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01/11 13:57
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlighted several negative factors, including declining sales, reduced guidance, and increased SG&A expenses. The withdrawal of full-year guidance and CEO transition add uncertainty. Despite stable shareholder returns and improved debt management, the overall sentiment is negative due to sales decline, margin pressure, and cautious outlook. The Q&A section further emphasized concerns about merchandise mix and the impact of the OMS cutover. These factors collectively suggest a negative stock price reaction in the short term.
Total Company Sales $154 million, down 4.9% compared to Q1 2024, impacted by adverse weather and OMS cutover.
Comparable Sales Down 5.7% year-over-year, partially offset by sales from new stores opened last year.
Store Sales Down 4.4% compared to Q1 2024, affected by weather and customer spending behavior.
Direct Sales Down 5.4% compared to Q1 2024, representing about 47% of total sales, impacted by OMS cutover and customer spending.
Gross Profit $110 million, down about $7 million compared to Q1 2024, due to higher markdown sales and promotional rates.
Gross Margin 71.8%, down 110 basis points versus Q1 2024, driven by a higher mix of markdown sales.
SG&A Expenses $91 million, up from approximately $89 million last year, driven by new store expenses and OMS related costs.
Adjusted EBITDA $27.3 million, down from $35.6 million in Q1 2024, reflecting overall sales decline.
Interest Expense $2.8 million, down from $6.4 million last year, indicating improved debt management.
Adjusted Net Income per Diluted Share $0.88, down from $1.22 last year, affected by a higher diluted share count.
Cash from Operations $5.3 million, resulting in ending cash of about $31 million, indicating stable cash generation.
Total Inventories Up about 14% compared to Q1 2024, primarily due to supply chain adjustments.
Capital Expenditures $2.7 million, compared to $2.3 million last year, focused on stores and OMS project.
Store Count 249 stores at end of Q1, compared to 244 stores at end of Q1 last year, reflecting store closures.
Quarterly Dividend $0.08 per share, maintained from previous quarters, reflecting commitment to shareholder returns.
Share Repurchase 186,800 shares repurchased for approximately $3.5 million, with $21 million remaining on the authorization.
New Store Openings: Expecting to open between 1 and 5 net new stores this year, down from a prior guidance of 5 to 10 new stores.
Ship-from-Store Capability: Initiating work to enable ship-from-store capabilities in the back half of 2025.
New OMS System: The OMS project was successfully implemented, providing a modern platform for scaling and growth.
Inventory Management: Taking swift actions to reduce inventory investments and align with current demand trends.
CEO Transition: Mary Ellen Coyne has joined as CEO, focusing on assessing business strengths and opportunities for improvement.
Shareholder Return Strategy: Maintaining quarterly dividend of $0.08 per share and continuing share repurchase program.
Consumer Spending Uncertainty: Increased uncertainty affecting consumer spending, particularly noted in April and May, leading to a more discerning customer base.
Supply Chain Challenges: Adverse weather in February and a new Order Management System (OMS) cutover in March impacted Q1 performance, with a $2 million negative effect from the OMS transition.
Macroeconomic Environment: Ongoing volatility in the macroeconomic environment, including uncertainty related to global trade policy, is affecting customer behavior.
Tariff Implications: Assumed tariffs at 10% on all countries and 30% on China, with potential for increased product costs impacting margins.
Inventory Management: Total reported inventories were up 14%, with expectations of margin pressure in Q2 due to select markdowns and promotions.
Store Performance: Store sales down 4.4% compared to Q1 2024, with a noted decline in direct sales as customers primarily shopped markdowns.
Guidance Withdrawal: Withdrawal of prior full year guidance due to increased uncertainty and CEO transition, indicating a cautious outlook.
Capital Expenditure Adjustments: Reduction in expected capital expenditures from $25 million to between $20 million and $25 million, with fewer new store openings anticipated.
New CEO Initiatives: Mary Ellen Coyne emphasizes her commitment to leveraging investments in stores, marketing, and systems to enhance customer experience and drive growth.
Inventory Management: The company is taking swift actions to reduce inventory investments and align with current demand trends.
Capital Expenditures: Expected capex for the fiscal year is revised to $20 million - $25 million, down from approximately $25 million.
Store Openings: The company now expects to open between 1 and 5 net new stores this year, reduced from a prior guidance of 5 to 10 new stores.
Ship-from-Store Capability: The company is piloting ship-from-store capabilities, expected to ramp up in the second half of 2025.
Full Year Guidance: The company has withdrawn its prior full year guidance due to increased macroeconomic uncertainty and CEO transition.
Sales Expectations: Quarter to date through May, total company sales are down mid-single digits compared to the prior year period.
Tariff Impact: The company assumes tariffs will remain at 10% on all countries and 30% on China, with expectations to mitigate costs through vendor negotiations and strategic price increases.
SG&A and Gross Margin: If sales continue to decline, significant SG&A deleverage and further pressure on gross margin are expected.
Dividend: The quarterly dividend of $0.08 per share will be maintained, payable on July 9.
Quarterly Dividend: Maintaining quarterly dividend of $0.08 per share, payable on July 9 to shareholders of record on June 25.
Share Repurchase Program: Repurchased 186,800 shares for approximately $3.5 million during the quarter; $21 million remaining on the $25 million share repurchase authorization.
The earnings call presented mixed results: financial performance was weak with declining EBITDA and net income, but there was optimism in product development and strategic initiatives like AI and marketing. The Q&A revealed concerns about price sensitivity and tariff impacts, but also highlighted promising product categories and strategic pricing successes. Overall, the sentiment is balanced, with positive aspects offsetting negatives, leading to a neutral stock price prediction.
The earnings call reveals mixed signals: a decline in adjusted EBITDA and net income per share, but cash flow remains strong. Product performance is promising in certain categories, and strategic pricing is offsetting tariff impacts. However, guidance for Q3 2025 indicates flat to declining sales and margins, and the company's response to price sensitivity is unclear. The Q&A section suggests some optimism but also highlights uncertainties. Without a market cap, the reaction is likely neutral, with minor fluctuations expected.
The earnings call reflects several concerns: declining sales, increased SG&A expenses, and EBITDA decline. Though there are improvements in inventory management and customer response to promotions, the withdrawal of full-year guidance and uncertainty in promotional levels indicate potential risks. Tariff impacts and cautious guidance further contribute to a negative outlook. The new CEO's initiatives are promising but lack immediate impact. The market's reaction may be negative, especially without clear positive catalysts.
The earnings call highlighted several negative factors, including declining sales, reduced guidance, and increased SG&A expenses. The withdrawal of full-year guidance and CEO transition add uncertainty. Despite stable shareholder returns and improved debt management, the overall sentiment is negative due to sales decline, margin pressure, and cautious outlook. The Q&A section further emphasized concerns about merchandise mix and the impact of the OMS cutover. These factors collectively suggest a negative stock price reaction in the short term.
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