Kohl's (KSS) 1 Mar 232022 Q4 Earnings call transcript

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kohl’s Corporation Q4 2022 Earnings Conference Call. Today’s conference is being recorded. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers’ the will question-and-answer be After like time, the Senior [Operator IR. this would Vice to of Rupe, Instructions] At Mark I turn to conference President over ahead. go Please

not including statements Kohl’s are terminology materially on Company’s forward-looking quarter in report of Certain are subject intends those should, anticipates, statements. plans initiatives, similar Form statements. statements Private as forward-looking believes, of forward-looking uncertainties, such the Such are Such results Act first identify quarterly limited Securities Item could on the ‘XX forward-looking results supplemented you. Thank statements XX-K the risks to, Company’s expressly filings Item recent of annual in projected other certain Litigation in expects, report future Kohl’s will, and SEC, may, described this Kohl’s for call, be incorporated such which on Reform and projected most time Form X of with all made to XA and the expressions meaning and are that reference. Part the which within or and as may XX-Q to financial uncertainties by of Kohl’s XA are from risks but time include, actual to in cause XXXX. to the of herein those fiscal differ from

Kohl’s to undertakes Forward-looking statements them. obligation and the no made, to relate initially date update

presentation website. an and on to to reconcile financial that non-GAAP be be filed Company’s these is X-K found recorded. the call will In can note addition, call, SEC make filed Investor exhibit the the Information measures. financial during this as to Relations this necessary available Form will investor Please non-GAAP our with we measures reference in

this call updated. of be will not However, replays

information to that and if you’re information. is call, update no Kohl’s undertakes obligation a no the listening replay to current, this is such discussed possible of it So, longer

CEO, our CFO. and turn Kingsbury, over will Tom now call are morning this the I our Jill me With Timm, Tom. to

for all us Thank joining morning. this you, to Mark. Thanks

start Kohl’s time. want is that saying excited I’m pivotal company. a this be solid leading I Kohl’s to by to during

a make to in opportunity have a the retail landscape. We substantial difference

foundation we will a priorities you and hear earnings a today, drive motivated solid with have Kohl’s a to set team highly and growth. of As sales

to had the I During in and past the processes with operational have to of our across stores organizational engaged I three number our relevant important structure. clear that months, market go-to-market opportunity conveniently have need a of strategies, customers country assess across offering in the online. and stores an visited to great and millions our the a our many also capabilities our is partners. Kohl’s fields of brand located in U.S. me highly It products the at value

Sephora great partnership. our beauty making are through in strides We

However, we categories. ground have we I know lost can Candidly, key in do better. other some

reach sharpen To merchandise opportunities and allow efficiency. across with strategy drive on our our new will positioning the to refine capitalize our us This and reestablish focus customers, full customer a disciplines organization. will center potential, greater we with

have efforts Our begun. already

seek measures percent we forward. the proactive of going mid-single inventory to the and fourth number a in took digits quarter to down our We will inventories, by planning clear discipline maintain

in several will to efficiently. more QX initiatives organization growth begin benefit structure results implemented also in the We run that our and to XXXX

report as our This to to that strategy. I late prior transitioning, the messages which we early consolidating be we time of we we simplify and as the In included on driving January, to X, spent and efficiency, general for me. greater pandemic had of in in turn our was directly shared parts drive merchandising the of to with the driving of to managers realigned number marketing merchandise allocation will that executing a to work objective efficiency One how departments leadership from well operations. allow must team X with structure planning the and our

pleased And Dave President other hiring Chief network, more retail as lead among center stores, the estate of Dave including am is supply leadership our positions. recently, we of functions. Officer. Yesterday, and our I operations and appointment Alves a Operating and our executive nearly with new two XX-year enterprise global veteran announced real will the distribution key portfolio, X,XXX chain

In many I our and apparel, and functions. and join will Nick look Nick us instrumental the and to as forward be categories, new including Both Merchandising Digital appointed Chief across has great Nick home coming gifting of merchandising leading addition, Dave Jones and Officer. we will our in strategy our in and our experience weeks, partnership.

the actions, important to right have in the consistent organizational confident plans, sales place term. earnings am performance these team and I improved over we drive and that long more structure Through

we full I The expectations. said, be actions must implementing these we That that happen to of challenging backdrop. won’t time. It macroeconomic in want in impact And will setting take realistic acknowledge a overnight. efforts are some our

As against for Jill prudent discuss more will detail, actions XXXX. backdrop of the form our our guidance basis in this

will discuss the our will that to action. context, guide I path priorities that forward our now key With and improve performance

manage with sheet. We strategies, our balance are customer these strengthen priorities that in four across discipline focused execution will overall unlock and long-term on Successful accelerate sales and and value the the They XXXX simplify experience, shareholder expenses value. profitability. overarching are: inventory considerable drive will priorities enhance and

are the me Let towards. priorities intended discussing you we and these through driving outcomes walk actions of each

stores shop experience. that to The and It at our customer the for first provide continue is enhancing we when best experience priority is the online. our imperative customers they

product ensuring way the the shop. on they to focused they tailored are for finding are customers looking are assortment that We our

experience. at excellent of year, the X years are purchase as the continue example presence. how we we grow enhancing in store this beauty with is Nearly partnership coming of and expand Our customers customer Sephora million last our Kohl’s Sephora an further at to will products our

