Welcome to Chico's FAS second quarter 2021 conference call and webcast. All participants will be in listen only mode. Please note, this call is being recorded. I'd now like to turn the call over to David Oliver, Interim Chief Financial Officer and Senior Vice President, Controller. Mr. Oliver, please go ahead. Good morning, and welcome to the Chico's FAS second quarter 2021 conference call and webcast. Molly Langenstein, our CEO and President, also joins me today. For reference, our earnings release can be found on our website at www.chicosfas.com under Press Releases on the Investor Relations page. Today's comments will include forward-looking statements regarding our current expectations, assumptions, plans, estimates, judgments, and projections about our business and our industry, which speak only as of today's date. You should not unduly rely on these statements. Important factors that could cause actual results or events to differ materially from those projected or implied by our forward-looking statements are included in today's earnings release, our SEC filings, and the comments made on this call. We disclaim any obligation to update or revise any information discussed on this call, except as may be otherwise required by law. Now I'll turn the call over to Molly. Thank you, David, and good morning, everyone. I'm excited to share our second quarter results as they underscore the incredible progress we continue to make in our turnaround strategy despite pandemic challenges. Our earnings per share of $0.21 is the best second quarter performance we have posted since 2013. This return to profitability was driven by our turnaround action plan that grew sales, expanded gross margin, and diligently controlled our expenses. Our robust second quarter sales growth of 54% was across all three brands and was propelled by our meaningful enhancements in product and marketing, which continued to significantly drive full price selling, reduce markdowns, and increase gross margins. Soma achieved the highest second quarter sales results in the brand's history. Not only did Soma post a 53% sales growth over last year's second quarter, comparable sales grew a remarkable 38% over the second quarter of 2019. In fact, we have had four consecutive quarters of comp growth at Soma. Congratulations to the Soma team. Soma remains on track to delivering an incremental $100 million in sales this year. According to NPD Research data, Soma's growth outpaced the market in non-sports bras, panties, and sleepwear for the past 12 months compared to the same period in 2019. In addition, as customers' preferences have shifted to comfort, Soma strategically increased its wireless bra assortment, taking more market share than any other brand for the last 12 months compared to the same period in 2019. We believe this data, along with our recent performance, is a strong indication that Soma is well positioned to capture additional market share and explode into a billion-dollar brand by 2025. The business strategies put in place in Soma around inventory, product, marketing, and digital are working, and we are confident applying this proven playbook at Chico's and White House Black Market will continue their sales momentum. Exciting things are indeed happening at both Chico's and White House Black Market, as indicated by second quarter sales growth of 59% and 48%, respectively. At both apparel brands, customers are enthusiastically responding to our elevated quality and styling enhancements, which are leading to meaningfully faster sell-through rates, higher productivity, and more full price sales and better maintained margins. Our second quarter results once again highlight the incredible progress we are making on our five strategic priorities. Let me take a few minutes to update you on each. Priority number one, continuing our ongoing digital transformation. Over the last two and a half years, we have successfully transformed into a seamless digital-first, customer-led company, adding resources and making strategic investments in talent and technology. We have been thrilled with the trajectory of our digital sales over this timeframe. As our store revenues continue to rebound, our second quarter digital sales grew 23% over 2019 levels. Style Connect and My Closet continue to gain traction, and customers using these proprietary digital tools are more engaged and have our highest conversion rates, UPTs, and average order values. These tools continue to drive new multi-channel customer growth, and these customers are our most valuable, spending more than 3x a single-channel customer. Afterpay, the popular benefit launched in time for holiday last year, allowing for customers to pay for their purchases in installments, has also proven to be a terrific UPT and sales driver and is beating our expectations. Priority two, further refining product through styling, fabric, and innovation. At each of our brands, we are leveraging customer data and insights and continually elevating our product to take market share and drive results. Customers are clearly responding across all three brands. Continual newness in creating comfortable, beautiful solutions are core to the Soma brand. We are feeding a conveyor belt of innovation for wireless and sports bras, ensuring she has the absolute right bra for everything she does in her life. Sleepwear and panties continue to be strong and drove double-digit growth over last year and 2019 levels. Chico's customers are continually responding to our newness, comfort features, novel technology, and innovative fabrics, with pronounced acceleration