吸引我們的核心客戶並推動他們建立頻率。

So next year, we have multiple launch plans that will have launches; 4 to 5 major launches throughout the year of new product categories that really do drive frequency with that core customer.

所以明年，我們有多個發射計劃；全年推出 4 到 5 個主要新產品類別，真正提高核心客戶的頻率。

And then on the new customer piece, it's -- as we mentioned in the remarks, it's primarily driven through store acquisition. That's the healthiest piece of that. But we are also -- we also have new customer acquisitions that will be driven through a digital campaign next year as well.

然後在新客戶方面，正如我們在評論中提到的，它主要是通過商店收購來驅動的。這是最健康的部分。但我們也是 - 我們也有新的客戶收購，明年也將通過數字活動來推動。

So happy with the retention of all building frequency among those customers and are focused on reactivation in the short term. But next year, we'll continue with a full 360-degree approach to building that customer file and maintaining the quality of that customer.

很高興保留這些客戶的所有建築頻率，並專注於短期內的重新激活。但明年，我們將繼續採用完整的 360 度方法來構建客戶檔案並維護該客戶的質量。

On the product conversion, I think I spoke a little bit to that in terms of new product, yes, Studio works very well for us. It continues to work well. I'm very happy with the product that the team delivered for holiday in terms of a balance between Cozi and then (inaudible) [00:25:17] really responded to the correct timing.

關於產品轉換，我想我在新產品方面談了一點，是的，Studio 對我們來說非常好。它繼續運作良好。我對團隊在 Cozi 和然後（聽不清）[00:25:17] 之間的平衡方面為假期交付的產品感到非常滿意，真正響應了正確的時間。

And I think our stores look, I think they look very, very good and have -- and our customers actually have been asking us if we remodeled. And I think that is a great comment on the quality of the merchandising assortment and how that was presented to the customer.

而且我認為我們的商店看起來，我認為它們看起來非常非常好並且已經 - 我們的客戶實際上一直在問我們是否進行了改造。我認為這是對商品分類質量以及如何將其呈現給客戶的一個很好的評論。

So we are seeing -- as we are bringing in relevant fashion products for the season and at the right level and presenting it appropriately that the customer response among not just our existing customers, but among new customers is positive. And so we're excited and think that that's a great indicator of some of the things that could be in store for us next year from a product perspective.

所以我們看到 - 當我們在適當的水平上引入相關的時尚產品並適當地展示它時，客戶的反應不僅在我們現有客戶中，而且在新客戶中也是積極的。因此，我們很興奮，並認為這是一個很好的指標，表明從產品的角度來看，明年我們可能會遇到一些事情。

The inflation channel question, one of the things that we've been talking about is that in the first several quarters of this year that the inflationary impact really was most prominent in our lower household income customers.

通貨膨脹渠道問題，我們一直在談論的事情之一是，在今年的前幾個季度，通貨膨脹的影響確實在我們較低的家庭收入客戶中最為突出。

And for the first time in the third quarter, it impacted all categories of the customer. So they had been immune. The upper income levels have been immune up until the end of third quarter and we did see that for the first time impacting that level.

在第三季度，它首次影響到所有類別的客戶。所以他們已經免疫了。直到第三季度末，較高的收入水平都沒有受到影響，我們確實第一次看到它影響了這一水平。

Our next question is from Lorraine Hutchinson with Bank of America.

我們的下一個問題來自美國銀行的 Lorraine Hutchinson。

This is (inaudible) [00:26:56] on for Lorraine Hutchinson. I had a quick follow-up on Oliver's question. Can you give us a more detailed breakdown of your inventory composition and just percentages of inventory in each category, whether it's basics evergreens versus fashion versus things you need to clear?

這是（聽不清）[00:26:56] Lorraine Hutchinson。我對奧利弗的問題進行了快速跟進。您能否更詳細地說明您的庫存構成以及每個類別的庫存百分比，無論是基本常青樹還是時尚產品還是您需要清理的東西？

And then secondly, on the upgrade updated development process you mentioned, just now, how much are you leaving open to chase in 1Q versus what you normally would leave open to chase?