We that in Sephora and XXXX high-single-digits XX%. sales in total sales shops XXXX. the better-than-expected percent in opened increased comparable the in XXX growth beauty sales achieved In opened fourth shops XXX beauty our the quarter,

also continue We see sales digital to strong growth.

in major as in on years our want category. industry market through the commend capitalizing gift ways a merchandise and fragrance confident successfully performance value on sets, and We on our in that key holiday momentum QX the in to I beauty to am expansion cemented drove a for notable player build Our I gains. shop both months period. selling the our share team aisle in the we with positioning can the many being come. and based this

and in accomplished in short partnership is can immense sales I to two, opportunities period; recently met we such has I what that, both we pleased continue we’ve both what And and future. been a built and Sephora you the with are tell one, drive profitability with leadership. see to the

summer, This total space. our open foot XXX than shops, another to more stores, XXX Sephora square X,XXX we’ll featuring standard bringing the

we of formats the by to by end Sephora to of year out opening the roll are addition, smaller chain a shops with XX this plan XXXX. In the remainder

beauty. beyond Moving

me Let underway in product efforts touch have merchandising. our and on we now

by lifestyles. it product focus we’ll relates to our recenter we our on the multiple brands, customers’ to our supporting As assortment, our active needs capitalizing key remain on committed business though highly

return to their rebalance our portions wardrobes. our more normal capture of will behavior purchasing to We customers’ assortment for

expanding including, career casual across year’s dress offerings and further more add we’ll example, for success. wear, women’s our business Additionally, last following

recognizing customers Home offerings Kohl’s other areas we our in how are broaden I us. a more our and opportunities assortment, into source and gifting tangible clear are our we the in see also home increase gifting. that we its areas increase To values, which going and great by are two rethinking that categories capitalize underpenetrated. penetration destination portions from like can domestic we our become regularly. expect for of in on We believe marketplace can find this, décor speed

to of the our want highlight now importance I stores.

that strong sales to nearly We of incredibly physical customers. across reviewing have team job the are continue estate we and can. U.S. driving Frankly in our very have comfortable our important I with to to am confident though, an I healthy. and productivity, we real we They have remain a portfolio in-store do engage our annual with that greater are better XX% and our how worked of our stores presence represent critically

of some quarter, our efforts early to fruit. fourth bear the In began

how for deliver wallet. and more greater to are customers their drive of frequency visits ahead, to Looking capture experience rethinking stores merchandise better we share a of we

share up to traffic. the early year. weren’t that a examples front significantly In standard. highly of few the taking proved in in This sell-through me peak of prior simply moved than December, holiday Let areas actions our the from capitalize effective, we back we to on early are the higher to better resulting store assortment gifting

untapped opportunity as We front a our of Kohl’s. more products, impulse customers products, the largely is and home gifting, will also store inspire to the which well including feature more showcase as for near

represents addition digital over initiatives highly to and Network. Kohl’s committed we sales. Kohl’s our Marketplace include and is online Kohl’s stores, and growth Marketplace to advertising and which digital digital brands traffic XX% site to our also of to of is capture Media our incremental of product Media Two with opportunities our capture broadening In partner expanding are our key business, platform Kohl’s sales dollars. key offering our leveraging our Network more more

customers. consistently have The must we our ever the be and needs customer a we just retail underway enhance focus of lot is of you This the to industry meets and that As our experience. ours. a initiatives of continuous positioning will heard, evolving, actions ensure

messaging. me second program times simplifying priority, Cash, our strategies. stands inflationary to pricing to important our and we compared is That great Kohl’s when our our in be our Kohl’s both Kohl’s rewards that transition disadvantage which a our know our in that let our and very environment, through Card. at strategy strategies. loyalty accelerating Now, value, promotional it value price-focused to value today’s In competitors’ our is and provide We customers to Kohl’s can said, for

in promotional efforts. progress and made years our couple the of have pricing over We past optimization

to our We XXXX, promotions. in accelerating general reliance this progress will on build our efforts reduce on

with flexibility. We with fully with this appropriately marketing great of part in the to small customer will pricing drive a messaging A we’ll everyday pricing and approach engagement and our increased years. the less will value consistency improve this percentage and subsequent our if complex. product experience, enhance of sensitivities assortment We pricing measure customer grow make it customers, and test around in recognize our successful, our

evident is the do This clarity have related When and we experienced recent we stand greater for customers effort. response with in customer clearance to in our our value, respond. weeks something