in the quarter in denim, pants, dresses, knits, and woven tops. White House Black Market also continued to benefit from elevated styling and quality improvements. Customers responded to our new pant and short programs as well as knits and dresses. Congratulations to the apparel teams for a great quarter. Next, driving significant increased customer engagement through digital storytelling. Through our enhanced customer data analytics and insights, we have elevated and targeted our marketing efforts, which are driving brand awareness, generating traffic, and acquiring new customers. We continue to allocate more resources to digital storytelling, social influencers, and other social efforts. Our social media customer engagement continues to grow and customers are responding to influencers and associates. We continue to acquire new customers and their average age continues to trend younger than existing customers, which reinforces the runway for all three brands. Priority four, maintaining our operating and cost disciplines. Our most meaningful second quarter accomplishment was our gross margin performance. In fact, we posted our highest gross margin rate in 13 consecutive quarters. This was driven by strength in full price sales and the corresponding reduction in promotions. Our on-hand inventories remain strategically lean, down 27% versus last year's second quarter, and down 20% compared to the second quarter of 2019. Scarcity of product and social proofing continued to drive a sense of urgency for customer purchasing. These factors should continue to strengthen gross margin performance. However, we are facing certain headwinds in the back half of the year that will impact gross margin and sales, including cost pressures from logistics, sourcing, fulfillment, and the labor market. These considerations are included in our guidance that David will cover later in the call. Finally, our last priority, delivering higher productivity in our real estate portfolio. We delivered strong store growth during the quarter, and stores continue to be an integral part of our overall strategy, as data indicates that digital sales are higher in markets where we have a strong retail presence. Prudent store growth makes sense where the investment delivers profitable returns. We have successfully opened 47 Soma shop in shops inside Chico's stores, which are exceeding expectations, driving new customers to both brands, and further expanding our digital business. More of these shop in shops are scheduled going forward, with a total of 70 expected by first quarter of next year. At the same time, we continue to rationalize and tighten our real estate portfolio for higher store profitability standards. Accordingly, we will continue to shrink our store base, primarily as leases come due, lease kick-outs are available, or buyouts make economic sense. We have lease flexibility with nearly 60% of our leases coming up for renewal or kick-out available over the next two to three years. We are still on track to close 13%-16% of our remaining store fleet through the end of fiscal 2023, with 45 to 50 of those closures occurring this fiscal year. During the quarter, we closed nine stores, bringing our year-to-date closings to 18, and we ended the quarter with 1,284 boutiques. Now, let me turn the call over to David to update you on our financial performance. Thanks, Molly. We are very pleased with our company's return to profitability, posting diluted earnings per share of $0.21 for the second quarter, compared to a $0.40 loss per share from last year's second quarter, and a $0.02 loss per share for the second quarter of fiscal 2019. Q2 is our best quarter earnings performance since 2013. Second quarter net sales totaled $472 million, compared to $306 million last year. This 54% increase reflects meaningful improvement in product and marketing, which drove full price selling, as well as a recovery in store sales. As our stores were temporarily closed or operating at reduced hours last year, partially offset by 29 net store closures in the last 12 months. Looking at the second quarter compared to 2019, our comparable sales were basically flat, declining just 1.6%, with Soma improving 38%, and Chico's and White House Black Market declining 14% and 5%, respectively. Total company on-hand inventories compared to 2019 declined 20%, with Soma up 19% and Chico's and White House Black Market down 32% and 49%, respectively, illustrating that the strategic investments in Soma's growth and our turnaround strategy in Chico's and White House Black Market are working. Second quarter gross margin was 38.4% compared to 14.6% last year, which included the impact of significant non-cash inventory write-offs. This year, we meaningfully expanded our margin rate as a result of disciplined inventory control, strategically reduced promotions, and more full price selling. This was our highest gross margin rate in 13 consecutive quarters. SG&A expenses for the second quarter totaled $146 million, or 30.9% of sales, an improvement of more than 400 basis points from last year's second quarter, and nearly 300 basis points better than the second quarter of 2019. We have continued our cost discipline and reduction initiatives, enabling us to realize leverage in the current year. Regarding our financial position, we continue to build cash and our balance sheet continues to strengthen. We entered the quarter with over $137 million in cash and marketable securities, an increase of nearly $35 million over the first quarter. Borrowings on our $300 million credit facility remain unchanged from fiscal year-end