然後其次，關於你提到的升級更新開發過程，剛才，你在 1Q 中留下多少開放追逐與你通常留下的開放追逐？

Yes. I'll take the first portion. We don't break out the total detail level of inventory both. As Lisa mentioned, what we've seen were the deepest in right now are things that are mostly basics and evergreen categories that we have the time to work through.

是的。我會拿第一部分。我們不會打破庫存的總詳細程度。正如 Lisa 所提到的，我們現在所看到的最深層次的東西大多是我們有時間研究的基本和常青類別。

We are very clean on seasonal and to liability product. So we're confident that we're going to continue to maintain that and that's what we're very much focused on. I'll turn it to you. Do you want to answer the question?

我們對季節性和責任產品非常乾淨。因此，我們有信心我們將繼續保持這一點，而這正是我們非常關注的。我會轉給你的。你想回答這個問題嗎？

On the development process, we are leaving -- I'm not going to go into percentages. But we're leaving more open on a liquid basis in order to test and react. We also are testing products in the third quarter with the idea of reordering that product into subsequent quarters.

在開發過程中，我們正在離開——我不打算討論百分比。但我們在流動性基礎上保持開放，以便進行測試和反應。我們還在第三季度測試產品，並打算將該產品重新訂購到後續季度。

So it's -- there's a quick turn aspect of the liquidity. And then there's also a test and then holding liquidity later as we get the results of those tests to buy into those specific categories.

所以它 - 流動性有一個快速轉變的方面。然後還有一個測試，然後在我們獲得這些測試的結果以購買這些特定類別時持有流動性。

So it's a multipronged approach. I'm comfortable with the amount that we have opened at this point. And our sourcing team is working diligently and finding opportunities for us to be more efficient and react more quickly to some of these wins.

所以這是一個多管齊下的方法。我對我們此時打開的數量感到滿意。我們的採購團隊正在努力工作，尋找機會提高我們的效率，並對其中一些勝利做出更快的反應。

And then lastly, does the updated guidance for sales really assume performance kind of in line with the exit rate? Or are you contemplating any more sort of incremental macroeconomic pressure?

最後，更新後的銷售指南是否真的假設業績與退出率一致？或者您是否正在考慮任何更多的增量宏觀經濟壓力？

I would say that our guidance contemplates a couple of different things. One is the trend that we've seen going through the third quarter, the uncertainty of the overall macroeconomic environment and our desire to maintain cleanliness in our inventory position and set us up for 2023 that we're pretty optimistic about where our product development as we roll into spring will position us well.

我會說我們的指南考慮了一些不同的事情。一個是我們在第三季度看到的趨勢，整體宏觀經濟環境的不確定性以及我們希望保持庫存狀況清潔並為 2023 年做好準備，我們對我們的產品開發位置非常樂觀我們進入春天將使我們處於有利地位。

Our next question is from Mark Altschwager with Baird.

我們的下一個問題來自 Baird 的 Mark Altschwager。

This is (inaudible) [00:29:39] on for Mark. Can you give us any commentary on your Black Friday performance and how that informs your deal on the holiday season? And then with respect to the updated guidance, what are the underlying assumptions that you've baked in for January as you cycle last year's supply chain disruptions?

這是（聽不清）[00:29:39] 馬克。您能否就黑色星期五的表現以及這如何影響您在假期的交易給我們任何評論？然後關於更新後的指南，當你循環去年的供應鏈中斷時，你在 1 月份提出的基本假設是什麼？

I'll take the first part of the question related to Black Friday. What we did see is, as Lisa mentioned, we are seeing the customer respond to some of the newness. Unfortunately, given our inventory position, we were still very promotional throughout the holiday.

我將回答與黑色星期五相關的問題的第一部分。正如 Lisa 提到的，我們確實看到了客戶對一些新事物的反應。不幸的是，鑑於我們的庫存狀況，我們在整個假期仍然非常促銷。

We did see actually a pretty surprising and slightly better than we expected response in store. But I think as Lisa mentioned, the way the new product is resonating in the stores has been well received by the customer. But again, we had to be highly promotional to continue to clear through product.

實際上，我們確實看到了非常令人驚訝的反應，並且比我們預期的店內反應略好。但我認為正如麗莎所說，新產品在商店中引起共鳴的方式受到了顧客的好評。但同樣，我們必須大力宣傳才能繼續通過產品清除。

Our January expectations are that the trends that we've been dealing with over the last quarter would retain itself through the holiday, less around the supply chain disruption that really didn't impact us all that much as a comparable benefit.

