Joann Inc (JOAN) 2024 Q3 法說會逐字稿

Hello and welcome to JOANN third quarter, fiscal 2024 earnings conference call. (Operator instructions) Please note this event is being recorded, and I'd like to remind everyone that comments made today may include forward-looking statements which are subject to significant risks and uncertainties that could cause the company's actual results to differ materially from management's current expectations.

您好，歡迎參加 JOANN 2024 財年第三季財報電話會議。 （操作員指示）請注意此事件正在被記錄，我想提醒大家，今天發表的評論可能包含前瞻性陳述，這些陳述受到重大風險和不確定性的影響，可能導致公司的實際結果與管理層的結果存在重大差異當前的期望。

These statements speak as of today and the company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances. Please review the cautionary statements and risk factors contained in the company's earnings press release and the recent filings with the SEC.

這些聲明截至今天，本公司不承擔更新或修改任何前瞻性聲明以反映後續事件、新資訊或未來情況的義務。請查看公司收益新聞稿和最近向 SEC 提交的文件中包含的警示性聲明和風險因素。

During the call today, management may refer to certain non-GAAP financial measures. A reconciliation between GAAP and non-GAAP financial measures can be found in the company's earnings press release. It was filed today with the SEC and posted to the Investor Relations section of JOANN website at investors.joann.com.

在今天的電話會議中，管理階層可能會參考某些非公認會計準則財務指標。公認會計原則和非公認會計原則財務指標之間的調節可以在公司的收益新聞稿中找到。該文件今天已向 SEC 提交，並發佈在 JOANN 網站 Investors.joann.com 的投資者關係部分。

On the call today, from Jo-Ann, either current leader of the Interim Office of the CEO, Chris DiTullio, executive vice president and chief customer officer; and Scott Sekella, executive vice president and chief financial officer. During the question-and-answer portion of the call, we will also be joined by Rob Will, executive vice president and chief merchant for JOANN. I will now turn the call over to Chris for his prepared remarks. Please go ahead.

今天的電話會議由執行長臨時辦公室現任領導 Jo-Ann、執行副總裁兼首席客戶長 Chris DiTullio 和執行副總裁兼首席客戶長 Chris DiTullio 主持。執行副總裁兼財務長 Scott Sekella。在電話問答部分，JOANN 執行副總裁兼首席商人 Rob Will 也將加入我們。我現在將把電話轉給克里斯，聽他準備好的講話。請繼續。

Good afternoon and thank you for joining us today. To start, we are pleased with our third-quarter results and, importantly, have increased our top-line full-year outlook. Our third quarter paired a focus on operational retail fundamentals with an agile data-driven approach, helping us to win in our core categories while overdelivering on the implementation and execution of our Focus, Simplify, and Grow cost-savings initiative. This has enabled us to stabilize the overall business, right size our expense structure, and capitalize on trending growth areas.

下午好，感謝您今天加入我們。首先，我們對第三季的業績感到滿意，更重要的是，我們提高了全年的營收預期。我們第三季將重點放在零售營運基礎上，並採用敏捷的數據驅動方法，幫助我們在核心類別中獲勝，同時超額交付我們的「聚焦、簡化和成長」成本節約計畫的實施和執行。這使我們能夠穩定整體業務，調整我們的費用結構，並利用趨勢成長領域。

With continued progress and another quarter of strong execution against our strategic priorities, we were able to deliver these results despite what remains a dynamic and challenging consumer and discretionary retail environment. We remain focused on controlling what we can control while maximizing our opportunities in this market and delivering a great customer experience, both in-store and digitally.

儘管消費者和非必需品零售環境仍然充滿活力且充滿挑戰，但憑藉持續的進展和另一個季度對我們戰略重點的強有力執行，我們能夠實現這些成果。我們仍然專注於控制我們能控制的事情，同時最大限度地提高我們在這個市場的機會，並提供出色的店內和數位客戶體驗。

Also during the quarter, supported by the use of advanced data analytics and in conjunction with our sequentially improving average unit costs, we actioned a strategy to selectively pulse promotions on a close-to-real-time basis to drive shopper conversion and maximize gross profit dollars.

此外，在本季度，在使用先進數據分析的支持下，並結合我們不斷提高的平均單位成本，我們採取了一項戰略，有選擇地在接近實時的基礎上進行促銷，以推動購物者轉換並最大化毛利美元。

With this nimble approach, we are making great progress on delivering the right pricing strategies to drive shopper conversion and have a high degree of confidence that we will continue to further optimize average unit retails as our AUCs are expected to be flat to slightly down in Q4 before turning fully turning to a tailwind in fiscal 2025.

透過這種靈活的方法，我們在提供正確的定價策略以推動購物者轉換方面取得了巨大進展，並且對我們將繼續進一步優化平均單位零售量充滿信心，因為我們的AUC 預計在第四季度將持平或略有下降在 2025 財年完全轉向順風之前。

In fact, our average unit costs turned favorable in October and are significantly improved on a new on our new inventory purchases. Our e-commerce performance was a quarter standout, driving double-digit improvement year over year. Anchored on our read-and-react business approach, we identified customer experience and site performance opportunities and swiftly implemented enhancements that resulted in an immediate uptick in shopper conversion.

事實上，我們的平均單位成本在十月變得有利，並且在我們新的庫存採購中顯著改善。我們的電子商務業績在一個季度表現出色，與去年同期相比實現兩位數的成長。基於我們的「閱讀和反應」業務方法，我們確定了客戶體驗和網站效能機會，並迅速實施了增強功能，從而使購物者轉換率立即上升。

We have also made great progress on delivering a better and faster overall online experience, setting the stage for continued growth in this important channel. As we look to continuing to grow our e-commerce business. We are also working on a number of initiatives to drive gross profit dollars, including further work we are doing to optimize operations and utilization of our West Jefferson, Ohio, omni-channel fulfillment center.

我們在提供更好更快的整體線上體驗方面也取得了巨大進展，為這一重要管道的持續成長奠定了基礎。我們希望繼續發展我們的電子商務業務。我們也致力於採取一系列措施來提高毛利，包括我們正在進行的進一步工作，以優化俄亥俄州西傑斐遜全通路履行中心的營運和利用率。

The expanded use of the omnichannel fulfillment center will not only lower order fulfillment costs, but will also lead to an overall improved customer experience we are fast-tracking these efforts and look forward to updating you on our progress on future calls. And finally, we continue to successfully engage with our core customers, registering increases in our customer account.

全通路履行中心的擴大使用不僅會降低訂單履行成本，還將帶來整體改善的客戶體驗，我們正在快速追蹤這些工作，並期待在未來的電話中向您通報我們的最新進展。最後，我們繼續成功地與核心客戶互動，客戶帳戶數量增加。

In fact, we saw more of our known customers shop in the quarter versus last year, resulting in positive transaction growth from this customer cohort signaling strength in our enthusiast base. While we are pleased with this increased engagement, as you have heard from other retailers, we are also experiencing some basket pressure by way of fewer items per transaction and are seeing customers shopping closer to their project needs versus stocking up and adding to their Stash as in years prior.

