JJill Inc (JILL) 2017 Q4 法說會逐字稿

Good morning. My name is Jack, and I'll be your conference operator today. At this time, I would like to welcome everyone to the J.Jill Fourth Quarter and Full Fiscal Year 2017 Conference Call.

On today's call are Paula Bennett, President and CEO of J.Jill, Inc.; and Dave Biese, Executive Vice President and Chief Financial and Operating Officer. (Operator Instructions) Before we begin, I need to remind you that certain comments made during this call may constitute forward-looking statements and are pursuant to and within the meaning of the safe harbor provisions of Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the press release and J.Jill's SEC filings. The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update our forward-looking statements. Finally, we may refer to certain adjusted or non-GAAP financial measures on this call. A reconciliation schedule showing the GAAP versus non-GAAP financial measures is available in our press release issued today. If you do not have a copy of today's press release, you may obtain one by visiting the Investor Relations page of our website at jjill.com.

I will now turn the call over to Paula.

Thank you. And thank you, everyone, for joining us for our year-end call. Before I review our results, I'd like to thank all of our associates for the work that they have contributed over the past year. As I've announced my retirement from J.Jill, I've had time to reflect on my 10 years with the company. I am tremendously proud of the team that we have built over that time and of what we have accomplished together as well as the consistent, profitable growth we have delivered in the shifting retail landscape. I've worked with Linda over the past year while serving on our board and I'm confident that her leadership experience and strengths and deep understanding of our industry and customers will allow her to transition very successfully into the CEO role and lead our company forward. Both Linda and I are committed to a smooth and effective transition. Now let me review our performance, and Dave will follow with further details regarding the fourth quarter financial results as well as our priorities for 2018. We finished 2017 with some positive trends within our business, but also with certain challenges that our teams are actively addressing. For the year, we delivered total company comp growth of over 6% and adjusted diluted EPS growth of 13%. We continue to have strong customer loyalty, with our customer file growing nearly 7% for the year ending fiscal 2017 with 1.84 million active customers. For the fourth quarter, we delivered a positive comp of almost 9%, driven by strong retail performance and actions we took to clear product. Our retail channel continued to be our stronger performer as our stores saw increased traffic and delivered higher conversions and average transaction value, and we look to continue to leverage this important channel. Within direct, we were pleased to have completed the rollout of our new e-commerce platform, however, our results continued to underperform. We are experiencing a combination of site and product issues that have affected traffic and conversion in the channel and this is having a significant impact on our forecast, which Dave will discuss. In sum, the business is performing below our standard. Our teams are incorporating recent learnings into our actions and plans for 2018 and are aggressively working on all fronts to reverse our trends. Before I turn the call over to Dave, I'd like to congratulate him on his recent promotion to Executive Vice President and Chief Financial and Operating Officer. In his new role, Dave assumes the responsibility for strategic planning and business development, while continuing his leadership role within finance, real estate and distribution. I will now turn the call over to Dave.

Thank you, Paula, and good morning. Let me first speak for everyone at J.Jill, to thank you, Paula, for your leadership and your guidance over the past 10 years. We wish you all the best in retirement and commit to move forward building on the strong foundation we created together.