at $149 million. Our financial position liquidity continues to be bolstered by improving retail sales and a lean expense structure that better aligns cost with sales. During the second quarter, we received a $16 million income tax refund related to the $55 million income tax receivable reported in the first quarter, and we expect to receive the balance of the $55 million in the third quarter. We anticipate building cash throughout the remainder of fiscal 2021. In the second quarter, we continued our lease renegotiation initiatives with A&G Real Estate Partners, securing year-to-date commitments of approximately $15 million in incremental savings from landlords, the majority of which will be realized this fiscal year. This is in addition to the $65 million in abatements and reductions negotiated last year, for a total savings to date of $80 million. Turning to our outlook. During the balance of fiscal 2021, we expect improving year-over-year demand but recognize that there is economic uncertainty as we continue to manage through the pandemic. In addition, we are facing macro supply chain headwinds in the back half of the year that we expect will impact sales and gross margin, including higher freight cost, extended transit times, and product supplier handover delays driven by the pandemic. Accordingly, given this uncertainty, we are not providing specific guidance, but instead offering high-level outlook expectations for the third quarter and fiscal year. For the third quarter, we expect consolidated year-over-year sales improvement in the 18%-22% range. Gross margin rate improvement of 13 to 15 percentage points over third quarter last year. SG&A as a percentage of sales to improve 500 to 600 basis points year-over-year, and an income tax rate of 34%-35%. For the full fiscal year, we expect consolidated year-over-year net sales improvement in the 32%-35% range. Gross margin rate improvement of 20 to 22 percentage points over fiscal 2020. SG&A as a percentage of sales to improve 500-600 basis points year-over-year, and an income tax rate of 34%-35%. I'll now turn the call back over to the operator for Q&A. Thank you. At this time, we would be happy to take your questions. In the interest of time and consideration to others, please limit yourself to one question. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Susan Anderson from B. Riley. Please go ahead. Hi, good morning. Really nice job on the quarter. It's nice to see the significant improvement there. I'm curious, just looking out to third quarter, it looks like your guidance is maybe expecting a slowdown versus 2019 levels from second quarter. Just curious if there's something driving that, and then also have you seen an impact from the Delta variant? Thank you, Susan. Let me start with the third quarter question that you mentioned in terms of the slowdown to second quarter, and then I'll follow up with the impact on the Delta variant. The biggest headwind that we see in front of us is in sourcing. With the back half, in terms of being with less strategic inventories, we need to make sure that we ensure our pipeline coming into us. We've done several things on the sourcing front, which really is what's impacting the guidance on the sales. First of all, we are managing and pivoting our supply chain, responding to the rising COVID cases that right now are resulting in manufacturing delays in countries like Vietnam, specifically. Today, 73% of our ex-factory is leaving on time, and the sourcing team is doing an excellent job managing what they can, and we've been successful moving 9% of our overall production out of Vietnam into other countries. Having said that, even though we are moving deliveries and we have protected those goods from Vietnam, at least partially, we are experiencing additional delays in terms of the ports and also in terms of road. That is why we are more cautious in the back half of the year, knowing that we have some of these supply chain headwinds. In regards to the impact on the Delta variant, we are not seeing, if we look at the month of August, any differences in traffic to our stores. There's been a little tiny bit that we've seen in the last couple of days. Some of that is part of the hurricane impact overall to the traffic. We are watching it very closely. Great. That's good to hear. Also, maybe if you could talk about the gross margin, a very nice performance in the second quarter. How much of that is sustainable longer term? Also, do you see more opportunity on the gross margin front as we look out over the next couple of years? Sure. Thanks, Susan. Regarding gross margin, we're not providing guidance long term on gross margin at this time. The biggest factors regarding gross margin, as you look back over the years, is we've been over purchasing, and we've had poor product in recent years, in particular in the apparel brands. We've become more disciplined in how we're managing our inventories, and we're improving our product. I think both will benefit gross margin performance moving forward. Great. Thank you. Then if I could just add one more follow-up on Soma. You mentioned you expect it to be a much larger brand as we look out into the future. Maybe if you could talk about where you see that brand going, and also just in terms of product categories, is there still opportunity to expand into new product categories? Susan, we are excited about the opportunities in Soma and the record performance that we had for this quarter with our record sales in Q2. The key point in terms of Soma is the aggressive market share that we are taking in bras and how