Container Store Group Inc (TCS) 2023 Q2 法說會逐字稿

Greetings, and welcome to The Container Store second quarter 2023 earnings call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎您參加 The Container Store 2023 年第二季財報電話會議。 （操作員指示）謹此提醒，本次會議正在錄製中。

It is now my pleasure to introduce your host, Caitlin Churchill of Investor Relations. Thank you, you may begin.

現在我很高興向您介紹主持人，投資者關係部門的凱特琳·邱吉爾。謝謝，你可以開始了。

Good afternoon, everyone, and thanks for joining us today for The Container Store's second quarter fiscal year 2023 earnings results conference call. Speaking today are Satish Malhotra, Chief Executive Officer; and Jeff Miller, Chief Financial Officer. After Satish and Jeff have made their formal remarks, we'll open the call to questions.

大家下午好，感謝您今天加入我們 Container Store 2023 財年第二季財報電話會議。今天發表講話的是執行長薩蒂什·馬爾霍特拉 (Satish Malhotra)；和首席財務官傑夫米勒。在薩蒂什和傑夫發表正式演講後，我們將開始提問。

Before we begin, I would like to remind everyone that certain matters discussed in today's conference call, are forward-looking statements relating to future events, management's plans, and objectives for the business, and the future financial performance of the company that are subject to risks and uncertainties.

在我們開始之前，我想提醒大家，今天電話會議中討論的某些事項是與未來事件、管理層計劃和業務目標以及公司未來財務業績有關的前瞻性陳述，這些陳述取決於風險和不確定性。

Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are referred to in The Container Store's press release issued today, and our annual report on Form 10-K filed with the SEC on May 26, 2023, as updated by our quarterly reports on Form 10-Q, and other public filings with the US Securities and Exchange Commission.

實際結果可能與這些前瞻性陳述中的預期有重大差異。今天發布的 The Container Store 新聞稿以及我們於 2023 年 5 月 26 日向 SEC 提交的 10-K 表格年度報告以及 10-Q 表格季度報告中提到的可能影響結果的風險因素，以及向美國證券交易委員會提交的其他公開文件。

The forward-looking statements made today are as of the date of this call, and The Container Store does not undertake any obligation to update their forward-looking statements. Finally, the speakers may refer to certain adjusted or non-GAAP financial measures on this call.

今天所做的前瞻性陳述截至本次電話會議之日，貨櫃商店不承擔任何更新其前瞻性陳述的義務。最後，發言者可能會在本次電話會議上提及某些調整後或非公認會計原則的財務指標。

A reconciliation schedule of the non-GAAP financial measures to most directly comparable GAAP measures, is also available in The Container Store's press release issued today. A copy of today's press release and investor deck may be obtained by visiting the Investor Relations page of the website at www.ContainerStore.com. I will now turn the call over to Satish.

The Container Store 今天發布的新聞稿中還提供了非公認會計原則財務指標與最直接可比較的公認會計原則指標的調節表。可透過造訪網站 www.ContainerStore.com 的投資者關係頁面取得今天新聞稿和投資者資料的副本。我現在將把電話轉給薩蒂什。

Thank you, Caitlin, and thank you all for joining our call today. I will begin today's discussion, by reviewing highlights from our second quarter performance. Jeff will then review the details of our second quarter financial results, followed by our outlook. We'll then open up the call to questions.

謝謝凱特琳，也謝謝大家今天加入我們的電話會議。我將首先回顧我們第二季度業績的亮點來開始今天的討論。然後傑夫將回顧我們第二季度財務業績的詳細信息，然後是我們的前景。然後我們將開始提問。

As we discussed on our last call, we expected a challenging quarter on consumer spending, impacted by long-term inflationary pressures, substantially increased interest rates, and overall market uncertainty. And that is essentially what we saw. It continued year-over-year decline in our customer traffic, and fewer units being purchased by them, especially in our core and more value oriented categories.

正如我們在上次電話會議中討論的那樣，受長期通膨壓力、利率大幅上升和整體市場不確定性的影響，我們預計消費者支出將面臨一個充滿挑戰的季度。這基本上就是我們所看到的。我們的客戶流量持續逐年下降，他們購買的產品也減少了，特別是在我們的核心和更注重價值的類別中。

The monthly cadence of our sales declines were steepest in July, which we primarily attribute to customer distraction with summer travel. Those declines did slightly moderate in August and September. Additionally, we benefited from the earlier than planned start of our 75th Elfa anniversary event, which assisted us in delivering sales, and adjusted EPS above the high end of our expectations.

7 月我們的銷售額下降幅度最大，我們主要將其歸因於夏季旅行分散了客戶的注意力。八月和九月的跌幅略有放緩。此外，我們還受益於 Elfa 75 週年紀念活動提前開始，這有助於我們實現銷售，並將每股收益調整為高於我們預期的上限。

However, as we look to the second half of the fiscal year, we have slightly lower revenue expectations. And we now expect to be contending with challenges in gross profit, driven by sales mix, and in SG&A expenses, all of which are driving changes to our full year outlook, which Jeff, we'll go over shortly.