XXXX, credit are label younger our card, customers industry-leading customers a Another We launch so want private value strong In of will co-brand with opportunities reach loyalty program. our the a is of options. card way have greater the through today’s we already payment their Kohl’s flexibility providing that through enhance we’ll credit broaden the we recognize Capital One. our in

inventory managing is me expenses Let which and our to for now third priority with turn discipline. XXXX,

mentioned earlier, up progression past I during inventory few proactive As actions our at quarters. in now Inventory generally the to to the up was and goods. despite QX, XX% slow fourth end XXXX. clear XX% is the best Inventory quarter excess seen This out and the inventory a we took of compared environment. tougher selling is sales with year-over-year at end X% sales through performance year-end, at of when up QX just over back our line

We important the a impact moment, our Jill in by XXXX. Company following sales percent trend in quarter these in benefited performance sales with followed down X.X% more through with which actions improved QX best we up mid-single-digits the into for December January but positive took that down November QX the related of in to down discuss will position the a low-double-digits to in percent, continuing percent quarter. was markdowns Christmas, detail February. high-single-digit comparable it margin took

have a I establishing focused time of amount During months, inventory the spent past including stronger on significant processes. merchandising, three control

on are fresh putting on a turnover. and driving We spotlight receipts

better We flow. will plenty that receipt enabling so of have chase operate to room of receipts, we management

part this, mid-single-digits -- to we planning are inventory of plan percent committing going forward. down As

getting instead flow also We year, of end we our how until items on season. throughout even mark will of waiting more a of excess slow-selling goods, rid adjust the the a inventory or

we good feel even increase inventory January during February. arrived with to about processes flow still our that left and liquidity with able lots open receipts terms lot QX that a be inventory headwinds new macro inventory optimistic of will position of of our a of transitional In considering there chase. productivity and our we to efficiency. sales am XXXX, have QX, spring buy steady for to are And I control our through greater we room and

greater environment, wage has paramount priority ongoing expense me higher for an inflationary on management. SG&A sales, over let our it on Now, pressure. strategic strength the address the given increased sales of inflation. In core focus Growing lower expense time, investments XXXX, but been and be This ratio the must even to easing our Kohl’s a drifted expense organization. is

on increasing reducing However, efficiency fourth spend as opportunities our we strengthening marketing priority across sheet. such and improved our for in of other lastly, proactively our is areas driving XXXX And all capitalize must self-service stores, the capabilities balance company.

remains focus challenging balance our returning strength its XXXX. Our on after to a sheet historical

objective long-term business at Our X.X leverage. remains manage times to our

In and we replaced our which we and sales to liquidity growth. and move a taking actions uncertainty secured January, $X.X to are upsized and macro Kohl’s earnings the given flexibility. our the revolver facility, was enhanced the This billion ongoing right drive

our capital working of we XXXX the we increase utilized While quarter were February partially the bond our completed year, only recently will in the first retirement the fund end borrowings maturities. to and of at

revolver work more down the discuss capital allocation healthy throughout will balance represents dividend, other at price. the no current which year-end. to year including our at will with priorities in the we share our Jill a planned our However, commitment borrowings detail, yield

enhancing for aligned XXXX. them. customer against discipline with expense and accelerating and of strengthening the four on broader is to inventory priorities value strategies, the sheet managing executing balance And So simplifying are Kohl’s and overarching each experience, our the organization and focused summarize,

we just the demand about XXXX discussed actions the anticipated consumer Now, how context the soft well I let as frame of outlook. thinking are priorities as me up in and

largely margin result. X% with want I as earnings and in setting to are be to planning We year realistic a prudently down operating pressured and expectations. the our sales X%

will take The benefits actions time. our from

term. I am earnings successful priorities and our produce However, will against that confident in long intended over improvement execution sales the the growth

on the transitional be our viewed to our a calls. it objective through XXXX year, forward look priorities providing year. we show is move as against quarterly We While future actions updates may and progressive to as improvement

in lead I associates want In who loyal I unlock and to every place. Kohl’s serving excited opportunity immense has that am closing, reiterate to to solid our company to a want I see foundation day. are value. this customers our thank

and to I to call turn now our will quarter the fourth outlook. discuss XXXX Jill? Jill over results

Thank morning, Tom, and good you, everyone.

outlook XXXX by pressured fourth inflationary position sales results for key quarter the we then QX our that our review meaningful to our will better I the and guidance XXXX, business measures performance takeaways and that discuss our environment. for and took persistent from remained proactive the

traffic were Net lower with another. down X%, units ticket driven by offsetting higher average per and reduced sales largely one transaction

value-oriented Our middle income brands. customers remain pressured and continued to lean into private our

quarter as As improved clearance Tom February. the were to late especially this transitioned indicated, our in trends and and January, strong continued we throughout December into sales a and focus