事實上，與去年相比，我們看到本季度有更多的已知客戶進行購物，導致該客戶群的交易量出現積極增長，表明我們的愛好者群的實力。雖然我們對這種參與度的增加感到高興，但正如您從其他零售商那裡聽到的那樣，我們也面臨著一些購物籃壓力，因為每次交易的商品數量減少，並且看到客戶購物更接近他們的項目需求，而不是囤積並添加到他們的儲藏室中在幾年前。

That said, and importantly, these customers are shopping with us frequently and converting well, validating that the JOANN brand positioning is strong and our assortments are resonating, although there is much work ahead of us, and we remain cautious due to continued uncertainty in the broader retail environment. The strategic shifts we have implemented this year, combined with our ongoing cost reduction strategies and the strong engagements over Black Friday week give us confidence to increase our full year top-line outlook while maintaining our bottom line outlook.

也就是說，重要的是，這些客戶經常在我們這裡購物，而且轉換率很高，這證明了JOANN 品牌定位強大，我們的產品種類引起了共鳴，儘管我們還有很多工作要做，而且由於市場的持續不確定性，我們仍然保持謹慎態度。更廣闊的零售環境。我們今年實施的策略轉變，加上我們持續的成本削減策略以及黑色星期五週的大力參與，使我們有信心在維持獲利前景的同時提高全年營收前景。

Now, I'll briefly review the highlights of our third-quarter performance. Total sales were $539.8 million, down 4.1% versus the prior-year period, which includes a 70-basis-point headwind from the strategic pull-forward of our Halloween assortment we discussed in the second quarter while also providing a margin benefit in the period.

以下我簡單回顧一下我們第三季的業績亮點。總銷售額為 5.398 億美元，比去年同期下降 4.1%，其中包括我們在第二季度討論的萬聖節產品系列戰略推進帶來的 70 個基點的逆風，同時還提供了該期間的利潤率收益。

More importantly, normalized for the Halloween shift, third-quarter total sales were essentially in line with second-quarter trend when you adjust for the category pull-forward in both quarters. With that in mind, we see this as a clear signal the business is stabilizing.

更重要的是，依照萬聖節班次的正常化，當您對兩個季度的品類前移進行調整時，第三季的總銷售額基本上與第二季的趨勢一致。考慮到這一點，我們認為這是業務正在穩定的明確訊號。

For the full season, our largely owned brands Halloween assortment performance was strong, registering double-digit year-over-year growth with higher realized margins, validating the success of our read-and-react business approach. Notwithstanding the continued strong category performance, we see opportunity to grow this business even further next year.

在整個銷售季，我們的主要自有品牌萬聖節品種表現強勁，同比實現兩位數增長，實現利潤率更高，驗證了我們的「讀取和反應」業務方法的成功。儘管該類別的表現持續強勁，但我們看到明年該業務有進一步發展的機會。

Expanding on our category performance for the quarter, we are winning in our core categories which have a strong correlation to our broader business. For example, we saw notable double-digit strength across needle arts, fleece, and sewing technology.

擴大本季的類別表現，我們在與我們更廣泛的業務密切相關的核心類別中獲勝。例如，我們在針線藝術、羊毛和縫紉技術方面看到了顯著的兩位數優勢。

In Networks, we saw broad demand across both our yarn and stitch categories, fueled by our strategic decision to balance our best in class national brand assortments, while also offering great value was broad selection of our owned private brands.

在網路領域，我們看到了紗線和縫線類別的廣泛需求，這得益於我們平衡一流民族品牌品種的戰略決策，同時我們擁有的自有品牌的廣泛選擇也提供了巨大的價值。

With regards to fleece, our strong performance was buoyed by the social media trend of tie knot blankets which emerged in Q3 in early Q3. While this is typically one of our highest-volume fabric categories in the fall and winter months with our core customer, we are seeing great engagement from new and younger shoppers coming to JOANN for their fleece tie blanket supplies. To capitalize on this trend, we went live in November with a new and disruptive social media campaign #GETTINGKNOTTY, K-N-O-T-T-Y, knotty, on TikTok and Instagram.

羊毛方面，我們的強勁表現受到第三季初出現的社群媒體趨勢「領帶結毛毯」的提振。雖然這通常是我們在秋冬月份與我們的核心客戶銷量最高的面料類別之一，但我們看到新的和年輕的購物者來到 JOANN 購買羊毛領帶毛毯用品的積極參與。為了利用這一趨勢，我們在 11 月在 TikTok 和 Instagram 上推出了一場新的、顛覆性的社交媒體活動#GETTINGKNOTTY, K-N-O-T-T-Y, knotty。

This campaign targets the under-35 demo and focuses on friends, couples, and families gathering together and making tie-knot blankets for special occasions in their lives. We are encouraged with our initial results and engagement from our social media followers and are seeing a positive impact both in stores and online.

該活動針對 35 歲以下的演示者，重點關注朋友、情侶和家人聚集在一起，為他們生活中的特殊場合製作領帶結毯子。我們對我們的初步成果和社交媒體追隨者的參與感到鼓舞，並看到商店和網路都產生了積極的影響。

In sewing technology, we saw the greatest gains in purchases of sub-$500 machines from new sewists entering the market, a strong indication we are attracting younger sewists to JOANN. As the category leader in sewing and fabric, we see this positive trend is a great indicator of overall health and strength across all generations of the sewing industry.

在縫紉技術方面，我們看到新進入市場的縫紉師購買 500 美元以下機器的收益最大，這強烈表明我們正在吸引年輕的縫紉師加入 JOANN。身為縫紉和布料領域的領導者，我們認為這種正面趨勢是各代縫紉產業整體健康狀況和實力的重要指標。

With regards to headwinds in the quarter, as expected, due to our strategic pullback of non-Halloween seasonal merchandise such as traditional autumn and fall-related decor and floral, we experienced a total seasonal merchandise headwind of approximately 150 basis points in the quarter. We also continue to experience persistent headwinds in our craft technology business which, for the quarter, was worth approximately 100 basis points.

至於本季的逆風，正如預期的那樣，由於我們對非萬聖節季節性商品（例如傳統秋季和秋季相關的裝飾和花卉）的戰略性撤回，本季度我們經歷了約150 個基點的季節性商品逆風。我們的製程技術業務也持續面臨持續的阻力，本季該業務的價值約為 100 個基點。

It's important to highlight that, as a result of our strategic pullback of non-Halloween seasonal inventory receipts, we saw exceptionally high sell-through rates with meaningfully improved profitability over the prior year, including contributing to reduced clearance inventory. As I mentioned earlier, our e-commerce performance was a standout in the quarter.

需要強調的是，由於我們策略性地減少了非萬聖節季節性庫存收貨，我們看到了異常高的售出率，與上一年相比，盈利能力顯著提高，包括有助於減少清倉庫存。正如我之前提到的，我們的電子商務業績在本季表現出色。

We registered strong e-commerce growth of 11.5% over last year, a significant acceleration from our trend in the second quarter with growth of 3%. Our e-commerce sales accounted for 13.1% of total company sales in the period, reflecting penetration expansion of 180 basis points.