然而，當我們展望本財年下半年時，我們的收入預期略有下降。現在，我們預計將應對由銷售組合和銷售管理費用驅動的毛利挑戰，所有這些都正在推動我們全年前景的變化，傑夫，我們很快就會討論這一點。

For Q2 overall consolidated net sales were $219.7 million, down 19.4% compared to the prior year period of $272.7 million. From a profitability standpoint, we delivered gross margin expansion, driven primarily by freight tailwinds, and shorter run general merchandise promotions, which was a learning, we took away from our Q1 [test]

第二季整體合併淨銷售額為 2.197 億美元，比去年同期的 2.727 億美元下降 19.4%。從獲利能力的角度來看，我們實現了毛利率的成長，這主要是由貨運順風和短期一般商品促銷推動的，這是我們從第一季[測試]中學到的教訓

The gross margin expansion partially offset the significant expected SG&A leverage, leading to adjusted income per share of $0.01. This was above the high end of our expectations, and driven by the execution of our SG&A reduction plan.

毛利率的成長部分抵消了預期的顯著 SG&A 槓桿，導致調整後每股收益為 0.01 美元。這超出了我們的預期上限，並受到我們銷售管理費用削減計劃的執行的推動。

The sales headwinds, not withstanding, I am pleased with how our organization has remained focused on executing across our strategic priorities of deepening our customer relationships, expanding our reach, and strengthening our capabilities. We are aiming to position ourselves for outsized share gains when the market normalizes.

儘管存在銷售逆風，但我對我們的組織如何繼續專注於執行深化客戶關係、擴大覆蓋範圍和增強能力的策略重點感到滿意。我們的目標是在市場正常化時獲得巨大的份額收益。

Let me now provide some key highlights on our most notable accomplishments in Q2. As it relates to our experience and customer service, we are proud to receive high marks, for our efforts in this area. Our store Net Promoter Score remained strong at 81 for the second quarter.

現在讓我介紹一下我們在第二季最顯著的成就的一些要點。由於這與我們的經驗和客戶服務有關，我們很自豪能夠因為我們在這一領域的努力而獲得高分。第二季我們的商店淨推薦值依然強勁，為 81。

This call is a testament to the dedicated efforts of our store specialists. Their expertise extends from conducting educational demonstration of our new premium products, to providing exceptional service, and specialized knowledge in their respective areas.

這通電話證明了我們商店專家的奉獻精神。他們的專業知識涵蓋從對我們的新優質產品進行教育演示，到提供卓越的服務以及各自領域的專業知識。

Our organized insider loyalty program remains a key to deepening our customer relationship, with the average ticket more than 45% higher than non-loyalty members. Experts, our highest loyalty tier members are spending five times more than our enthusiast members.

我們有組織的內部忠誠度計劃仍然是加深客戶關係的關鍵，平均門票比非忠誠會員高出 45% 以上。專家們，我們最高忠誠會員的消費是我們狂熱會員的五倍。

In Q2, we'll have the journey of our insiders, through ongoing storytelling. Now when a customer joins the program, they receive engaging and educational communication, about our organizing solution, customer bases, and in home services. To ensure they understand all that we have to offer them in their transformational journey with us.

在第二季度，我們將透過持續的故事講述我們的內部人士的旅程。現在，當客戶加入該計劃時，他們會收到有關我們的組織解決方案、客戶群和家庭服務的引人入勝的教育性溝通。確保他們了解我們在他們的轉型之旅中必須為他們提供的一切。

On the product front, we continue to enrich our assortment with more premium and upscale items. Which we believe not only drove new customers to shop with us, but was also positively received by existing customers as well.

在產品方面，我們繼續透過更多優質和高檔產品來豐富我們的品種。我們相信這不僅吸引了新客戶來我們這裡購物，而且也受到了現有客戶的積極歡迎。

In fact, recent customer intercept validated that, our new premium products are giving customers more reason to shop with us, and that they see The Container Store as a one-stop shop for both the organizational, and home beautification needs. For example, we saw great success with our back to college campaigns, which gives us the opportunity to engage with new and existing customers, during an important milestone in each year.

事實上，最近的客戶攔截證實，我們的新優質產品讓客戶更有理由在我們這裡購物，並且他們將貨櫃商店視為滿足組織和家庭美化需求的一站式商店。例如，我們的「重返大學」活動取得了巨大成功，這使我們有機會在每年的重要里程碑期間與新客戶和現有客戶互動。

To recap our 2023 assets. We ran our annual college offer, where college parents and college students could sign up to receive 25% off their purchases. Curated a complete and compelling holiday shop, with each of our categories in stores and online, and activated pop-up shops in 36 college campus bookstores nationwide.

回顧我們 2023 年的資產。我們推出了年度大學優惠活動，大學家長和大學生可以報名享受 25% 的購物折扣。策劃了一個完整且引人注目的假日商店，我們的每個類別都在商店和網上開設，並在全國 36 家大學校園書店激活了快閃店。

Our college offer, brought in 35% new customers. So a 68% increase in sign-ups, and drove a 43% increase in sales compared to last year. From our [tried and trued] under bed storage, to multidirectional redesign, to an innovative three door charging cost from [dormify] we attribute the campaign success to positioning The Container Store as a one stop shop for college, with our enhanced and expanded assortment.

我們的大學優惠帶來了 35% 的新客戶。與去年相比，註冊人數增加了 68%，銷售額增加了 43%。從我們[久經考驗的]床下儲物櫃，到多向重新設計，再到[dormify]創新的三門充電費用，我們將活動的成功歸功於將貨櫃商店定位為大學一站式商店，並增強和擴展了產品種類。

In addition, we launched our uncontained, branding campaign during the [four] product spotlight. This campaign supports our ongoing expansion, into strategic growth categories, that complement our core offerings, including on-the-go travel, dining, entertaining, home decor, and textiles.

