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RTW Retailwinds, Inc. (NYSE:RTW) Q2 2019 Results Conference Call August 22, 2019 4:30 PM ET
Francesca Filandro - IR
Greg Scott - CEO
Traci Inglis - President, Chief Marketing and Customer Officer
Sheamus Toal - EVP, COO and CFO
- Francesca Filandro - IR
- Greg Scott - 首席执行官
- Traci Inglis - 总裁，首席营销和客户官
- Sheamus Toal - 执行副总裁，首席运营官和首席财务官
Dave Kanen - Kanen Wealth Management
- Dave Kanen - Kanen Wealth Management
Greetings, and welcome to RTW Retailwinds Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host, Francesca Filandro. Please go ahead.
问候，并欢迎RTW Retailwinds 2019年第二季度收益电话会议。 此时，所有参与者都处于只听模式。 问答环节将在正式演讲之后进行。 [操作员说明]提醒一下，此会议正在录制中。
我现在想把会议转交给你的主持人Francesca Filandro。 请继续。
Thank you. Good afternoon, everyone. Before we begin, I'd like to remind you that some of the comments made on today's call, either as part of our prepared remarks or in response to your questions, may contain forward-looking statements that are made pursuant to the Safe Harbor provisions in the Private Securities Litigation Reform Act of 1995.
Actual results may differ from those projected in such forward-looking statements. Such forward-looking statements are subject to risks and uncertainties as described in the Company's documents filed with the SEC, including the Company's fiscal year Form 10-K. The Company undertakes no obligation to publically update or revise any forward-looking statements to reflect subsequent events or circumstances.
As a supplement to today's presentation, we have made slides available which you can view under the Investor Relations section at nyandcompany.com.
And now, I would like to turn the call over to Greg Scott, CEO.
谢谢。 大家下午好。 在我们开始之前，我想提醒您，在今天的电话会议上发表的一些意见，无论是作为我们准备的评论的一部分还是回答您的问题，都可能包含根据安全港规定作出的前瞻性陈述。 在1995年的私人证券诉讼改革法案中。
实际结果可能与这些前瞻性陈述中的预测结果不同。 这些前瞻性陈述受到公司向美国证券交易委员会提交的文件中所述的风险和不确定性的影响，包括公司的财政年度表10-K。 公司不承担公开更新或修改任何前瞻性陈述以反映后续事件或情况的义务。
Thank you, Francesca. Good afternoon and thank you for joining us.
With me today to discuss our second quarter 2019 results are Traci Inglis, our President, Chief Marketing and Customer Officer; and Sheamus Toal, our Executive Vice President, COO and CFO.
As noted in our press release, we continue to execute against our strategic initiatives, most notably building the foundation of our multi-brand platform to address customer opportunities. That said, we were disappointed with our second quarter results in our core New York & Company brand. While our traffic and eCommerce business improved sequentially from the prior quarter, and we delivered positive increases in new customer acquisition, we continued to experience decreases in brick-and-mortar traffic as well as declines in basket size and an ongoing weakness from our SoHo Jeans sub-brand. This is reflected in our Q2 comp sales decline of negative 4.8%.
While we were disappointed in our sales performance, the team was agile and reacted appropriately by managing expenses and inventory, which contributed to near-peak product margin rates levels, while also investing in our new businesses to drive future growth.
Unfortunately, the combination of sales declines, coupled with increased expenses, including shipping and store expenses, reduce vendor rebates, increased legal fees and increased recruiting fees, combined with our investments in new businesses resulted in an operating loss of $7.6 million, missing our guidance.
We believe the majority of these impacts are temporary and fixable. We are addressing the challenges today with a sense of urgency while also investing in the business to drive future growth.
During the second quarter, we continued to make progress toward our strategy, creating a multi-brand digital platform. And I'd like to share a few highlights regarding the progress made in our transformation.
Regarding our celebrity brands and new businesses. . Fashion to Figure, our on-trend plus-size brand, delivered positive comp results with double-digit growth online. Happy x Nature, our ready-to-wear brand in partnership with Kate Hudson, continued to build momentum, driven by the strength of Kate's 10 million active and engaged social following. Our celebrity brands, which are exclusive to New York & Company delivered double-digit increases, driven by significant comp increase in the Gabrielle Union sub-brand.
Regarding our goal to increase new customer acquisition, 4% comp increase in new and reactivated customers to our brand as new digital marketing initiatives that our new CMO implemented in the last few weeks of the quarter, performed very well.
