Q3 2021 Signet Jewelers Ltd Earnings Call
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Good day and welcome to the Signet Jewelers third quarter fiscal 2021, <unk> earnings Conference call.
All participants will be in listen only mode should you need assistance. Please signal at conference specialist by pressing the star keep all the price Euro after.
After todays presentation, there will be an opportunity to ask questions. Please note. This event is being recorded I would now like to turn the conference over to Vinnie Sinisi of VP Investor Relations and Treasury. Please go ahead.
Great. Thanks, so much of let's say and good morning, everybody welcome to our third quarter earnings conference call on the call today are Signet CEO, John address those and CFO Joe income during today's presentation, we will make certain forward looking statements any statements that are non historical facts are subject to risks and uncertainties and actual results may differ materially.
We urge at read of risk factors cautionary language on other disclosure on our annual report on form 10-K quarterly reports on 10-Q and.
Current reports on eight cash.
Except as required by law, we undertake no obligation to revise or publicly update forward looking statements in light of new information on future events. During the call, we'll discuss certain non-GAAP financial measures for for further discussion on non-GAAP.
Financial measures as well as reconciliation on the non-GAAP financial measures to the most directly comparable GAAP measures of investors should review of the news release, we posted on our website at Www Dot Signet jewelers Dot com slash investors I'll now turn the call over to John.
Thank you Manny good morning, everyone. We're pleased to report our third quarter results, which I will share in a moment I also want to use this call to take a longer term view of where we're headed and to share my confidence that our past a brilliant strategies are working and are positioning signet for long term growth.
Let's begin with a look at the Q3 results.
Total sales increased 9.5 per cent and same store sales increased 15.1 per cent versus last year as our stores reopened and we made intentional efforts to capture both pent up demand and early holiday sales.
E Commerce sales increased 71.4 per cent compared to last year through continued execution of our omni channel focus as part of the power of really up.
[noise] brick and mortar same store sales grew 6.8% with over 90% of our stores opened this quarter. This demonstrates that our E. Commerce growth is not coming at the expense of our stores and also demonstrates the progress we're making toward our goal of becoming the strongest omni channel player in our industry.
We generated $606.7 million in cash flow from operating activities year to date by focusing on working capital efficiencies and cost consciousness non-GAAP EPS was 11 cents, reflecting the combination of our accomplishments on both the top line growth.
And at our expense categories.
These results were driven by several factors first the passion and performance of our Signet team.
Second continued strong execution of our pastor brilliant strategy building on the foundation, we have established and adding a number of significant digital product and marketing innovation this year [laughter].
Third of targeted efforts, including marketing and Clienteling to capture pent up demand following store reopening.
And fourth intention on media and promotional efforts that we put in place to capture early holiday shopping [laughter], our signet team brought remarkable creativity capability agility and passion to every aspect of our performance pressure can derail some organizations, but it has focused on.
Signet team and is bringing out the best enough.
We have of saying at Signet that I love of pressure makes diamonds.
That's been evident throughout the entire pastor brilliance journey, and it's been especially palpable over the past nine months I am very proud of our team who are at the heart of Signet and I'm honored to work alongside them. Every single day, we are now and even stronger and more of United team and company [laughter] on.
Success. This quarter is a result of our strategic transformation work are focused only on and the investments we've made in people and technology enabled us to accelerate our transformation during the pandemic our pivot to digital for example, with non an abrupt change or a reaction to crisis.
Two of the contrary, it's what we've been building toward for the past three years.
For example throughout our pastor brilliance journey, we've taken costs out of our company that customers don't care about and then have reinvested in capabilities that customers of do care about we've invested significantly in digital in a wider array of financial services and.
In better richer more engaging customer experiences at every touch point.
The result is a more contemporary shopping experience that gives our customers greater convenience and flexibility, which carries the added value of offering a safe experienced during a pandemic.
We've also taken decisive steps to optimize our store footprint and accordingly, the size of our organization. This has given us the ability to invest in our people end to bring in new talent, where needed. Our organization has never been as strong as it is today. The Signet leadership team is just one example.