此外，我們也在[四]產品聚焦期間推出了不受限制的品牌宣傳活動。這項活動支持我們不斷向策略性成長類別擴張，補充我們的核心產品，包括行動旅行、餐飲、娛樂、家居裝飾和紡織品。

We introduced more than 400 new products, across these categories in September. Like college and other new product introduction, we have shared, sales have exceeded our expectations. We consider over 85% of the general merchandise in this introduction to be premium, and includes brands like Cadence, which offers original [magnetic, travel capital,]

9 月份，我們在這些類別中推出了 400 多種新產品。像大學等新產品推出，我們都分享過，銷售量都超出了我們的預期。我們認為本介紹超過 85% 的一般商品都是優質商品，其中包括 Cadence 等品牌，該品牌提供原創 [磁性、旅遊資本、]

The Citizenry known for a socially conscious, artisan made, home goods, and Fortessa known for its innovative break resistant dinnerware. This gives us confidence in our direction and focus, on bringing in more upscale and premium solutions, particularly those that complement our premium customer spaces.

Citizenry 以其具有社會意識、手工製作的家居用品而聞名，而 Fortessa 則以其創新的防碎餐具而聞名。這讓我們對自己的方向和重點充滿信心，致力於引入更多高檔和優質解決方案，特別是那些補充我們優質客戶空間的解決方案。

Though this new product is a sales tailwind. It does come at a lower gross margin, than some of our more mature and larger volume, core, and value oriented product categories. While we do expect to improve the margin profile of these new more premium products lines over time, we have updated our full year outlook to reflect the current impact of this mix on our gross margin.

儘管這款新產品是銷售的動力。與我們一些較成熟、銷售量較大、核心和價值導向的產品類別相比，它的毛利率確實較低。雖然我們確實希望隨著時間的推移改善這些新的更優質產品線的利潤率，但我們更新了全年展望，以反映這種組合對我們毛利率的當前影響。

As we move into the remainder of the year, customers will see more new products and seasonal assortments [currently paired], giving them more reasons to shop with us. Earlier this month, we introduced more than 1,000 products, as part of our seasonal holiday offering, supported by an in-store and online holiday shop, digital and traditional marketing, including an elevated, direct mail lookbook.

隨著今年剩餘時間的到來，顧客將看到更多新產品和季節性品種（目前已配對），這讓他們有更多理由在我們這裡購物。本月早些時候，我們推出了 1,000 多種產品，作為季節性假日產品的一部分，並得到店內和線上假日商店、數位和傳統行銷（包括高級直郵式樣本）的支持。

But approximately 80% of the assortment is new, and almost half is considered premium, and 55% is limited distribution or exclusive to The Container Store. We believe it is our best holiday assortment yet.

但大約 80% 的品種是新的，近一半被認為是優質產品，55% 是有限分銷的或 The Container Store 獨家的。我們相信這是我們迄今為止最好的節日品種。

There are more gift-giving opportunities, along with curated premium decor than we've ever had during this time period. For example, customers will discover tested table arrangements, and the core that complement our holiday trends, including a collection of artisan crafted stoneware from in home.

在此期間，送禮機會以及精心策劃的優質裝飾比以往任何時候都多。例如，顧客會發現經過測試的餐桌佈置，以及補充我們節日趨勢的核心，包括一系列手工製作的家居陶器。

Additionally, customers can explore elevated gifting opportunities, like exclusives and timeless leather travel essentials from [Quana] , innovative and premium pet brands like [Stable and Hiben] premium gift wrapping, holiday storage essentials, and so much more.

此外，顧客還可以探索更多送禮機會，例如 [Quana] 的獨家且永恆的皮革旅行必需品、[Stable 和 Hiben] 優質禮品包裝等創新和優質寵物品牌、節日存儲必需品等等。

On the custom spaces side, we have continued to see relative strength compared to our general merchandise performance, and resilience in our premium, [Avaira] and Preston lines, despite the challenging environment.

在客製化空間方面，儘管環境充滿挑戰，但與我們的一般商品表現相比，我們繼續看到相對強勁的表現，以及我們的高端、[Avaira] 和 Preston 系列的彈性。

With interest rates as high as they are, coupled with fewer homes in the market, we do believe, we could benefit from customers investing in their homes more, which is one of the reasons we have been very intentional with our focus on strengthening our custom spaces offering.

由於利率如此之高，加上市場上的房屋數量減少，我們確實相信，我們可以從客戶對房屋的更多投資中受益，這也是我們一直非常有意識地專注於加強我們的客製化服務的原因之一空間提供。

We ended the quarter with 135 in-house designers, who are focused on selling premium spaces, and drove more than 85% of premium sales in Q2. The effort we are putting into improving lead contact time, quality service is reflected in our customer faces Net Promoter Score, which continues to trend positively and increased to 81, up two points from Q1.