XX% accounted and more perspective, year were quarter Digital year. From of open The largely down last stores. to quarter sales. demand occurred sequentially performance last improved improved a XX% shops Sephora for the channel in driven sales and to and the sales X% throughout in by having store was were elevated late clearance down that

our From many our strong & Gear relatively private were in Croft brands, of flat with a performance Tek product including Lauren Conrad. brands private Sonoma, in perspective, the sales quarter and top Barrow, of

due of performance. percent, best-performing to down Sales our of business, were home high-single-digit line and to weaker Accessories was denim brands year. national our up active mid-single-digits last percent mostly

associated room in which, jewelry growth with lower driven for was displacement to by fine reminder, jewelry counter in-store by a is sales sales of shops. Strong largely as offset beauty the partially make removing Sephora

lost a category. in opportunity for job an this solving have We do to better the sales

the men’s, in it outdoor. results men’s women’s dress, some our men’s saw we Company to and apparel relates and In young tailored categories, average. of outperformed As other solid

sequential demand While from intimates. improvement women’s higher wear and in a and casual dress elevated for benefited

women’s, be children the was headwind active continued of challenged lines within Juniors across the and business. Home, all footwear to average. and a underperformed Company

quarter. which credit loss a business, business overall pressured Other fourth by XX% our and continues is rates. revenue, of receivable credit to normalizing declined primarily the in lower be accounts our Performance balances

of cost and XX%, rest approximately the basis turn last approximately of two from driven me margin points statement. to of was gross items: product inflation XX.X%. primarily The QX decline basis XXX points. year’s clearance let XXX Now markdowns the down income was by

expenses shrink also higher-than-expected headwinds freight saw quarter. from the in We higher and

loss lease technology last Net reduced quarter spend. for $X.X mostly expense $X marketing the by amendments per revolver million borrowings. were million and Interest of million SG&A due of expenses to capital wage $XX distribution was store to Sephora the increased offset expense headwinds declined million was billion, lower in expenses related was $XX X.X% and than due by Depreciation quarter. loss was share spending $X.XX. year driven $XXX million across $XXX higher than higher year last reduced to and

the cash to flow. Turning sheet balance and

quarter-end against the is of XXXX, to compared same last the at decline which period. sales over in fourth generally line X% XX% inventory declined the increased year, Our yet with quarter

Tom forward. to $XXX year was fourth million plan down $XXX we Capital million. As Operating for Difficulty] the quarter mid-single committing indicated, flow going were the in and were are quarter. inventory [Technical for digits expenditures the percent cash

As small XXX XXXX and an a XXX refreshes X new one well in primarily In XXXX, by store stores, reminder, which and Sephora million, CapEx we XX is including stores the invest as as to million format refreshes relocations. shops, $XXX store new a relocation. additional $XXX X X openings, driven was openings, planning Sephora are of Sephora to

that leverage of manage our and provide our me longer-term X.X structure important It update an let in times. priorities our top remains Now, balance capital we and it at sheet a allocation cash XXXX. to of on our this business rebuild target position capital is one priorities. our Strengthening is goal

progress move will XXXX. leverage cash both make and on we through We as

anticipated bond the fund it work first no $XXX at to year-end. down quarter, the and borrowings working year revolver retirement the million capital We sequentially in through will both, utilizing we’ll with be and

we bonds also $XXX the retirement, will of XXXX. February addition bond million retire in In to December of

prioritize for it shareholders. a to capital yield continue current As which to relates returning our will we shareholders, represents our to healthy dividend,

quarter, million the in dividends to paid shareholders. $XX per we fourth share During or $X.XX

addition, shareholders share cash activity our on March any per we In not our Board quarterly previously as $X.XX on are additional XXth. as February dividend disclosed, as of earnings until is call, QX it strengthened. stated XXst, a to declared the planning repurchases, we share repurchase sheet payable to balance And on relates

provide me let for our Now, outlook details on XXXX.

priorities and prudent key on a supports sales we on As the today, improved the performance. drive upcoming you’ve macroeconomic stance are still with This, heard challenging environment year. four focused highly to planning coupled earnings

As of that expectations actions, establish actions Tom indicated, build us allowing the it on the important realistic is the have we we to appropriate, if performance our given take flexibility through to our progress underway, and year. additional

EPS the we approximately X% excluding any $X.XX, sales year, percentage For and includes XXrd margin to point versus to be X full net growth, is currently be in X% to to charges. the X% nonrecurring and to $X.XX of range week, which approximately worth decrease the XXXX expect of operating

details. Let me share some additional guidance

our We are XXXX. other net down to planning revenue line in sales overall with in be

D&A XX%. interest of million, our expect $XXX to tax rate be approximately We to and be million approximately expense $XXX

of with the from XXXX to margin and XX.X% a tailwind gross XX% is product to the expense a expect first Freight And in cost be perspective, we a in the and year. to remain stabilize progressive cost the benefits expect expected in to half inflation through margin year, be headwind and range. we

environment, we expect competitive. remain to relates promotional to the it it As

be headwind, dollars a benefits and by a expect Sephora We will to offset openings Wage SG&A more year. inflation from organization continue structure to efficient fewer deleverage this slightly.