我們的電子商務較去年強勁成長 11.5%，較第二季 3% 的成長趨勢顯著加速。期內，我們的電子商務銷售額占公司總銷售額的 13.1%，滲透率擴大了 180 個基點。

More specifically, to change our prior trends, we executed improvements to our site by enhancing our cart and checkout experience, resolving issues that provided the most friction to the customer purchase journey, substantially improving performance speed of the site, and beginning an intensive focus and edit of our product assortments, all leading to improvements in experience and shopper conversion. We also saw broad-based improved traffic with more effective marketing spend and SEO benefits from the work we've done on our core site.

更具體地說，為了改變我們先前的趨勢，我們對網站進行了改進，增強了購物車和結帳體驗，解決了給客戶購買旅程帶來最大阻力的問題，大幅提高了網站的性能速度，並開始集中關注和編輯我們的產品分類，所有這些都有助於改善體驗和購物者轉換。我們也看到，我們在核心網站上所做的工作帶來了更有效的行銷支出和搜尋引擎優化 (SEO) 帶來的流量的廣泛改善。

We continue to prioritize and identify new opportunities to improve the online experience and drive shopper conversion. And finally, as I also mentioned, we are overdelivering on the implementation and execution of our focused, Simplify and Grow initiative, which Scott will go into further detail on our focus throughout all of this work is to realign our costs to our current revenue base, which has stabilized at pre-pandemic levels.

我們繼續優先考慮並尋找新的機會來改善線上體驗並推動購物者轉換。最後，正如我也提到的，我們超額交付了我們重點關注的「簡化和成長」計劃的實施和執行，斯科特將進一步詳細介紹我們在所有這些工作中的重點，即根據我們當前的收入基礎重新調整我們的成本，已穩定在疫情大流行前的水平。

As part of this work during the quarter, we made the difficult decision to rightsize our corporate overhead aligned to that principle and are confident in how we are allocating resources to both support and drive the business forward.

作為本季這項工作的一部分，我們做出了艱難的決定，根據這項原則調整我們的公司管理費用，並對我們如何分配資源以支持和推動業務發展充滿信心。

Additionally, we are pleased with the results from our recently rolled out store labor initiative and remain focused on operating as effectively and efficiently as possible, including allocating store labor to better serve customers during peak traffic periods and reducing non-value added tasks. Our store teams are doing a great job of navigating this holiday season with new team structures and ways of working and are delivering the friendly clever Ally customer experience we promise to fulfill.

此外，我們對最近推出的商店勞動力計劃的結果感到滿意，並繼續專注於盡可能有效和高效的運營，包括分配商店勞動力，以便在高峰客流量期間更好地為客戶服務，並減少非增值任務。我們的商店團隊正在透過新的團隊結構和工作方式出色地度過這個假期，並提供我們承諾實現的友好、聰明的 Ally 客戶體驗。

With that said, I would like to take this opportunity to extend my gratitude and appreciation to our entire JOANN team throughout a year of great change their unwavering dedication to helping every customer find their creative happy place is what makes JOANN truly unique and drives my confidence and excitement and our future.

話雖如此，我想藉此機會向我們整個JOANN 團隊表示感謝和讚賞，他們在這一年的巨大變革中堅定不移地致力於幫助每位客戶找到他們的創意快樂之地，這使得JOANN 真正獨一無二，並激發了我的信心以及興奮和我們的未來。

Turning on to inventory, we entered the fourth quarter with very clean inventory quality with less than 5% of our total inventory in our clearance bucket, our exposure on fashion and seasonal inventory is relatively low with basic inventory compromising approximately 60% of our total, an increase of 400 basis points to last year.

就庫存而言，進入第四季時，我們的庫存品質非常乾淨，清倉庫存佔總庫存的比例不到5%，我們對時尚和季節性庫存的敞口相對較低，基本庫存約佔總庫存的60%，比去年增加400個基點。

Additionally, with the success of our retail pricing initiative, combined with our focus on driving core categories and our read and react business approach. Unit sales velocity has accelerated nicely and allowed us to invest back into additional basic inventory to meet increasing demand.

此外，隨著我們零售定價計劃的成功，加上我們對推動核心類別的關注以及我們的閱讀和反應業務方法。單位銷售速度大大加快，使我們能夠重新投資於額外的基本庫存，以滿足不斷增長的需求。

To provide a bit of color on the current quarter. Although we have many important selling days ahead of us for the holiday season, we are pleased with our trends thus far as we all know, Black Friday and Cyber Monday are no longer single day events and like many others in retail, we extended our Black Friday event to a full week and Cyber Monday ran for multiple days.

為當前季度提供一些色彩。儘管我們在假期期間還有許多重要的銷售日，但據我們所知，我們對我們的趨勢感到滿意，黑色星期五和網路星期一不再是單日活動，並且像零售業的許多其他活動一樣，我們延長了黑色星期五和網路星期一的銷售日期。週五活動持續一周，網路星期一持續多天。

We are pleased with how we competed in this dynamic retail climate. Our customer is increasingly shopping us across both physical and digital channels, and we are seeing mobile shopping increase at higher levels than before. Our holiday floral and holiday decor assortments are resonating, and we are tracking to achieve our plans in these important categories. Broadly, the categories we saw success with in Q3 have continued to be strong in the early stages of Q4.

我們對自己在這種充滿活力的零售環境中的競爭方式感到滿意。我們的客戶越來越多地透過實體和數位管道向我們購物，我們發現行動購物的成長水平比以前更高。我們的節日花卉和節日裝飾品種引起了共鳴，我們正在追蹤實現這些重要類別的計劃。總體而言，我們在第三季度取得成功的類別在第四季度的早期階段繼續表現強勁。

While we continue to see pressure from the shopper on items per transaction, which does provide a headwind to the total basket, we are pleased with the transaction velocity and traffic we're driving to our stores in joann.com. Before turning to outlook, I wanted to take a moment to mention our recent Corporate Responsibility Impact Report that we published in November, which outlines JOANN's corporate responsibility results for 2023.

雖然我們繼續看到購物者對每筆交易的商品施加壓力，這確實給整個購物籃帶來了阻力，但我們對 joann.com 商店的交易速度和流量感到滿意。在談到展望之前，我想花點時間提一下我們最近在 11 月發布的企業責任影響報告，其中概述了 JOANN 2023 年的企業責任結果。

In the report, we highlight our impact across our evergreen strategic pillars, which we take very seriously and implement across the business every day. These include creating an environment where all team members can be their authentic selves and contribute at the highest level; minimizing carbon footprint by taking action throughout JOANN and supplier operations; powering reusability and customers to tie environmental responsibility to a greater purpose; and appealing to, inspiring, supporting our diverse customer base and communities. I encourage you to review the report which you can access investors.joann.com. On to outlook.

在報告中，我們強調了我們對常青策略支柱的影響，我們非常重視這些策略支柱，並每天在整個業務中實施。其中包括創造一個讓所有團隊成員都能做真實的自己並做出最高水準貢獻的環境；透過在 JOANN 和供應商營運中採取行動，最大限度地減少碳足跡；推動可重用性和客戶將環境責任與更大的目標連結起來；吸引、激勵和支持我們多元化的客戶群和社群。我鼓勵您查看該報告，您可以訪問 Investors.joann.com。展望未來。

And as we look to the final quarter of the year. We are encouraged by the progress we're seeing in the business, which is a direct result of the many strategic actions we've taken and continue to execute on. As I mentioned, we are increasing our full year top line outlook and maintaining our bottom line guidance, which Scott will elaborate on shortly.