我們 1 月份的預期是，我們在上個季度一直在處理的趨勢將在整個假期中保持不變，而不是圍繞供應鏈中斷，而供應鏈中斷確實並沒有像可比較的好處那樣對我們產生太大影響。

So we've kind of just assumed basically the current trend of the business will carry forward in our guidance.

因此，我們基本上只是假設當前的業務趨勢將在我們的指導中繼續發展。

Okay. And -- then if I could ask one more. When you're approaching 2023 internally, what scenarios are you baking into your operational planning?

好的。並且 - 那麼我是否可以再問一個。當您在內部接近 2023 年時，您將哪些情景納入您的運營計劃？

Sorry, can you repeat that question? I just want to make sure I follow you.

抱歉，你能重複這個問題嗎？我只是想確保我跟著你。

Yes. So not asking about 2023 guidance when you're approaching here internally, what macro scenarios are you baking into your operational planning?

是的。因此，當您在內部接近這裡時，不要詢問 2023 年的指導，您將哪些宏觀情景納入您的運營計劃？

We maintain as much flexibility as we can right now with the -- given the uncertainties in the overall macroeconomic environment. We're going to continue to focus on maintaining our inventory investments in line with the demand trends.

鑑於整體宏觀經濟環境的不確定性，我們現在保持盡可能多的靈活性。我們將繼續專注於根據需求趨勢維持我們的庫存投資。

And as Lisa mentioned, by keeping a little bit more open in our open-to-buy process, it allows us flexibility to throttle up or throttle back as needed to react to the demand.

正如 Lisa 所提到的，通過在我們的開放購買流程中保持更多的開放性，它使我們能夠根據需要靈活地節流或節流以響應需求。

Our next question is from Alex Stratton with Morgan Stanley.

我們的下一個問題來自摩根士丹利的 Alex Stratton。

This is Kim -- on for Alex Stratton. I was wondering how you view the help of the consumer. Are you seeing maybe any different impacts in terms of income level? And are you seeing any signs of trade down?

我是 Kim——代表 Alex Stratton。我想知道您如何看待消費者的幫助。在收入水平方面，您是否看到了任何不同的影響？您是否看到任何交易下降的跡象？

For the first 2 quarters of '22, we only saw an impact to our lower income customer and that was pretty consistent. And for the first time in the third quarter, we saw an impact through at all income levels. I don't have the data for fourth quarter, but we'll talk about that as we move -- at our next call.

在 22 年的前兩個季度，我們只看到了對低收入客戶的影響，而且這種影響非常一致。在第三季度，我們第一次看到了對所有收入水平的影響。我沒有第四季度的數據，但我們會在我們行動時討論這個問題——在我們的下一次電話會議上。

But for the first time, as I mentioned, in the third quarter, we did see it impact all income levels.

但正如我提到的，在第三季度，我們第一次確實看到它影響了所有收入水平。

And then to answer your question about if the customer is trading down, we have not seen them actively trading down when the product is right and they're responding to the newness. We've seen some strong response there regardless of price.

然後回答你關於客戶是否正在交易的問題，我們沒有看到他們在產品合適並且他們對新事物做出反應時積極交易。無論價格如何，我們都看到了一些強烈的反應。

However, we have been so highly promotional that our average unit retail that is lower than it has been historically. So she hasn't actually had the trade down.

但是，我們的促銷力度如此之大，以至於我們的平均單位零售價低於歷史水平。所以她實際上並沒有進行交易。

There are no further questions at this time. I'd like to turn the floor back over to management for any closing comments.

目前沒有其他問題。我想將發言權交還給管理層以徵求任何結束意見。

Thanks, everyone, for joining us on this call. We look forward to returning on the fourth quarter and full year call. And I want to wish everyone a happy holiday season. So thanks so much.

謝謝大家加入我們的電話會議。我們期待在第四季度和全年電話會議上回歸。我想祝大家節日快樂。非常感謝。

All the best to you and yours.

祝你和你的家人一切順利。

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

今天的會議到此結束。此時您可以斷開線路。感謝您的參與。