Weve brought on deeply experienced talent over the past three years to complement the strong legacy leaders, who remain critical parts of our team. We've recruited exceptional leaders from best in class retailers from privately held entrepreneurial firms and from Fortune 500 companies [laughter], we now have the most diverse.
And most experienced leadership team in Signet history.
We've also dramatically improved our ability to generate cash flow as a result, we're better positioned than ever before to make strategic investments that are enabling us to win with customers now and will drive future growth.
Data analytics is an important driver of these and many other improvements. We believe were now one of the most of data driven omnichannel retailers on jewelry. This capability has real potential to be game, changing it's enabling precision targeted marketing and dynamic content creation of getting the right messages.
To the right customers at the right time, when where and how they want to be engaged it's powering our ability to localized assortments to ensure we have the optimal mix of new end core product store by store day by day end, it's allowing us to bring predictive analytics to our clients.
Selling approach is providing our associates with highly precise targeting mouth that help them bring the best of high Tech and high touch to their most important customer related relationships.
Most of fundamentally our digital and analytics capability is driving our omni channel strategy, making it possible to continually improve the performance of every store every platform every channel based on traffic customer preferences and digital divide.
And the jewelry industry has been slow to move to a data driven omni channel model. We are working hard to lead the way and it's becoming an increasing source of competitive advantage.
My core message here is that the per pharmacy, you've seen from our team. These past several months has not been reactive it's been strategic and intentional.
We've been building a strong foundation that is becoming a springboard to our future.
We're now at a turning point moving to of future of long term sustainable growth [laughter]. There are several critical shifts under way that we're prepared to leverage and I want to highlight a few of them.
First customer behaviors and expectations are changing in ways that play to our strength and will end door. After the pandemic is behind US we're leveraging proprietary consumer research on insights to anticipate these changes and are taking advantage of them in fact in some cases, we're accelerating them.
[noise] stuck at we are shaping the future of our industry with our omni channel strategy, continuing innovation and dynamic responses to changes in the competitive landscape and third the power of Signets purpose is growing more important to our customers employees investors and.
Of business partners.
I'll start with the consumer Colin has changed consumer behavior, but not just in terms of when or where they shop. This experience has prompted people to pause and to reflect on the relationships that matter most of them.
The pain and the laws that cobalt has created is irrefutable, but.
But one customer said something that I think rings true to a lot of us. He said he was taking a fresh look at his contacts and thinking more carefully about who he most wants to spend time with.
The unexpected gift of coal that he said is clarity.
With that clarity comes a desire to do special things with end for the people. We love most people know that the holidays will be different this year and as a result, they want to make their celebrations of even more special they want the people in their lives to know how much their loved and are looking for timeless way.
Moving to express that love.
There are also falling in love.
Our early research indicated that we would see an increase in engagements during the pandemic, which has happened we've seen double digit growth across bridal with particular of growth and engagement rings on.
Another good example of how we're responding to an accelerating consumer changes is the way we've evolved our digital offerings I talked last quarter about the launch of our virtual selling capability.
This includes an expanding range of services from virtual consultations to buy online pickup in store to curbside to digital outreach visual search and now conversation on messaging.
We're building momentum across all of these touch points.
For example ahead of holiday, we now have a fully dedicated virtual sales force of more than 700 expert kind of also trained more than 20000 of our store managers and jewelry consultants to sell virtually on our weighted training our entire field team to date, we've completed net.
At least 600000 virtual appointments since our recent launch this is important because when consultants are involved we see higher conversion rates and higher transaction value.
On Black Friday as is my tradition I visit as many of our stores as I can.
Last Friday, I met with Mandy and excellent store manager, who has been with Kay jewelers from many years. She shared a fascinating example of how powerful our new capabilities are in her every day work.
She's been able to reconnect with customers. She served in previous locations, bringing back of customers to K now she can help them purchase of jewelry virtually and leverage their local store team for service.
This new sales opportunity is a direct result of our digital consultation platforms and E commerce capabilities Mandy exemplifies the power of technology, plus trust to drive lifetime relationships with our customers.