當我們展望今年最後一個季度。我們對業務的進展感到鼓舞，這是我們已經採取並繼續執行的許多策略行動的直接結果。正如我所提到的，我們正在提高全年營收展望並維持我們的獲利指引，史考特將很快對此進行詳細闡述。

We remain keenly focused on winning in our core categories, further utilizing enhanced data-driven read and react capabilities and continued implementation and expansion of our Focus, Simplify and Grow cost reduction initiatives. In conclusion, I am proud of what we've accomplished over the past few quarters and recognize there is more to do.

我們仍然熱衷於在我們的核心類別中獲勝，進一步利用增強的數據驅動讀取和反應能力，並繼續實施和擴展我們的「聚焦」、「簡化」和「成長」成本削減計劃。總之，我對我們在過去幾季所取得的成就感到自豪，並意識到還有更多工作要做。

We have made great progress to rightsize our expense structure. We have strengthened our already profitable store base with over 95% of our stores generating positive four-wall cash flow. We have made tremendous strides in our e-commerce business to improve the performance and experience, but the results speak for themselves.

我們在調整開支結構方面取得了巨大進展。我們加強了已經獲利的商店基礎，超過 95% 的商店產生了正的四牆現金流。我們在電子商務業務方面取得了巨大進步，以提高效能和體驗，但結果不言而喻。

And we are attracting and capturing younger customers at an increasing rate through social media and the growth of our selling technology business while continuing to engage our core, we will continue to work tirelessly on the many initiatives we discussed to fuel sales growth, improved profitability and drive shareholder value.

我們透過社群媒體和銷售科技業務的成長，以越來越快的速度吸引和吸引年輕客戶，同時繼續致力於我們的核心業務，我們將繼續不懈地致力於我們討論的許多舉措，以推動銷售成長、提高獲利能力和驅動股東價值。

With that, I will hand it over to Scott to review our Q3 results and outlook in more detail. Scott?

這樣，我將把它交給斯科特來更詳細地審查我們的第三季業績和前景。史考特？

Thanks, Chris. As Chris mentioned, we continue to execute our proactive actions to enhance our read and react capabilities in the third quarter more specifically, our advanced data analytics and progress of our strategic initiatives continue to drive our results. As we close out the year, we remain cautious given the continued challenging retail environment.

謝謝，克里斯。正如克里斯所提到的，我們在第三季度繼續採取積極主動的行動，以增強我們的讀取和反應能力，更具體地說，我們先進的數據分析和戰略計劃的進展繼續推動我們的業績。在年底之際，鑑於零售環境持續充滿挑戰，我們仍保持謹慎態度。

However, our consistent execution of our growth priorities and prudent management of the business gives us confidence to increase our top line full-year outlook and maintain our bottom line view. Now let me turn to the third quarter results. In the third quarter, net sales totaled $539.8 million, a decline of 4.1% compared to last year with total comp sales also decreasing by 4.1%.

然而，我們對成長優先事項的一貫執行和對業務的審慎管理使我們有信心提高我們的全年營收前景並維持我們的獲利前景。現在讓我談談第三季的業績。第三季淨銷售額總計 5.398 億美元，較去年下降 4.1%，總銷售額也下降 4.1%。

As Chris mentioned, utilizing our read and react business approach to strategic pull forward of our Halloween assortment in the second quarter, which was the season success impacted our third quarter sales by approximately 70 basis points. Our read and react approach also allowed us to win in our core categories and capitalize on other marketplace opportunities.

正如克里斯所提到的，利用我們的閱讀和反應業務方法在第二季度戰略性地推進我們的萬聖節品種，這一季節的成功影響了我們第三季度的銷售額約 70 個基點。我們的閱讀和反應方法也使我們能夠在核心類別中獲勝並利用其他市場機會。

As Chris mentioned, from a category perspective, we saw notable strength in the quarter and needle shorts, fleece and selling technology. This performance is again a direct result of our data-driven approach to make sure we provide the right products, prices and choices for our customers and our core customers are continuing to engage in this space.

正如克里斯所提到的，從類別的角度來看，我們看到了本季的顯著優勢以及針短褲、羊毛和銷售技術。這項業績再次是我們數據驅動方法的直接結果，以確保我們為客戶提供正確的產品、價格和選擇，並且我們的核心客戶將繼續參與這一領域。

In a meaningful way. Success of our strategy to selectively pulse promotions on a week-in and week-out basis to best drive shopper conversion and maximize gross profit dollars is another great example of how we are utilizing data, innovating the most to our consumers as we drive towards improved overall performance.

以有意義的方式。我們每周有選擇地推出促銷活動，以最好地推動購物者轉換並最大限度地提高毛利，這項策略的成功是我們如何利用數據、在我們推動改進的過程中為消費者提供最大創新的另一個很好的例子。整體表現。

Our non-Halloween seasonal category was 150-basis-point headwind to comp sales in the third quarter due to our strategic inventory reduction. In addition, craft technology continued to underperform and represented a headwind of 100 basis points in the quarter. Our gross profit in the third quarter was $282.1 million, an increase of 4/10 of a point from the third quarter of last year. The year-over-year increase was driven largely by continued improvement in import freight costs, which had a 450-basis-point positive impact on our gross margin.

由於我們的策略性庫存削減，我們的非萬聖節季節性類別對第三季的銷售業績造成了 150 個基點的逆風。此外，製程技術持續表現不佳，本季逆風100個基點。我們第三季的毛利為2.821億美元，比去年第三季成長了4/10個百分點。年比成長主要是由於進口貨運成本的持續改善，這對我們的毛利率產生了 450 個基點的正面影響。

On a cash basis. In the third quarter, we realized $16.8 million of cash benefit from lower ocean freight rates. Our gross margin was 52.3% in the third quarter, an increase of 240 basis points from the third quarter of last year. The year-over-year 240 basis point improvement was primarily driven by the previously described 450 basis point impact from continued improvement in import freight costs. If 60 basis point favorable product category mix impact driven by momentum in our core selling categories, the 55 basis point benefit from improved domestic carrier freight rates and associated surcharges and a 40 basis point tailwind due to improved clearance activity.

以現金為基礎。第三季度，我們從較低的海運費實現了 1,680 萬美元的現金收益。第三季我們的毛利率為52.3%，比去年第三季成長了240個基點。年比提高 240 個基點主要是由於先前描述的進口貨運成本持續改善帶來的 450 個基點影響。如果我們的核心銷售類別的勢頭推動了60 個基點的有利產品類別組合影響，那麼55 個基點受益於國內承運商運費和相關附加費的改善，以及由於清關活動改善而帶來的40 個基點的順風。

This was all partially offset by the 210 basis point decline due to the flow through inflationary product cost increases, 100 basis point decline from lower overall pricing, driven by actions taken to optimize average unit model on a 40 basis point decline due to increased shipping costs associated with growth in our e-commerce business and a 15 basis point decline from lower vendor allowances.