Regarding the goal to drive digital growth. eCommerce sales improved sequentially from Q1, with total sales increasing to approximately 30% of our total business. In addition, we made key additions to the RTW executive team, representing industry leaders who will bring the expertise necessary to drive our near and long-term growth objectives. And we maintained our strong balance sheet with $83 million in cash on hand or $1.28 per share and no debt which is a competitive advantage in today's volatile environment.
今天和我一起讨论2019年第二季度的结果是Traci Inglis，我们的总裁，首席营销和客户官员;和Sheamus Toal，我们的执行副总裁，首席运营官和首席财务官。
关于我们的名人品牌和新业务。 。 Fashion to Figure是我们的潮流大尺寸品牌，在线提供了两位数的增长，带来了积极的成果。 Happy x Nature，我们与Kate Hudson合作的成衣品牌，在凯特1000万积极参与的社交活动的推动下，继续发展势头。由于Gabrielle Union子品牌的大幅增加，我们的名人品牌在纽约和公司独家销售额实现了两位数的增长。
That said, based on our current performance and the necessary decision to focus our resources on improving the New York & Company business, we are prioritizing our efforts around Fashion to Figure and Happy x Nature. As such, we’ve decided to exit the Uncommon Sense lingerie lifestyle concept. Sheamus will walk you through the additional details in his prepared remarks.
Looking ahead, we continue to see opportunity in our core brand and are working to address the customer and assortment challenges, which impacted our second quarter performance. To further accelerate RTW transformation, we are launching our Customer First initiative this fall, which Traci will outline during her prepared remarks, and will drive positive results across our multi-brand portfolio. We also know, we have the team and the action plans in place to bring about a positive change in the business, and we are acting with the sense of urgency.
Turning to our second quarter results, I'd like to spend a few moments discussing our progress against our 2019 keys to success. First, we continue to leverage our celebrity collaborations and sub-brands as market differentiators that our customer can only find at New York & Company. Together, our celebrity collaborations delivered double-digit comp growth in the second quarter, representing nearly 10% of our business. Our Gabrielle Union collection was particularly strong, with customers responding to key pieces wore by Gabrielle on America's Got Talent. In addition, we are pleased by the customer response to our recently launched Happy x Nature brand. We look forward to continue to expand this brand beginning with our international debut in partnership with UK-based department store, Selfridges, which launched this week.
We are seeing our customers respond to areas of business that satisfy her need for fashion, style, quality and value. Our dress assortment, which represents our largest category business in the second quarter at 16% of our mix, delivered strong results in the quarter and provides an important fashion and lifestyle halo across New York & Company. In addition, our 7th Avenue sub-brand supported by strength at our market leading franchise pants program continues to be an area of competitive strength and a strong driver of customer loyalty. In fact, we ranked 12th in the overall apparel category in the pants category, reflecting our strength in the business. Finally, SoHo Street, our streetwear influenced and lounge lifestyle sub-brand delivered significantly improved results, which we look forward to building on in the third quarter.
Unfortunately, the comp decreases we experienced at our SoHo Jeans sub-brand, significantly impacted our overall comp performance. Specifically in denim, we continue to see weakness in our deliveries and our overall results were far below our expectations. In the near term, we are managing our inventory investments in this area, while leaning into our core competencies, and we will be reinventing our casual offering in 2020.
也就是说，基于我们目前的表现以及将我们的资源集中用于改善纽约和公司业务的必要决策，我们将优先考虑时尚与形象和快乐与自然的关系。因此，我们决定退出Uncommon Sense内衣生活方式概念。 Sheamus将在他准备好的评论中向您介绍其他详细信息。
谈到我们的第二季度业绩，我想花一些时间讨论我们取得2019年成功关键的进展。首先，我们继续利用我们的名人合作和子品牌作为我们的客户只能在纽约和公司找到的市场差异化因素。我们的名人合作在第二季度实现了两位数的增长，占我们业务的近10％。我们的Gabrielle Union系列特别强大，客户回应Gabrielle在America's Got Talent上穿的关键部件。此外，我们对客户对我们最近推出的Happy x Nature品牌的回应感到高兴。我们期待着继续扩大这一品牌，首先是与本周推出的英国百货公司Selfridges合作进行国际首发。
Regarding our second strategic priority to increase brand awareness and customer engagement, our overall traffic improved sequentially from the first quarter, driven by eCommerce, while our brick and mortar traffic continues to reform generally in line with widely reported industry results. We are pleased to see new and reactivated customer accounts increase in the quarter by 4% comp, which represents an improved -- improvement from trends.
