Q3 2024 Signet Jewelers Ltd Earnings Call

Good morning, and welcome to the Signet Jewelers third quarter fiscal 2024 earnings call.

Speaker 1: Good morning and welcome to the Signet Jewelers' third quarter fiscal 2024 earnings call. Our participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star zero.

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Speaker 1: Joining us on the call today are Rob Ballue, Senior Vice President of Investory Relations, Jenna Joseph, Chief Executive Officer, and Joan Hilton, Chief Financial Strategy and Services Officer.

Joining us on the call today are Rob Ballew Senior Vice President of Investor Relations, Janet Joseph Chief Executive Officer, and Joan Hilson, Chief financial strategy and services Officer.

Speaker 1: At best time, I would like to turn this conference over to Mr. Rob Ballue, Senior Vice President of Investory Relations. Please go ahead.

At this time I would like to turn this conference over to Mr. Rob Ballew Senior Vice President of Investor Relations. Please go ahead Sir.

Speaker 2: Good morning, welcome to Signature Jewelers 3rd Quarter Ernie's conference call. During today's discussion, we will make certain forward-looking statements, any statements that are not historical facts or subject to a number of risk and uncertainties. Actual results may differ materially. We urge you to read the risk factors, cautionary language, and other disclosures in our annual report on Form 10K. Quarterly reports on Form 10Q, and current reports on Form 8.

Good morning, welcome to Signet Jewelers third quarter earnings conference call. During today's discussion we will make certain forward looking statements any statements that are not historical facts are subject to a number of risks and uncertainties. Actual results may differ materially we urge you to read the risk factors cautionary language and other disclosures in our annual report on Form 10-K quarterly reports on Form 10-Q.

And current reports on form 8-K, except as required by law, we undertake no obligation to revise or publicly update forward looking statements in light of new information or future events. During the call. We will discuss certain non-GAAP financial measures for further discussion of the non-GAAP financial measures as well as reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures investors should review.

Speaker 2: that's is required by law. We undertake no obligation to revise or publicly update for the Hien statements in light of new information or future events. During the call, we will discuss certain non- GAAP financial .

Speaker 2: For further discussion of the non- GAAP financial measures, as well as reconfiguations of the non- GAAP financial measures to the most directly comparable GAAP measures , investors should review the news release we posted on our website at ir.thingtjores.com. With that, I'll turn the call...

The news release, we posted on our website at IR Dot Signet jewelers dot com with that I'll turn the call over to Jim.

Speaker 3: Thank you, Rob, and thanks to all of you for joining us today. Our team delivered this quarter with non-GAP operating income at the high end of our expectation.

Thank you, Rob and thanks to all of you for joining US today, our team delivered this quarter with non-GAAP operating income at the high end of our expectations recall the jewelry category is experiencing its second COVID-19 as engagements are down 25%.

Speaker 3: Recall the jewelry category is experiencing its second COVID. As engagements are down 25%.

Speaker 3: due to the disruption of dating three to three and a half years ago. Through this environment, our team has continued to be agile and innovative, resulting in significant growing our bridal market share again this quarter. Unconfident will grow from this trough next year, just like we rebounded strongly from the closures of the pandemic. Our team knows our customers, creates unrivaled experiences to meet their needs, and delivers on our commitment.

Due to the disruption of dating three to three and a half years ago through this environment.

Environment. Our team has continued to be agile and innovative resulting in segment growing our bridal market share again this quarter I am confident we will grow from this trough next year, just like we rebounded strongly from the closures of the pandemic our team knows our customers create unrivaled experience.

To meet their needs and delivers on our commitments and this time of year their expertise really shines I'm honored to work alongside them.

Speaker 3: And this time of year, their expertise really shines. I'm honored to work alongside them.

I'd like to leave you with three key takeaways today.

Speaker 3: I'd like to leave you with three key takeaways today. First, we delivered our financial commitments this quarter and remain on track to deliver the year. Even if we delivered a profitable third quarter, we invested in marketing and merchandise strategies to deliver our fourth quarter commitment and to drive share gains.

First we delivered our financial commitments this quarter and remain on track to deliver the year.

Even as we delivered a profitable third quarter, we invested in marketing and merchandise strategies to deliver our fourth quarter commitment and to drive share gains jewelry continues to be an important gifting category, particularly among gen Z with Black Friday weekend results in line with our expectations.

