Signet Jewelers (SIG) Q2 2022 Earnings Call Transcript

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Signet Jewelers (NYSE:SIG)

Q2 2022 Earnings Call

, 8:30 a.m. ET

Contents:

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Signet Jewelers second-quarter fiscal 2022 earnings call. [Operator instructions] Please note this event is being recorded. I’d now like to turn the conference over to Vinnie Sinisi, senior vice president, investor relations and treasury. Please go ahead, sir.

Vinnie Sinisi – Senior Vice President, Investor Relations and Treasury

Great. Thanks very much, Jason, and good morning, everyone. Welcome to our second quarter earnings conference call. On the call today are Signet’s CEO, Gina Drosos; and chief financial and strategy officer, Joan Hilson.

During today’s presentation, we’ll make certain forward-looking statements. Any statements that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. We urge you to read risk factors, cautionary language and other disclosure on our annual report on 10-K, quarterlies on 10-Q and current reports on Form 8-K. Except as required by law, we undertake no obligation to revise or publicly update forward-looking statements in light of new information or future events.

During the call, we will discuss certain non-GAAP financial measures. For further discussion of those as well as reconciliations of them to GAAP measures, investors should review the news release we posted on our site at signetjewelers.com/investors. And with that, I’ll turn the call over to Gina.

Gina Drosos – Chief Executive Officer

Thank you, Vinnie, and thanks to all of you on the call with us today. First, let me begin by sending our thoughts and prayers to our colleagues and partners who were in the wake of Ida. We hope you and your loved ones are all safe and sound. Now on the quarter.

Our performance this quarter reflects continued momentum in our Inspiring Brilliance transformation to maximize jewelry category strength and capture market share over the last year. Specifically, we are advancing and better integrating our banner value propositions, product newness, always on marketing and connected commerce experiences. Our team continues to accelerate our transformation and delight new and loyal customers through their passion, dedication and expanding capabilities and talents. Thank you to the Signet team.

It’s an honor to work alongside them. There are three key messages that I’d like to leave you with today. First, we outperformed expectations and are raising our fiscal ‘22 guidance. Data-driven insights and our bespoke research capabilities enabled our team to quickly identify and make the most of changing consumer trends.

Second, our Inspiring Brilliance strategies are working in an integrated manner. Our continued refinement of our banner value propositions are serving distinct customers with differentiated product assortments and experiences. Our Connected Commerce strategy is increasingly enabling more consumers to shop with us whenever, however and wherever they want. And third, we are continuing to strengthen our culture of innovation and agility.

And our team members are embracing new capabilities with excellence. By investing in our people and attracting the best talent across industries, our people and culture are becoming an even stronger competitive advantage. Now let me share some highlights from the second quarter. We delivered total sales of $1.8 billion this quarter.

That’s a same-store sales improvement of 97.4% compared to last year. We’re pleased with this performance but are also mindful that we didn’t meaningfully reopen our stores until about two-thirds of the way through the second quarter last year. A better indicator of our performance is the comparison to two years ago, when our fleet was fully operational. On that basis, this quarter represents same-store sales growth of 38.1%.

Total revenue was nearly $425 million higher than two years ago despite having roughly 450 fewer stores, a 16% reduction in store count. This performance points to the importance of both Connected Commerce and our store footprint optimization. As we continue to transform our operating model, we delivered non-GAAP operating margin of 12.5% this quarter, representing an 860 basis point improvement compared to this time two years ago. As a result of this strong momentum, our view of the back half is more positive than it was a few months ago, particularly for the third quarter.

We are seeing a delay in the anticipated shift of spending toward travel and experiences, which we believe is primarily related to the COVID Delta variant. While we continue to put the health and safety of both our employees and customers first, we don’t anticipate significant store closures in the back half of the fiscal year. These factors are why we’re raising our guidance today, reflecting second quarter outperformance and third quarter momentum while remaining cautious given potential macro headwinds. To explain our second-quarter performance, it’s important to point out how our Inspiring Brilliance strategies are enabling our team to stay agile and create competitive opportunities.

While category tailwinds existed in Q2, it was our differentiated assortments that resonated with customers, our Connected Commerce capabilities that increased conversion and our always on targeted marketing that all worked in combination to deliver strong growth this quarter. Recall that the Inspiring Brilliance phase of our transformation is built on four where-to-play strategies: winning in our biggest businesses, accelerating services, expanding accessible luxury and value and leading in digital commerce. As we aim to win in our big businesses, we focused on leaning into four consumer trends that our data identified early and our team worked to quickly execute against. The first of these trends is strong consumer confidence.

While this index took a step back in August, it was heightened throughout our second quarter and remains similar to levels earlier this year. Confidence is highest among millennials and higher-income customers. Our recent research also shows that 80% of U.S. consumers believe they are the same or better off economically today than they were before the pandemic.

We’ve responded by providing additions to our assortments that offer higher-quality pieces at higher price points. The second trend is gifting at higher price points as customers continue to celebrate those closest to them. We identified this trend early and leaned into it at Valentine’s Day and again at Mother’s Day. In the week leading up to Mother’s Day, we drove brick-and-mortar same-store sales growth of more than 30% to two years ago, with average transaction value up 18%.

Similarly, growth in eCommerce over the same time period was more than 90%, showing that our Connected Commerce experience is resonating, both in store and online. The third trend is higher self-purchasing among both women and men. Customers are seeking ways to express themselves by spending discretionary dollars on better quality pieces that both hold their value over time and reflect their personal style. A great example of our response to this trend is our new Serena line being launched this week at the U.S.

open and now available at sales. This new 60-piece collection is a testament to Serena’s self-love and strength and has been met with strong initial customer response. Another good example is our decision to expand the fashion assortment available through James Allen. While still a relatively small portion of its overall sales, James Allen’s second quarter fashion sales were up more than threefold to this time two years ago.

The fourth trend I’d like to highlight is the rising tide of engagements. Our research indicates 15% of committed couples or approximately 2.3 million couples plan to get engaged this calendar year, which is up high single digits to a typical prepandemic year. As a company, we have tremendous expertise in providing customers with education and counsel, both in store and online, which builds trust on such an important decision. Customers are responding as we saw total sales of our bridal category increased over $150 million or 25% this quarter to two years ago.