本季末，我們擁有 135 位內部設計師，專注於銷售優質空間，並推動了第二季 85% 以上的優質銷售。我們在改善潛在客戶聯繫時間和優質服務方面所做的努力反映在我們的客戶淨推薦值上，淨推薦值繼續呈正面趨勢，增至 81，比第一季上升了 2 分。

Additionally, we're adding an incremental investment in marketing, in the second half of fiscal 2023, to support overall custom space awareness, and lead generation. As previously stated, we look forward to launch -- soft launching garage class by Elfa in November, which bridges the gap between our entry-level Elfa Classic, and premium prestige garage offerings.

此外，我們將在 2023 財年下半年增加行銷的增量投資，以支援整體客製化空間認知度和潛在客戶開發。如前所述，我們期待在 11 月推出 Elfa 試行車庫課程，這將彌補我們的入門級 Elfa Classic 和高級聲望車庫產品之間的差距。

Appearing strategically with our garage general merchandise, with features like lighting, fully enclosed wall, and rolling cabinet, and a heavy duty workbench, we are bringing to the market solutions our customers want at a competitive price.

我們的車庫百貨產品策略性地出現，具有照明、全封閉牆、滾動櫃和重型工作台等功能，我們以具有競爭力的價格向市場提供客戶想要的解決方案。

Moving on to new stores, we are successfully expanding our reach with an average of over 60% new customers shopping with us in these locations. We opened up our Mateo, California location before the end of Q2, and our new Woodland Hills, California location, just over a week ago.

轉向新店，我們成功擴大了影響範圍，平均有超過 60% 的新顧客在這些地點與我們購物。我們在第二季末之前開設了加州馬特奧辦事處，並於一周前開設了加州伍德蘭希爾斯新辦事處。

We continue to be pleased with the productivity of our small-format stores, specifically with the faster adoption of custom spaces, which is averaging 39% of sales per store. In addition, the Net Promoter Score for our small-format stores remains incredibly strong at 83.

我們仍然對小型商店的生產力感到滿意，特別是更快地採用客製化空間，平均佔每家商店銷售額的 39%。此外，我們小型商店的淨推薦值仍然非常強勁，高達 83。

Looking ahead to the remainder of the fiscal year, we expect to open three more small-format stores, for a total of five. Previously announced Miami location will be shifted into fiscal 2024, due to construction delays.

展望本財年剩餘時間，我們預計將再開設 3 家小型商店，總數達到 5 家。由於施工延誤，先前宣布的邁阿密地點將轉移到 2024 財年。

To highlight one of our technology initiatives in Q2, we have started testing AI generated content on our websites, to create efficiencies, and personalize the online experience for our customers. This content is now automatically generated, based on sophisticated prompts that in corporate customer reviews, which allow the content that allows us to enhance product display pages, providing even more compelling reason to buy, a greatly improving search capabilities.

為了突出我們在第二季度的一項技術舉措，我們已開始在我們的網站上測試人工智慧產生的內容，以提高效率並為客戶提供個人化的線上體驗。現在，這些內容是根據企業客戶評論中的複雜提示自動生成的，這使得我們可以增強產品顯示頁面的內容，提供更令人信服的購買理由，從而大大提高搜尋能力。

And finally, as I've said many times, our employees are the lifeblood of this company, and all contribute to its long-term stability and growth. Investing in our people, and recognizing their contributions is critical in remaining an employer of choice.

最後，正如我多次說過的，我們的員工是公司的命脈，所有人都為公司的長期穩定和發展做出了貢獻。投資我們的員工並認可他們的貢獻對於維持我們的首選雇主地位至關重要。

In Q2, we announced the reinstatement of our annual employee pay increase for eligible employees, effective October 1. Like everyone, our people are contending with inflation, higher cost of living, and other economic pressures. And we firmly believe this pay increase was the right thing to do.

在第二季度，我們宣布恢復符合條件的員工的年度加薪，自 10 月 1 日起生效。像每個人一樣，我們的人民正在應對通貨膨脹、更高的生活成本和其他經濟壓力。我們堅信加薪是正確的做法。

We also added back some store payroll hours, and our revised SME outlook now reflects the decision. Additionally, we launched a new recognition program, TCS Appreciates. This program to facilitate peer-to-peer celebration, to acknowledge the ways that our team members exemplify our company's foundation principles every day.

我們也增加了一些商店的薪資發放時間，我們修訂後的中小企業前景現在反映了這個決定。此外，我們也推出了新的認可計畫：TCS Appreciates。該計劃旨在促進點對點慶祝活動，以表彰我們的團隊成員每天實踐公司基本原則的方式。

Before I turn the call over to Jeff, I want to reiterate our conviction in our strategy that we believe will serve us well, and deliver share gains when Container began prioritizing investments in their homes, and market conditions normalize. We have a strong balance sheet in place, and believe we are navigating today's environment with exceptional discipline, while ensuring we further strengthen our competitive position.

在我把電話轉給傑夫之前，我想重申我們對我們的戰略的信念，我們相信這一戰略將為我們提供良好的服務，並在Container 開始優先投資他們的房屋並且市場狀況正常化時實現股票收益。我們擁有強大的資產負債表，並相信我們正在以卓越的紀律駕馭當今的環境，同時確保我們進一步加強我們的競爭地位。

With that, I'll now hand it over to Jeff. Jeff?

現在，我將把它交給傑夫。傑夫？

Thank you, Satish, and good afternoon, everyone. As Satish reviewed, we continue to contend with a tough macro backdrop, and industry pressures that impacted our second quarter performance. However, our results did exceed our guidance ranges.