the are items a how I to highlight couple about want we of year. Lastly, thinking about

seen quarter-to-date it guidance. our we trends to have As annual sales above relates QX,

lower driven has However, clearance a much elevated upside been that of margin. activity by this has

inventory, moderate. we work to trends we expect clearance through As the

both the and build our expect to We year. earnings through sales

be in with actions Our the year, the the cost guidance of half from fourth in year half the EPS will product assumes second well quarter. taken as compared of inventory benefiting freight that lower the as and as first inflation lapping last to easing

time. and Tom at are this that, your With to take I questions happy

We’ll go to Guggenheim Bob Securities. [Operator Instructions] at Drbul first

have. guess questions morning. two that Tom, I And Good Hi. welcome. I just

the can be opportunities about look the it? little that what Kohl’s guidance at for you for and that second be really would you more us, about do more, you When how And you one given to little the things now just question Jill. can Tom, at elaborate you some the expecting guidance and how as that more see Just first on The opportunities? elaborate is have the approached excites Thanks. think great. a you should you’ve play you how just a we really

of really things things I It’s nice has has a Kohl’s the think job I up, Kohl’s think already. I set a opportunities. solid done mean, to really in with business. company place a such as Sephora lot

will a big -- continue that’s a bringing in a It’s for opportunity think a diverse us. younger to consumer, be I consumer, different more consumer.

good. just very out We to We We all XXXX. a the that’s a big did inventory But of of discipline. we we inventory. think I have good ‘XX. that -- disciplines control need improve spike So, got obviously, the in have some ‘XX, in in the job

okay? in and lot need every all we that buy a more sells, be the agile of upfront than quarter and doing the of open better to It’s buy, we’re it can so what it to So, hope need terms those spend to to understand chase wants go to disciplines improve it to customer single after and business. having that. we So,

-- fourth We said. I the in already took and as quarter Jill both actions significant we

to also We opportunity we’re that’s We a want looking our store big operations. think at -- us. for

but of need flow We’re we tremendously, more We of working gifting that in feel did fourth the some and it very on that quarter, have product, did well. not upfront. to the changing we

for Valentine’s Day. continued we So, it

in Mother’s do We’re all going Day, the gift-giving to periods. true it

look Just working sidelines. to have different, the bit little on we’re store a

to to amount and and we But, have of stores more on, overall. digital want working our we’re stores obviously to our we in in the well have business in feel productivity to signs a what reducing the continue we just as modern graphics have higher grow want We’re store, that’s working as on overall.

think I I I reason think in a opportunities of and to see because is those general, The opportunities, in back can opportunities. those Kohl’s So see there’s we came advantage why I future. take that -- but of I lot the

guidance, in high what to we wanted inflation, I rising, then, appropriate interest given we our are cautious be the particularly know and to that as income impact plan the think we to our We a has our And we guide, is with rates did it’s look middle customer. Bob, year. took large to a environment, regards

So, outlined that times, as his are we of see have not a had script, certain us. we ahead well navigating in Tom them in we what the only lot in terms remarks change of but as in obviously of just

the year. we roll have more build throughout these the open. So, do Sephora expect sales to as stores going we’re to Particularly out, initiatives

the home build think freight gifting, We’re on gross throughout that year. well with the throughout seeing year the moderating. with going as to I we’ll as well margin, work more And build then that décor see really impulse, the

this seasonally. actually going back-to-school We’re taking then And we’re markdowns down, a to because year. to starting margin typically see will clearance timely our throughout going QX these costs start taken commodity more have And with to impact receipts. come we’ve the bigger

negative positive QX, much as marks in on up and that a in but You’ll timely, particularly perspective. move our them summer more see and we goods from a QX those take impact spring impact

QX started with more them stores have in that construction opening it we’re year, new Sephora you’ll earlier then the more And QX due QX to year costs shop the in SG&A, when XX and timing and in those year, QX shops. and then, stores. of associated see we just up and Last this with XXX the to we’ll expect our

from of how I So, make perspective. and guidance build work that’s would model kind a the work your

Gaby Bank. to at Deutsche next move We’ll Carbone

X% a is X% Kohl’s previously, so operating Tom, margin. to targeted long-term

I your what get FYXX. there? if in X% still you. time. Thank for goal to X% look confidence And wondering over to bridge X% to like that the guiding You’re was does

those few to get and not Jill. I’ll obviously Well, again. I’ll target X% confident still X% to in sales But our we’re to have. do Overall, lot levels minutes, with then we has that have the A we’re to rebuilding a changing. for talk

let there. changing at because can not we But it. feel long-term our Jill We’re about get guide I’ll we talk all

Yes.