While our strategies are working together to respond to these trends, I think the continued refinement of our banner differentiation shines brightest here. Recall that while our banners are well positioned to serve any customer journey, each of them is best positioned to serve a specific one. For example, our data analytics on Kay shows that new customers are 700 basis points more likely to be on a milestone gifting and holiday or holiday purchase journey, aligning with Kay’s target of the generous sentimentalist. Meanwhile, Zales continues to refine their approach to attract the bold statement maker, and we can measure our progress.

Zales’ new customers in the first half of the year are 400 basis points more likely to be on a self-purchase journey than two years ago. One of the ways that we’ve driven this differentiation is through the continued refinement of our assortment. This includes engagement rings at Kay with the larger center stones and more fancy cuts, higher-quality diamonds and metals available through the Chosen line at Jared or our increasing assortment of diamond pieces at Pagoda. Alongside our efforts to provide a differentiated and consumer inspired assortment is our focus on a healthy inventory position.

Through a series of integrated initiatives, we’ve driven a 40% improvement to our overall inventory turn since we began our transformation. First, we’ve improved the design and testing phase of our merchandise cycle so that we can lean into trends faster and at a scale that is unmatched in our category. Second, we are rationalizing our SKUs dynamically with data-driven precision to focus on assortments that resonate most, thereby reducing buildups of sell down or clearance merchandise. These efforts enable us to lower inventory levels while giving customers higher access to newness.

A clear example here is Kay. New or high-turn inventory penetration at Kay is now 50% higher than it was two years ago. I’d also note that we’ve applied this playbook to our Memo inventory as well, a decision that has led to more effective purchasing and has bolstered our vendor relationships. Given potential macroeconomic headwinds, these improvements to our inventory and merchandise strategies are important to helping us remain agile.

Services is our second where-to-play strategy, and we’re making good progress here as well. We see an opportunity to grow services into $1 billion business. Not only do services carry higher margins, they are strategic as they drive trust and long-term relationships. Trust is key when a customer hands us a treasured piece of jewelry to repair or when they ask us to safely pierce a part of their body or when they act on the counsel of our jewelry consultants to choose and customize the perfect engagement ring.

Every time we earn a customer’s trust, we take a step toward building a relationship that will last a lifetime. And we’re working to provide services at every relevant touch point in a customer’s purchase journey. For example, in July, we took another step in the transformation of our financial services. We now have long-term agreements with strategic credit partners, which lower our costs and provide customers with a broader and more flexible range of payment options.

Customization is also an increasingly important service. In a recent survey, 36% of retail consumers expressed interest in customizing their products and services and 20% indicated that they’re willing to pay a premium. Over 80% of bridal customers express interest in some level of customization for their engagement and wedding rings. These insights are reflected in the performance of our Jared foundry experience.

Stores with foundries delivered roughly 10% higher sales than Jared locations without them this quarter. This unique offering combines on-site jewelers with computer-assisted design software and 3D printing to provide an experience that customers cannot get at most other jewelry stores. With roughly 50 foundry locations today, we will continue investing in its rollout as we plan to have more than 70 Jareds with foundry experience this fiscal year. Our third where-to-play strategy is expanding the mid-market by growing accessible luxury and value through the continued differentiation of our banner portfolio.

As an example, take Kay and Jared. Kay is our broadest reaching banner, positioned squarely in the mid-market. We’ve been pushing Jared toward the higher end of the mid-market or what we refer to as accessible luxury. The traction of this strategy is proving out in our results.

In the second quarter, Jared’s average transaction value was 86% higher than Kay’s, up from roughly 31% differential this time two years ago. This differentiation allows our scaled banner portfolio to reach more customers with their ideal assortment and value. And we are following this playbook across our portfolio, including our U.K. banners as we work to further differentiate between Ernest Jones and H.

Samuel. On the value end of the mid-market, we’ve continued the rollout of our rebranding test, Banter by Piercing Pagoda, that we began in 100 stores at the end of April. Based on promising results, we expanded to bring the total to 200 stores on August 2. At the same time, we launched banter.com.

This new mobile-first site represents an exciting opportunity because the target customer is digitally savvy and most likely to shop from their mobile device. But our eCommerce penetration has historically been among the lowest of our banners. Results of this new site are still very early, but encouraging. Online traffic has doubled, and interaction times on the site have increased 25%.

Importantly, we’re seeing a lift from both new customers and existing Pagoda customers, unlocking new levels of customer acquisition and growth. Our fourth and final where-to-play strategy is leading digital commerce in the jewelry industry. I want to put particular emphasis on this because it is so fundamental to our strategy. If winning in our biggest businesses is our foundation, then leading in Connected Commerce is our accelerator.

The two together, combined with services and mid-market expansion, are multipliers. Connected Commerce is not brick-and-mortar or eCommerce or digital. It’s the integration of customer experiences, leveraging in store and online and mobile and ubiquitous delivery as both a mindset and a capability. It’s data-driven and channel-agnostic, and it is seamless.

It brings our people and our technology together in a more powerful way. In fact, our Connected Commerce capabilities are adding more opportunities to meet our customers through video calls, buy online, pick up in-store services and more. Customers are also growing more comfortable buying jewelry online. We recognize that the pandemic was a factor in this shift as 78% of consumers have said that the pandemic made them realize that shopping online is better and easier than their previous perception.

We continue aiming to be at the forefront of this trend by working to provide an innovative digital shopping experience. Of engaged couples in 2021, roughly 30% said they bought their engagement ring online, which is more than double the amount in calendar 2019. Customers are also looking for convenience, capabilities like virtual consulting, buy online, pick up in-store and ship from store are changing the way that many customers shop with us. In Kay, more than 25% of online orders this quarter utilized at least one of these capabilities.

And in Jared, it was over 30% of online orders. Last quarter, we implemented Google Business Messenger and Apple Business Chat as additional ways for customers to reach our virtual jewelry consultants. This is important because we know that when our virtual consultants establish a human connection through these conversations or help customers book an in-store appointment, we drive higher rates of conversion. For example, within Ernest Jones, 20% of our in-store business is now the result of appointments that were made online.