I'll turn now to our fourth quarter results. First, our income statement. Our total net sales for the 14 weeks ended February 3, 2018, were $188.7 million compared to $166.9 million for the 13 weeks ended January 28, 2017. On a 13-week basis, total company comparable sales were 8.9% driven by our retail stores, and as noted, increased promotion to clear inventory. Gross profit was $117.3 million versus $105.5 million last year, and gross margin was 62.2% compared to last year's 63.2%. The rate reduction was in line with our expectations, and again, reflects the actions to move excess and slow-selling product. Our reported SG&A expenses were $105.6 million versus $94.6 million last year. Included in this year's expense was approximately $2.3 million of nonrecurring costs. In the fourth quarter of 2016, we incurred $2.9 million of nonrecurring costs. Excluding the nonrecurring expenses from both this year's and last year's figures, fourth quarter SG&A as a percentage of total net sales was 54.8% versus 55% for the fourth quarter of 2016. Our GAAP operating income was $11.7 million or 6.2% of sales. Excluding the nonrecurring costs from both periods, operating income was $14 million or 7.4% of sales versus $13.7 million or 8.2% of sales last year. Adjusted EBITDA for the quarter was $24.2 million as compared to $22.5 million last year. As a percentage of sales, adjusted EBITDA was 12.8% versus 13.5% last year. A reconciliation of adjusted EBITDA to net income is included in our press release. Interest expense for the quarter decreased to $4.7 million from last year's $5 million, reflecting voluntary term loan reductions totaling $25 million during the year, $5 million of which was in the fourth quarter. The U.S. Tax Cuts and Jobs Act enacted in December 2017 significantly reduced our federal corporate income tax rate and required us to revalue our deferred income tax liabilities using the lower federal rates. This resulted in a onetime benefit of $24 million or $0.55 per diluted share in our fourth quarter. Excluding this benefit, income tax expense was $1.6 million compared to $3.7 million in the fourth quarter of fiscal 2016. Finally, GAAP net income for the period was $29.3 million or $0.67 per diluted share versus $2 million or $0.05 per diluted share last year. Adjusted diluted earnings per share, which excludes nonrecurring expenses and other onetime items, including the impact of tax reform was $0.13 for the quarter compared to last year's $0.08. In the quarter and for the year, the 53rd week of business contributed approximately $9.2 million in sales and approximately $0.02 in adjusted earnings per share. For our full year performance highlights, please refer to this morning's press release. Turning to our balance sheet, we ended the quarter with $26 million in cash and $38.4 million in availability under our revolving credit facility. Inventory at the end of the quarter was $80.6 million compared to $66.6 million at the end of the fourth quarter 2016. This is not an apples-to-apples comparison because of the 53rd week in 2017, as we had March inventory receipts in that final week of the fiscal year of approximately $8.4 million, whereas, March receipts last year were received in the first fiscal week of 2017. During the quarter, we opened 2 stores and closed 1, ending the quarter with 276 stores. For the year, we opened a total of 9 stores and closed 8. Finally, our annual capital spending for 2017 totaled $38 million, also in line with our expectations. Turning to our outlook. As Paula mentioned, our teams are incorporating recent learnings into our actions and plans for 2018. And we are aggressively working on all fronts to reverse our trends. As we look back, our business has not recovered from the product and sell-through issues we experienced in the third quarter of last year, particularly, in our direct channel. Though product acceptance improved early in the fourth quarter as we had increased global promotions to move our third quarter product, our mix began to be an issue during the peak holiday weeks. As we ended December and operated through January, our inventory levels were simply too high, and at that time, we were not able to materially adjust our spring inventory commitments. Therefore, inventory levels continue to be an issue. Further, as it relates to the direct business, the customer experience on the site is still not where it needs to be. While we improve technical performance of our new e-commerce site, including faster page load times and clearer messaging at the checkout, we continue to need to improve our engagement with our customer. This combination of too much of the wrong inventory and the performance of our new website has caused a significant deceleration in our e-commerce business, which is seen in lower traffic and conversion. Our business thus far in the first quarter of 2018 has also been well under expectation. And we will continue to promote through at least the first half of the year to get inventory in line with demand. We have been able to reduce our second half purchases, with a goal of having a healthier balance of supply and demand and being able to set ourselves up to promote in a more controlled and planful manner. Also, with our new merchandise financial planning system now in place, our teams going forward will have a much clearer view from a planning perspective, with more timely views of inventory ownership in both our markdown and full priced product offering, which will improve our preseason and in-season management of our inventory investment. Needless to say, improving the direct business is our highest priority. Every area of the business is working to improve results in this channel. We have dedicated teams working to improve the e-commerce site experience, the productivity of our marketing, our creative and product presentation and to implement customer-facing enhancements enabled by our new e-commerce platform. We remain confident in our new e-commerce site and the benefits it will deliver to our customers. And we are continuing to diagnose and address the changes we are seeing in consumer behavior that are impacting our direct business. Given the current trends in the business and the transition in leadership, we are only providing guidance 1 quarter out until our visibility improves. This will give us the flexibility to fully diagnose trends and make adjustments to the business as the year progresses and position ourselves for a healthy recovery. Given this, we do not expect to report year-over-year earnings growth in 2018. With that and for our first quarter, we expect total comparable sales to decline in the mid-single-digit range, and we continue to see our retail business outperforming our direct business during the period. With regard to gross margin, given the needed promotion to bring our inventories in line with demand, we expect gross margin for the quarter to decrease approximately 300 basis points compared to the first quarter of 2017. We expect SG&A, as a percentage of sales, to deleverage slightly. We have reduced spending where we could. Interest for the quarter will decrease about $200,000 year-over-year, given the $25 million in term loan prepayments made in 2017. Diluted earnings per share are expected to be in the range of $0.18 to $0.20 compared to diluted earnings per share of $0.22 and adjusted diluted earnings per share of $0.24 in the first quarter of 2017. Diluted earnings per share for the first quarter of fiscal 2018 assumes a $0.04 benefit versus the prior year from The U.S. Tax Cuts and Jobs Act. This is expected to reduce the company's effective income tax expense rate to approximately 26%. Let me also speak to comparisons. Fiscal 2017 was a 53-week year, as you know, and 2018 reverts back to a 52-week year. This creates a timing shift in the first quarter this year, where a low volume week in February is replaced with a much higher volume week from May. We expect this shift to benefit first quarter earnings per share versus last year by approximately $0.03, and this is reflected in our guidance. Our first quarter guidance does not include any expenses associated with the transition and leadership, and we are working to determine that amount. We do expect it will be material and it will be onetime in nature. Once again, I'll reiterate that work is underway to aggressively identify and implement actions that will reverse our trends as soon as possible. We will look forward to updating you as we progress and expect to release our first quarter earnings and further outlook in early June. Now we can take your questions.