這全部被通貨膨脹產品成本增加導致的 210 個基點下降、整體定價下降導致的 100 個基點下降（由於運輸成本增加而採取的優化平均單位模型行動導致的 40 個基點下降）所部分抵消。這與我們電子商務業務的成長以及供應商津貼減少導致15 個基點的下降有關。

Drilling down, our average unit costs were up 2.4% to the third quarter of last year, which is an improvement from what we saw in the second quarter of this year. We continue to anticipate our average unit cost comparisons to sequentially improve throughout the course of the year as we cycle these inflationary increases. And as Chris also mentioned, we expect Q4 AUCs to be flat to slightly down year over year. Average unit retails declined 1.2% relative to the same period last year.

深入分析，我們的平均單位成本比去年第三季成長了 2.4%，比今年第二季有所改善。我們繼續預計，隨著通膨成長的循環，我們的平均單位成本比較將在全年中持續改善。正如 Chris 也提到的，我們預計第四季度 AUC 將同比持平或略有下降。平均單位零售量較去年同期下降 1.2%。

Turning to expenses, our third quarter fiscal 2024. SG&A expenses increased by 1.6% from the third quarter of last year. The primary drivers of the year-over-year SG&A increase included severance and other upfront costs to implement our cost reduction initiatives, asset impairment and disposal expenses, inflationary pressures on labor and other costs.

說到費用，我們 2024 財年第三季的 SG&A 費用比去年第三季增加了 1.6%。 SG&A 年成長的主要驅動因素包括實施成本削減計畫的遣散費和其他前期成本、資產減損和處置費用、勞動力和其他成本的通膨壓力。

And we wrapped a favorable general insurance reserve reduction in the prior year period. These increases were partially offset by improved operating efficiencies, including savings generated through our new store labor operating model as well as optimized corporate headcount, favorable incentive and stock-based compensation activity and lower store pre-opening and closing costs.

我們在上一年期間進行了有利的一般保險準備金削減。這些成長部分被營運效率的提高所抵消，包括透過新的商店勞動力營運模式產生的節省、優化的公司員工人數、有利的激勵和基於股票的薪酬活動以及較低的商店開業前和關閉成本。

Our net loss in the third quarter was $21.6 million compared to a net loss of $17.5 million in the same period last year. Our adjusted EBITDA in the third quarter was $37.5 million compared to adjusted EBITDA of $40.2 million in the third quarter of last year. Moving on to our balance sheet, our cash and cash equivalents were $28.3 million at the end of the third quarter.

我們第三季的淨虧損為 2,160 萬美元，而去年同期的淨虧損為 1,750 萬美元。我們第三季調整後的 EBITDA 為 3,750 萬美元，而去年第三季調整後的 EBITDA 為 4,020 萬美元。看看我們的資產負債表，第三季末我們的現金和現金等價物為 2830 萬美元。

As of October 28, 2023, we had $72.1 million of availability on our revolving credit facility. Our face value of debt, net of cash at the end of the third quarter was $1.14 billion. This reflects an increase of $9 million from the same period last year and a leverage ratio of 5.7 times as measured by net debt and finance lease obligations relative to credit facility adjusted EBITDA on a trailing 12-month basis, our inventory at the end of the third quarter was down 9% compared to the same period last year due to the optimization of inventory receipts and a reduction in access and port freight costs.

截至 2023 年 10 月 28 日，我們的循環信貸額度有 7,210 萬美元。第三季末我們的債務面額（扣除現金）為 11.4 億美元。這反映了比去年同期增加了 900 萬美元，槓桿率為 5.7 倍（以過去 12 個月的信貸安排調整後 EBITDA 的淨債務和融資租賃義務衡量），我們的庫存在第三季度較去年同期下降9%，原因是庫存收貨優化以及通路和港口運費成本下降。

We continue to maintain low clearance inventory of less than 5% of total, leaving us well positioned to leverage our read and react capabilities to further drive the top line. During the quarter, we continued to execute against our Focus, Simplify and Grow cost reduction initiatives.

我們繼續保持低於總量 5% 的低清倉庫存，使我們能夠充分利用我們的讀取和反應能力來進一步推動營收。本季度，我們繼續執行「聚焦」、「簡化」和「成長」成本削減計劃。

As you are aware, we previously identified $200 million of cost savings across supply chain product and SG&A expenses as we implement these cost savings initiatives, we are driving meaningful cash flow improvement in fiscal year 2024 that will continue beyond this year.

如您所知，我們先前確定，透過實施這些成本節約舉措，供應鏈產品和SG&A 費用可節省2 億美元的成本，我們正在推動2024 財年現金流的顯著改善，這種改善將持續到今年之後。

I am pleased to share that based on our execution. To date, we are increasing this $200 million target to $225 million with the majority of this over delivery coming in SG&A and supply chain drilling down. As mentioned last quarter, we finalized new agreements with our ocean freight carriers that have put us in a position to continue to experience tailwinds and will have us over-deliver on the targeted $100 million of supply chain costs.

我很高興根據我們的執行情況來分享這一點。迄今為止，我們正在將 2 億美元的目標提高到 2.25 億美元，其中大部分超額交付來自 SG&A 和供應鏈深入研究。正如上季度所提到的，我們與海運承運人敲定了新協議，這使我們能夠繼續順風順水，並使我們超額交付 1 億美元的供應鏈成本目標。

I mean, we also continue to execute a broad-based initiative to reduce product costs across our business. A significant number of our domestic and import vendors have already agreed to price allowing, and we continue to expand this work into all of our product categories, giving us confidence we can deliver the targeted $60 million of product cost reductions.

我的意思是，我們也繼續執行一項廣泛基礎的舉措，以降低整個業務的產品成本。我們大量的國內和進口供應商已經同意價格允許，我們將繼續將這項工作擴展到我們所有的產品類別，這讓我們有信心實現 6000 萬美元產品成本降低的目標。

Additionally, in the third quarter, we made meaningful progress on implementing SG&A reductions and building efficiencies across only First, we are very pleased with the rollout of our store labor initiative that was implemented at the beginning of Q3, similar to what we experienced during the pilot of this initiative.

此外，在第三季度，我們在實施 SG&A 削減和提高效率方面取得了有意義的進展。首先，我們對第三季度初實施的商店勞動力計劃的推出感到非常高興，這與我們在這一舉措的試點。

In addition to reduce costs, we are confident we are enhancing the in-store selling experience as we have converted more labor hours to customer facing sales activities and critically important during the peak holiday selling period, we have rightsized labor hours to more effectively staff our stores during the busiest selling hours of the day.

除了降低成本之外，我們還有信心增強店內銷售體驗，因為我們已將更多的勞動時間轉化為面向客戶的銷售活動，並且在假日銷售高峰期至關重要，我們調整了勞動時間，以更有效地為我們的員工配備人員。商店在一天中最繁忙的銷售時間。

Also, as Chris mentioned, in the third quarter, we made a difficult decision to rightsize our corporate expense structure back to pre pandemic levels. Now that revenue has returned to pre-pandemic levels. Cross-functionally, we continue to focus on deploying our resources in new ways to drive better more efficient and more effective ways of running the business while staying true to our strategic priority of providing high-quality in-store and online experiences for our guests. Finally, during the quarter, we closed on the sale leaseback of our corporate facility in Hudson, Ohio for a price of $34.5 million. We intend to use the proceeds to invest in the business.