With Traci's leadership, we are actively rebalancing our marketing mix to invest more in working media and digital acquisition channels to ensure we are bringing new customers to our portfolio of brands. In addition, we are launching our Customer First initiative this fall, which will reinvent all aspects of our marketing organization from data analytics, creative storytelling, personalization and segmentation and content creation with an intense focus on the customer.
Traci will share additional details of this initiative during her prepared remarks. We are also expanding our relationship and connection with customers through enhanced levels of personalization and segmentation. We are tailoring our marketing voice to where she is in the customer journey and experience improved results in our targeted email marketing performance during the second quarter, leveraging audience segmentation insights and category affinities.
Our third strategic priority focuses on driving digital and omni. Our New York & Company eCommerce performance improved in the second quarter supported by increases in traffic from the incoming trends. Our Fashion to Figure eCommerce business also delivered significant comp growth where we recognized an opportunity to accelerate performance in this channel even further. In addition, sales through our omni programs, which include in-store pickup, order online ship from store -- from store or online and order in store, ship from store or online, increased at double-digit rate for the quarter.
From a product perspective, our eCommerce exclusive merchandise delivered double-digit comp performance in the quarter and allows us to expand our fashion projection to new styles and categories. These assortments are also size inclusive as we offer sizes 00 through 20 in nearly all styles, including our celebrity collaboration.
Across all brands, we’re able to increase our digital sales penetration to nearly 30% of volume as compared to 26% last year, driven by the positive comp performance across our digital channels and brands. With our new executive leadership in place, we will continue to implement the changes necessary to reaccelerate our digital growth.
Our fourth strategic priority focuses on our real estate portfolio where we have opportunistically taken advantage of much of the consolidation that has happened in the industry over the past several years.
We see stores as an important driver of customer acquisition and engagement, methods that inform a holistic approach to real estate. During the quarter, we opened three New York & Company locations and will continue to evaluate opportunities in the high profile and the premium centers. Importantly, we benefit from a highly flexible real estate portfolio with roughly 70% of our existing store base on two years or less terms. Sheamus will elaborate further on the steps we’re taking to rationalize and optimize our store fleet.
关于我们提高品牌知名度和客户参与度的第二个战略重点，在电子商务的推动下，我们的整体流量从第一季度开始逐步改善，而我们的实体流量继续改革，与广泛报道的行业结果一致。我们很高兴看到新的和重新激活的客户账户在本季度增加了4％，这代表了改进 - 从趋势的改善。
我们的第三个战略重点是推动数字和全方位。我们的纽约和公司电子商务业绩在第二季度有所改善，这得益于来自趋势的流量增加。我们的Fashion to Figure电子商务业务也实现了显着的增长，我们认识到有机会进一步提升该渠道的业绩。此外，通过我们的全方位计划进行的销售，包括店内提货，从商店订购在线发货 - 从商店或网上订购，在商店订购，从商店或网上发货，在本季度以两位数的速度增长。
Next, Project Excellence. While our Q2 operating loss was impacted by several factors, including reduced vendor rebates and increased legal and recruiting fees, we remain committed to looking at every cost to improve efficiencies and deliver a more profitable operating model. We continue to identify opportunities to enhance our organization's effectiveness and as we've discussed previously, we have streamlined our organization. That said, we recognize the challenges in today's environment with respect to shipping expenses, store payroll expenses, and the impact of potential tariffs on imports from China.
Regarding potential tariffs, we have been proactively working with our partners to mitigate risk. And we have taken early receipts of merchandise in advance of potential tariffs as seen in our Q2 in-transit inventory. While our current guidance does not incorporate potential risk of tariffs, we maintain an active and open dialogue with our vendor partners, recognizing dynamic nature of the macro environment.
Our final strategic priority focuses on growth initiatives. While we are maintaining our focus within our core New York & Company business, we are also looking at additional whitespace opportunities with significant -- without significant capital investments through leverage of our RTW's operating platform.
Our Fashion to Figure brand continues to execute against the strategic plan we implemented beginning the fall of 2018. We are pleased with the overall customer response to our assortment and marketing messages as we position this brand for growth in the plus size market. Looking ahead, we'll be accelerating growth in our eCommerce business to build on the channel’s double-digit growth rate and efficient customer acquisition costs.