Another example of our digital progress is our new visual search capability, that's driving significant engagement our at the current rate for customers, who use visual search is roughly three times that of those who don't.
And one of my favorite Q3 innovations is our new conversation on messaging offering well from people want to have a lot of of video experience. Many people just want to chat or text, we launched conversation on messaging on October 15th and has already had more than 300000 conversations.
Worth of $18 million end sales to date in fact of nearly a third of that came in just the past week over our Thanksgiving cyber Monday push.
These are great examples of where our customer first pillar and our omni channel strategy converge and where our future is headed.
The second shift I want to highlight is the way our industry is changing and how we're working hard to read those changes both to growth in jewelry category and our market share.
Clear advantage, we have is our ability to blend of digital experiences personal relationships and physical touch points in a uniquely competitive way our primary jewelry competitors don't have that same combination we are working to make this a discernible and sustainable competitive.
Advantage and we're getting better every day, we're also building competitive advantage in other ways and I'll mention to briefly.
The first is product innovation and newness.
In every aspect of our business innovation is a core driver of paths of brilliance.
No where is that more visible than our in our product collections as coven hit our product teams, who worked with our strategic vendor partners to design and place holiday orders early prioritize our production and achieve significant newness together, we have ensured we have fresh new fashion items.
And collections that enable people to express both of love end gratitude to name just a few we've launched everything you are unstoppable love closer together, new styles for Levy on and new modern collections of zoom worthy gold and diamond jewelry across every day.
On or we have new bridal brands, such as per Neenah tornado and Royal Asher end, Jared we've introduced exciting newness in Disney Veer away and Leo and our first ever collection of reclaimed gold and re purpose diamonds with the sales remixed Reimagine collection.
Weve expanded our customization offerings K for example has brought technology to its iconic Neil Lane bridal brands within Neil Lane, Configurator I'm grateful to our vendors for their partnership as they are a source of competitive advantage that is differentiating our banners.
Beyond product innovation. Another advantage, we have at the diversity of our banner portfolio. We've used data analytics to map customers end purchase occasions in the jewelry category and are now positioning our banners to capture a broader share of the market. This includes communicating our banner of value proposition.
Revenue in more precise and relevant ways with target customers testing of new store formats launching services like the custom design focus Jared foundry and new products like the zale's designer of spotlight and online marketplace for up income and independent jewelry designers.
We're also moving decisively to create advantage when we see changes in the competitive landscape.
A number of jewelry retailers are weakening and in some cases closing when closures occur we move quickly to capture the upside we geo target our marketing to serve customers left on served we look for opportunities to attract top talent when jobs are cut and we leveraged competitor closures to strengthen our.
Real estate position within trade areas to serve customers even better.
There will likely be more competitive closures in the months ahead, and we'll continue taking dynamic action to shape. The next normal in our industry and gross share in the process.
[noise] the final shift I want to highlight is the accelerating importance of our purpose inspiring love is a powerful concept. It's our of North star. The reason, we get out of bed every day and it's a demanding standard two of which we hold ourselves accountable.
I'm very proud of what signet stands for our purpose as a source of strength.
Internally and externally the.
The pandemic experience has deepened people's empathy towards others and as a result their expectations for values based leadership, our growing higher but they're also prepare to reward companies that take action, 70% of consumers, who feel a personal connection to a brand spend twice as much with that brand.
Compared to those who don't establish that connection.
We build these kinds of bonds when we stay on visibly for what is right. When we use our voice to help create the change we want to see in the world.
We also inspire passion pride and the loyalty among our employees by acting on our values and fulfilling our purpose. We're pleased that signet for the first time was honored to be recognized as a certified great place to work company. We're also proud that signet was named to the Bloomberg gender equality index.
For the second at year in a row. This on or is rare among retailers and signet is the only specialty retailer in jewelry to achieve that recognition.
We've created a culture of that great people want to be part of 86% of Signet employees, who responded in a recent survey said they feel a sense of pride when they look at what we've accomplished together.