X% mentioned, was exists low-single-digit that I you of beginning framework, Tom sales it think really that that X% gave with framework. we the a that to starts if And in you with still growth framework sales And as it growth. the was recall the today.

in that it I that we’re I to the confident So growth think today, mentioned, we as initiatives get takes going pattern. suggested, back do But to we’ve outlined time that to Tom feel like this.

things the So, we’re moving direction. in right

look we framework that a still at this as So, long-term exists.

things, XX% to we You go of around see continue going margin the end inventory about. our that the a XX.X%. think Tom it’s the spoke side guide strong at year this benefits, is particularly do low that, But into we’re of to to management

processes, better We’re this inventory control drive we’ll going to turn, have will better have reg selling.

higher do So, we that end get see that we to to can continue there.

on at a X.X always we expense Kohl’s. at know we’ve for expenses, focus from a had continues to This be focus We comp. us. strong discipline can very then leverage about And a

of self-service done centers. around see in for looking organizational going in you’re that particularly, stores, efficiencies We’re automation our lot optimization. distribution a the like to the But across We’ve business. automation, our

We’re to that to run rate places can marketing continue all as well. down bring we efficiencies, lean into looking SG&A at our

So and think getting overall, heard margin, I very you I, from in framework hopefully, op X%. X% term Tom back for to both we’re to the confident long

a And quick follow-up. just

a quarter, private your So which the encouraging. brands you for flat mentioned is

leveraging Just continuously private your curious as more you’re especially thinking consumers are brands seeking value. portfolio how ahead, moving about

Yes.

they’ve by in also Hilfiger our I several you quarters, leaned our value. this proprietary -- value this seeking But portfolio very is that the value. like because we’ve in to brands important them into brand new more think environment, of Eddie and brings seen and customer, and And said is Bauer great it obviously, Sephora some think, they’re it outdoor. seen performance Tommy for last that to the I out. we’ve And

income think quality course, items. trade-offs goes wallet value making is customer chain them product think And that’s them of can middle a discretionary sell sometimes those in good. across given So price and see you the we bringing a I And the the more stretched. where for think I being is they

brands So given portfolio private that brands that consumers national pivot to make I dual be the think constraints with of having well for the worked our able the to wallet their today. has on

So, based we’re more it, has mentioned, Tom on into lean what a taking we’ll chase that. in of advantage And much model. being again,

life, more vendors So bring using faster a really proprietary working Coast to have how suppliers those and as model can direct lot of well. on now that we doing through working to right on West we people by direct more or a brands -- and

think there’s that continue indicated. with discipline the that ways that brand So Tom feed us portfolio inventory you’ll into to doing I see and private

Yes.

that the that really think performance to part private -- in brands I But national of XXXX important going lot a time business. our our in the spend are of brands think we’re little I in goal improving well. But our both ‘XX. need to at level. as to perform both. private and brands do a We in is have a national We national stumbled brands bit the the high brands

to Baird. We’ll at go Mark next Altschwager

in you incremental I’m about categories do curious domestic primarily is investments if décor home within Is and teams an you to build see and interesting. well? merchandising buying as opportunity or apparel So, make muscle Tom, in And the strategy commentary organization. that or the on are marketplace your -- focused if other need utilizing to the that there gifting, in order

chase. with have pretty do in I that to to ample you can at be I’ve readily. work that looking all goods that. that place can really chasing categories we that always honest do the experienced There’s where in of another across right structure you. We’re product do place business, We before

sure that. from teams, do I that But have That’s that our prevent it’s have pursuit. the key. the But There’s We open we it. that thing that’s we spend. think could doing to managing us to structure really, mean, could that right us can have inventories, to we I in hurt the the that. nothing do board general, make the only that I across in buying right think, GMM

Thank you. follow-up quick A for Jill.

continued into clearance the It you any was quarter? very give that first like more the Just on with the fourth margin, quarter. gross large the guess, I early activity first quarter. specifically, sounds can color for headwind us obviously

the about So be how just that should to relative Thank we you. headwind the in here? thinking basis XXX year early points,

Yes.

think I throughout is year. the going That’s to we’re freight what moderating. is seeing happen

benefit with marks We’re into like The going selling we Obviously, lot indicated, the continuing took to clearance benefits product fourth our some is into get us had back-to-school. starting QX. quarter. I but to in the February, of cost a happened

it’s So punitive QX. not into as

clearance I to sell-throughs. timely markdowns just get relevant we’re looking that more is thing taking them when better the more think with much they’re the for

done And one QX. so be waited clearance QX. say I would We in typically because look QX we different till that will haven’t the quarter will

So, we’re to up. move those going

expect little more of don’t have because you’ll QX then we pressured will margin change, see a So into course, of QX, a year. offset to QX. And be of that and this that repeat

QX. benefit a So, large you’ll see into

Matthew at to We’ll go next JP Boss Morgan.

how existing view new picture, this And maybe we relative help at us opportunity level, -- customers about we how do from then as about the you’ve refining time your line opportunity what you the the reestablishing retail talked needed? to disciplines. to So Tom, needed customer and is think a for merchandise the experience? turnaround micro that larger about to think spend the Maybe past relative might strategy, be acquisition market share think about release in should

make -- Time happen to the should line, level we’ve got It But it’s really inventories we’ve made at and we’re XXXX, feel inventories things to a our far. lot already they so of while be. our our get -- doesn’t done overnight. really of traction. we’ve going it second overnight. gotten lot progress. -- but me. to we -- takes a it Obviously, a And a Excuse in the already first doesn’t happen business, planning any lot already appropriately. has for going But we’re quarter But for -- we it progress some as