Speaker 3: Jewelry continues to be an important gifting category, particularly among Gen Z. With Black Friday, we can result in line with our expectations.

Yeah.

Speaker 3: Second, the multi-year engagement recovery has begun, as we predicted, with engagement ring units beginning to rebound in recent weeks.

Second the multiyear engagement recovery has begun as we predicted with engagement ring units beginning to rebound in recent weeks.

Speaker 3: While we still expect a gradual recovery over the next three years of the 45 proprietary relationship milestones that we track, we have seen the expected progression to late-stage milestones over the past few months.

While we still expect a gradual recovery over the next three years of the 45 proprietary relationship milestones that we track we have seen the expected progression to late stage milestones over the past few months. This progression is highly correlated with engagement ring purchases, which we have.

Speaker 3: This progression is highly correlated with engagement ring purchases, which we have also seen increase over the last several weeks.

Also seen increase over the last several weeks importantly engagement rings are the catalysts to lifetime value, which makes them a competitive advantage for establishing sustainable long term growth.

Speaker 3: Importantly, engagement rings are the catalyst to lifetime value, which makes them a competitive advantage for establishing sustainable long-term growth.

Third our company is strategically positioned to leverage our scale and competitive advantages to help weather the highs and lows of our category and general macro pressures. For example, we are the largest advertiser in our industry by far with three times the annual.

Speaker 3: Third, our company is strategically positioned to leverage our scale and competitive advantages to help weather the highs and lows of our category and general macro pressures.

Speaker 3: For example, we are the largest advertiser in our industry by far with three times the annual spend of our nearest competitor. The scale and effectiveness of our marketing spend is reflected in the fact that our top three banners, K, sales, and Jared, have top of mind awareness among jewelry consumers that it's twice that of nearly any other US retailer.

Spend of our nearest competitor.

Scale and effectiveness of our marketing spend is reflected in the fact that our top three banners.

Hey, Zales and Jared have top of mind awareness among jewelry consumers that is twice that of nearly any other U S retailer.

Speaker 3: Our consumer insights also give us foresight, which for example, helped us predict the engagement slowdown and reduce our inventory double digits, even while investing in newness for the holidays.

Our consumer insights also give us fore sight, which for example helped us predict the engagement slowdown and reduce our inventory double digits, even while investing in newness for the holidays.

Let's look at each of these points beginning with the quarter, we delivered sales of roughly $1 $4 billion this quarter and $24 million of non-GAAP operating income prior to the pandemic. The third quarter was consistently a loss quarter for signet, it's the one quarter of the year without a major gift.

Speaker 3: Let's look at each of these points beginning with the quarter. We delivered sales of roughly $1.4 billion this quarter and $24 million of non-gap operating and

Speaker 3: Prior to the pandemic, the third quarter was consistently a loss quarter for Cigarette. It's the one quarter of the year without a major gift giving occasion. And is when we are investing in marketing and merchandise delivery for our largest gift occasion, the winter holiday season.

Giving occasion and is when we're investing in marketing and merchandise delivery for our largest gifting occasion, the winter holiday season as a result of our transformation. We have delivered four years in a row of positive Q3 earnings all while continuing to invest in both our holiday strategy.

Speaker 3: As a result of our transformation, we've delivered four years in a row of positive Q3 earnings.

Speaker 3: all while continuing to invest in both our holiday strategy and our long-term growth.

And our long term growth.

Adding to the obstacles are team navigated this quarter over inventoried independent jewelers continue to drive heightened levels of promotion in our category.

That said our brand equities services targeted promotional cadence and sourcing efforts allowed us to increase gross merchandise margin in the quarter up 250 basis points to last year.

Further inventory was down 14% from a year ago, allowing us to bring in more newness, creating a competitive advantage.

Speaker 3: This includes value engineered pieces that offer great looks and value at hot price points along with broad assortments of on-trend gold jewelry such as sculpted gold earrings and necklaces and strong presence in lab-created items that also provide excellent value. Compared to last year, self-thru of new SKUs increased by 30% in the third quarter.

This includes value engineered pieces that offer great looks and value at high price points, along with broad assortment of on trend gold jewelry, such a sculptor gold earrings, and necklaces and strong presence in lab created items that also provide excellent value.

Impaired to last year sell through of new Skus increased by 30% in the third quarter.