We continue to look for opportunities to walk our talk for example at the suggestion of Signets Black employee network. We created the Euro voices of gold campaign for the 2020 election pledging paid time off to all employees. So they could play their role in our democracy confidently and securely.
We closed our stores for the morning of election day, and our employees loved more than 1000 hours of paid time off.
The key point here is simply to underscore that Signets purpose is clear and matters consumers increasingly want to buy from companies. They believe in employees want to be part of companies. They believe in and business partners want to work with companies that day and.
Their employees want to be part of that.
That's the kind of company were creating at the signal.
I Hope this perspective helps you put both our Q3 performance and our longer term future into context in summary, we believe our pastor brilliant strategy is working we're winning with customers based on strong innovation and deep insight, we're investing in people and technology.
On to continually strength, and our advantages and where inspiring love to build bonds with customers pride and our employees and partners and growth for investors on the.
Now I'll turn the call over to Joan to take a deeper look at this quarter's results and share our outlook for Q4, Joan Thank you Jenna Hello, everyone.
Q3 performance reflects the traction of our pets pastor brilliant strategy delivering top line growth expense control improvements in working capital at that drove strong cash flow and a return to Q3 of profitability.
Total sales on the third quarter grew 9.5% over last year at the same store sales grew 15.1%. This growth reflects our company's evolution and ability to meet shift end customer shopping trends this year.
I also note that we believe the topline benefited from the shift and we captured pent up demand from the second quarter as well as intentionally drove early happy holiday shopping through marketing and promotion, which is expected to impact the fourth quarter.
Before continuing our walk through the PML I'd like to color on some of Joe's comments.
The 71.4% growth in third quarter E Commerce sales represents 18.4% of our total sales.
We were able to maintain that level of growth with stores, mostly open.
Through investments like visual search capabilities search as you type functionality that returns more intuitive resolve new customer routing technology that is getting customers assistance more effectively as well as the launch of messaging that allows our jewelry consultants to message directly with customers.
Phones.
The digital achievements are enhanced by the strides were making and optimizing our physical footprint on the positive brick and mortar same store sales reflects our continued shift of our store base to off mall locations.
So approximately two thirds of our fleet as housed in traditional mall of the.
380 store closures planned for this fiscal year.
We have closed 316 by the end of the third quarter of large majority of closings continue to be in traditional mall locations.
Supportive of our continued per far lip portfolio shift to off mall, we have seen that traditional mall foot traffic is lagging to our other formats.
Especially in this macro environment as we've previously discussed our Greenfield analysis from earlier. This year has informed us on how to best represent our banners and formats and again on trade area, helping to drive omni channel growth.
[noise] continuing along the piano, we delivered non-GAAP third quarter gross margin of approximately 437 million or 33.6% of sales. This is 250 basis points above last year, largely due to higher sales volume at lower store occupancy costs.
[noise] SGN day was approximately $390 million down about 9 million to last year. The decline was driven by lower labor and operating costs that was partially offset by increased advertising investments made to communicate the extended holiday selling period.
Please note that store labor cost will sequentially increase on the fourth quarter as we have implemented extended holiday shopping hours and over 2000 concierge stations.
Non-GAAP operating profit was 46.8 million up over 76 million to last year, and excludes 7.1 million, an asset impairment and restructuring charges related to the pastor brilliance transformation plan.
Third quarter non-GAAP EPS was 11 cents. This compares to a prior year non-GAAP EPS loss of 76 cents.
Turning now to the balance sheet continued use of strategic clarity at this quarter improved our product lifecycle management at Crunch contributed to a reduction in our inventory of more than 300 on 45 million to this time last year, while a portion of that reduction is due to the timing of inventory receipts.
It also demonstrates our continued focus on managing inventory level of ahead of holiday.
Combining our inventory manager men with extended payment terms within our network of valued vendors has improved our working capital those improvements along with a tax refund of 164 million contributed to more than 600 of 6 million of cash from operating activities a share.
Supporting reinvestment for long term share gains.