Regarding our Happy x Nature business, we are pleased with the customer response and believe in the potential of this lifestyle brand. We are seeing the strength at Kate Hudson’s social channel. In fact, social channels contributed to nearly 20% of happyxnature.com volume, reflecting the importance of social and acquiring customers and driving sales. We will continue to provide feature updates regarding our growth plans for Happy x Nature throughout 2019.
Our subscription box service NY&C Closet continued to grow and benefit from a strong and positive customer response. Building on the strength of this program, we introduced FTF Closet for our Fashion to Figure brand to ensure we’re engaging our customers wherever, whenever and however they shop across our brand.
Looking ahead to the third quarter, we believe there's opportunity in our core New York & Company brand, despite challenging trends as reflected in our guidance. We have repositioned our product investments for fall by leaning into categories and franchises of strength, including celebrity and our dominant wear-to-work pants categories, while mitigating risk in our SoHo Jeans sub-brand. In addition, Customer First initiative, led by Traci Inglis, President, Chief Marketing and Customer Officer will transform the customer journey across our portfolio of brand and position us for long-term growth.
我们的最终战略重点是增长计划。虽然我们将业务重点放在纽约和公司的核心业务上，但我们也在寻找额外的空白机会 - 通过利用我们的RTW运营平台，无需大量资本投资。
我们的Fashion to Figure品牌继续执行我们从2018年秋季开始实施的战略计划。我们对客户对我们的分类和营销信息的整体反应表示满意，因为我们将此品牌定位于大尺寸市场的增长。展望未来，我们将加速电子商务业务的增长，以建立渠道的两位数增长率和有效的客户获取成本。
关于我们的Happy x Nature业务，我们对客户的反应感到满意，并相信这个生活方式品牌的潜力。我们看到了Kate Hudson社交频道的实力。事实上，社交渠道占happyxnature.com数量的近20％，反映了社交和收购客户以及推动销售的重要性。我们将继续提供有关2017年快乐x自然增长计划的功能更新。
我们的订阅盒服务NY＆C Closet继续增长，并从强大而积极的客户响应中受益。在此计划的基础上，我们为Fashion to Figure品牌推出了FTF Closet，以确保我们随时随地为客户提供服务。
展望第三季度，我们认为我们的核心纽约和公司品牌有机会，尽管我们的指导中反映出挑战性的趋势。我们已经重新定位了我们秋季的产品投资，通过分类和特许经营实力，包括名人和我们的主要穿着工作裤类别，同时降低我们的SoHo Jeans子品牌的风险。此外，由Traci Inglis领导的客户优先计划，总裁，首席营销和客户官员将改变我们的品牌组合中的客户旅程，并为我们的长期发展定位。
I would like to introduce Traci Inglis, our President, Chief Marketing and Customer Officer who joined the RTW leadership team in June. Traci's expertise in translating customer data, analytics and insights into innovative Customer First strategy will help leader evolution to a multi-brand portfolio, and I look forward to working with her on building for the future of RTW and transforming our customer journey across our portfolio of brands.
I now will turn the call over to Traci.
我想介绍Traci Inglis，我们的总裁，首席营销和客户官，他在6月份加入了RTW领导团队。 Traci在将客户数据，分析和洞察力转化为创新的客户至上战略方面的专业知识将帮助领导者向多品牌组合发展，我期待与她一起构建RTW的未来，并在我们的产品组合中改变我们的客户之旅。品牌。
Thank you, Greg.
I'm very excited to be here at RTW and to be working with the talented team as we execute our brand growth strategies. I believe we have the right ingredients for success, including strong product with unique market positioning, highly engaged customers, and an organization that is receptive to making the necessary changes to introduce digital marketing and Customer First best practices. I'd like to spend a few moments sharing my initial observations as we embark upon a journey to become a customer-led organization.
We have a great foundation in products across the RTW portfolio from celebrity collaborations and a market leadership position in wear-to-work pants and dresses for the New York & Company to on-trend plus-size fashion at FTF and Happy x Nature's distinct lifestyle fashion with an evolving environmentally conscious platform.
To drive growth, we need to amplify our marketing reach with a focus on gaining new customers and continuing our strong focus on driving lifetime value. Our shoppers are very loyal and spend per customer is strong. We simply need more of them. With this in mind, we are transforming our marketing efforts to be Customer First, data-driven and creative optimized, which when combined will elevate our overall brand experience while reaching new customers for whom we may not be front of mind today. I will share updates regarding our progress on this initiative in future quarters, but would like to provide the three key areas we are focusing on as part of our Customer First transformation.