that also complements the additional market share with panties. We are finding that there are many additional categories within bras that we can expand into. We just launched two new bras actually this past month, and we have a pipeline of innovation that we have put into place in front of us to be able to continue to grow that category. Additionally, we enjoy a fantastic sleepwear program within the brand, and we see the changes that we've made within marketing to be able to invite more people into the brand have been working for us over the last two years. The shop in shop additions into Chico's has introduced it to additional customers, and they are also responding positively. This is about growth in the brand, not only in stores, in shop in shops and online, and also recognition from getting additional customers into the brand from an age standpoint and diversity and size. Great. Thanks a lot. There's a lot more runway in front of us. Yeah. Thank you. The next question comes from Janet Kloppenburg from JJK Research. Please go ahead. Hi, everybody. Can you hear me? Yes. Yes. Okay. Thank you. Congratulations on the progress. If you look at your sales guidance for the year, you get to about something close to $1.8 billion versus the $2 billion you did in 2019. Can you adjust the 2019 number for store closings so we know how much closer you are on a like-to-like store base? Well, we shared that the comp for the quarter was down 1.6%, which would include the store closures in totality. That is in that number. That includes the stores that have closed to this date. Yes. I take the $2 billion that you did for 2019 down about 2%, and I get the like-to-like number. Is that right? Yes. We've also listed out the stores that we've closed so far through Q2, and we have additional stores to close in the back half of the year. Right. It'll be a greater impact in the back half of the year. Yes. Okay. That decline versus 2019 then would be reflective of lost productivity at Chico's and White House Black Market. I'm wondering how you're thinking about that, Molly, and when you think you might be able to get back to pre-pandemic levels there. Janet, we don't look at it as lost productivity. We look at it as this is part of our turnaround strategy and how we are resetting the brand. Something that's been key to our strategy is walking away from promotion. That has been intentional. Key to being able to deliver a new brand to consumers is resetting that brand image and keeping our inventories tight this year as part of our strategy. Okay. Thank you. When you look at Chico's and White House, how far along do you think you are on that turnaround in terms of winning your customer back? Maybe you look at loyalty attachment, those kinds of things, repeat purchases. Some of what's going on in women's apparel has to do with just the fact that women didn't buy any clothes last year. Sometimes or not a meaningful amount of clothes for work or social occasion. The question is, where are you in terms of winning back your customer on a repeat basis as we look forward? How much more work is there to do in these repositioning programs? I will give you the statistic of our spend per customer. Our spend per customer in the second quarter in all three brands was at its highest level in five years. That is a testimony that the customers are not buying just one items, but multiple items at a higher AUR, and that includes new customers to the brand, reactivated customers, and our loyals. Okay, great. That's great. When you think about the supply chain issues that are going on right now, do you think this is a scenario that could continue into next year? Yes. We have every indication from the market that these will certainly continue into the first half of the year and why we have moved up our life cycle calendar four weeks. We have partnered with suppliers to find alternative countries for production and also we have found different ports to be able to use. We are using every strategy and tactic to be able to manage and get in front of this going forward. When need be, we are definitely flipping to air to ensure that we have a flow of inventory. Do you think that the inventory picture for both Chico's and White House will be improved as we enter the fourth quarter and the first quarter? Still constrained, but improved versus where it is now. We have a thoughtful plan on part of our resetting strategy and our turnaround plan on gradually moving those brands forward. You will see our continued investment in both of those brands, and we are also not taking our foot off of the gas on Soma. Right. Well, you've done much better on the inventory levels at Soma, so I guess you must be eying that. We have a combination in all three of the brands, and we are prioritizing our biggest key items and drivers in those differentiator categories to make sure that we have them on time and making that decision between the three brands. Okay. Thanks so much. You're welcome, Janet. Thank you. Good luck. The next question comes from Marni Shapiro from Retail Tracker. Please go ahead. Hey, guys. Congratulations on the improvements. I have to say, your latest Chico's set is absolutely beautiful. Thank you, Marni. Could you talk a little bit, two topics, one on marketing, if you could talk a little bit about your thoughts on marketing spend for the back half of the year. You had that outstanding viral TikTok, and I'm just curious in the aggregate what your thoughts are about marketing and what your spend looks in the back half of the year. Then just a quick question on traffic. Are you seeing