Of those appointments, over 70% results in a sale that averages four times what a walk-in customer spends. We continue to believe that blending physical and virtual experiences will be a core customer expectation for fine jewelry and a Signet competitive advantage in the years to come. Now a few words on the potential headwinds ahead. Our research indicates that younger unvaccinated customers, those aged 18 to 49 and particularly those with young children, are more concerned about COVID variants than older customers.

This growing concern may impact shopping behaviors among younger people. So we’re preparing to meet them wherever and however they want to shop with us across our Connected Commerce ecosystem, including online, curbside pickup, same-day concierge delivery. That said, we also know that these customers are relatively more comfortable being in malls and shopping centers than on planes, in concert venues and at spas. So as travel and experiences take a backseat, we’re advancing our flexible fulfillment options while also meeting customers' desires to celebrate those closest to them with gifts of significance and lasting value.

Inflation is the other concern that we’re seeing in our research. As prices for essentials increase and as stimulus programs wane, naturally, customers' discretionary income decreases. However, within jewelry, this trend still plays to our competitive strengths and to our optimized assortments. Customers, particularly higher-income and engagement customers, will continue to spend discretionary dollars focused on purchases with lasting value.

With our scale and trusted network of vendors, we’re able to offer product assortments that provide excellent value across a variety of price points, which also align with our margin goals. In summary, our ability to capitalize on category momentum with increasingly strong execution of our Inspiring Brilliance strategies as well as remain agile in a time of uncertainty is a reflection of our culture and our people. In a recent survey, 85% of our team members said they are proud to work at Signet, illustrating the dedication and commitment to performance within our company. We’re unlocking incredible discretionary effort among our team, while also attracting top talent from within the retail industry and beyond.

All of this creates a powerful cycle, capabilities that translate into positive customer experiences, continuing innovation, productive execution and talent advancements. And it’s the strength of our organization and improving agility of our culture that drives my confidence in our near- and long-term performance more than any other factor. On that note, I’ll turn this over to Joan, who will share her insights into what’s working and what’s ahead. Joan?

Joan Hilson – Chief Financial Officer

Thank you, Gina, and hello, everyone. The team delivered strong results this quarter, working to maximize the jewelry category strength with our new capabilities. As I talk to our performance, there are three key messages to highlight. First, we expanded operating margin by leveraging fixed costs, growing merchandise margin and achieving higher labor productivity and additional cost savings.

Second, we are raising guidance to reflect our Q2 beat and a stronger Q3, given current business momentum and the delay of the anticipated shift to experience-related spending, which we believe is primarily due to the Delta variant. We are maintaining a conservative view of the fourth quarter due to macro uncertainty related to COVID-19 variants and the impact of government support policies on consumer spend. And third, aligned with our capital priorities, we’ve expanded our authorized repurchases to $225 million to reflect our confidence in our longer-term growth opportunities and the strength of our balance sheet and cash flow. Now turning to the quarter.

Our total sales of $1.8 billion reflect growth of more than 100% over last year. We continue to overcome lower levels of retail industry foot traffic through higher conversion, higher average transaction values and Connected Commerce capabilities. I’d also note that this quarter reflects the return of brick-and-mortar business for our U.K. banners.

Moving on to gross margin. We delivered approximately $780 million this quarter or 40% of sales. This is a 650 basis point improvement compared to the second quarter two years ago. Leveraging of fixed cost contributed more than 400 basis points of the improvement.

The remaining factors were driven by sustained cost savings and merchandise margin expansion. A favorable merchandise mix, complemented by increasing levels of service revenue, enhanced discount controls and targeted promotions drove the expansion. This combination of drivers is an example of the strategy we detailed at our virtual investor event earlier this year. SG&A was approximately $503 million or 28% of sales.

This rate reflects a 210 basis point improvement to two years ago. Our data-driven labor model continues to be one of the largest factors in our cost efficiency. It’s worth noting that this model continues to make use of flexible store hours by removing unproductive store operating hours where possible. In other words, though overall traffic is down, we’re increasing traffic per store hour.

This model has delivered a sales per labor hour improvement of more than 70% to this time two years ago, while also contributing to our decrease in employee turnover compared to the same time period. Non-GAAP operating profit was $223 million compared to an operating loss of $41.7 million in the prior year. Second quarter non-GAAP diluted EPS was $3.57, including a discrete tax benefit of $0.80 per share. This is due to a release of a valuation allowance against deferred tax assets as our performance has significantly improved since it was recorded.

This compares to prior year non-GAAP diluted loss per share of $1.13 and diluted EPS of $0.51 two years ago. Turning to the balance sheet. We made significant progress in strengthening our financial health this quarter, and I’d like to offer some additional perspective. Starting with inventory, we’re improving the health of our inventory, both in productivity and margin capture as well as broadening the accessibility of our inventory to customers.

This has resulted in both a 40% improvement to inventory turn and a reduction in overall inventory levels. To achieve this, we took three key strategic actions. We reduced the level of end-of-life and slow-turning product through strategic promotions. We are also leveraging flexible fulfillment capabilities such as ship from store and buy online, pick up in store, driving increased inventory access and visibility for our customers and team members.

We’ve leaned into our consumer insights, improved design and test cycle to ensure that the new product that we bring in is better aligned with our banner value propositions, thereby reducing the amount of inventory that reaches the sell-down or clearance stage of product life cycle. Moving on to liquidity. We have financial flexibility to continue investing in our long-term growth, recently enhanced by the extension of our ABL facility. Alongside this, we removed customer credit risk from our balance sheet with the recently announced agreements with financial services partners.

We’re in a net cash position, including both our long-term debt and preferred share obligations, positioning us well to deliver on our capital priorities. Our first priority is to invest in the business. This primarily includes investment in digital capabilities, technology and banner value propositions. This also includes the evaluation of acquisition opportunities that align with our Inspiring Brilliance strategy, such as Rocksbox, which we announced earlier this year.

Our second priority is to focus on our debt, with the goal of reducing our adjusted debt-to-EBITDA leverage ratio to below three times. And I’d note that the recent extension of our ABL facility through July 2026 provides us an additional option to address our 2024 senior note and preferred share obligations. Our third priority is returning capital to shareholders. Last quarter, we reinstated our common dividend.