Speaker 3: The next point I want to underscore is that we are in the midst of the most popular time of year for engagement ring sales October through February . As I highlighted above, we've crossed the trough and the engagement recovery has begun.

The next point I want to underscore is that we are in the midst of the most popular time of year for engagement ring sales October through February as I highlighted above we've crossed the trough and the engagement recovery has begun for example couples moving in together a late.

Speaker 3: For example, couples moving in together, a late stage milestone was up nine points from early 2022. And Google searches for engagement rings are now 10% higher than last year. The first time they've exceeded the prior year in nearly two years.

Stage milestone was up nine points from early 2022.

And Google searches for engagement rings are now 10% higher than last year. The first time, they've exceeded the prior year and nearly two years the.

Speaker 3: The percentage of couples moving to the engagement phase has improved by five points, a statistically significant movement over the last 18 months.

The percentage of couples moving to the engagement phase has improved by five points a statistically significant movement over the last 18 months.

Beyond the Covid driven engagement recovery. We are also seeing more positive attitudes among younger unmarried consumers toward getting engaged and married in our most recent survey nearly 80% of non married millennial and Gen Z adults say they.

Speaker 3: Beyond the COVID-driven engagement recovery, we are also seeing more positive attitudes among younger unmarried consumers toward getting engaged and married. In our most recent survey, nearly 80% of nonmarried millennial and Gen Z adults say they want to eventually get engaged and married, which is a notable improvement to younger adults from a 2018 survey.

Want to eventually get engaged and married which is a notable improvement to younger adults from a 2018 survey that's encouraging as are the multi cultural changes we're seeing in engagements moving forward. The majority of engagements in the U S will be multicultural led by.

Speaker 3: That's encouraging. As are the multicultural changes we're seeing and engaged.

Speaker 3: Moving forward, the majority of engagements in the U.S. will be multicultural, led by growth in Hispanic America.

Growth in Hispanic Americans. This multicultural trend is steering our merchandise and marketing strategies as we lean into higher penetration of products like yellow gold and provide bilingual marketing and sales expertise that makes our multicultural customers feel respected and welcome.

Speaker 3: This multicultural trend is steering our merchandise and marketing strategies as we lean into higher penetration of products like yellow gold and provide bilingual marketing and sales expertise that makes our multicultural customers feel respected and welcome.

It's working in the third quarter Zale's performance at high. Hispanic doors is better by 130 basis points compared to the balance of Zale fleet, driven by assortment bilingual consultants and signage as well as increased Hispanic targeted media.

Speaker 3: It's working. In the third quarter, Zayl's performance at high Hispanic doors is better by 130 basis points compared to the balance of Zayl's fleet driven by assortment, byling well consultants and signage, as well as increased Hispanic targeted media. The end of the third quarter, Zayl's performance at high Hispanic doors is better by 130 basis points compared to the balance of Zayl's fleet driven by assortment, byling well consultants and signage, as well as increased Hispanic targeted media.

So our data is clear engagements are on their way back and we are positioning ourselves to win we continue to expect a gradual return to pre pandemic levels of engagements that will play out over the coming three years.

Speaker 3: So our data is clear. Engagements are on their way back and we are positioning ourselves to win. We continue to expect a gradual return to pre-pandemic levels of engagement that will play out over the coming three years, a three-year tailwind that we can leverage for business and market share growth, given our scale and our position as the engagement leader of the industry.

Three year tailwind that we can leverage for our business and market share growth given our scale and our position as the engagement leader of the industry.

The recovery of engagement rates is also our catalyst to lifetime value, we provide services step some net customer relationships, including nearly 80% attachment rate to extended service agreements on bridal pieces.

Speaker 3: The recovery of engagement rates is also our catalyst to lifetime value. We provide services that cement customer relationships, including nearly 80% attachment rate to extended service agreements on bridal pieces.

Speaker 3: We are also increasingly using our customer data platform, loyalty program, and personalized marketing capabilities to meet our customers' ongoing needs for Julie to celebrate birthdays, anniversaries, and holidays for years to come.

We are also increasingly using our customer data platform loyalty program and personalized marketing capabilities to meet our customers' ongoing needs for jewelry to celebrate birthdays anniversaries and holidays for years to come.

For example, we are now approaching 4 million loyalty members and this quarter their average transaction value or ATV was 40% higher than our non loyalty members. It's a clear reflection of loyalty as a long term growth driver and scaled competitive advantage.