Capital expenditures remain on track to be approximately 85 million fluctuation in inventory levels combined with the increase on our cash position allowed us to pay down approximately 300 million of our revolver this quarter as well as an additional 190 million subsequent to quarter end.
Cash and equivalents ended the quarter at $1.3 billion, enabling us to maintain flexibility and remain prudently cautious in this current environment.
Now regarding our cost savings efforts, we remain on track to deliver on a $285 million of cumulative cost savings under pastor brilliance by fiscal year end. These efforts are largely derived from efficiencies on labor store operating and inventory related costs and direct sourcing.
I'd like to quickly update you on our financial in jewelry services at.
As of the end of the third quarter accounts that Weve originated were 39.6 million net of allowances and continue to perform in line with expectations.
We continue to enhance our payment options to include installment loans at Apple pay Google pay as well as the ability to fully apply and buy online across all payment products.
We know payment penetration remains lower to last year at 42.6%.
Though improved over last quarter by 200 and day 40 basis points.
Our goal is to offer our customers a wide range of payment alternatives to meet their needs Importantly in October ahead of holiday, we made substantially all of warranty service products available to our customers online.
Looking to the fourth quarter, our preliminary same store sales through November Thirtyth were up approximately 3% quarter to date versus last year for the Thanksgiving weekend through cyber Monday same store sales were down low single digits.
Reflecting weak retail store traffic trends somewhat offset by higher conversion rate migration to digital platform at higher transaction value.
We have taken additional steps ahead of the shopping season to help manage high traffic days, including earlier and longer promotional period.
Additional labor in the form of longer store hours, and coffee or location as well as expanded fulfillment capabilities to meet customer demand throughout the holiday.
That said since our strongest holiday weeks have historically been the two weeks prior to Christmas.
We believe same store sales could be negatively impacted in December as a result of weaker retail store traffic trends.
All of it social distancing capacity constraints at store closures due to volume drivers trends.
As such we're not providing financial guidance at this time and.
And believe coded related issues will have a more significant negative in effect in December versus November.
Before we open the call for Q on a I'd like to take a moment to thank the signet team on.
This year at has challenged each of us and our team has met that challenge to drive this quarter's results above our expectations.
I have confidence that our team will continue to exhibit resiliency and agility into the future.
We wish all of our team members customers end business partners, a safe and healthy holiday season.
And now I will turn the call over to the operator to begin the Q and a session.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your touched on.
If you are using a speakerphone please pick up your handset before pressing the key to it.
All of your question. Please press Star then two at this.
This time, we will talk momentarily to assemble the roster.
Our first question today comes from Lorraine Hutchinson of Bank of America. Please go ahead.
Thanks, Good morning.
She toping to get a little bit more detail on the third quarter comp of maybe at break out how bridal did worse from fashion.
Hi, Lorraine. Thanks for the question, we saw double digit growth in both our bridal and our fashion portfolios, so really strength across the board.
And were there any brands of categories that you tested in Threeq of that you're particularly excited about for the holiday season.
I would say, yes. So a couple of areas. We continue to see some of the best performance on Big brands, including Neil Lane Levy on Vera Wang of.
We now have online customization options for several of those which are doing quite well and our new launches. The Petite I mentioned in my remarks, depending on a tornado line at Jared Royal Asher at Jared is doing really well everything you are is of a great.
Sentimental gifting opportunity that we have of cross K and sales. We just store, we're very thankful to our vendor partners for working with us early.
On to achieve I think the best level of newness on.
And optimized core assortment that we've had at signet. So they really did a great job in a tough time on managing all of the social distancing and everything to get us great newness into our stores and online.
Thanks, and then last one from me there has been a lot of talk about very crowded shipping channels of were holiday. How are you thinking about capacity constraints of what's your cut off date for Christmas and do you think you can profit on the volume that you need to this holiday season.
So on a couple of things on that one that's something that we've been anticipating so we've worked to head on at a we took some of our existing internal distribution network and have made at external facing so we now have five times the shipping capacity for.
E Com orders this year versus last holiday season. So that's something we started working on a end of last spring and have been able to bring that to life and given our strong ecommerce numbers, it's already paying off but I think that will especially be true in December.