First, experience. We are addressing how the customer engages with our brands, and how we can translate awareness into advocacy across an integrated approach with specific focus on new customer acquisition.
Next, data and technology. We are leveraging customer data in decision-making with the focus on acquiring new customers and maintaining our healthy lifetime value. We will optimize our investments by building a test to invest mindset across promotion, channel and creative to minimize risk of untested concepts, and scale proven investments. As we do this, the measurement, management and optimization of these investments is increasingly important. We are building capabilities and tools to support these efforts and we are focusing on driving stronger engagement with our customers by leveraging data to drive personalization, and better targeting offers and experiences.
Finally, creative. We have an opportunity to better align our fashion, products and celebrity messages with integrated marketing campaigns aligned with where our customer is engaging with our brands, whether stores, site or social. Content generation is critical and with data as our content, we will optimize our creative execution across all channels of engagement.
In summary, I'm truly excited by the opportunity to partner with Greg and the RTW organization to lead the transformation to be truly customer-centric.
With that, I will now turn the call over to Sheamus.
我们在RTW产品组合中拥有良好的基础，包括名人合作以及纽约公司穿着工作裤和连衣裙的市场领导地位，以及FTF和Happy x Nature独特生活方式的潮流大码时装时尚与不断发展的环保意识平台。
Thank you, Traci. Good afternoon, everyone.
Net sales were $201.9 million, as compared to $216.4 million in the prior period, reflecting a 4.8% decrease in comparable store sales and a reduction of 13 stores, partially offset by the increase of sales from new businesses.
Gross profit as a percentage of net sales decreased 260 basis points to 29.5% versus the 2018 second quarter gross profit percentage of 32.1%. While product margin remained near-peak levels, on a rate basis it decreased slightly due to increased promotional activity. We also experienced an increase in shipping costs due to the growth in our digital businesses and a reduction of vendor rebates due to lower inventory receipts. These amounts were partially offset by an improvement in the leverage of buying an occupancy cost as we continue to reduce occupancy expenses.
Selling, general and administrative expenses were $67.2 million, or 33.3% of net sales as compared to $66.3 million, or 30.7% of net sales in the second quarter of 2018. In selling, general and administrative expenses is $2 million of incremental marketing spend, principally in connection with the incubation of our three new businesses and increased recruiting expenses, which were partially offset by a reduction in variable compensation expense.
Operating loss for the second quarter was $7.6 million inclusive of $2.3 million of losses from the Company’s new businesses. This compares to operating income of $3.1 million for the second quarter of fiscal year 2018. Net loss for the second quarter of fiscal year 2019 was $7.5 million or a loss of $0.12 per diluted share, as compared to net income of $3.1 million or $0.05 per diluted share in the second quarter fiscal year 2018.
Total quarter-end inventory increased 8.8% as compared to the end of the prior period, primarily reflecting an increase in merchandise and transit due to shifts in the signing of receipts in an effort to receive goods in advance of tariff increases and an increase in inventory to support new businesses. On hand inventory per store is down slightly.
Capital expenditures were $1.8 million, as compared to $1.4 million in the prior year period, reflecting continued spending to support new stores and the remodel refresh of existing stores and investments in the IT infrastructure.
During the second quarter, the Company opened three New York & Company stores, and two Fashion to Figure stores, closed one New York & Company store and one outlet store, and converted two New York & Company stores to outlet stores, ending the quarter with 413 stores, including 120 outlet stores.
On the real estate front, our short-term renewal strategy continues to provide a highly flexible real estate portfolio with approximately 70% of our store leases expiring in two years or less.
We are also pleased to end the quarter with a strong balance sheet with $83.3 million of cash on hand, representing $1.28 per diluted share, and we have no outstanding borrowings under our credit facility and no long-term debt.
在第二季度，公司开设了三家纽约公司商店和两家Fashion to Figure商店，关闭了一家纽约公司商店和一家直销店，并将两家纽约公司商店转换为直营店，结束了本季度413家商店，包括120家直营店。
Now, turning to our outlook for the third quarter of fiscal year 2019. We continue to focus on investing in the future to drive improvements in long-term operating results and increases in both top-line sales and annual operating income.