(Operator Instructions) Your first question comes from the line of Lorraine Hutchinson with Bank of America.

First, let me just say congratulations to Paula. As sad it is for us, but we're very happy for you. So good luck in your retirement.

Thank you.

And then moving on. Dave, I just want a little bit more clarity on the issues that you're having on the e-commerce business. First of all, I thought you were beta testing the new website. So has that had gone live throughout the entire reach of the website? And then secondly, it wouldn't seem that traffic would be an issue, if really, it's page load speeds and things like that. So is there something going on with marketing that is not driving the right people to the site at this point?

So on your first point, yes, absolutely, we did do beta testing. As we think about that now and when we talked about it earlier, we were very focused on the page load times and some of the other performance metrics. We absolutely saw an improvement there. And that is what brought us to the point where we rolled it out. As we look at it now I would say 2 things. One is the adoption period is something that we believe is simply taking a little bit longer, just as a natural point in terms of changing the experience. Secondly, there are more experiential things that are going on the site that -- those are our focus now. And as we're watching those behaviors and listening to our customer, we -- in hindsight, now I'd say, we could have focused more there. And that is a big idea for us right now is to be very clear on the experience she's having, where are we taking her, how is she navigating through the site and how it is we can continue to improve that aspect of the business? So on the marketing side of it too, I think, I would take that down to a couple points, is when you look at the unprecedented level of marketing that we had in the fourth quarter and the promotional level that we used, I think, it's fair to say that we were in front of her a lot and she took advantage of that and she really was able to complete her wardrobe to a large extent. So as we moved into February, yes, traffic was down as well as conversion. So we do believe there is, I'll call it a little bit of fatigue just in terms of inviting her back in and introducing product in the month of February. The second thing I would say is simply the fact that, yes, as we work through the newness and some of the things we need to do to improve the experience, it's possible she is not visiting us quite as much. So we cited like 4 different areas where we're really focused in terms of the e-commerce experience, and we're working on those. One of those being the marketing. And I would say there are very tactical things like e-mail, where we are very focused on right now. We do see some opportunities to improve our performance just in terms of e-mail, the product presentation in that regard, the messaging that she's getting. And over time, as we continue to improve the site and refine that marketing and segment that marketing a little bit better, we believe that traffic is an opportunity, along with conversion as we improve the experience.

Your next question comes from the line of Randy Konik with Jefferies.

Couple of things. I guess, first, Dave, you mentioned in the remarks that obviously, the balance sheet inventory up 21% is not apples to apples. Could you give us a little bit of perspective of what the inventory growth would look like if we thought about shifting it 1 week further, what have you to make more apples to apples? Just try to give us some sense on how high the inventories are versus your normalized rate at the moment?

Yes, if we were to exclude those receipts that we noted in our commentary, our inventories would have been roughly 8% up year-over-year on an apples-to-apples basis. Not outside necessarily where we expected. What I would say is we had more challenges in the composition of inventory versus where our expectation was as opposed to the absolute level. And now when you take into consideration, our slow start in February and our receipt level that was planned and bought when we had a different expectation for the business, we are in a situation now where, again, the composition is off in terms of the aged product and the new product is coming into the level that is higher than the demand at the moment, particularly, in direct.