The second thing that we're doing is keeping our teams safe so our protocols and our distribution center are very strict and so we're on.
Working hard to make sure we don't have any disruptions on that front.
We do expect that there will be a high demand across the industries of not just signet, but across the industry as we get closer to Christmas and so we've been working with our key partner you have to make sure that we can have an allocation of shipping options that are available at the latest.
Possible in the season, and then when that cuts off we have curbside service buy online pickup in store concierge is who are helping to direct traffic, especially at our higher traffic locations and fulfill those BOPUS orders really quickly. So I'm all of those are kind of interventions that we've put in place.
Anticipating just what you said, which is some some traffic in the online shipping network and the only thing I would add to that is the pull forward that we've done in our promotions on marketing to try and smoothed out some of that capacity issues that we would anticipate.
Hey of potentially occurring closer into holiday so on our intentional efforts towards marketing earlier holiday promotions and so forth. We're are all direct excuse me director at towards mitigating some of that help that traffic.
Great. Thank you.
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Your next question comes from Paula Jones of Citi. Please go ahead.
Thank you. Thank you for calling in for Paul I had a couple of questions.
Yes, I was wondering if you could quantify the change in merchandise margin in the quarter and maybe give us a sense of a promotional levels and then and then secondly is there any way to get it.
How much of your comp this quarter, maybe was a pull forward of demand on how your marketing dollars shifted around between quarters any any color you can give there would help thanks.
Okay. Thank you.
The first question on merchandise margin, our merchandise margin was down somewhat in the quarter end, that's a reflection of the pull forward of of the the marketing efforts on promotional efforts to try to smoothed out of high traffic day says we lead into of the holidays, So that end.
It really included you know as we've said in the past strategic.
Use of clear on on promotions on a sell down inventory earlier. They on you know moving to clear on switches off of helpful. At in terms of just managing our overall inventory levels. So that's the color on verge margin and the.
Oh and on the though the overall marketing efforts on the pull forward you know Theres no perfect formula for what the pent up demand was from the second quarter end to the third quarter. You know we've we've taken a view that we believe at 28 per size of what we of the.
Second quarter at as at a market level of based on some research.
It has pushed into the third quarter on we believe that is a very much directed at bridal as we've seen of warranty improve as well related to that product on the in the third quarter. So there's a little bit of the mentioned there, but as I said, there's no perfect Formula and then the other thought that I went on.
Leave you with is that as we pulled forward promotions into the third quarter. We believe that we were able to capture at holiday demand and that we you know the marketing investment that we put into the third quarter. It did not limit, but the marketing investment in the fourth quarter. So we've been able to.
We may in a very consistent at our approach to our marketing efforts to continue to drive business in the fourth quarter.
Great. Thanks very much.
As a reminder, it is star then one to ask a question on the next question comes from Ike Boruchow of Wells Fargo. Please go ahead.
Hi, good morning, everyone. So oh follow ups of the so the pent up demand type of question I guess it was almost 15 comp on outside of the pull forward of marketing and promotions or anything else you could say either on or look to that.
Suggest a pull forward and again I don't know but.
Essentially a backlog of maybe repairs all they're waiting mall stores were closed at your had that they've got people from all this interest was there anything else there to kind of suggests the transition from an EPS gene too on.
At the low single on November and the slightly negative over book rather would be helpful.
Ah you know really I think it is very much the promotional efforts that we've put in place you know as we end the new product that we've been able to lay on.
Working with our vendors on instead of the third quarter, we were able to hold on mother's day for the second quarter end, we were able to lay on that newness on the third quarter. So you know I would lean into the product offering on that end to the of.
Core products that you know as fresh on and we're able to turn quicker of was all of our inventory management and then I would also say that ship from store is you know another opportunity that we saw launch later in the quarter able you know, enabling us to really leverage.
Of that opportunity you know earlier in the year end, you know that kind of stuff. When it first goes out of tends to have a bit of of push early and then on tank tends to even out as you know the year of progressive So I would say those on those would be the additional factors I might mention.
