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Edited Transcript of NWY earnings conference call or presentation 22-Aug-19 8:30pm GMT

Q2 2019 RTW Retailwinds Inc Earnings Call

New York Sep 11, 2019 (Thomson StreetEvents) -- Edited Transcript of Rtw Retailwinds Inc earnings conference call or presentation Thursday, August 22, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Gregory J. Scott

RTW Retailwinds, Inc. - CEO & Director

* Sheamus G. Toal

RTW Retailwinds, Inc. - Executive VP, COO & CFO

* Traci Inglis

RTW Retailwinds, Inc. - President, Chief Marketing & Customer Officer and Director

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Conference Call Participants

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* David L. Kanen

Kanen Wealth Management LLC - President & Portfolio Manager

* Francesca Filandro

ICR, LLC - IR Associate

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Presentation

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Operator [1]

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Greetings and welcome to RTW Retailwinds Second Quarter 2019 Earnings Conference Call. (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.

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Francesca Filandro, ICR, LLC - IR Associate [2]

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Thank you. Good afternoon, everyone. Before we begin, I would 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 publicly 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.

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Gregory J. Scott, RTW Retailwinds, Inc. - CEO & Director [3]

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Thank you, Francesca. Good afternoon, and thank you for joining us. With me today to discuss our second quarter 29 result -- 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 multibrand 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 in 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 has 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 up to near-peak product margin rate 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, reduced 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 of 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 towards our strategy, creating a multibrand 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, continues 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 increased 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 our 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. 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 multibrand 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 a 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 in 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 worn by Gabrielle on America's Got Talent. In addition, we were 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 U.K.-based department store Selfridges, which launched this week.

We are seeing our customers respond to areas of business that satisfy their need for fashion, style, quality and value. Our dress assortments, 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 in our marketing -- market-leading franchise pant programs continues to be an area of competitive strength and a strong driver of customer loyalty. In fact, we ranked 12th in the overall payoff category in the pants category, reflecting our strength in the business.

Finally, Soho Street, our street wear-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 in our Soho Jeans sub-brand significantly impacted our overall comp performance. Specifically in denim, we continue to see weakness in our delivery 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.

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 perform generally in line with widely reported industry results. We were pleased to see new and reactivated customer accounts increase in the quarter by 4% comp, which represents an improved -- improvement from trend. With Traci's leadership, we are actively rebalancing our marketing mix to invest more 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 in 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 e-mail marketing performance during the second quarter, leveraging audience segmentation, insight 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 trend. 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 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 through new styles and categories. These assortments are also size-inclusive as we offer sizes 00 through 20 in nearly all styles, including our celebrity collaborations. Across all brands, we were 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, metrics that inform a holistic approach to real estate.

During the quarter, we opened 3 New York & Company locations and will continue to evaluate opportunities in high-profile and premium centers. Importantly, we benefit from a highly flexible real estate portfolio, with roughly 70% of our existing store base on 2 years or less terms. Sheamus will elaborate further on the steps we are taking to rationalize and optimize our store fleet.

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 our more profitable operating model. We continue to identify opportunities to enhance our organization's effectiveness. As we have 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 advance -- 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 the dynamic nature of the macro environment.

Our final strategic priority focused on growth initiatives. While we are maintaining our focus within our core New York & Company business, we are also looking at additional white space opportunities with significant -- without significant capital investments through leverage of RTW's operating platform.

Our Fashion to Figure brand continues to execute against the strategic plan we implemented beginning in the fall of 2018. We are pleased with the overall customer response to our assortments 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 an efficient customer acquisition cost. 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 of 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 future update regarding our growth plans for Happy x Nature throughout 2019.

Our subscription box service, NY&C Closet, continues 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 brands.

Looking ahead to the third quarter. We believe there is 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 pant categories while mitigating risk in our Soho Jeans sub-brand.

In addition, our customer-first initiative, led by Traci Inglis, President, Chief Marketing and Customer Officer, will transform the customer journey across our portfolio brand and position us for long-term growth.

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 strategies, will help lead our evolution to a multibrand 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.

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Traci Inglis, RTW Retailwinds, Inc. - President, Chief Marketing & Customer Officer and Director [4]

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Thank you, Greg. I'm very excited to be here at RTW and to be working with the talented teams as we execute our brand's growth strategies. I believe we have the right ingredients for success, including strong products 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 and product across the RTW portfolio, from celebrity collaborations and a market leadership position in wear-to-work pants and dresses for 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 3 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 acquisitions.

Next, data and technology. We are leveraging customer data and decision-making with a focus on acquiring new customers and maintaining our healthy lifetime values. We will optimize our investments by building a test-to-invest mindset across promotions, channels 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, product and celebrity messages with integrated marketing campaigns, aligned with where our customer is engaging with our brands, whether stores, sites or social. Content generation is critical, and with data as our compass, 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.