Got it. And then on the mismatch of goods or the mix is a little off, is there any comments throughout that you're seeing in terms of trying to assess what's off about it over the last couple quarters? Just trying to get -- in terms of trying to figure out the identification of the issue and so forth?

I don't see it as a specific category of business or things you can put your finger on that precisely in terms of the goods that are more challenging, if you will. We talked about a couple of things after the third quarter. First, there were some real wins in our buys. And we were -- we hadn't bought to the level that we could have. And I think that's important to hold, and we've talked about the fact that as we moved through the fourth quarter, there was improved acceptance of October and November's deliveries. As you went through December, our business, after we talked on December 5 with this group, the business was somewhat softer in December and the January goods came in at some point as well. So as we went into January, we did have some levels of inventory and the acceptance of January was not what we had hoped for and that's when we saw things start to manifest themselves a little bit more as we went through that month. We did turn up our promotions a little bit more as we ended January. Again, it was kind of the composition more so in the aged goods and that is in part what you're seeing in direct. So in retail, you're able to really guide that service experience. It showcases the full goods or the full-priced goods, and we are seeing relative strengths there. In direct, historically, it's been a strength of ours to clear goods there. Right now I would simply say there are just too many of the wrong things in the direct channel. It's become a little bit more challenging to merchandise it. It is one of the things that we have to work through in the first half.

Got it. And then last question. So on that point on the clearance strategy, you've always sought to clear through direct keeping your stores more, reg price, if you will. How do you guys think about the clearing strategy altering -- being altered, if at all, given the inventory? Do you think do you need to do some extra clearing through the stores channel? Just trying to get a sense of, A, how the clearance strategy will change if at all over the next couple of quarters; and B, if the first quarter guide is, I believe, of down 300-plus gross margin. Is that a function of thinking that you can get through most of it -- most of the issue of the inventory through the first quarter? And we can get 75% of it cleared out through the first quarter and less hangover into the second quarter and then be clean into the third quarter?

Okay. So I mean, if I start from the beginning on that, I don't see anything about our current situation that changes the way we approach our flow of goods generally. Retail, we'll see some additional promotions along with direct. So we do expect to help move some of those promotional goods through retail. With that said, though, I think, it's still the same strategy. It's going to be more goods going out through our direct channel. So even though we're seeing some softness as we begin to promote, we would expect that a good deal of that product is going to go out through our direct channel. The 300 basis points too, I would tell you, leaves us room to do some very aggressive promoting, whether it be in direct or frankly, to see that if there are goods that are simply not performing and aren't going to perform, there's no reason to keep them in front of the customer, and we may simply take things out of stock. So that is our thinking. And that is fully baked into our guidance. Beyond the first quarter, Randy, I really wouldn't say a whole lot more other than to say that it would be our point of view right now, that's going to take us through the first half. And at some point in the fall, we are more comfortable with having the right composition and levels of inventory.

Your next question comes from the line of Oliver Chen with Cowen and Company.

Perhaps you should try for the next one.

Operator, please go to the next question.

Your next question comes from the line of Paul Trussell with Deutsche Bank.

So I believe you mentioned that the customer file grew, still I think, 7% or so this past year. Can you just talk to us about what kind of returns you're getting on the newly acquired customers? Are those falling meaningfully short from what you've seen in prior years? And -- or is it more material shortfall really coming from prior customers reducing their frequency of spend, if you can just elaborate on that please?

Interpreting that a little bit, I would say that in terms of shortfall in the business, I would point to direct a little bit more than retail. It is across new-to-brand customers as well as existing customers. As far as the economics on customer acquisition, it's fair to say that the third and fourth quarters would have a little bit different of a return metric, if you will. But overall, we adjust quickly to that. And we are still continuing to acquire new to brands. They continue to be in line with our model. We adjust the return model kind of in the moment for what we're seeing in the moment to see that in the short term, we're right in terms of level of marketing. But I wouldn't say we've had a dramatically different point of view in terms of the acquisition model. The only other thing I would say too is, coming out of the year, we did have nice growth year-over-year and even through the third and fourth quarters in our retention rates. So we feel like our customer is still with us, and now it is up to us to make the experience better.