traffic at the stores improve or sales being driven more by conversion and AUR? Just curious what the mix shift is there. Let me start with the marketing spend on the back half, and then I'll come back to the traffic and mix and kind of what we're seeing in the stores. For marketing, we continue to push more of the budget towards digital. In fact, our digital spend is double that of a traditional marketing spend, and that is our allocation for the back half as well. In that digital spend, we are pushing more dollars into social, not only for our Facebook Live events, but also influencers. We also even have associates that are using that platform with great success, and that continues to drive traffic and revenue. We are also spending, so how we look at in terms of acquiring customers and reactivating and really literally do a plan by customer to make sure that we hit our numbers. That's how we're thinking about the back half of the year. In terms of traffic in stores, the store traffic is still down. Year over year, it has improved as stores have fully reopened. Overall, compared to 2019, traffic at Chico's and White House Black Market is still down and it's up modestly at Soma. Okay. This is all being driven by conversion and AUR. Yes. Conversion, AUR, UPT. Fantastic. Thanks so much, guys. I'll take the rest offline. Thank you, Marni. The next question comes from Dana Telsey from Telsey Advisory Group. Please go ahead. Good morning. Nice to see the progress. Can you unpack the performance between the stores and digital by brand? What did you see? Was there anything different that you noticed? With the full price sell through on raw materials, are you taking price increases that you think are sticky? I have a quick follow-up. Let me start with the stores and things that we've noticed between the different channels. The customer that we saw when we really first started to open up more in the second quarter was excited to come back to stores. However, we do still see that her behavior of pre-shopping online has not waned. She's spending a lot of looking online and then either contacting her stylist to make sure that she can get things in the fitting room for her to try on, which then makes her trip to the store much shorter and faster in terms of the transaction. We're still seeing the behavior between both channels, and very interactive. There was early in the quarter, a lot of euphoria for customers to get back into stores and meet with their person, and that traffic has pretty much remained consistent between the three brands during the quarter. If that answers your question in terms of how we're seeing the stores and the digital, they're definitely playing and supporting one another, which is what we hoped it to do. In terms of prices and how we're thinking about prices, there are cost pressures, as you know, in logistics, sourcing, fulfillment, and even fabric and manufacturing. Our primary goal is to maintain or improve the quality of our product and then deliver that product as quickly as possible to customers. Having said that, we have surgically looked at ticket prices by style and by category, and raised ticket prices where we feel it is in a price value that our customer would expect. We've done that very judiciously and surgically. Got it. Just following up on the real estate commentary that you made. It sounds like there's a little bit more on renegotiated lease terms and dollars that you get back. Anything as you look out to 2022, what we should look at that way? The Soma shop-in-shops in Chico's appears to be successful. What are you replacing by putting that in, and does that go chain wide? I'll take on the shop-in-shops, then I will give David the other question. What the shop-in-shops are replacing is actually clearance. We're serious about making sure that we have reset the brands for regular price for the future and making sure that we have selected stores that are very big footprint. There's a 350 sq ft that occupies the Soma shop-in-shop that it fits in nicely, and it actually is not disrupting the Chico's business. It's a plus one, it's definitely an and. Right now we see that by first quarter we'll have up to 70 open. There might be a few more stores, Dana, than that to look at for the future, really where we will focus our growth in 2022 is opening new Soma stores and put our attention there. Thank you. Dana, regarding the A&G real estate initiatives. As you know, we had $65 million in savings last year. We've added to that in phase II with additional $15 million. We're currently nearing the end of phase II with that $15 million of savings. As stated this morning, we expect the $15 million, most of that to be realized this fiscal year. That stated, the earnings impact or as it translates into the P&L is based over the remaining lease term. You're not going to see that in the P&L, but you will ultimately see it in the cash balance. Thank you. This concludes our question and answer session. I'd like to turn the call back over to Molly Langenstein for closing comments. Thank you. We are a digital-first customer led company with three unique brands, each with tremendous growth potential. Our turnaround is on track, and we are well positioned to build on our first half momentum, continue to improve our operating performance, and generate shareholder value over the long term. We have an exciting future ahead. Thank you so much for your interest in Chico's FAS and for joining us today. We look forward to speaking with you again in November for our third quarter call. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.