此外，正如克里斯所提到的，在第三季度，我們做出了一個艱難的決定，將我們的公司費用結構調整回疫情前的水平。現在收入已恢復到疫情前的水平。在跨職能方面，我們繼續專注於以新的方式部署我們的資源，以推動更好、更有效率、更有效的業務運作方式，同時堅持我們的策略重點，即為客人提供高品質的店內和在線體驗。最後，在本季度，我們以 3,450 萬美元的價格完成了俄亥俄州哈德遜公司設施的售後回租。我們打算將所得款項用於投資該業務。

Now, let's turn to our fiscal 2024 full year outlook. We are continuing to utilize our reman capabilities through advanced data and analytics to capitalize on new opportunities as they arise and focus on the controllables. Our inventory position is in great shape, and we remain diligent on prudently managing all expense aspects of the business of over-delivering on our Focus, Simplify and Grow initiatives.

現在，讓我們轉向 2024 財年全年展望。我們將繼續透過先進的數據和分析來利用我們的再製造能力，以抓住新機會的出現並專注於可控因素。我們的庫存狀況良好，我們仍然努力謹慎管理業務的所有費用方面，超額交付我們的「聚焦」、「簡化」和「成長」計畫。

We are cautiously optimistic for the fourth quarter of the fiscal year and believe our strategic initiatives, combined with our third quarter top line performance and the ongoing implementation of our cost reduction initiatives leave us well positioned to deliver on our updated full year fiscal 2024 outlook.

我們對本財年第四季持謹慎樂觀態度，並相信我們的策略舉措，加上第三季的營收業績以及持續實施的成本削減舉措，使我們能夠很好地實現更新後的2024 財年全年展望。

In terms of our top line, based on our year-to-date performance and line of sight for the remainder of fiscal year 2024. We are increasing our full year outlook and now expect net sales relative to fiscal year 2023 to be down between 1% and 2% compared to our prior outlook of down between 1% and 3% as we outlined last quarter.

就我們的收入而言，基於我們今年迄今的業績和對 2024 財年剩餘時間的展望。我們正在提高全年展望，目前預計淨銷售額相對於 2023 財年將下降 1與我們上季度概述的預期下降1% 至3% 相比，下降了1% 至2%。

This range is inclusive of a 53 fiscal week in fiscal year 2024, which is worth approximately 2% based in large part on the cash benefit of the implementation of our focus, simplify and growth cost reduction initiative and working capital and capital expenditure optimization actions. We believe we will continue to deliver significant year-over-year improvement in free cash flow.

該範圍包括2024 財年的53 個財週，價值約為2%，這在很大程度上取決於我們實施重點、簡化和降低成長成本計劃以及營運資本和資本支出優化行動所帶來的現金收益。我們相信，我們將繼續實現自由現金流的同比顯著改善。

However, and given our decision to buy into some inventory positions in core categories. In Q4, we now expect that we will see a year-over-year improvement in free cash flow for fiscal 2024 to be between $115 million and $135 million previous expectations of $150 million and $170 million.

然而，考慮到我們決定購買核心類別的一些庫存部位。在第四季度，我們現在預計 2024 財年的自由現金流將比去年同期改善在 1.15 億美元至 1.35 億美元之間，先前的預期為 1.5 億美元至 1.7 億美元。

With this, we expect to end the year with inventory down low to mid-single digits. Also, our full year outlook for capital expenditures, net of landlord contributions is still expected to be between $35 million and $40 million. It is important to remember that much of the work we are doing related to our Focus, Simplify and Grow initiatives will result in a significant cash benefit in fiscal 2024.

因此，我們預計年底庫存將降至低至中個位數。此外，我們預計全年資本支出（扣除房東捐款）仍將在 3,500 萬美元至 4,000 萬美元之間。重要的是要記住，我們正在做的大部分與「聚焦」、「簡化」和「成長」計畫相關的工作將在 2024 財年帶來可觀的現金收益。

While we expect that much of the annualized P&L benefit will be realized in fiscal 2025 due to the time it takes for inventory and repeated costs to cycle through our balance sheet. That said, we are reiterating our comparable adjusted EBIT between $85 million and $95 million.

雖然我們預計大部分年化損益效益將在 2025 財年實現，因為庫存和重複成本需要時間才能在我們的資產負債表中循環。也就是說，我們重申可比調整後息稅前利潤在 8,500 萬美元至 9,500 萬美元之間。

In conclusion, we're pleased with our third quarter performance and are waiting to deliver the fourth quarter holiday season with a continued focus on our enhanced data driven read and react capabilities within our core categories and the continued implementation of our Focus, Simplify and Grow cost reduction initiatives.

總而言之，我們對第三季的業績感到滿意，並等待第四季度假期的到來，繼續關注我們在核心類別中增強的數據驅動讀取和反應能力，以及繼續實施我們的聚焦、簡化和增長降低成本的舉措。

We're very proud of our team and their continued execution against our strategic initiatives in the quarter, which in turn further strengthens our competitive position, and we're confident in the future and believe that we are well positioned to deliver on our outlook for the remainder of this fiscal year and capitalize on any discrete market opportunities for JOANN.

我們對我們的團隊以及他們在本季度繼續執行我們的戰略舉措感到非常自豪，這反過來又進一步增強了我們的競爭地位，我們對未來充滿信心，並相信我們有能力實現我們的前景並利用JOANN的任何離散市場機會。

With that, we'd be happy to take questions. Operator?

這樣，我們很樂意回答問題。操作員？

(Operator instructions) Laura Champine, Loop Capital.

（操作員說明）Laura Champine，Loop Capital。

Thanks for taking my question. Now that the sales guide is just for that effectively for Q4, can you give us more information on what you expect in terms of store count year on year or any changes in the store base sequentially and what kind of a comp range that would imply to hit your full year guide?

感謝您提出我的問題。既然銷售指南只是針對第四季度有效的，您能否向我們提供更多信息，說明您對同比商店數量的預期或商店基礎的任何變化，以及這意味著什麼樣的比較範圍達到你的全年指南了嗎？

Yes, or Scott, on this back to Tom, in terms of store count, nothing is really materially changed. You knows the last couple of years we've gone down. I think was 15 last year to probably be somewhat similar this year, Tom, as we do open new stores and are doing a lot of two for ones and those sorts of things. So there's not a material change to the path we've been on with our store count.

是的，或者斯科特，回到湯姆，就商店數量而言，沒有任何實質改變。你知道過去幾年我們已經走下坡了。湯姆，我認為去年的 15 歲可能與今年有些相似，因為我們確實開設了新商店，並且正在做很多「兩人為一」之類的事情。因此，我們的商店數量並沒有重大變化。

Got it. And then on comp, would that imply a sequential improvement in the same-store sales trends.

知道了。然後在比較方面，這是否意味著同店銷售趨勢的持續改善。

It basically implies the trend we've been on this year is what I would say from a comp perspective.

它基本上意味著我們今年的趨勢就是我從比較角度所說的。

Got it. Thank you.

知道了。謝謝。

Peter Keith, Piper Sandler.

彼得·基思，派珀·桑德勒。

I think Good afternoon, guys. On the on the comp headwinds that you've been calling out with some of the craft technology and strategic inventory reductions on maybe just to give some visibility in the out-quarters, when might we think about and lapping those and that no longer do you see them as headwinds?