This brings me to my third and final point.

Speaker 3: Signet is well positioned to grow reliably over time. Thanks to the mode of competitive advantages and scale, we've built that are unique in our category.

Cigna is well positioned to grow reliably over time, thanks to the moat of competitive advantages and scale. We've built that are unique in our category.

Speaker 3: Signet is able to withstand and even gain share through cyclical dynamics of the jewelry industry and general macro pressures thanks to those advantages. A good example is how we are managing the price decline of larger loose diamonds this year. The elevated promotional activity of overstocked independence is a key contributor to driving down diamond prices to pre-pandemic levels in recent months.

<unk> is able to withstand and even gain share through cyclical dynamics of the jewelry industry and general macro pressures. Thanks to those advantages are good example is how we are managing the price decline of larger loose diamonds. This year the elevated promotional activity.

Of Overstocked independence is a key contributor to driving down diamond prices to pre pandemic levels in recent months.

Speaker 3: In contrast to independent jewelers, our product innovation and assortment, promotional priorities and scaled buying power have delivered stable ATVs all year, including in recent months, both for natural and lab-created diamonds.

In contrast to independent jewelers are product innovation and assortment promotional priorities and scale buying power have delivered stable atvs all year, including in recent months, both for natural and lab created diamonds.

Speaker 3: Within the industry, the natural diamond over-supply situation, which has been pressuring retail prices, is beginning to abate. Independence have been buying less in recent months, and their inventory levels have improved by more than 15 points since the first quarter.

Within the industry, the natural Diamond oversupply situation, which has been pressuring retail prices is beginning to abate.

Independents have been buying less in recent months and their inventory levels have improved by more than 15 points since the first quarter.

Speaker 3: Midsream inventory appears to have peaked in June , and major jewelry manufacturers have dramatically reduced their output.

Midstream inventory appears to have peaked in June and major jewelry manufacturers have dramatically reduced their output.

Large diamond miners have recently suspended mining activities and sales for two months or longer.

Further for the first time in more than a decade to beers stimulating category demand with a branded natural diamond marketing campaign over the holiday season.

Speaker 3: Further for the first time in more than a decade, debiers stimulating category demands with a branded natural diamond marketing campaign over the holiday season.

Combined with the upcoming engagement multiyear tailwind.

Speaker 3: Combined with the upcoming engagement multi-year tailwind.

Speaker 3: We believe the natural diamond market should normalize through next year.

We believe the natural diamond market should normalize through next year.

But what's most important for us as the world's largest retailer of diamond jewelry is that we are strategic with our partners to drive better pricing better assortment and better value for our customers by leveraging our inventory discipline and vertical integration.

Speaker 3: But what's most important for us as the world's largest retailer of diamond jewelry is that we are strategic with our partners to drive better price.

Speaker 3: better assortment and better value for our customers by leveraging our inventory discipline and vertical integration. The other growth pillars of our midterm goals are also meaningfully progressing.

The other growth pillars of our mid term goals are also meaningfully progressing our services business up 5% in the quarter and year to date has contributed close to one point of our gross merchandise margin expansion. For example, we continue making great progress with Esa attachment up.

Speaker 3: Our services business, up 5% in the quarter and year to date, have contributed close to one point of our gross merchandise margin expansion.

Speaker 3: For example, we continue making great progress with ESA attachments up to last year again this quarter, improving by 310 basis.

Until last year again, this quarter, improving by 310 basis points.

Speaker 3: In accessible luxury, we've opened five diamonds direct stores this year, including three cents the quarter ended, bringing our total to 30 stores. These stores, once reaching full maturity, generate over $15 million a year in average revenue per store.

In accessible luxury we've opened five diamond direct stores this year, including three since the quarter ended bringing our total to 30 stores.

These stores once reaching full maturity generate over $15 million a year in average revenue per store.

Speaker 3: Our Foundry Custom Jewelry at Jared has grown, including 40% unit growth in Q3 compared to a year ago. This is complemented by our premium assortment doors, which outperformed the balance of the Jared fleet by nearly 900 basis points this quarter.

Our foundry custom jewelry at Jared has grown including 40% unit growth in Q3 compared to a year ago. This is complemented by our premium assortment doors, which outperformed the balance of the Jared fleet by nearly 900 basis points this quarter.