And as we announced today, we’ve expanded our current authorization of share repurchases to $225 million, which we’ll evaluate on an opportunistic basis. Now I’d like to discuss our fiscal 2022 financial guidance. We are raising our full year guidance to reflect the Q2 beat and current business momentum. Factor into our view of Q3 is a delay in the anticipated shift to experiences-related spending primarily a result of the Delta variant.

We are maintaining a conservative view of the fourth quarter due to macro uncertainty related to COVID-19 variants and the impact of government support policies on consumer spend. Building on last year, our back half strategy includes always on marketing, earlier receipt of holiday assortment and a promotional cadence designed to drive earlier holiday shopping into the third quarter to create less reliance on the fourth quarter. We expect third-quarter sales in the range of $1.26 billion to $1.31 billion, with same-store sales in the range of down 3% to up 1% and non-GAAP EBIT of $10 million to $25 million. Within Q3 guidance, we’ve embedded higher marketing and store staff expenses to last year as well as the favorable impact from our recently enhanced credit agreements.

Implied in our guidance is fourth quarter negative same-store sales in the range of low to mid-single digits. For the fiscal year, we now expect total sales within range of $6.8 billion to $6.95 billion with same-store sales in the range of 30% to 33% and non-GAAP EBIT of $618 million to $673 million. Our guidance assumes no significant level of store closures resulting from COVID variants. And as we’ve already begun acting on our holiday strategy, we assume no meaningful impact to sourcing or fulfillment arising from inflation or pricing environment changes.

As we continue to optimize our footprint, we remain on track to open up to 100 locations and close at least 100. We’ve opened 37 locations so far this year and closed 33, including 10 mall closures that were then reopened in off-mall locations. Recall over the past 18 months, we’ve evolved our real estate strategy from strict fleet rationalization to fleet optimization. This quarter has shown the benefits of this approach as our mall and off-mall locations drove similar performance levels.

Lastly, recall that I mentioned expected capital expenditures in the range of $190 million to $200 million. This represents a narrowing of our previous range of $175 million to $200 million as we continue fueling Connected Commerce. Further, as we’ve identified incremental cost savings within gross margin and other indirect spend, we’re raising our expected cost savings for the year from a range of $75 million to $95 million to a range of $85 million to $105 million. Before we open the call for Q&A, I’d like to take a moment to thank our Signet team.

Our team continues to be a driving force for this company as their commitment to our strategies delivered strong performance this quarter. It is an exciting time for Signet as we continue through our transformation, and I’m proud to work alongside such a devoted team. And now I’ll turn the call over to the operator to begin the Q&A session.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Ike Boruchow from Wells Fargo. Please go ahead.

Unknown speaker

Good morning. This is Will on for Ike. I just wanted to ask about gross margin. You said you had another 600 basis points over prepandemic levels.

Can you just talk a little bit about the sustainability into the back half of these levels? I mean, do you expect it to revert to more normal levels in the back half? Or how should we think about gross margin?

Joan Hilson – Chief Financial Officer

So I’ll take that, Will. The gross margin in the second quarter was really driven by several things. One is, consistently, we’re seeing that our assortment, and the response to our assortment is very strong and is broad-based. We’ve targeted our markdowns and our promotions very specifically rather than broad-based.

So that’s also helping the margin expansion. And thirdly, discount controls, enhanced controls is expanding our merch margin. And then I would say that the occupancy costs and the leveraging of that fixed cost, but also the reduction of occupancy costs related to our store closures is also helping that gross margin expansion. And so as we said in my remarks regarding the third quarter and essentially the back half, we’re positioning ourselves for flexibility with targeted promotions as well with the uncertainty, particularly in the fourth quarter of the competitive environment and the consumer shopping behavior.

Unknown speaker

Great. And just if I could squeeze in one more. Service business, can you just give us some idea of where that business is from a revenue perspective? I know you’re targeting $1 billion over the long term. But can you just give us a sense of where that revenue is now?

Gina Drosos – Chief Executive Officer

Hi Will, it’s Gina. I’ll take that one. So no, we don’t report out our services revenue separately. What I can say is that services have been a meaningful part of Signet’s business, even pretransformation.

We have more than 1,400 jewelers on staff who do everything from ring sizing to repairs to fully custom design work. And what we’re doing now is really expanding those capabilities and building a better end-to-end customer experience. Same on our warranty programs, where we’re expanding those offerings, testing and learning on simpler and better options for customers. Same on customization, where we’re really shining a light on that service with our Jared foundries.

So a lot of these capabilities have been part of the company, but a bit underutilized. And now we’re really bringing them to life with consumer insights driving how we do that.

Unknown speaker

Great. Thank you.

Operator

The next question comes from Paul Lejuez from Citibank. Please go ahead.

Unknown speaker

This is Brian Cheatham on for Paul. I just wanted to ask in your prepared remarks, you mentioned trying to pull forward holiday sales into the third quarter and potentially promoting there. I guess, can you reconcile that with some of the momentum like what you’re seeing going into the third quarter and then are you promoting in the third quarter over 2019 levels? Or I guess, just why try and pull forward those holiday sales in this period?

Gina Drosos – Chief Executive Officer

So from a macro standpoint, we have, for the last several years, been looking to reduce our reliance on fourth quarter performance. And that’s another consumer-driven insight. We now look at three different types of holiday shoppers. We know that early savvy shoppers, who are more typically women, more typically looking for value, more typically a lower-transaction value, are shopping earlier and earlier for them this year.

We believe that Christmas and holiday begins in September. And so we are ready with merchandise and with the right kinds of promotional cadence targeted to them. We know that engagements are something that most people start thinking about in the October time frame. And so we think a lot about where are we in our engagement business and bridal.

We also know that there are very late shoppers. They think they’re early if they’re shopping on December 23 because it’s two days to go. But we know that we’ve got to have all the right capabilities in place to serve them, especially on the 24th after eComm cutoffs. So we’re really targeting all of our promotional cadence, the merchandise that we bring in and these Connected Commerce services to meet differentiated consumer needs in this whole September through December time frame.