It’s experience, be not a the right we even make Kohl’s of really So -- it’s my a it is going on people that place in it’s we’ve overnight. to not us understand we my in good need already things in to -- working things something are clear. total strategy, overhaul. it’s sure do to it, things want not a we overhaul. lot have company And company. direction. the something get make but to just But just previous some already while I can’t the very started doing, different it. you There a in that and than I an want so took previous But

I think there’s today. in a already place lot of things good

share, far places. I market as can we different As think we that can execute, many if share gain market from

Advisory Telsey Dana to Next Telsey Group. at

there, always effective? driving your What merchandise the where in omnichannel Jill, of a mix? expense Tom portion think expense headwinds freight Thank most margin they think the has and the And big do also, terms were in whatever And Kohl’s, chain? and how impact supply the about merchandise XXXX happening you is you to. of and you. ultimate framework As then of some you would see mix, been do of is be goal and what delivery active with that in of on

tell want. Well, let us what to we’re customer they going the

interest think in businesses, of that’s targets the our don’t I in of best overall. terms establishing I think customers,

is our time, customer we Right important, feel what is as really outdoor also to is like important feel for. active now, but well. that over will mix business looking So, we evolve the the

targets So we’re we the going But outdoor going presentations, to We’ve not have I’m into some general, of to already that. the in of done agile. to products. because set some be integrate

to we assortments the the -- we have have wants, set. targets customer We build to to relative what not what do

in fourth assortments repositioned and going Valentine’s us, what it’s store, see a more in telling impulse more quarter sell-throughs, will believe want the our product, we because front. is was it had product more and gifting in in forward, -- the did home the that’s customer in that on the already gifting well lot You something very I they based the

what wants, but we’re the just to -- So going that’s continue that’s do. following to and what customer

what I does omnichannel, to obviously, when come cost of terms In would is it ship. of that incremental say always an is, digital pressure

moderating, But will always past. penetration We obviously, we a it like headwind. mentioned, are an that as the cost, seeing that have increase of be a in there digital so for not of seeing, much we as we increase

opportunity heard there’s so, if think think you grow today, our productivity. I substantial to store we

headwinds a be something because we those won’t both grow And helps is can I as the so us And heard channels. growing of penetration that definitely some we’ve if think offset that that’s a about. much lot place

and the we bring such new that’s do just customers in our the whether how new and focus through as productivity initiatives drive stores, the categories presentation is that through changes, back focus into Sephora. to really through Our Tom mentioned has

in it we it’s past. I as quite but always headwind, the as predominant isn’t extra an think it as been So, see

we third through it we also a the we piece -- And products we’re think new out fulfillment I seeing of is put our they centers, those as of efficiency days customer. more more getting as more And with which to can lot centers. to are to course, continue customers the gets of us then, a our utilize to how -- get And it well. we efficient stores, our couple in continue of of

we’re manner. in that So do a able really to efficient

our stores a which delivery, role in harder. work even So makes to key continue our digital play inventory our actually

well. that can as that’s another So that about inventory utilize talk as lever we and inventory, turning we discipline

side kind on to look some past. cost grow help of at seen stores, a in -- I So, mitigate we’ve huge we us the the of the will headwinds of shipping have opportunity which

comes Our Cowen. Oliver from next TD at Chen question

differ? percentage bigger is the had a as about Regarding gross And as And particular, what been will [indiscernible] home the capturing outweigh as inventory we inflation inventory, and opportunity will the margin, what’s a terms on -- any those or apparel, and assume and would of what forecast Thank see on your very do question thoughts inflation, I you And about strategy, of on mix of factors. does what I margin an customer, there? has you include we picture thoughts the the return in retail? think love and think your fruit. younger women’s opportunity. as hypothesis your about would much. and traffic new as in see I think younger profile love unit the lower-hanging specifically terms opportunity do you And Jill, control average customer an this gifting, processes you

Jill consumer. bringing a in I’ll second the part, the So take bringing then Sephora Well, younger take I’ll having already of first is in piece let this. Sephora, and

we’re the cetera. younger One working of that ancillary make customers can other footwear, accessories, that the they products Sephora, et such coming buy is to buy women’s want also things apparel, women’s, women’s we that on to sure when women’s in as

really feel we that we’re started. So,

We have consumer. something that’s bringing in a younger

to other expand within to need it categories store. we the Now

before, just level what gifting. home mix to As tell of and us -- mentioned customer the not décor goes in far as we’re as mix I we’re the terms in what percent, Jill? be should going let the

an disciplines chase have terms the in think the really the we I perspective, think ourselves and some from just I letting And and inventory control processes of place in have model of ahead fundamental liquidity buys we and a not time. upfront, the making of like allocating has goods just need really all all Tom our core is mentioned instead to that reinstate,

marks the helps goods, can at the don’t take season. I to as way, because we the so It helps It sell-throughs. items. buying to margins think many chase this right you’re have the right them the you end of

quite discipline to go So And the get the the demand is core going organization. then where I to really reinstilled really into that just needs a honestly, that’s think liquidity is.

agile plants areas. So, moving at be then what to those bustle to giving beginning for open and the of on based in need we the buy even is that the consumer looking right though year, to through the

fundamental really So think that’s know, you I’ve been always focused, as inventory control. I on

organization. the So in brought has the new I that love Tom disciplines of... then terms to And

-- spend to second. going just excuse one We’re me,

want just to of spend directly beyond. control is terms because We’re and report going And of XXXX inventory to in is of time in me the have that to spend and to going that already -- going a accomplish area everything just we to we lot importance on inventory. we’re

Sorry Jill.