Our digital and marketing capabilities continue to drive efficiencies led by our use of AI in North America, and reflecting our Rollouts improvement this quarter of 30% to last year in our core banners.

Speaker 3: Our digital and marketing capabilities continue to drive efficiencies led by our use of AI in North America and reflecting our ROWAS improvement this quarter of 30% to last year in our core banner.

Speaker 3: We are activating Signet's new CDP for this holiday season, more fully than ever before. As we target the 35 million people, we know have purchased jewelry in the US in recent years, and 14 million people, we know are in various stages of dating relationships.

We are activating signals new CDP for this holiday season more fully than ever before as we target. The 35 million people. We know have purchased jewelry in the U S. In recent years and 14 million people. We know are in various stages of gaining relationships.

To summarize my comments today, the competitive advantages that we've built are working we are positioned to deliver our commitments. This fiscal year and are on track to meet our mid term goals.

Speaker 4: To summarize my comments today, the competitive advantages that we've dealt are working. We are positioned to deliver our commitments this fiscal year and our on track to meet our midterm goals. With that, I'd like to hand it over to Joan. Thanks, Jenna, and good morning, everyone. Our performance with quarter reflects our continued ability to deliver free cash flow improvement on lower-con sales.

With that I'd like to hand, it over to John.

Thanks, Jim and good morning, everyone. Our performance this quarter reflects our continued ability to deliver free cash flow improvement on lower comp sales.

Speaker 4: We generated nearly $1.4 billion in sales of quarter down 12.1% compared to this time last year, with same store sales down 11.8%.

We generated nearly $1 $4 billion in sales this quarter down 12, 1% compared to this time last year with same store sales down 11, 8%.

Speaker 4: Our performance reflects a 1% improvement in North America's total ATV compared to this time last year or flat on a same store sales basis. Also a one-point improvement over first-tab trend.

Our performance reflects a 1% improvement in north America's total ATV compared to this time last year are flat on a same store sales basis also a one point improvement over first half trends.

Speaker 4: Traffic was down compared to last year in the mid single digits.

Traffic was down compared to last year in the mid single digits.

Speaker 4: trends from the second quarter were largely consistent throughout the third quarter across both bridal and fashion as well as across most price.

Trends from the second quarter were largely consistent throughout the third quarter across both bridal and fashion as well as across most price points.

As expected the decline in engagements impacted sales in the quarter, especially in our digital banners given their more than 80% bridal penetration.

Speaker 4: As expected, the decline in engagements impacted sales in the quarter, especially in our digital banners, given they're more than 80% bridal penetration.

Consumer access to credit remains healthy overall payment plan penetration was 46% for the quarter similar to last year.

Speaker 4: Consumer access to credit remains healthy. Overall, payment plan penetration was 46% for the quarter similar to last year.

Speaker 4: Approval rates in store improved compared to last year, and the amount financed was in line with the prior year.

Crude oil rates in store improved compared to last year and the amount financed was in line with the prior year.

Credit health has continued into the fourth quarter.

Speaker 4: Credit Health has continued into the fourth quarter.

We delivered $501 million of gross margin this quarter with non-GAAP margins, increasing 80 basis points to 36% of sales.

Speaker 4: We delivered $501 million of gross margin this quarter with the non-gap margins increasing 80 basis points to 36% of sales.

Speaker 4: Within that improvement is a 250 basis point expansion of merchandise margin that reflects the continued strength of our merchandise strategy and the growing penetration of service.

Within that improvement is a 250 basis point expansion of merchandise margin that reflects the continued strength of our merchandise strategy and the growing penetration of services.

Speaker 4: partially offsetting these games was the leveraging of the occupancy on lower sales.

Partially offsetting these gains was the deleveraging of occupancy and lower sales.

Speaker 4: Turning to S.C.NA, our non-GAP spend of $477 million or 34.2% of revenue was 280 basis points higher than last Q3.

Turning to SG&A, our non-GAAP spend of $477 million or 34, 2% of revenue was 280 basis points higher than last Q3.

This year over year change reflects a 50 basis point improvement compared to the first half of this year driven by our meaningful cost savings initiative in our seasonally lowest sales quarter.

Speaker 4: This year over year change reflects a 50 basis point improvement compared to the first tap of this year driven by our meaningful cost savings initiatives in our seasonally lowest sales quarter.

Speaker 4: We achieved $65 million in cost savings this quarter in line with our expectations, bringing year-to-date savings to approximately $140 million.