So this idea of spreading our holiday sales into Q3 and starting it early is here to stay for us. We did it successfully last year, and we’ll continue to do it. This year, it’s probably a bit more important, given the macro uncertainties in Q4. And so we’re looking to really drive top-of-the-funnel marketing to be part of customers' consideration set in Q3 so that as we move toward holiday, we’ve already been in contact with the 2.3 million people that we anticipate getting engaged this year.

And we’re a big part of where they’re considering purchasing.

Joan Hilson – Chief Financial Officer

The only thing I would add to that is that the always on marketing strategy began with Path to Brilliance in fiscal ‘20. And so we’ve been fine-tuning that and transitioning our business to the – support the promotions and holidays that Gina spoke about. And then this year, particularly as we see the momentum and the delay of the anticipated shift that we expected later in the second quarter and with the momentum we’re seeing in the third quarter, we think it’s very important for us to manage into that and maximize our share in the market with the strategies that we’ve put in place. Importantly, the holiday receipts so much of it being within on the water ,as well as really in receipt already also helps us support that strategy importantly.

So we’re positioned to take advantage of the timing of what we’re seeing in the market and bring to our customer the product newness that they would expect for gift-giving as well.

Unknown speaker

Got it. And if I can just follow-up. Some of the mitigation efforts that you cited in your release that the supply chain isn’t expected to disrupt the second half. Were you able to pull forward holiday inventory? Or you just feel like you’re in a good position heading into the back half?

Gina Drosos – Chief Executive Officer

This is where the value of our trusted vendor relationship really shines. We took deliberate actions with our partners to manage the potential sourcing disruptions this holiday. And at this time, we don’t anticipate any material impact. We provided holiday projections very early to allow our vendors time to safely plan for production and also to have inventory proximity to help us meet demand.

In fact, we have more than half of our holiday orders already in hand.

Unknown speaker

That’s great. Thank you very much and good luck.

Operator

[Operator instructions] Our next question comes from Dana Telsey from Telsey Advisory Group. Please go ahead.

Dana Telsey – Telsey Advisory Group – Analyst

Gina, as you talked about inventory rationalization and SKU productivity, where are you on the inventory rationalization pipeline? And where do you see it going by category? And then, Joan, on the incremental cost savings, where is that coming from? And is there opportunity for more on this path?

Gina Drosos – Chief Executive Officer

Thanks, Dana. So on inventory, we’re really pleased with the progress that we’ve made, a 40% increase to our inventory turn during our transformation so far. But we do have an integrated set of actions. We have a good team member focus on this.

We have yet, I think, to see the full benefit of new technology that we’ve invested in that can help us continue to improve our inventory productivity. So it’s a journey that we plan to continue to be on. It just gives us I would say two things, so much more flexibility and agility and especially with kind of the uncertain times ahead, we think that’s very important. It’s better for our vendors when we can be more precise and specific about what we need and when we need it.

So we’re planning further out with them. And that’s really because we’re testing and learning, we’ve done over 300 concept tests on new product ideas just in the last couple of years. And so now our volume forecasting has statistical significance on that. So we’re getting much more precise on being able to predict the performance of new lines that we’re bringing in as well as the data analytics that we’ve put against our core inventory, which is really helping.

So I would say the team is very focused on it, and we’re looking to continue improvements in that area.

Joan Hilson – Chief Financial Officer

Then, Dana, with respect to the cost savings, we see that occurring in merchandise-related costs and process costs and which really impact our gross margin. And then we continue to drive down areas of indirect spend in places where the customer doesn’t really see or care about, as well as continuing to drive our store labor productivity model. So we’re very focused on continuing to drive these disciplines. And the team has put forth an amazing effort to really drive these costs down so that we can continue to invest in our business and our growth strategy.

So very much a team effort.

Dana Telsey – Telsey Advisory Group – Analyst

Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Gina Drosos for any closing remarks.

Gina Drosos – Chief Executive Officer

Thank you, again, everyone, for joining us today. Despite continuing macro uncertainties, we’ve armed our team with insights and capabilities that allow us to stay agile, and we’re heading toward holiday with confidence. Thanks again.

Operator

[Operator signoff]

Duration: 52 minutes

Call participants:

Vinnie Sinisi – Senior Vice President, Investor Relations and Treasury

Gina Drosos – Chief Executive Officer

Joan Hilson – Chief Financial Officer

Unknown speaker

Dana Telsey – Telsey Advisory Group – Analyst

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Openings & Closings: Alexis Bittar, Target (Early Opening), Bareburger, Cafe 71, Spear

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Posted on August 11, 2021 at 6:21 pm by West Sider

High-end jewelry store Alexis Bittar is replacing Papyrus at 209 Columbus Avenue between 69th and 70th. Alexis Bittar closed a location on Columbus a few years ago “as it was an underperforming door compared to our other three NYC locations.” Thanks to David L., Nancy and Rachel for the tips.

The Target at 795 Columbus Avenue near 98th Street opened on Wednesday, although its grand opening isn’t until Sunday. The store was already pretty busy, according to Betsy Howard, who snapped the photo above. “It’s much smaller than the store at 61st and Broadway,” Betsy wrote. The store will open at 7 a.m. and close at 10 p.m. on weekdays and open from 8-10 on weekends. On Tuesdays, the 7-8 a.m. hour is reserved for vulnerable guests, including people who are pregnant or elderly or those with health conditions.

Bareburger says it will open soon on Broadway between 79th and 80th, a location where the burger chain has had signs up for two years. There are hiring signs on the door. Thanks to Gretchen for the tip.

Cafe 71 on 71st and Broadway has been closed for a while, but its vacancy has now been confirmed by a for-rent flyer. Thanks to Upper West Sider for the tip.

A new physical and occupational therapy office called Spear is opening at 2465 Broadway near 92nd street, near the Equinox. Thanks to P. for the tip.

9Things to do in Colorado this weekend: Sept. 10-12

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This September weekend brings potato, Scottish-Irish, Native American, mineral, harvest, wine, beer and alpaca festivals to the Centennial State.

COLORADO, USA — It’s another packed weekend of spectacular events in Colorado!

From festivals and fairs to expos and runs, there’s lots to do, see and explore in Colorado this September weekend. This weekend features potato, Scottish-Irish, Native American, chile, home, fossil, mineral, mining, harvest, wine, beer and alpaca festivals across the Centennial State.