AURs a terms I saw people It same anything -- just you’re on No an or in think perspective, selling year the in problem. as buying our inflation I this spend. the lot discretionary wasn’t think a we are that things inflation, And isn’t deflation need. in from of AUR if of we

haven’t we the So expand able been on AUR. to really

bring you Our But higher has something in table. Sephora, with the the bringing been mix for in continually ups obviously, the of the all more ticket despite AUR the item. value. lens we’re of of goods downs we’ve growth And really It’s inflationary perform and it’s again, the to that a seen environment. us, that

higher had had Calvin products We’ve of brought Tommy like in items tickets. Hilfiger different and Klein

to going managing tickets bring through brands. sales be this And really because XX% national we’re then I a we think didn’t of are easy up. our very So, manner in

to ticketed well. the So seeing be what going then with we’ll are as we’re really brands and move across landscape those them based on

one we thing think of I take So, because things didn’t is inflation. up

take have down to So there’s things to of room perspective. lot a not my either from

And Okay. to can is And pretty the the and you’ll iconic complex. and journey less less at that? on more. on What’s Tom, which be been simplify has a Company on timing Cash pricing making amplify, execute Kohl’s one follow-up

think ideas So, what’s different be making And what might good about of to what around be needs of you guardrails kinds changes? these done? kind

very we do, thoughtful we’re appropriate the do at whatever to be pace. going and everything Well,

But It’s prices. some digits won’t overall. things percent mode back-to-school we’re it that the in of or to period, going One it test start single around then big we’re total, in it’s as be the at maybe product determine going from that it’s It’s and have doing, learn and going a to how big all. bring be to that everyday will we’re to low and small.

a lot lot just simplify of to a that. have going promotions and of of stuff that. We layering try like And we’re to

other because to on said, clearance We’re really to spending time. of clearance going clearance important. going But Kohl’s the to a at value off address to more equation We our not things. Jill We back want as we’re just which going to markdowns markdowns allocate monthly to is appropriate to inventories, we’re take focus component -- on the test going very we’re important overall. That’s want Cash. to

already a reviewed the look to first have promotions targeted well. in more promotions, lot a already as of which We’ve second could general we -- -- and opportunity. do, we quarter at pace. markdowns where our audience feel going out be have that now, we right general be lot going of we’re we’ve promotions, at that Right that. our We’re But targeting to of we going the more areas an figure but everything and spend to we certain where do it’s on to

take final at Paul question our Lejuez we’ll Citi. from And

Thank, for guys. Kogan It’s Tracy Paul. in filling

which you’re a billion it CapEx run this $X.X the your like just years? CapEx, but Just looks longer three rate wondering you’re and year, is no good that’s over if two understandable, expecting questions. On reducing

could how I you in us you traffic hoping update stores how Thanks. assess year you’re and And of the this the the you then Amazon do results as Returns doing driving partnership back converting overall? secondly, was on and Amazon look at

Sure.

our of CapEx, Tracy, for talked strategies one back obviously, core think the balance to I about we’ve being to strengthen sheet.

make focusing reduction the on in we did terms return year this So, really of projects. that

So, the adding pull stores that back areas to stores of course, from still those build that then hit given going to now to able all being invest those small more into to our we back XX have back of are solution just in our trying we Sephora meaningful Sephora cash. but a fact and a perspective, really

the obviously So we to assess be really over making we’re going we given But is needs to we’ll years. and be what this be difference return where hitting to the to math, that based probably next billion $X.X up next continue at just to CapEx not is won’t that what point. model. year of a But on this get year spent couple

I just this think thoughtful. whole going through as it’s be call, And to we’ve we’re really said term. long

but balance for investments a to that’s as need make from that for back because right So build strength position we growth our we’re going to the to business of time sheet going to well. some take also perspective,

many, one that drive And Amazon, we’re hopefully, I of to then, with. think in traffic is looking initiatives today, of heard you’ve Amazon terms

and Sephora to driven. the things all will décor, along So more have impulse home that gifting, see changes, customers it’s in impulse, with more even coming

then obviously So, whole replenishment of store and experience new to exploration. topic, and on customers more another to focused one key our just from store drive all to just being we’re terms drive ore really of Sephora traffic and items, into really going a is the be initiatives perspective, the newness, driving those to one in continue Amazon of

a key just is Amazon think total. in I So to that strategy

joining today. us for Thanks

conference today’s concludes this And call.

now disconnect. may You