Got it. That's helpful. And then, I mean, obviously you've outlined expectations here for that you won't have earnings growth this year and certainly that's understandable given the outline product and kind of conversion inventory issues. But I mean, circling back to a question kind of asked earlier, I mean, at this juncture, do you firmly have an expectation to return to positive comps and flattish-or-so gross margins by the second half, or is it just too early to tell at this point?

I appreciate the question, Paul. But I am going to ask you to wait, and we will give further guidance in early June when we have our next call.

Your next question comes from the line of Kimberly Greenberger with Morgan Stanley.

I'm wondering if you can look at the first quarter comp guidance, this negative mid-single-digit. And give us any color, if you have it, on how you think that will breakdown between stores and e-commerce? And then, secondarily, the challenges that you're having, is it strictly with the carryover clearance product, or are new spring deliveries also struggling, either in the stores channel or in the e-commerce channel?

Well, in terms of the mix of the business, I won't be specific on that other than to tell you that our expectation of both businesses would be that they're going to be negative in the first quarter, but direct much more so.

And I would add in terms of the product, Kimberly, that there is strong response to significant portions of the new collections as they come in. The challenge -- and it's certainly showing very nice response in retail. The challenges in direct that she can see the -- that our sale product is competing with the full price product. So we're seeing more -- a better response in retail as Dave mentioned than we are in direct.

Okay. And then Dave, I know you said that you're continuing to diagnose the problems with the website. And I know it's probably a very complex issue. But can you just give us a sort of list, as you know it today of the issues on the website that you're currently experiencing and then what else you're working to diagnose?

Sure. So I guess, I would go back to the 4 things that we noted in the script. So there is the site experience itself. I believe, again, that there's an overall adoption period that is going to run longer than we originally expected. So I think, there's going to be something natural about that in terms of her becoming better acclimated to the site. We're not counting on that though. What we are counting on is the things we can control. And I would tell you that there's a number of updates that are scheduled to occur over the next few months. All of them have very specific things that are either our customers have called out for us or we've sat down, put ourselves in the room, worked through with experts in terms of where are we having challenges either with where we're taking her, how it navigates, what she's seeing in the like, and we have a number of things specifically identified, and we'll work through largely in the spring season. The productivity of our marketing was the other thing we noted. Again, I pointed to e-mail there. We believe there are things we can do that will improve the performance there. Things that are simply in terms of the initial communication, what she's seeing in the e-mail. We'll look to improve open rates and then when we take her into the site, where is she landing, what is she seeing and how are we -- and it ties into the creative and product presentation that I noted. It's really all of those experience things. Now that sounds a little generalized, but I would tell you that's where our data comes in very handy. And we do have a lot of diagnosis going on in terms of how is she going through, how would she click through, how is she going through the funnel in terms when she lands on the site, how is she behaving when she hits the pages, what is she buying. So I would say heavy diagnosis in seeing that we have analyzed that all the way through to the purchase to really look for those points of friction and to improve that. The last thing we talked about was the customer-facing enhancements. There are a number of things there. I'm just going to touch on a few. We are going to add pay options to the site at some point this year. There's going to be different my account features that we believe, will improve the experience. There's going to be some added fit guidance features later this year. A lot of those things are things that we see sometime in the fall. But I like it from the standpoint of working through these other things I talked about, offering these additional features in the fall and really looking to starting now, and we started earlier to be honest, and really working through to the point, where we can significantly improve the experience.

Your next question comes from the line of Oliver Chen with Cowen and Company.

Can you guys hear me? Paula, I will miss you. Congratulations.

Thank you, Oliver.

The details were helpful. David, along the lines of the digital experience, which parts do you think are the most friction-causing in terms of the experience? And related to this, are there other factors that play in terms of customer acquisition challenges in terms of just digital being a competitive channel across the sector? And ultimately, how should the site be better with the changes in terms of where it's supposed to go over time and what does it enable? And the second question was in the customer matching program and the data analytics that you have, has that helped you -- helped inform a lot of the decisions and hypothesis you're making about what you should do next?