For the third quarter, we expect the following. Net sales are expected to be down by a low-single-digit to mid-single-digit percentage range, reflecting the combination of reduced store count and the reduction in comparable store sales, which are expected to be down in the low to mid-single-digit percentage range.
Gross margin is expected to be down slightly on a rate basis, primarily reflecting increased shipping costs due to the growth in our digital businesses, and increased vendor rebates due to lower inventory receipt levels, partially offset by improvements in product margin.
Selling, general and administrative expenses are expected to increase by approximately $2 million versus the prior year’s third quarter. This increase reflects investments in marketing in our effort to drive new customers to our brand, and increase in selling senses, driven by growth in our eCommerce variable costs, and increases in costs to support new businesses, partially offset by reductions in variable compensation and reduced payroll expenses.
Operating loss for the third quarter are expected to reflect a modest loss, excluding one-time non-GAAP charges to exit the Uncommon Sense business, which may include charges to write down inventory and to a much lesser extent, charges to impair certain digital assets and site development costs and record severance as we plan on divesting this business.
On-hand inventory at the end of the third quarter of fiscal year 2019 and the core New York & Company business is expected to be down slightly, offset by increased in-transit levels due to the timing of receipts and inventory to support the new business with total inventory expected to be up in the low to mid single digit percentage range.
Capital expenditures for the third quarter of 2019 are expected to be approximately $4.5 million to $6 million to support ongoing investments in IT infrastructure, and new and remodel store activity. Full-year capital expenditures are expected to be between $12 million and $13 million as compared to $8.5 million in the prior year.
Depreciation and amortization expense for the third quarter is estimated to be approximately $5 million.
During the third quarter of fiscal year 2019, the Company expects to open three New York & Company stores, remodel and refresh one New York & Company store and close one New York & Company store and one outlet store.
With that, I would like to turn the call over to the operator to begin the question-and-answer portion of the call.
[Operator Instructions] Our first question comes from the line of Dave Kanen with Kanen Wealth Management.
Hi, guys. Good afternoon. First, I'd like to welcome Traci aboard, look forward to seeing her prints on the Company and hopefully a positive effect going forward. So, again, welcome Traci and I wish you much success.
嗨，大家好。 下午好。 首先，我想欢迎Traci加入，期待看到她在公司的印刷品，并希望在未来取得积极成果。 所以，再次欢迎Traci，我祝你取得圆满成功。
You’re welcome. So, a few questions. Could you go into FTF, what was the same-store sales growth for the quarter?
别客气。 那么，几个问题。 您能否进入FTF，本季度的同店销售增长是多少？
Hi, Dave, it Sheamus. So, we don't disclose the actual same-store sales growth by channel within the business. But the FTF business continues to grow on a strong rate, particularly within the core, eCommerce component or the digital component of that business. We continue to have double-digit comps within that segment of the business and believe that that opportunity, as Greg highlighted, is significant for us in the future.
嗨，戴夫，谢谢。 因此，我们不会在业务范围内按渠道披露实际的同店销售增长。 但FTF业务继续以强劲的速度增长，特别是在核心，电子商务组件或该业务的数字组件中。 我们继续在该业务部门中拥有两位数的合并，并相信Greg强调，这一机会对我们未来具有重要意义。
Was it profitable for the quarter or do you expect it to be profitable in the near future?
So, in terms of the profitability of the business, it was not profitable for the quarter. However, as we've commented in the past, this was always a year for us of investment in terms of each of our new businesses. And while we did not have profitability in the quarter within those businesses or within the Fashion to Figure business, we do believe in the long-term opportunity within Fashion to Figure. And we do believe that in short order, we will, with growth and with the investments that we're planning on making in both digital and customer growth and with Traci's influence, we believe we will shift that business to profitability in the very near term.
因此，就业务的盈利能力而言，本季度并无盈利。 但是，正如我们过去所评论的那样，对于我们每个新业务而言，这对我们来说总是一年的投资。 虽然我们在这个季度内没有盈利能力，但在时尚到图形业务中，我们确实相信Fashion to Figure中的长期机会。 我们相信，在短期内，我们将通过增长和我们计划在数字和客户增长方面进行的投资以及Traci的影响力，我们相信我们将在短期内将业务转变为盈利能力。
Okay. And then, what was the growth year-over-year in eCom?
So, again, we don't disclose the comps by channel or business. But, I think as we commented in several components of our prepared remarks, we did see the penetration of our eCommerce business grow to 30% of our sales, which is a significant, obviously, component of our total sales. That was up from 26% of our sales last year. And the digital businesses did perform positively and comp positively within our core business. So, it was a strong quarter for our digital businesses, positively comping.