謝謝薩蒂什，大家下午好。正如薩蒂什所評論的那樣，我們繼續應對嚴峻的宏觀背景和影響我們第二季業績的行業壓力。然而，我們的結果確實超出了我們的指導範圍。

For the second quarter, consolidated net sales decreased 19.4% year-over-year to $219.7 million. By segment, net sales for The Container Store retail business were $208.5 million, a 19.8% decrease compared to $259.9 million last year. The decrease is inclusive of a comp store sales decrease of 20%, driven primarily by the 20.4% decline in our general merchandise categories, which negatively impacted comp store sales by 1,320 basis points.

第二季綜合淨銷售額年減 19.4% 至 2.197 億美元。按部門劃分，The Container Store 零售業務的淨銷售額為 2.085 億美元，比去年的 2.599 億美元下降 19.8%。這一下降包括同店銷售下降 20%，這主要是由於我們的一般商品類別下降 20.4%，這對同店銷售產生了 1,320 個基點的負面影響。

Custom spaces comp store sales declined 19.3% compared to last year, and negatively impacted comp store sales by 680 basis points. Sales from new stores more than offset the discontinuation of C studio third party sales year over year which benefited total TCS net sales by 20 basis points.

客製化空間對比店銷售額與去年相比下降了 19.3%，對對比店銷售額產生了 680 個基點的負面影響。新店的銷售額比去年同期抵消了 C studio 第三方銷售中斷的影響，使 TCS 總淨銷售額提高了 20 個基點。

For the second quarter fiscal 2023, our online channel decreased 21.7% year over year, and our website generated sales, which includes curbside pickup, decreased 16.4% compared to last year. Website generated sales represented a total of 21.8% of TCS net sales in Q2 compared to 20.9% in Q2 last year.

2023 財年第二季度，我們的線上通路較去年同期下降 21.7%，我們的網站銷售額（包括路邊取貨）比去年下降 16.4%。第二季度，網站產生的銷售額佔 TCS 淨銷售額的 21.8%，而去年第二季為 20.9%。

Unearned revenue decreased to $18.3 million in Q2 this year versus $22.1 million last year, and reflects the pullback in customer spending that we are experiencing.

今年第二季的非勞動收入從去年的 2,210 萬美元下降至 1,830 萬美元，這反映了我們正在經歷的客戶支出的縮減。

Elfa third party net sales of $11.2 million decreased 12.5% compared to the second quarter of fiscal 2022. Excluding the impact of foreign currency translation, Elfa third-party net sales decreased 10.7% year over year, primarily due to a decline in sales in the Nordic markets. The decline in Elfa third party sales reflects the continued challenging macroeconomic environment in the Nordic and other regions, due to higher inflation and interest rates.

埃爾法第三方淨銷售額為 1,120 萬美元，較 2022 財年第二季下降 12.5%。排除外幣換算的影響，埃爾法第三方淨銷售額較去年同期下降 10.7%，主要是由於北歐市場。埃爾法第三方銷售額的下降反映出，由於通貨膨脹和利率上升，北歐和其他地區的宏觀經濟環境持續充滿挑戰。

From a profitability standpoint, our consolidated gross margin for Q2 increased 100 basis points to 57.6% compared to 56.6% last year. By segment, TCS gross margin increased 10 basis points compared to last year, primarily due to lower freight costs, partially offset by unfavorable mix, and increased promotional activity.

從獲利能力的角度來看，我們第二季的綜合毛利率比去年的 56.6% 成長了 100 個基點，達到 57.6%。按細分市場劃分，TCS 毛利率比去年增長了 10 個基點，這主要是由於貨運成本下降（部分被不利的組合所抵消）以及促銷活動的增加所致。

The unfavorable mix was primarily related to a shift in sales mix to lower margin general merchandise products during the quarter, and the increased promotional activity was primarily related to custom spaces, as we had an earlier than planned start of our 75th Elfa anniversary event. Elfa gross margin increased 500 basis points compared to last year, primarily due to price increases.

不利的組合主要與本季度銷售組合轉向利潤率較低的一般商品產品有關，而促銷活動的增加主要與定制空間有關，因為我們比計劃提前開始了 75 週年 Elfa 週年紀念活動。 Elfa 毛利率比去年增加了 500 個基點，主要是因為價格上漲。

Consolidated SG&A dollars decreased $9.4 million or 7.9% to $109.3 million compared to $118.7 million in Q2 last year, which reflects the cost management actions taken in the first quarter. As a percent of net sales, SG&A margin increased 620 basis points year over year to 49.7%. The increase is primarily due to deleverage of fixed costs, associated with lower sales in the second quarter of fiscal 2023. Additionally, SG&A spend in Q2 last year included a $2.6 million net benefit from a one-time legal settlement.

與去年第二季的 1.187 億美元相比，合併 SG&A 美元減少了 940 萬美元，即 7.9%，至 1.093 億美元，這反映了第一季採取的成本管理行動。 SG&A 利潤率佔淨銷售額的百分比年增 620 個基點，達到 49.7%。這項成長主要是由於固定成本的去槓桿化，以及2023 財年第二季銷售額的下降。此外，去年第二季的銷售、一般行政費用(SG&A) 支出包括一次性法律和解帶來的260萬美元淨收益。

During the quarter, we completed impairment tests of goodwill and indefinite-lived intangible assets, and concluded there was a total non-cash impairment of goodwill and the TCS reporting unit and the amount of $23.4 million. Our net interest expense in the second quarter of fiscal 2023 increased to $5.2 million compared to $3.8 million last year. The year-over-year increase is primarily due to a higher interest rate on our term loan, and to a lesser extent, higher borrowings on the revolving credit facility during the quarter.