Got it and.
And then a follow up on the gross margin loan you gave us a lot of helpful detail on quarterly debuted in the Black Friday week any commentary on the promotional environment over about selling period of these kind of curious on how pricing is one of acted on November at <unk> and over the holiday weekend and then joined last question just on on gross margin from.
Q3, I think you mentioned, some occupancy savings, which which kind of helps you expand the gross margin is there anything more to you bought of ball or between keys at one time in some way I'm just trying to understand how the flow through the occupancy benefits from weak you as we think about modeling Fourq you will be on no sure I, so with respect to.
The the price promotion over the holiday weekend, we believe we were very competitive at in our positioning we had a you know a wide range of.
Value offers to to include you know that at the higher end product the new brands that you know Gen. On mentioned, we're also very well received on and got a strong response from our customers. So.
No I would say that in the in the world of Mark of promotion over Thanksgiving weekend, we were up in a very competitive and we expect of promotional environment to continue and believe we're positioned very well to to manage that through a debt.
The balance of the holiday selling and then with.
The store occupancy costs there.
The revenue is really about negotiation and and you know as we renewed our leases that our team our real estate team has done a wonderful job working at conducted in conjunction with our real estate.
Ah developers and business partners to on manage our costs and look forward to make sure that we're working towards arrangements that are very much in line with market and in the current environment. So we're pleased with that I would just on note for you I think that when you think of of the lever.
On the end that comes off of of 15 comp that's also something to keep in mind.
Okay. Thank you very much.
Your next question comes from Dana Telsey of Telsey Advisory. Please go ahead.
Good morning, everyone and congratulations on the progress.
Do you think about of different banners Jenna any commentary on performance by banner on how those performed.
And Joe on its you think about the gross margin and and also on the EPS DNA line as you move through the fourth quarter and into 2021 lots of levers of expenses is there continued opportunities for reduction and where can we continue to see some of merchandise margin improvement going forward. Thank you.
[noise] Hi, Dana Thanks, so much you.
You know, we don't give specific banner comp performance, but I will say a couple of things about our ban on our portfolio. So based on our assessment of the market of purchase occasions demographics of jewelry customers Psycho graphics, we have now begun to.
Who really tease apart what our banner stand for and as we focused the sales for example on a more style oriented customer both from the bridal category and in self purchase we're seeing some real strength on Vera Wang and our fashion lines on K. as weve targeted that.
More toward a sentimental gift or we see strength in bridal and end romantic gifting.
Jared we've been hearing up and were seeing strength at higher price points, and then piercing pagoda is typically our lowest average transaction value brand and we've seen strength in gold of especially gold chains and gold earrings in that banner.
The other thing I'll say is that we've been on bringing significant a new capability to all of our banners in E Commerce and so we're seeing digital strength across all of the banners.
At that day now with respect to your question on cash DNA cost outs on on margin.
Expansion, we'll get the benefit of those things that we put in place. This year that have a wrap around into 21 of the the other future.
Opportunities really relate to the many investments that Jim mentioned in her script, which as you know basically the flexible fulfillment of our new policies that we have around merchandise be trade ins et cetera, and just the better on management and at the teams have done at.
Tremendous job at bringing our inventory levels down should.
No certainly be a positive for US you know we are on also.
Also working towards really understanding our inventory across all banners on leveraging of back office, our size and the commonality of some of the products to really help improve our core in terms of costing so on and our vendors have been very helpful.
And working through that with us on so we look forward to continued discussions with them. So you know those are just a few of the examples that I would give you on in a potential opportunities for the future.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.
[laughter]. Thank you all four of your engagement on our call today as we conclude I just want to reiterate my profound appreciation for signet team for their passion performance and commitment to our purpose and our customers. The acceleration. We've discussed today is a direct result.
Of their dedication and really on execution of our path of brilliant strategy and to everyone listening. We wish you on your families a happy and healthy holiday season.
Okay.
The conference is now concluded. Thank you for attending today's presentation you may now disconnect.