While there are more indoor activities planned this weekend than we’ve seen in months, there are still plenty of chances to get outside under the blue Colorado sky.

Remember to share your weekend photos with the “Near Me” feature on the 9NEWS app.

Have an event you’d like to see in 9Things? Send it our way.

9/11 20th Anniversary Ceremony

AURORA — The Colorado Freedom Memorial will remember the anniversary of the 9/11 attacks with a reading of the 116 names of Coloradans who “gave all” in Iraq and Afghanistan. Starting at 10 a.m. Saturday, as each name is read, a rose will be placed in their honor by cadets of the Colorado Civil Air Patrol. Remarks will be made by Aurora Mayor Mike Coffman and U.S. Rep. Jason Crow (D-Colo.). Guests are encouraged to bring lawn chairs for seating.

San Luis Valley Potato Festival

MONTE VISTA — Scenic Monte Vista is the site of the annual San Luis Valley Potato Festival. The event is a fun day of activities that celebrates the harvest of Colorado Potatoes in the San Luis Valley. Saturday’s Potato Festival includes food and craft vendors, a farm and field show, truck and semi-truck show, kid’s games, human hamster balls, mashed potato dunk tank, chef demonstrations and more. A 5K Tater Tot/Spud Run will start at 8 a.m. and Octane Addictions will present a family-friendly motorsport aerial freestyle stunt show. Show tickets are available online.

Westwood Chile Fest

DENVER — The Westwood Chile Fest celebrates the Hispanic-centric cultures that make up much of Denver’s Westwood neighborhood. Saturday’s festival is free and open to the public from 12 p.m. to 7 p.m. The event will have live music, art, food and drink vendors and family-friendly activities including bounce house and carnival games.

Longs Peak Scottish-Irish Highland Festival

ESTES PARK — For 45 years, the Longs Peak Scottish-Irish Highland Festival has celebrated Celtic culture in the “Celtic Capital of North America” Estes Park. This huge festival has Scottish athletics, Celtic rock and folk music and live field performances. This year’s Festival Field will be open to the public from 9 a.m. to 5 p.m. Friday to Sunday with food, drink, jousting, hurling, Irish and Highland dancing and strongman competitions.

Tattoo Estes will be staged Friday and Saturday at 7:30 p.m. The Longs Peak Scottish-Irish Highland Festival Parade steps off Saturday at 9:30 a.m. in downtown Estes Park. See the large event schedule and get your tickets at ScotFest.com.

Trapper Days

FORT LUPTON — Citizens, businesses and organizations will come together in Fort Lupton this weekend for the annual Trapper Days celebration. Held in downtown Fort Lupton on Friday and Saturday, this year’s Trapper Days features food trucks, gelato pops, live music, pizza competition, cornhole competition, beer garden, car show, bike show and vendors. The Trapper Days Parade begins at 10 a.m. Saturday.

Rist Canyon Mountain Festival

BELLVUE — Rist Canyon Mountain Festival is the annual fundraiser for the Rist Canyon Volunteer Fire Department. This one-day event returns Saturday with live entertainment, silent auction, book & plant sales, kid’s activities, free admission, free parking, free ice cream and more.

Vail Oktoberfest

VAIL — With a gorgeous mountain backdrop and “European flair,” the Vail Oktoberfest has been named one of the ten greatest Oktoberfest celebrations in the United States by USA Today. The festival, which runs Friday to Sunday in Vail Village, will have great Bavarian fare including brats, schnitzel sandwiches, pretzels and more. On the schedule this weekend are stein-lifting competitions, adult keg-bowling contests, bratwurst-eating contests, Bavarian costume contest and live music. Vail Oktoberfest is free and open to the public at Vail Village.

Friendship Powwow and American Indian Cultural Celebration

DENVER — One of the Denver Art Museum’s longest-running events returns this Sunday. The 32nd annual Friendship Powwow and American Indian Cultural Celebration will take place from 11 a.m. to 5 p.m. at the Denver Indian Center, Inc. at 4407 Morrison Road in southwest Denver. The event will feature American Indian dance competitions, drum groups, hands-on activities for families and vendor booths. The event is free and open to the public.

New American Arts Festival

AURORA — The New American Arts Festival is an eight-day event that celebrates Diversity and Inclusivity and promotes Racial Equity in the Arts. The 2nd annual festival begins Saturday at the International Pavilion at Fletcher Plaza next to the MLK Library. The festival, which is free and open to the public, will have 62 performances, presentation and fun family-friendly activities.

Fall Fest

FRISCO — Frisco’s Fall Fest is scheduled for Saturday at the Frisco Historic Park and Main Street between 2nd Avenue and 1st Avenue from 10 a.m. to 5 p.m. Fall Fest will feature beers in the great tradition of German brewing including Ayinger and Weihenstephaner beers. Local and regional art will be available at the Arts at Altitude art show in the Frisco Historic Park on Friday and Saturday.

Colorado Artfest at Castle Rock

CASTLE ROCK — The 32nd annual Colorado Artfest returns to downtown Castle Rock this weekend. This year’s festival features more than 110 artists from across the country and live main stage entertainment. There will also be interactive exhibits for the kids, delicious food and beverage vendors and much more. Colorado Artfest at Castle Rock runs Saturday and Sunday at Festival Park with free admission each day.

ArtWalk on Main Street

LONGMONT — ArtWalk on Main Street is back after a pandemic hiatus. The festival will close Longmont’s Main Street from 3rd Avenue to Longs Peak to celebrate arts, culture and community. ArtWalk on Main, scheduled for Saturday from 4 p.m. to 8 p.m., features stages with music and performance. Over 40 artist booths will be on-hand to display, sell and even create artwork.

Golden Sidewalk Sale

GOLDEN — On Saturday from 10 a.m. to 5 p.m., Golden hosts its Sidewalk Sale where shoppers find deep discounts and fun times. Golden’s unique shops are going all-out with great prices on everything from outdoor gear and jewelry to clothing and artisan crafts. The sale is city-wide and most downtown Golden merchants are participating. There will be family fun including a mobile bubble tower, face painting and kids’ craft kits at the Golden Visitors Center.