本季度，我們完成了商譽和無限期無形資產的減損測試，得出的結論是商譽和 TCS 報告單位的非現金減損總額為 2,340 萬美元。 2023 財年第二季我們的淨利息支出從去年的 380 萬美元增加至 520 萬美元。年比成長主要是由於我們的定期貸款利率上升，以及在較小程度上由於本季度循環信貸便利的借款增加。

The effective tax rate for the quarter was negative 2.6% compared to 25.9% in the second quarter last year. The decrease in the effective tax rate was primarily related to the impact of discrete items on a pretax loss in the second quarter of fiscal 2023, as compared to pretax income in the second quarter of fiscal 2022.

本季的有效稅率為負2.6%，而去年第二季的有效稅率為25.9%。有效稅率的下降主要與離散項目對 2023 財年第二季稅前虧損（與 2022 財年第二季稅前所得相比）的影響有關。

Net loss for the quarter on a GAAP basis, inclusive of the $23.4 million noncash goodwill impairment charge, was $23.7 million or $0.48 per share, as compared to a GAAP net income of $15.7 million or $0.31 per diluted share in the second quarter of last year.

以GAAP 計算，本季淨虧損為2,370 萬美元，即每股0.48 美元，其中包括2,340 萬美元的非現金商譽減損費用，而去年第二季的GAAP 淨利為1,570 萬美元，即稀釋後每股收益0.31 美元。

Adjusted net income was $365,000 or $0.01 per share as compared to last year's adjusted net income of $13.8 million or $0.27 per diluted share. Our adjusted EBITDA decreased to $17 million in the second quarter of this year, compared to $35.9 million in Q2 last year.

調整後淨利潤為 365,000 美元，即每股 0.01 美元，而去年調整後淨利潤為 1,380 萬美元，即稀釋後每股 0.27 美元。今年第二季度，我們調整後的 EBITDA 下降至 1,700 萬美元，而去年第二季為 3,590 萬美元。

Turning to our balance sheet, we ended the quarter with $10.2 million in cash, $173.2 million in total debt and total liquidity, including availability on our revolving credit facilities of $104.3 million. Our current leverage ratio is 2.3 times.

談到我們的資產負債表，本季末我們的現金為 1,020 萬美元，債務總額和流動資金總額為 1.732 億美元，其中包括可用的循環信貸額度 1.043 億美元。我們目前的槓桿率為2.3倍。

We ended the quarter with consolidated inventory down 8.8% compared to the second quarter last year. The decline is primarily the result of lower freight costs and inventory year over year. Capital expenditures were $22 million in the first half of fiscal 2023 versus $32 million in the first half of fiscal 2022, which reflects the planned pullback in capital spending in fiscal 2023.

本季結束時，我們的綜合庫存比去年第二季下降了 8.8%。下降的主要原因是貨運成本和庫存年減。 2023 財年上半年的資本支出為 2,200 萬美元，而 2022 財年上半年為 3,200 萬美元，這反映了 2023 財年資本支出計畫的縮減。

We are continuing to invest primarily in our stores and technology. Free cash flow in the first half of this year was a use of $1.3 million versus a use of $5.3 million in the first half of last year.

我們將繼續主要投資於我們的商店和技術。今年上半年的自由現金流使用量為 130 萬美元，去年上半年的使用量為 530 萬美元。

Now for our outlook. As Satish alluded to, we have updated our outlook to reflect certain items impacting the top and bottom line that I will discuss. While the macro backdrop remains tough, we continue to be extremely disciplined, investing in inventory, planning our campaigns, managing our expenses, and allocating our capital, while simultaneously making prudent investments in alignment with our strategic initiatives and longer-term growth plans.

現在談談我們的展望。正如薩蒂什所提到的，我們更新了我們的前景，以反映影響我將討論的收入和利潤的某些項目。儘管宏觀背景依然嚴峻，但我們繼續保持嚴格的紀律，投資庫存、規劃行銷活動、管理開支和分配資本，同時根據我們的策略舉措和長期成長計劃進行審慎投資。

For the third quarter of fiscal 2023, we expect consolidated net sales to be approximately $220 million to $225 million, driven primarily by a comparable store sales decline of mid to low teens. The expected decline in comparable store sales is reflective of a pullback in our core and value oriented products in the third quarter, compared to our previous outlook.

對於 2023 財年第三季度，我們預計合併淨銷售額約為 2.2 億至 2.25 億美元，這主要是由於可比商店銷售額下降了中低十幾歲。與我們先前的預期相比，可比商店銷售額的預期下降反映了我們第三季核心和價值導向產品的回落。

The expected consolidated revenue declines are inclusive of continued Elfa third party headwinds, which we expect to be more than offset by new store sales. We expect adjusted net loss per share in the third quarter to be in the range of $0.08 to $0.04.

預期的綜合收入下降包括埃爾法第三方持續的不利因素，我們預計新店銷售將足以抵消這種不利因素。我們預計第三季調整後每股淨虧損將在 0.08 美元至 0.04 美元之間。

The implied year-over-year operating margin decline for the third quarter is expected to be more than entirely driven by SG&A, primarily due to fixed cost deleverage on lower sales. Our SG&A spend expectations for the third quarter have increased from our previous outlook, and include incremental investments in primarily store payroll, pay increases, and marketing.