And again, we believe as we make investments in terms of marketing as we make investments in terms of customer acquisition that we will see more dramatic growth in future, but that was one of our positives for the quarter.
因此，我们再次不按渠道或业务披露合同。 但是，我认为，正如我们在准备的评论的几个组成部分中所评论的那样，我们确实看到我们的电子商务业务的渗透率增长到我们销售额的30％，这显然是我们总销售额的重要组成部分。 这比我们去年销售额的26％有所上升。 数字业务确实在我们的核心业务中发挥积极作用并积极参与。 因此，对于我们的数字业务而言，这是一个强劲的季度，积极合作。
And then, you guys kind of not snuck a press release, and it looks like yesterday on Kate Hudson getting this collaboration with Selfridges. Could you speak to the opportunity size there? How many doors, countries, and what you guys think your total addressable market is in collaboration with them?
然后，你们有点没有偷看新闻稿，看起来就像昨天Kate Hudson与Selfridges的合作。 你能跟那里的机会大小说话吗？ 有多少门，国家，以及你们认为你的总可寻址市场与他们合作的东西？
Hi, Dave, it's Greg. So, this was an opportunistic partnership in the sense that they really, really liked the collection. It also has a sustainable part of the collection, which is really what Selfridges is all about. Kate also is obviously very popular in all of Great Britain. So, I think it was a great marriage. So, we started very small with them. What it did give us is international shipping. We currently don't have international shipping on our current sites. And so, it will allow the collection to expand internationally, as well have a premier retailer in Europe to have the collection. I would say we're going to go slow. We're very happy with the initial results. It's just launched on Sunday, and the results are very promising. I think what this does is there's probably opportunity, as we expand this outside of New York & Company, especially as we're seeing the response to the collection outside of the New York & Company brand.
嗨，戴夫，这是格雷格。 所以，这是一个机会主义的伙伴关系，因为他们真的非常喜欢这个系列。 它也是该系列的可持续部分，这正是Selfridges的全部内容。 凯特在整个英国也显然很受欢迎。 所以，我认为这是一场伟大的婚姻。 所以，我们从他们开始很小。 它给我们带来的是国际航运。 我们目前的网站上目前没有国际运费。 因此，它将使该系列产品在国际上得到扩展，并在欧洲拥有一家顶级零售商来收藏该系列产品。 我会说我们会慢下来。 我们对初步结果非常满意。 它刚刚在周日推出，结果非常有希望。 我认为这可能是机会，因为我们在纽约和公司之外进行扩展，特别是当我们看到对纽约和公司品牌之外的收藏品的回应时。
And then, Sheamus, in terms of the guidance that you gave in the prepared remarks, you said that you expect gross profit to be down slightly and to have, I think, you said something like a modest operating loss. Could you quantify that? What is gross profit down slightly, is that 50 basis points or is that 200 basis points? And then, a modest operating loss. Does that means sub $1 million or potentially more than that?
然后，Sheamus，就你在准备好的评论中给出的指导而言，你说你预计毛利润会略微下降，而且我认为你说的是一些适度的经营亏损。 你能量化一下吗？ 什么是毛利润略有下降，是50个基点还是200个基点？ 然后，适度的经营亏损。 这是否意味着低于100万美元或可能超过100万美元？
Yes. So, in terms of, first, the gross margin question. I think, we commented, you're correct, the gross margins are expected to be down slightly. We are seeing improvements in our product margin. So, where we're seeing a slight deterioration, and it would be towards the lower end of the numbers that you threw out. It would certainly not be in the 200 basis-point range, so towards the lower end of what you commented in the ranges. And it's primarily based upon, as we commented, increases in shipping costs. And we grow the digital businesses, we're seeing an increase in those variable expenses. We're obviously offsetting that to a certain degree with our real estate strategy and the aggressive approach that we're taking to reduce occupancy costs. But given the increases that we're expecting in digital sales, we are anticipating shipping increases, which is driving a slight decrease in overall margin. But, the product margin is up.