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Sheamus G. Toal, RTW Retailwinds, Inc. - Executive VP, COO & CFO [5]

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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 remains near peak levels, on a rate basis, it decreased slightly due to increased promotional activity. We also experienced an increase in shipping cost 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 and occupancy costs 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, there's $2 million of incremental marketing spend, principally in connection with the incubation of our 3 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 of 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 timing of receipts in an effort to receive goods in advance of tariff increases and an increase in the 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 a remodel refresh of existing stores and investments in the IT infrastructure.

During the second quarter, the company opened 3 New York & Company stores and 2 Fashion to Figure stores, closed 1 New York & Company store and 1 outlet store and converted 2 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 2 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.

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 cost due to the growth in our 8 digital businesses and decreased 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 brands, an increase in selling expenses driven by growth in our eCommerce variable costs and increases in cost 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 onetime 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 in 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 remodeled 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 3 New York & Company stores, remodel and refresh 1 New York & Company store and close 1 New York & Company store and 1 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.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Dave Kanen with Kanen Wealth Management.

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David L. Kanen, Kanen Wealth Management LLC - President & Portfolio Manager [2]

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First, I'd like to welcome Traci aboard. Look forward to seeing her prints on the company in the -- hopefully, a positive effect going forward. So again, welcome, Traci, and I wish you much success. So a few questions. Could you go into F to F? What was the same-store sales growth for the quarter?

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Sheamus G. Toal, RTW Retailwinds, Inc. - Executive VP, COO & CFO [3]

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So Dave, it's 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 -- at 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.

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David L. Kanen, Kanen Wealth Management LLC - President & Portfolio Manager [4]

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Was it profitable for the quarter or do you expect it to be profitable in the near future?

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Sheamus G. Toal, RTW Retailwinds, Inc. - Executive VP, COO & CFO [5]

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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.

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David L. Kanen, Kanen Wealth Management LLC - President & Portfolio Manager [6]

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Okay. And then what was the growth year-over-year in eCom?

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Sheamus G. Toal, RTW Retailwinds, Inc. - Executive VP, COO & CFO [7]

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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 the future. But that was one of our positives for the quarter.

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David L. Kanen, Kanen Wealth Management LLC - President & Portfolio Manager [8]

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Okay. And then you guys kind of 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 the -- what you guys think your total addressable market is in collaboration with them?

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Gregory J. Scott, RTW Retailwinds, Inc. - CEO & Director [9]

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So David, it's Greg. So this was an opportunistic partnership in the sense that they really, really like 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 site, and so it allowed the collection to expand internationally as well have a premium retailer in Europe have the collection. I would say we're going to go slow. I -- we're very happy with the initial results. It just launched on Sunday and the results are very promising. I think what this says 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.

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David L. Kanen, Kanen Wealth Management LLC - President & Portfolio Manager [10]

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Okay. 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 mean sub-$1 million or potentially more than that?

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Sheamus G. Toal, RTW Retailwinds, Inc. - Executive VP, COO & CFO [11]

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Yes. So in terms of, first, the gross margin question, I think we commented at -- 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 cost. As 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 cost. 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 project margin is up.

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David L. Kanen, Kanen Wealth Management LLC - President & Portfolio Manager [12]

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Okay. 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?

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Sheamus G. Toal, RTW Retailwinds, Inc. - Executive VP, COO & CFO [13]

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Yes, I mean, obviously, we're seeing -- 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.

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David L. Kanen, Kanen Wealth Management LLC - President & Portfolio Manager [14]

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Okay. And then one more question, and this is really for Traci. I understand the pivot or the transformation that the company's 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 worked 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 30x 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 3 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.

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Traci Inglis, RTW Retailwinds, Inc. - President, Chief Marketing & Customer Officer and Director [15]

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Sure. I mean it's interesting that you bring a fair valuation 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 as brining 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 in 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 are not the entire entirety, right? So expanding that digitally -- that digital footprint for the brands will really help us to grow our customer base.

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David L. Kanen, Kanen Wealth Management LLC - President & Portfolio Manager [16]

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Okay. Well, I wish you the best of luck. I'm excited to see your mark on the company in the next year or 2.

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Traci Inglis, RTW Retailwinds, Inc. - President, Chief Marketing & Customer Officer and Director [17]

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Thank you. Me too.

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Operator [18]

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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.

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Gregory J. Scott, RTW Retailwinds, Inc. - CEO & Director [19]

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Thank you, again, for joining us. We look forward to speaking with you when we report our third quarter results in December. Thank you.

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Operator [20]

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This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.