預計第三季隱含的年比營業利潤率下降將不僅僅是由銷售、管理及行政費用（SG&A）驅動，主要是由於銷售額下降導致的固定成本去槓桿化。我們對第三季的銷售、一般行政費用 (SG&A) 支出預期較先前的預期有所提高，其中包括主要商店薪資、加薪和行銷方面的增量投資。

From our gross margin perspective, freight is still expected to be a tailwind to gross margin in the third quarter in comparison to last year, partially offset by unfavorability within our general merchandise product mix. Our outlook reflects our expectation that we will continue to drive increased sales, from our new general merchandise product, while also seeing greater pressure on our higher-margin, core general merchandise products.

從我們的毛利率角度來看，與去年相比，貨運預計仍將是第三季毛利率的推動因素，但部分被我們的一般商品產品組合中的不利因素所抵銷。我們的前景反映了我們的預期，我們將繼續透過新的百貨產品推動銷售成長，同時我們的利潤率較高的核心百貨產品也面臨更大的壓力。

Interest expense for the third quarter is expected to be approximately $5.3 million, driven primarily by higher interest rates. We expect income tax expense in the range of $2 million to $2.5 million, primarily driven by discrete tax items in the third quarter. This discrete tax expense is primarily related to the expiration of certain stock options granted in connection with our initial public offering in 2013. As a result of these discrete items, our effective tax rate is expected to be in the range of negative 50% to negative 145%.

第三季的利息支出預計約為 530 萬美元，主要是由於利率上升。我們預計所得稅費用在 200 萬至 250 萬美元之間，主要由第三季的離散稅項推動。這項離散稅費主要與我們 2013 年首次公開募股所授予的某些股票選擇權到期有關。由於這些離散項目，我們的有效稅率預計將在負 50% 至負數的範圍內145%。

With respect to fiscal 2023, our press release outlines our current versus prior outlook, the key changes are as follows. We now expect consolidated net sales in the range of $870 million to $885 million or $5 million lower than our previous outlook.

關於 2023 財年，我們的新聞稿概述了我們目前與先前的展望，主要變化如下。我們現在預計合併淨銷售額將在 8.7 億美元至 8.85 億美元之間，比我們之前的預期低 500 萬美元。

We continue to expect less significant declines in comparable store sales, in the second half of the fiscal year, driven by our planned cadence of new product introductions and campaigns, and the easier comp comparisons from the prior year. Implied low to high teens fourth quarter comparable store sales declines are primarily related to our planned custom space campaign Cadence in fiscal 2023 compared to last year.

我們仍然預計，在本財年下半年，由於我們計劃的新產品推出和活動節奏以及與上一年相比更容易進行比較，可比商店銷售額的下降幅度不會那麼大。與去年相比，第四季可比商店銷售額從低到高的隱含下降主要與我們計劃在 2023 財年開展的客製化空間活動 Cadence 有關。

We believe there could be more Elfa product sales headwinds in the fourth quarter in comparison to the third quarter, due to the pull forward of our Elfa product line sales during the fiscal year. Elfa is planned to be on promotion one more time in fiscal 2023 as compared to fiscal 2022.

我們認為，由於本財年埃爾法產品線銷售的提前，第四季度埃爾法產品銷售的阻力可能會比第三季度更大。 Elfa計劃在2023財年比2022財年再進行一次促銷。

We have reduced our gross margin projection by about 100 basis points for the fiscal year. Embedded in our updated gross margin projection, we believe freight will continue to be a tailwind to gross margin in fiscal '23, partially offset by increased promotional activity and mix dynamics within the general merchandise category.

我們已將本財年的毛利率預測下調了約 100 個基點。在我們更新的毛利率預測中，我們認為貨運將繼續成為 23 財年毛利率的推動力，但部分被普通商品類別內促銷活動和組合動態的增加所抵消。

We are seeing lower than expected sales of our higher-margin core, and more value oriented general merchandise products, while our new premium general merchandise product, which is lower margin, has performed and is expected to perform better than originally expected. Our outlook, therefore, assumes a gross profit range of $504 million to $513 million.

我們看到利潤率較高的核心產品和更注重價值的百貨產品的銷售額低於預期，而利潤率較低的新優質百貨產品的表現已經並且預計會比最初預期的表現更好。因此，我們的展望假設毛利範圍為 5.04 億美元至 5.13 億美元。

We have revised our expectation for SG&A savings to approximately $37 million for the year versus the previously planned $45 million. The change in our savings estimate is primarily related to incremental investment in store payroll, and pay increases for eligible employees.

我們已將今年 SG&A 節省預期調整為約 3700 萬美元，而先前計劃為 4500 萬美元。我們的節省估算的變化主要與商店工資的增量投資以及符合條件的員工的加薪有關。

We believe this incremental investment is important to maintain superior customer service levels, and to recognize our team for the lifeblood of our culture and operations. We've also made additional investments in marketing, to support our custom space business, and further awareness of new product introductions.