Well, as I work back through that, I'll start with the last one first. I guess, in the previous response that was what I was alluding to is we -- our data capabilities and our analytic capabilities, we still see that as a real advantage. And we are taking full advantage of that now to really understand. And I'll -- it's beyond the data and really also into those behaviors on the website in using not just the data, but the tools you have to really understand what our customers doing at every point in the transaction and breaking those things down, identifying those points of friction, being very clear on what the end fix is, scheduling that in terms of an update to the site, scheduling all those updates; it's really mechanical from that standpoint in terms of stepping through all of that, using the data and seeing that we've identified those points and implementing improvements. I'm really not -- I'm not inclined to tell you what I think that list looks like. I will tell you that it's fulsome in terms of the opportunities. So I'll say that's a little bit of the bad news and that's also the good news, is there are some clear things that we can identify, have identified that we see that can and will improve the experience. As far as digital is concerned, I guess, what I would confirm is, it's our belief in the fourth quarter that there were players, big players got bigger and more players came in just in terms of the crowding of the space from a digital standpoint. So I would say that we acknowledged that and recognized it. I can't tell you I can translate that into how did that impact us. But it's something we're aware of. And obviously, then, we looked at them to use that as the collective bodies now looks to improve our performance going forward. So it's something, I'll say, particularly, around holiday that is part of our hindsights we will build into our thinking next year.

Right. And I think the key point -- Oliver, key point to make is that we are really focusing and working on the things that we can control. There's certainly market forces at play. But we know that we can do a better job in terms of the creative presentation on the site and delivering a better customer experience. And that's what we're focusing our energy on and a great product experience as well.

Okay. And lastly -- Paula, helpful. On the product innovation side and the creative guardrails in the process. How are you feeling about that engine in terms of where you are with where you want to be? It sounds like the tools will enable you to continue to mitigate risk there. Just curious about the status of that, just to avoid the misses as best as possible going forward?

So interpreting that, you are simply asking how it is if there is -- what it is around our design process that gives us comfort going forward. So from that...

I mean, Oliver, I would say that our creative team and our design and merchandising team are still very much in place. They're all working very clearly toward delivering a great experience for the customer. There's absolutely no change in strategy from a design or a creative or a merchandising perspective other than to continue to do a better job and to learn what we can from what's happening on the site now and to improve that experience.

And to reinforce what we said historically, at the moment because of the way we've accumulated some goods, we are overassorted, particularly, in direct, particularly in aged product. So one of the things in the first half, it's an absolute inventory level, but it is also to get our assortment back to a certain point. And that also would likely meaning that in the full price offer too, we have chances to edit the assortment and improve it. All of that again is geared towards the fall. So inventory is a composition and assortment opportunity as well as an overall level.

Your next question comes from the line of Brian Tunick with the Royal Bank of Canada.

Paula, we wish you all the best as well.

Thank you.

I guess really, my real question, trying to understand the desale at the store level, really, trying to understand. So it sounds like comps at the stores over the fourth quarter must have been double digits and now you're guiding them for negative. So just trying to understand, was it the direct desale that's impacting this? Just maybe walk us through what's happening to the retail side? And then maybe, Dave, on the comments that the year earnings won't be up on the 26% tax rate now. Just curious if you're -- were planning to take any of those tax savings and reinvesting them in any parts of the business on top of all of the turnaround initiatives that you're talking about today? So just curious if you were doing anything with your tax savings? And then, the third question is just you lead times. I think, Oliver, just asked about some of the guardrails. Just can you remind us sort of what's going on from a lead time perspective?

Well, on the lead times, I don't think there's really anything to mention. Nothing stands out in terms of anything that's changed, or how we think about it differently. Like many retailers, we're always working to improve it and see what we can do to improve our response times and the like, but nothing out of the ordinary course. So we feel like we have the right development cadence and the like. We've gotten ourselves a little bit behind right now. We're going to catch that up, and we're going to continue to focus on getting ourselves in a much better position by the fall. I'm going backwards now. As far as taxes are concerned, there's nothing for me to share at this point around our investment beyond the first quarter. So stay tuned on that. But I would say, as a general idea, we don't have -- there's not a thought process around taking savings from taxes and reinvesting them in a particular way. I think our priorities are what they are because of where we are in the business as opposed to how to invest those savings. But it is a meaningful savings for us. It is a nice benefit, and we'll look to be smart about that going forward. In retail -- retail, also, in the fourth quarter benefited from our promotional schedule, but less so. There was a better mix of business in terms of the full price and the off-price goods. So -- and we really saw a nice benefit in both traffic and conversion in the quarter. I think there's also a little bit there in terms of that idea of, as promotional as we were, our customer's smart, she took advantage of that and she really filled out her wardrobe. So February is not a big idea in terms of the overall business. But we have seen traffic drop off, not so much conversion. So and on a relative basis, it is stronger. I will change my answer a little bit on retail. It's -- we could be more like a flat in retail to a slight negative. But I'll be official now, and I'll say that business is probably going to be more like a flat sort of answer, whereas the negative mid-single is going to be driven more -- much more so by direct.