Art on the Green

GREENWOOD VILLAGE — Art on the Green runs from 10 a.m. to 5 p.m. Saturday and Sunday at Curtis Park. This free all-Colorado art fair features more than 80 artist booths, food trucks and live music.

Denver Mineral, Fossil, Gem & Jewelry Show

DENVER — The largest mineral, fossil, gem and jewelry show in the country opens in Denver this weekend. The Denver Show is really five mineral, fossil, gem and jewelry shows and fills 500,000 square feet (and eight miles of tables) at the National Western Complex.

Nearly 500 dealers will be selling mineral specimens, fossils, dinosaurs, gems, gemstones, lapidary, cabochons, artisan and antique jewelry, beads, crystals, meteorites, metaphysical, gold, silver, turquoise, Native American items, interior décor, metal art, miner’s rough, tools, supplies and more. Organizers say to expect to spend most of the day here because there is so much to see. The event and parking are free. This show will be open from 10 a.m. to 6 p.m. daily through Sunday, Sept. 19.

Colorado Mineral and Fossil Fall Show

DENVER — More than 100 retail and wholesale vendors from around the world will be at the 2021 Colorado Mineral & Fossil Fall Show. Vendors will be showcasing minerals, fossils, meteorites, tektites, carvings, gems, jewelry and more. The show opens Friday at the Crown Plaza Denver Airport Convention Center and continues through Saturday, Sept. 18.

CU vs. Texas A&M

DENVER — The University of Colorado and 6th-ranked Texas A&M University meet Saturday at 1:30 p.m. at Empower Field at Mile High in Denver. The Pac-12 vs. SEC matchup is one of the top non-conference games on the 2021 college schedule.

The Buffaloes, who lead the all-time series with the Aggies 6-3, won their last meeting in 2009. Colorado is 54-35-3 overall in games played in Denver. The teams were scheduled to play in College Station on Sept. 19, 2020, but the game was canceled due to the pandemic.

CSU vs. Vanderbilt

FORT COLLINS — The Colorado State Rams are coming off a rough loss last weekend at home against South Dakota State. The Rams look to bounce back on Saturday when they host Vanderbilt of the SEC. The “Orange Out,” “Ag Day with 4-H” and “Spirit Day” game kicks off at 8 p.m. Saturday night.

Colorado School of Mines vs. New Mexico Highlands

GOLDEN — It’s Alumni Weekend at Colorado School of Mines. The Orediggers football team will play New Mexico Highlands at 12 p.m. Saturday at Marv Kay Stadium at Campbell Field in Golden. Head to MinesAthletics.com for tickets.

Seltzerland

DENVER — Hard seltzer fest Seltzerland comes to Denver’s Overland Golf Course on Saturday. Brands large and small will participate including White Claw, Mike’s Hard Lemonade Seltzer, Vizzy and Playamar (Jose Cuervo Seltzer). This event will mark Seltzerland’s triumphant return to Denver after a sold out event last year. Attendees are invited to leisurely walk around the golf course while sampling from over 100 flavors of hard seltzers with no golfing required. Tickets are on sale now at Seltzerland.com.

Lafayette Brew Fest

LAFAYETTE — Saturday’s Lafayette Brew Fest will feature breweries and cideries from within 75 miles of Lafayette. The festival runs from 2 p.m. to 11 p.m. Saturday at a new location at Morrell Printing Solutions at 990 South Public Road. There will be live music from Slick Machine and souvenir cups.

Union Peak Festival

COPPER MOUNTAIN — Union Peak Festival is a new three-day festival happening Friday through Sunday at Copper Mountain celebrating the convergence of music, community and art. Walk the Moon, Saint Motel, The Record Company and more local bands and musicians will perform free concerts throughout the weekend in Copper’s Center Village. Fans can upgrade their experience with a VIP Pass for exclusive concert viewing and lounge space, food and drink perks and more.

Criterium and Brewfest

WHEAT RIDGE — The Criterium and Brewfest and Colorado State Championship on Ridge at 38 will have a bike race and brew festival with local breweries showcasing their best summer beers. In addition to racing and beer, the free, family-friendly event offers a kids’ zone, food trucks, beer garden, outdoors expo and community fun ride.

Palmer Lake Wine Festival

PALMER LAKE — The 2nd-ish Palmer Lake Wine Festival begins at 1 p.m. Saturday at Palmer Lake Regional Recreation Area. A portion of the proceeds will benefit Tri-Lakes Cares. The festival offers 20 Colorado wineries with live music, food and gift vendors. The first 1,000 attendees can snag a Palmer Lake Wine Festival souvenir tasting glass and wine tote.

Boulder Valley Wine Festival

LOUISVILLE — Wine lovers, rejoice: the 3rd annual Boulder Valley Wine Festival returns to Louisville Community Park on Saturday. The 2021 festival will feature over 20 Colorado wineries, including reds, whites, ciders and meads. There will also be live music, food, retail vendors and more. Admission includes a commemorative wine glass, wine tote and unlimited tastings. The festival runs from 11 a.m. to 5 p.m. Tickets can be purchased here.

Food & Wine Classic

ASPEN — The 38th annual Food & Wine Classic runs Friday to Sunday in Aspen. Set against the scenery of the Rocky Mountains, guests will enjoy three days filled with cooking demonstrations, wine tastings and panel discussions led by world-class chefs and wine experts.

Mile High Country Q & Brew

DENVER — The 11th annual Mile High Country Q & Brew, featuring a concert from LOCASH and including specialty cocktails and food trucks, is back at Mile High Station on Friday to benefit Tennyson Center for Children. A Denver mainstay for over a decade, the event has raised millions of dollars for Tennyson Center for Children to accomplish a mission of working with every child and family impacted by trauma to realize their infinite possibilities.

Ticket’s to Friday’s Mile High County Q & Brew with LOCASH get attendees access to the show, beer from local breweries, specialty cocktails from local distilleries and barbeque from Denver food trucks plus photo opportunities.

13th Floor Haunted House

DENVER — 13th Floor Haunted House will open for the 2021 season on Saturday. Celebrating 14 years of scares in the Mile High, this season brings terrifying twists and turns, new characters and new add-on attractions that are sure to thrill. Enter if you date — at 3400 East 52nd Avenue.