我們相信，這種增量投資對於維持卓越的客戶服務水準以及認可我們的團隊是我們文化和營運的命脈非常重要。我們還在行銷方面進行了額外投資，以支持我們的客製化空間業務，並進一步提高對新產品推出的認識。

We now expect to reduce overall SG&A expense by approximately $17 million in the second half of the fiscal year compared to the second half of fiscal 2022, with the fourth quarter total dollar savings contributing almost two thirds of the anticipated decline. Our outlook assumes operating margins of approximately negative 2% to negative 1%.

我們現在預計，與2022 財年下半年相比，本財年下半年的整體銷售、管理及行政費用將減少約1,700 萬美元，其中第四季的美元節省總額幾乎佔預期下降的三分之二。我們的前景假設營業利潤率約為負 2% 至負 1%。

We're operating loss of $20 million to $13 million, inclusive of the $23.4 million noncash goodwill impairment charge in Q2, that was not reflected in our prior outlook. Interest expense for fiscal 2023 is expected to be approximately $20.5 million, driven by higher interest rates.

我們的營運虧損為 2,000 萬至 1,300 萬美元，其中包括第二季 2,340 萬美元的非現金商譽減損費用，這在我們先前的展望中並未反映出來。由於利率上升，2023 財年的利息支出預計約為 2,050 萬美元。

Our effective tax rate is expected to be in the range of 0% to negative 4%, due to the previously mentioned discrete income tax expense of approximately $2.8 million, expected to be recorded primarily in the third quarter of fiscal 2023. We expect net GAAP loss per share in fiscal 2023 to be in the range of $0.82 to $0.7.

由於前面提到的約 280 萬美元的離散所得稅費用預計將主要在 2023 財年第三季記錄，我們的有效稅率預計將在 0% 至負 4% 的範圍內。我們預計淨 GAAP 2023 財年每股虧損將在0.82 美元至0.7 美元之間。

After adjusting for the 23.4 million noncash goodwill impairment charge, that 2.5 million of severance expense incurred during the first quarter, and a $2.8 million discrete income tax expense, we expect adjusted net loss per diluted share to be in the range of 0.24 to $0.13.

在調整2,340 萬美元的非現金商譽減損費用、第一季產生的250 萬美元的遣散費以及280 萬美元的離散所得稅費用後，我們預計調整後每股攤薄淨虧損將在0.24 至0.13 美元之間。

Capital expenditures are still expected to be approximately $45 million to $50 million. And with this outlook, we now aim to be free cash flow neutral to slightly positive in fiscal 2023. Almost half of our planned capital expenditures are related to new stores, planned to be opened in fiscal 2023 or in fiscal 2024.

資本支出預計仍約 4,500 萬至 5,000 萬美元。考慮到這一前景，我們現在的目標是在 2023 財年實現自由現金流中性至小幅正值。我們計劃的資本支出中近一半與計劃在 2023 財年或 2024 財年開設的新店有關。

As a result of construction delays at our my planned Miami, Florida small-format store location, we are now planning to open five new stores in fiscal 2023 and four new stores in fiscal 2024. The remaining capital is related to investment in commerce, technology infrastructure, and software projects, and to a lesser extent, maintenance.

由於我計劃的佛羅裡達州邁阿密小型商店地點的建設延誤，我們現在計劃在 2023 財年開設 5 家新店，在 2024 財年開設 4 家新店。剩餘資金用於商業、技術投資基礎設施和軟體項目，以及較小程度的維護。

This concludes our prepared remarks. I'll now turn it over to the operator to begin the Q&A session.

我們準備好的演講到此結束。我現在將其移交給操作員以開始問答環節。

Thank you. (Operator Instructions)

謝謝。 （操作員說明）

Kate McShane, Goldman Sachs.

凱特麥克肖恩，高盛。

Hi. This is Emily Ghosh on for Kate. We were wondering if you could provide more detail on your expectations for promotions around holiday, how this might compare to last year, and then promotional activity so far this year? Thank you.

你好。我是艾米莉·戈什 (Emily Ghosh) 為凱特代言。我們想知道您是否可以提供更多詳細信息，說明您對假期前後促銷活動的期望，與去年相比如何，以及今年迄今為止的促銷活動？謝謝。

Hi, yes, thank you for the question.

你好，是的，謝謝你的提問。

We obviously learned a lot during our Q1 quarter around how to think about our promotions, and clearly demonstrate our ability to manage our promotional levers in Q2, delivering sales and adjusted EPS above the high end of our expectations.

顯然，我們在第一季學到了很多關於如何考慮促銷活動的知識，並清楚地展示了我們在第二季度管理促銷槓桿的能力，實現了銷售額和調整後每股收益高於我們預期的上限。

So similarly, as we think about the back half and into holiday, we'll be looking at our promotional Cadence with a level of scrutiny, just like we did in Q2. And we don't anticipate there being a significant change, relative to [outlive] other the fact that we do have our normal Elfa promotion, and that we have every year.

同樣，當我們考慮下半年和假期時，我們將仔細審視我們的促銷節奏，就像我們在第二季度所做的那樣。我們預計不會發生重大變化，相對於我們確實有正常的埃爾法促銷活動，而且我們每年都有的事實而言。

Thank you.

謝謝。

(Operator Instructions)

（操作員說明）

Thank you. Ladies and gentlemen, we have reached the end of our question and answer session. With that this will conclude today's teleconference. You may now disconnect your lines at this time. Thank you for your participation.

謝謝。女士們先生們，我們的問答環節已經結束。今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與。