Your next question comes from the line of Pamela Quintiliano from SunTrust.

And best of luck, Paula, on your retirement. I just had 2 questions. The first was, can you remind us of the profile of your customer who is shopping online versus in the store, and the metrics on the customers who are cross-shopping and the spending patterns there? And then the second question is just regarding store growth plans for the year, what those are? And are you shifting anything there due to the recent challenges?

So as far as store growth is concerned, in our guidance, we -- 10 to 12 and -- so for new stores, we're looking for growth in the range of 10 to 12 new stores. And we decided that we expected to close around 8 stores in the coming year. So there you go, there's your guidance for next year. I'm sorry, I was looking -- so that's where we're at for new stores, I apologize. For some reason I thought I'd covered that. But for next year, we look for growth of new stores at 10 to 12 locations. We expect to close I'll say, 7 to 8 locations in the next year.

Is that any change from where you have been reflecting the recent challenges you've had, or has that been consistent?

No, that -- what we're talking about now really hasn't influenced that necessarily. I would say that's been our idea for some time. As far as the profile of the customers and the channel, I wouldn't tell you that -- I wouldn't note anything materially different in terms of the profile. The metrics that we've talked about in the past though is about 22% of our customers shop in both channels. Historically, that meant that she spent at about a 3x -- a 3x type of multiple versus a single-channel customer. There was relative strength in our file in terms -- as we ended the year in terms of those customers that shop both, there is relative strengths in the file and retail. There were some positive highlights in direct, but for the most part, I guess, what I'd do is go back to my comment earlier that in the direct channel, it was not just new to brand, it was the existing customer as well. And that's where we saw some, I'll say, real weakness.

And I know you mentioned marketing. But how do you keep her because you have such a loyal customer and recently, with some of the disappointments that have occurred online. When you think about the outreach, either the timing of marketing and if you're speaking to her more often, or just anything you could provide on how you may be messaging differently, would be appreciated?

Well, I think for the next 6 months, I don't believe there's an opportunity to do -- we're always working to improve messaging. Let me start there. We use the data to really try to refine the mix of marketing. I touched on e-mail, and I think, where we can do a better job there. There are some specific things in terms of initiatives around our brand message and also being able to segment the file that are also directed more towards the fall of this year, at least in terms of beginning those activities and then looking for a longer term for them to really take hold. So I see those as some bigger ideas. We're going to look to improve as soon as we can. But as far as the overall message for the next 6 months, again, because of where we are with inventory, I would expect that for the most part, the frequency of the messages and a fair amount of those messages are going to be more promotional.

Your next question comes from the line of Ike Boruchow with Wells Fargo.

Dave, I don't know if you gave, sorry if I missed it. Can you give a CapEx number for the year? And then can you just confirm or deny Brian's comment about the store comp being in the double-digit range? Just trying to get on the 53rd week kind of throws it off a little bit for us kind of back into it. Just kind of curious if you can comment on the store comp performance in Q4?

Yes. I'll confirm for the fourth quarter that it was a double-digit comp in the retail.

Got it. And the CapEx number?

Oh the comp -- just to remind you the comp percent is a 13-week comp calculation as opposed to 14-week, whereas, our results are based on the 14 weeks. And your other question, I believe, was about CapEx. We'll provide guidance on that at a later date.

This concludes the Q&A portion of our call. I would now like to turn the call back over to Paula for closing remarks.

Thank you. And before we close, I'd like to thank all of you for your support over the past year as we transitioned to a public company. And while we're aggressively taking action to improve our current trends, our commitment to our customers remains stronger than ever, and I could not be more confident in the future of J.Jill. With our loyal customer base, our strong omni-channel foundation, our disciplined approach to using data effectively and our talented team, J.Jill is well positioned to regain momentum over time. And I look forward to working with Linda over the coming weeks to ensure a smooth transition. And I'll be cheering the team as they work to realize the power and the potential of our J.Jill brand and business. Thank you.

Thank you.

This concludes today's conference. You may now disconnect.