Goodguys Car Show

LOVELAND — The Goodguys 23rd Colorado Nationals is a giant car show at Loveland’s The Ranch Events Complex. The event will feature over 2,000 custom hot rods, muscle cars, restored classics and trucks competing for show prizes and racing on-track at the Goodguys CPP Autocross Series. There will also be live music, a swap meet, memorabilia, kids’ zone and more. Parking is free at The Ranch Events Complex for the Friday-to-Sunday show. To register your vehicle or purchase tickets, visit Good-Guys.com.

Concours d’Elegance & Exotic Sports Car Show

LITTLETON — The 37th annual Colorado Concours d’Elegance & Exotic Sports Car Show is Sunday at Arapahoe Community College. The show will have over 300 cars and motorcycles and runs from 9 a.m. to 3 p.m. The show will benefit Ability Connection Colorado’s Creative Options for Early Childhood Education Centers. Tickets are available online at ColoradoConcours.org.

Beach Doggie Day at Water World

FEDERAL HEIGHTS — Water World is closed for the season and it has officially gone to the dogs. Water World hosts its annual Beach Doggie Day where the park is open for your pup’s water enjoyment. Cowabunga Beach and Thunder Bay will be ready for canines of all sizes and Wally World will be open for pups under 25 lb. There will be tennis balls and souvenir bandanas for the dogs and t-shirts, beer and snacks for the humans. Each dog is $9.99 and people are free. Tickets must be purchased online ahead of Saturday’s event. There will be no walk-up sales.

Alpaca Days

CASTLE ROCK — Anyone interested in alpacas and their fabulous fleece & fiber should check out PacaBuddies Alpaca Days at the Douglas County Fairgrounds on Saturday and Sunday. Hug an alpaca, sit in on demonstrations and seminars, talk to local breeders and browse a huge selection of yarn, handmade items, fleece goods and artwork. The free event runs from 10 a.m. to 4 p.m. each day. This event was first published by MileHighontheCheap.com. For more local deals and discounts go to MileHighontheCheap.com.

Longmont Fall Home Show

LONGMONT — Ready for some home inspiration? The Longmont Home Show will provide the opportunity to get ideas for home renovations while meeting vendors and suppliers. You’ll find the latest in design trends, remodeling, automation and outdoor living. The Longmont Fall Home Show will be held at the Boulder County Fairgrounds on Friday from 12 p.m. to 6 p.m., Saturday from 10 a.m. to 5 p.m. and Sunday from 11 a.m. to 4 p.m. Admission and parking are free.

The Drowsy Chaperone

LAKEWOOD — The Lakewood Cultural Center kicks off its LCC Presents 2021-2022 season with the musical comedy “The Drowsy Chaperone.” A loving send-up of the Jazz Age musical, the musical features one show-stopping song and dance number after another. The original production won five Tony Awards.

Performances are Fridays and Saturdays at 7:30 p.m. and Saturdays and Sundays at 2 p.m. Tickets start at $20 and are available at 303-987-7845, Lakewood.org/LCCPresents or the Lakewood Cultural Center Box Office at 470 South Allison Parkway.

Channel 93.3 Big Gig

GREENWOOD VILLAGE — Channel 93.3’s Big Gig is back. The concert will return to Fiddler’s Green Amphitheatre on Sunday. This year’s Big Gig lineup features Cage the Elephant, Rise Against, grandson, Half Alive and I Don’t Know How But They Found Me (iDKHOW). Tickets for the Fiddler’s Green concert are on sale at AXS.com.

Heroes & Villains 5K Run/Walk

DENVER — The 17th annual Heroes & Villains 5K Run & Walk For HD is scheduled for 9 a.m. Saturday at Stapleton Central Park. To register or donate, click here. A COVID-19 survey form must be filled out 24 hours before the event.

Superhero Run/Walk

GREELEY — The 9th annual Superhero Run/Walk is this Saturday in Greeley with a 10K, 5K and 1-mile run. Caped crusaders, serious runners and families can all take part at the event, held at St. Michael’s Town Square. Superhero Run and Family Carnival information and registration can be found at RunSignUp.com.

SACFFA 60th Annual Spaghetti Dinner

COMMERCE CITY — The South Adams County Fire Fighters Association is hosting its 60th annual Spaghetti Dinner on Saturday. The family-friendly drive-thru event begins at 2 p.m. at two locations: Station 23 at 6550 East 72nd Avenue and Station 28 at 10326 Walden Street. Proceeds go to the South Adams Fire Fighters Association. Get your tickets online.

Colorado Rapids vs. LA Galaxy

COMMERCE CITY — The Colorado Rapids soccer club is back home in Commerce City this weekend to host the Los Angeles Galaxy. The Rapids and Galaxy meet at 1:30 p.m. Saturday at Dick’s Sporting Goods Park. Tickets are still available at Ticketmaster.com.

Red Rocks Amphitheatre

MORRISON — There is no better venue for live music in the country than Colorado’s own Red Rocks Amphitheatre. Concerts are back at full capacity at the outdoor venue. Brandi Carlile, who announced this weekend’s concerts back in January 2020, finally performs with your Colorado Symphony.

Friday, Sept. 10 — NeedtoBreathe, Switchfoot, The New Respects

Saturday, Sept. 11 — Brandi Carlile with the Colorado Symphony

Sunday, Sept. 12 — Brandi Carlile with the Colorado Symphony

Movies this weekend

The Labor Day weekend box office was on fire thanks to the newest movie in the Marvel Cinematic Universe (MCU) — “Shang-Chi and the Legend of the Ten Rings.” The film broke the all-time record for the Labor Day weekend with a fantastic $94 million from Friday to Monday.

No movies will try to open against Marvel and Disney in its second weekend, so expect a great week-two haul for “Shang-Chi.” No major releases are planned in September except “Dear Evan Hansen” on Sept. 24.

Last weekend’s box office

Shang-Chi and the Legend of the Ten Rings — $75.4 million Candyman — $10.3 million Free Guy — $8.9 million Jungle Cruise — $4 million PAW Patrol: The Movie — $4 million

Would you like to see your favorite Colorado festival, fair, expo, concert, drama, musical, ballet, run or event listed in 9Things? Send it to alexander.kirk@9news.com.

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