我想大家下午好。關於您一直在呼籲的一些工藝技術和戰略庫存削減的競爭逆風，也許只是為了在外部季度提供一些可見性，我們什麼時候可以考慮並研磨這些，而您不再這樣做了將它們視為逆風嗎？

If you're right you do and it's Chris from. So what we've really been able to do this year is reset that baseline and a lot of those seasonal businesses. So strategically pulling back early in the year on spring and summer to core categories, investing in how we'll win strategically pulling back in autumn and fall. We really see that resets being the new baseline that we start from so on the seasonal it into 2025. So on the seasonal side, I would say on we'll be a lot more comp to opportunistic next year.

如果你是對的，你就這麼做了，這是克里斯。因此，我們今年真正能夠做的是重置基準和許多季節性業務。因此，今年年初，我們將在春季和夏季策略性地撤回核心類別，並投資於我們如何在秋季和秋季策略性地撤退。我們確實看到，重置是我們從季節性開始到 2025 年的新基線。因此，在季節性方面，我想說，明年我們將更加重視機會主義。

On the craft technology headwind side. And you know, we continue to read and react to the business that you heard us say for the full year before we thought it would be still a headwind and it was a little more of a headwind than we thought it would be in the third quarter. So we continue to evaluate that and adjust we can.

在工藝技術逆風方面。你知道，我們繼續閱讀你聽到我們所說的全年業務並做出反應，然後我們認為這仍然是一個逆風，而且比我們想像的第三季度的逆風要大一些。所以我們會繼續評估並進行調整。

We are working to see how we can reabsorb, if need be if the headwinds persist and then craft technology as well.

我們正在努力研究如何在逆風持續存在的情況下重新吸收（如有必要），然後再開發技術。

Okay, that's helpful. Thank you. And then I guess to on with the the update to the sales guide and and the EBITDA guide holding. I think what that's implying is quite a bit of gross margin improvement it year on year that we've been kind of using adjusted gross margin. We were stripping out those excess freight costs that you guys had boxed out in prior quarters.

好的，這很有幫助。謝謝。然後我想繼續更新銷售指南和 EBITDA 指南。我認為這意味著我們一直在使用調整後的毛利率，毛利率逐年增加。我們正在剔除你們在前幾個季度中排除的超額運費。

So my thinking is right with Q4. Is there a notable swing factor from Q3 to Q4 in terms of year-on-year gross margin change? And if so, what are the factors to that?

所以我對第四季的想法是正確的。第三季到第四季毛利率年減是否有顯著波動因素？如果是這樣，那麼是什麼因素造成的呢？

Yes, Peter, Scott, I think the biggest change in Q4, sort of what we called out with the AUCs. Turning from a headwind to a tailwind, we expect them to be flat to slightly down in Q4 and then that trend we do expect to continue into 2025.

是的，Peter、Scott，我認為第四季最大的變化就是我們在 AUC 中提出的。從逆風轉為順風，我們預計第四季將持平或略有下降，然後我們預計這種趨勢將持續到 2025 年。

What I will say that does give us some of the fuel to really read and react to the pricing for our customers because our approach is really two maximize gross profit dollars. And so we're going to be opportunistic where we see opportunities to win.

我要說的是，這確實給了我們一些動力來真正閱讀客戶的定價並對定價做出反應，因為我們的方法實際上是最大化毛利兩美元。因此，當我們看到獲勝機會時，我們將採取機會主義態度。

And so the AUC declines are intriguing and it sounds like something that could actually increases the benefit next year. Could you help us unpack that a little bit and understand, I guess some of the mechanism to get the lower cost?

因此，AUC 的下降很有趣，聽起來實際上可能會增加明年的收益。您能否幫助我們稍微解開這個問題並了解一些降低成本的機制？

Yes, a lot of it's coming from our Focus, Simplify and Grow initiative where we've been negotiating all here, lower cost, lower product costs. And so keep in mind with our long term, call it a nine month on average, it takes a while for those units to come in and start to sell through. So we're getting to that inflection point in Q4. And that's what we've been talking about, where we're going to see a much bigger P&L benefit next year because of that versus this year.

是的，其中很大一部分來自我們的「聚焦、簡化和成長」計劃，我們一直在這裡談判降低成本、降低產品成本。因此，請記住我們的長期計劃，平均為九個月，這些單位需要一段時間才能進入並開始銷售。因此，我們將在第四季達到這個拐點。這就是我們一直在談論的，與今年相比，明年我們將看到更大的損益效益。

Very helpful. Thanks so much, guys. Excellent.

很有幫助。非常感謝，夥計們。出色的。

Thank, Peter.

謝謝，彼得。

(Operator instructions) Cristina Fern�ndez, Telsey Advisory Group.

（操作員說明）Cristina Fernï¿ndez，特爾西諮詢小組。

Hi, good afternoon and thank you for taking my questions. I wanted to follow up on Peter's question around the implied fourth quarter profitability because on the EBITDA on the EBITDA margin, it looks like it's going to be it's going to expand pretty meaningful to double digit. So is it primarily on the gross margin or what can we expect from the SG&A, I guess how much of the benefit of having the 53 week as well?

你好，下午好，謝謝你回答我的問題。我想跟進彼得關於第四季度隱含盈利能力的問題，因為就 EBITDA 利潤率而言，看起來它將非常有意義地擴大到兩位數。那麼，主要是毛利率還是我們對 SG&A 的期望，我猜 53 週的好處有多少？

Yes, I can. I can touch on the accuracy that we own in terms of build off the margin piece. So SG&A will also be providing the bunch of that benefit in Q4 is now we've talked about some of our store labor structure changes that we made we talked about the corporate structure change that we made.

我可以。我可以談談我們在建立邊際部分方面所擁有的準確性。因此，SG&A 也將在第四季度提供一系列好處，現在我們已經討論了我們所做的一些商店勞動力結構變化，我們討論了我們所做的公司結構變化。

So those won't be providing benefits in Q4 as we go forward. So we have both the margin benefit. We talked about in the SG&A tailwinds front from all of that as well. And the 53 week on what we disclosed exactly what it is a tailwind for adjusted EBITDA in the quarter was one.

因此，隨著我們的前進，這些不會在第四季度帶來好處。所以我們都有邊際收益。我們也從所有這些方面討論了 SG&A 順風車。第 53 週我們準確地揭露了本季調整後 EBITDA 的推動力就是其中之一。

And then the second question I have was around the decision to invest in inventory. Can you give more details about what categories or product lines it is? And if it's mostly inventory to be sold through in the first half of next year.

我的第二個問題是關於投資庫存的決定。您能否詳細介紹一下它是什麼類別或產品線？如果主要是明年上半年售完的庫存。

Kristina, it's Rob. I'll take that one on sort of we have been talking for a few quarters now about the strength in our textiles business, in particular, on certain categories across the fabric business. And as we mentioned on this call and media are that's where the majority of our incremental spend is making sure that we're in-stock.

