RTW Retailwinds Inc (NYSE:RTW) Q3 2019 Earnings Conference Call - Final Transcript

Dec 05, 2019 • 04:30 pm ET

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RTW Retailwinds Inc (NYSE:RTW) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Greetings, and welcome to the Retailwinds, Inc. Third Quarter 2019 Earnings Conference Call. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions]

I will now turn the conference over to your host, Francesca Filandro of ICR. You may begin.

Executive
Francesca Filandro

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 '18 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.

Executive
Gregory J. Scott

Thank you, Francesca. Good afternoon and thank you for joining us. With me today to discuss our third 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 were disappointed with our third quarter results as softness in our store channel contributed to our sales decrease and operating loss below our expectations. That said, we continue to make progress against our strategic initiatives, which include growing our multi-brand platform, driving digital growth across all brands, and implementing our Customer First initiative.

I'm encouraged to report that in the third quarter, our Fashion to Figure brand delivered a 55% comp, our total digital businesses across all brands delivered positive comp results and represented 36% of total volume, and we were able to accelerate further our new customer growth. Unfortunately, traffic in our store channel combined with challenges in our denim-based SoHo Jeans sub-brand drove the quarter's operating loss. The team navigated these headwinds through disciplined inventory and expense controls and we ended the quarter with $66 million in cash on-hand and no debt. We acknowledge these challenges and are addressing with a sense of urgency.

I'm proud of our team's ability to navigate challenges by appropriately managing our controllables, including expenses and inventory which contributed to near peak product margin rate levels while also investing in new businesses to support our multi-brand portfolio and customer acquisition to drive future growth. Overall, the combined impact of the negative 4% consolidated comp sales decline coupled with increased shipping expenses, reduced spender rebates, increased marketing spend to drive customer acquisition and investments in new businesses resulted in non-GAAP operating loss of $7.5 million, which excludes the impact of a one-time charge as related to the closure of our lingerie business, Uncommon Sense.