是。 因此，首先是毛利率问题。 我认为，我们评论说，你是对的，预计毛利率会略有下降。 我们看到产品利润率有所改善。 所以，在我们看到轻微恶化的地方，它会向你扔出的数字的低端。 它肯定不会在200个基点范围内，所以在你所评论的范围的下端。 正如我们评论的那样，它主要基于运输成本的增加。 我们发展数字业务，我们看到可变费用增加。 我们的房地产战略以及我们为降低入住成本所采取的积极态度，我们显然在一定程度上抵消了这一点。 但考虑到我们对数字销售的预期增长，我们预计出货量增加，这推动整体利润率略有下降。 但是，产品利润率上升。
And then, the statement, modest operating loss. How do you define modest? Is that $1 million or less or $2 million or less, $5 million or less?
然后，声明，适度的经营亏损。 你如何定义谦虚？ 这是100万美元或更少，还是200万美元或更少，500万美元或更少？
Yes. I mean, obviously, we didn't define a range. So, it's a small loss. I would say, we wouldn't say, it's $1 million or less, that would -- that's a very narrow range. But, certainly, not a significant loss. But, as I said, we haven't defined an explicit range in that. But, given some perspective that we are anticipating a modest loss.
是。 我的意思是，显然，我们没有定义范围。 所以，这是一个小小的损失。 我会说，我们不会说，它是100万美元或更少，那将是 - 这是一个非常狭窄的范围。 但是，当然，不是重大损失。 但是，正如我所说，我们尚未确定明确的范围。 但是，鉴于一些观点，我们预计会出现适度的损失。
And then, one more question, and this is really for Traci. I understand the pivot or the transformation that the Company is embarking upon, to a -- and perhaps my terminology is not really correct, in eCom first, social media, social influencer type of model. And I would point to textile where you were previously involved, and I'm very excited about that. I understand that that really is the future. And when we look at valuations of public companies, that model has values like possibly 30 times that of a traditional brick and mortar retailer. So, that being said, Traci, looking out longer term, with the relationships that we have, the celebrity collaborators, our existing brands with what you're working with today, how do you feel in general about the opportunity? And, three years from now, where do you see this pivot going to, if you could quantify it? I'm not going to hold you to specific numbers. But what do you -- if you could kind of give me a range of how you would define success, giving some numbers, I'd appreciate that.
然后，还有一个问题，这对Traci来说真的很重要。我理解公司正在着手的支点或转型 - 在eCom首先，社交媒体，社会影响者类型的模型中，也许我的术语并不正确。我会指出您之前参与的纺织品，我对此感到非常兴奋。我明白这真的是未来。当我们研究上市公司的估值时，该模型的价值可能是传统实体零售商的30倍。所以，就是说，Traci，从长远来看，与我们的关系，名人合作者，我们现有的品牌与你今天的工作，你对这个机会的整体感觉如何？而且，从现在起三年后，如果你能量化它，你会在哪里看到这个支点？我不打算让你知道具体的数字。但你怎么样 - 如果你能给我一系列如何定义成功，给出一些数字，我会很感激。
It's interesting that you bring a fair evaluation process for digitally native brands. I think also what we should be talking about is the customer acquisition practices for digitally native brands. And that's where I see a lot of opportunity is bringing that more modern customer acquisition process and expanding the digital footprint to a more traditional business like New York & Company. I think that's where we'll really have a lot of success and growth.
You mentioned the celebrity collaborations. We're looking at influencer programs. I'd like to think about influencers as from celebrities at the top to civilians at the bottom. And there are influencers that we can tap into that are micro and nano influencers that you may have never heard of, but are actually going to be very, very cost efficient for driving customer acquisition at scale.
So for me, I wouldn't be comfortable right now putting some specific numbers out there for you. But what I can say is that we're looking at a roadmap of bringing some of those best practices and customer acquisition and being digitally native and understanding how to grow the business in a more modern way and tell our brand story in places where the consumer is consuming the brand story, which is not always just in your stores and catalogs. Those are important parts of the piece, but they're not the entire -- entirety, right? So, expanding that digital footprint for the brands will really help us to grow our customer base.
Okay. Well, I wish you the best of luck. I'm excited to see your mark on the company in the next year or two.
好的。 好吧，祝你好运。 我很高兴在未来一两年内看到你在公司的成绩。
Thank you. Me too.
Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Greg Scott for closing remarks.
Thank you again for joining us. We look forward to speaking with you when we report our third quarter results in December. Thank you.
再次感谢您加入我们。 我们期待在12月报告第三季度业绩时与您交谈。 谢谢。
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
今天的会议结束了。 您可以在此时断开线路。 感谢您的参与，祝您度过愉快的一天。
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