克里斯蒂娜，我是羅布。我認為我們幾個季度以來一直在談論我們紡織品業務的實力，特別是在布料業務的某些類別上。正如我們在這次電話會議和媒體中提到的那樣，我們的大部分增量支出都是為了確保我們有庫存。

We've also been talking about our Basics business and as we have seen some strength in those core categories, the basic side of the business that go along with the go on with those projects. Think so in construction and foam and fiber, and we are increasing our in-stocks to make sure that we are ready for the full project as our customers come in.

我們也一直在談論我們的基礎業務，因為我們已經看到了這些核心類別的一些優勢，以及與這些專案的進行相伴的業務的基本方面。在建築、泡沫和纖維領域也是如此，我們正在增加庫存，以確保我們為客戶進來時的整個專案做好準備。

And the last question I had anything on any update on the competitive environment? Are you seeing anything you see anything different in the third quarter and should run through the Black Friday period.

最後一個問題是關於競爭環境的最新情況嗎？您是否看到第三季有什麼不同，並且應該貫穿黑色星期五期間。

And Kristina, it's Chris. I would say the competitive environment continues to be a really pretty rational overall. I mean, it's as we all know, the discretionary retail environment is it's tough and we are being thoughtful and using our data to find the best retails we can for our customer that said, we haven't seen anything of that that gives us pause on the promotional front with competitors, and we're pretty confident in how we're navigating the current period.

克里斯蒂娜，是克里斯。我想說，整體而言，競爭環境仍然非常理性。我的意思是，眾所周知，可自由支配的零售環境非常艱難，我們正在深思熟慮，並利用我們的數據為我們的客戶找到最好的零售方式，我們還沒有看到任何讓我們猶豫的事情在與競爭對手的促銷方面，我們對當前時期的應對方式非常有信心。

Thank you.

謝謝。

David Lance, Wells Fargo.

大衛‧蘭斯，富國銀行。

Hey, guys. Thanks for taking my questions. So I was just curious if you could talk about the sales trajectory a little bit in a little bit more detail. I think you had mentioned Q2 or Q3 to date trends. We're tracking in line with Q2, but you know, you ended the quarter, down 4.1. So, I was just curious if you could provide an additional color there.

大家好。感謝您回答我的問題。所以我很好奇你是否能更詳細地談談銷售軌跡。我想您已經提到了第二季或第三季的最新趨勢。我們的追蹤與第二季一致，但您知道，本季結束時，下降了 4.1。所以，我只是好奇你是否可以在那裡提供額外的顏色。

Hey, it's Chris. Yes. The way we are most of the quarter is when you normalize for the how lean pull forward that we experienced, which was a meaningful impact positively to Q2. But the negative result was it took some sales out of Q3. So when you pull that impact out, the business was really very consistent between Q2 and Q3. And what we're really seeing is some of the categories that Rob called out and that I talked about India in the earlier portion of the call. We're seeing really good strength in fleece and needle arts and sewing technology. which, gives us a lot of confidence as we head into the fourth quarter.

嘿，這是克里斯。是的。我們本季大部分時間的情況是，當你將我們經歷的精實拉動正常化時，這對第二季產生了有意義的正面影響。但負面結果是第三季的部分銷售下降。因此，當你排除這種影響時，第二季和第三季的業務確實非常一致。我們真正看到的是羅布提出的一些類別，以及我在電話會議的早期部分談到的印度。我們在羊毛和針線藝術以及縫紉技術方面看到了非常強大的實力。當我們進入第四季時，這給了我們很大的信心。

Got it. That's helpful. And then can you provide an update on how you're thinking about interest expense and potential debt paydown in the coming quarters?

知道了。這很有幫助。然後您能否提供有關您如何看待未來幾季的利息支出和潛在債務償還的最新資訊？

Yes, Scott, on right now, we're getting the benefit kicking in of our interest rate swaps. So that definitely helps. But the main thing we're focused on is getting this business back to the historical profit levels that it's been and generating cash so that we can handle that does it comes due in 2026 and 2028.

是的，斯科特，現在我們正在從利率互換中受益。所以絕對有幫助。但我們關注的主要事情是讓這項業務恢復到歷史利潤水平並產生現金，以便我們能夠處理 2026 年和 2028 年到期的問題。

Thanks.

謝謝。

Steven Forbes, Guggenheim.

史蒂文福布斯，古根漢。

Good evening, Chris, Scott. So I wanted to follow up on operator operating working capital, and you gave some nice color then on inventory for the year end Payables as a percentage inventories fluctuate pretty dramatically over the years here. So any any sort of framework to think about where were Payables as a percentage of inventory end of the year.

晚上好，克里斯，斯科特。因此，我想跟進運營商運營營運資金，您在年終應付賬款庫存上給出了一些漂亮的顏色，因為這些年來庫存的百分比波動非常劇烈。因此，任何類型的框架都可以考慮年末應付帳款佔庫存的百分比。

If you're really asking about the inventory composition breakdown. So in order to reap, I think I said on the call, inventories will be down low to mid-single digits. But I will tell you the unit piece is actually going to be up slightly and the costs will be down. So that's getting back to how broad do some color around the categories we're buying into and seeing that. That's that's how the composition is going to work, especially as our ACs continue to become tailwinds.

如果您確實詢問庫存構成細目。因此，為了收穫，我想我在電話會議上說過，庫存將降至低至個位數。但我會告訴你，單位面積實際上會略有上升，而成本會下降。因此，這又回到了我們所購買的類別的顏色範圍有多大，並看到了這一點。這就是組合的運作方式，特別是當我們的空調繼續成為順風的時候。

And then, Eric, maybe just a quick follow-up. Focusing on free cash flow, right, given the change in the guidance for the year. I'm not sure if you can maybe help us frame sort of how you see the evolution of free cash flow next year in a particular scenario, whether that's sort of a flat sales scenario, just given what's happening with the AUC.

然後，埃里克，也許只是一個快速的跟進。考慮到今年指引的變化，重點關注自由現金流，對吧。我不確定您是否可以幫助我們框架一下您如何看待明年在特定情況下自由現金流的演變，無論這是否是一種持平銷售情況，只要考慮到 AUC 的情況。

Is there sort of a is there a path to flat? Or is there any sort of framework you can provide us to help you think through sort of the free cash flow for the business as these benefits start flowing through?

有沒有一條通往平坦的路？或者，您可以向我們提供任何類型的框架來幫助您思考隨著這些效益開始流動時企業的自由現金流嗎？

Yes. I mean, we're still working through the exact plans for next year. But when you see the momentum that we have with the cost savings and then on the product cost side as well, I see a path to positive free cash flow next year, not suspect to fly that even in a sort of flat sales scenario. So we're really excited about the momentum we have on the cost-saving side. None of that is contingent on the sort of top line growth.

是的。我的意思是，我們仍在製定明年的具體計劃。但是，當你看到我們在成本節約以及產品成本方面的勢頭時，我看到了明年通往正自由現金流的道路，即使在銷售持平的情況下，也不會懷疑這一點。因此，我們對節省成本方面的勢頭感到非常興奮。所有這些都不取決於收入的成長。

Thanks for that. Thank you.

感謝那。謝謝。

Thanks, Steve.

謝謝，史蒂夫。

This concludes the question-and-answer session. And the conference has now concluded. Thank you for attending today's presentation. You may now disconnect your line.

問答環節到此結束。會議現已結束。感謝您參加今天的演講。現在您可以斷開線路。