We achieved $65 million in cost savings this quarter in line with our expectations, bringing year to date savings to approximately $140 million.

Key drivers of the cost savings include non customer impact initiatives, such as lower inventory costs related to material recovery.

Speaker 4: Key drivers of the cost savings include non-customer impact initiatives such as lower inventory costs related to material recovery.

Speaker 4: enhanced credit agreements and overhead officials.

Enhanced credit agreements and overhead efficiencies.

Speaker 4: Deleverage in STA was primarily driven by investments in our digital banners and strategic initiatives in our seasonally lowest revenue quarter.

Deleverage in SG&A was primarily driven by investments in our digital banners and strategic initiatives and our seasonally lowest revenue quarter.

For the third quarter non-GAAP operating income was $24 million or one 7% of sales as Janice said this represents our fourth year in a row of positive earnings in the third quarter. This reflects the flywheel nature of our operating model as we leverage scale.

Speaker 4: For the third quarter, non-gap operating income was $24 million, or 1.7% of sales. As Jim has said, this represents our fourth year in a row of positive earnings in the third quarter.

Speaker 4: This reflects the flywheel nature of our operating model as we leverage scale and performance to drive consistent cash generation that we then invest to extend our competitive advantages and return cash to shareholders.

And performance to drive consistent cash generation that we then invest to extend our competitive advantages and return cash to shareholders.

Speaker 4: Turning the services, customers continue to see the value of extended service agreements or ESAs, outperforming merchandise by more than 15 points this quarter. Consumers continue to be attracted to the great value of our warranty plans, driving overall attachment to 310 basis points higher to a year ago, with gains as both bridal and fashion categories.

Turning to services customers continue to see the value of extended service agreements or msas outperforming merchandize by more than 15 points this quarter.

Consumers continue to be attracted to the great value of our warranty plans driving overall attachment 310 basis points higher to a year ago with gains in both bridal and fashion categories.

Turning to repair we've made progress ramping up the capacity of our enterprise wide service center in Seattle and now in source appraisal services for Kay in sales.

Speaker 4: Turning to repair, we've made progress ramping up the capacity of our enterprise-wide service center in Seattle and now in source appraisal services through K and Sales.

Speaker 4: The Tennessee repair facility continues to grow with B2B client base, while also bringing in-house all of Kay and Jarrod's watch repair needs. With sales planned to be integrated next year.

The Tennessee repair facility continues to grow with B to B client base, while also bringing in house all of Kay and Jared watch repair needs with zale's planned to be integrated next year.

Turning to fleet optimization.

Speaker 4: Turning the fleet optimization, subsequent to the quarter, we sold 15 stores primarily luxury watch showrooms in the UK to the watches of Switterling Group.

Subsequent to the quarter, we sold 15 stores, primarily luxury watch showrooms in the UK to the watches are Switzerland group do.

The accretive sale multiple generated proceeds of approximately $53 million.

Speaker 4: The accretive sale multiple generated proceeds of approximately $53 million.

Speaker 4: This sale represents a gain of approximately $12 million and will be treated as a one-time event.

This sale represents a gain of approximately $12 million and will be treated as a one time event.

Speaker 4: The divestiture of this non-strategic business allows Signet to accelerate key elements of our UK transformation plan. Now, turning to the balance sheet, we ended the quarter with more than $640 million of cash and equivalents, up more than $315 million compared to a year ago.

The divestiture of this non strategic business allows thickness to accelerate key elements of our U K transformation plan now turning to the balance sheet. We ended the quarter with more than $640 million of cash and equivalents up more than 315 million.

Compared to a year ago.

In terms of free cash flow, we outperformed last year by nearly $100 million in the quarter on lower sales driven by sustainable working capital improvement.

Speaker 4: In terms of free cash flow, we outperform last year by nearly $100 million in the quarter on lower sales, driven by sustainable working capital improvement.

Speaker 4: We repurchase $35 million or nearly half a million shares in the quarter. Since the end of the quarter, we repurchase an additional $11 million or $135,000 share.

We repurchased $35 million or nearly half a million shares in the quarter. Since the ended the quarter, we've repurchased an additional $11 million or 135000 shares.

This brings our year to date total to more than $128 million and we have approximately $672 million in remaining repurchase authorization as of today.

Speaker 4: This brings our year-to-day total to more than $128 million. And we have approximately $672 million in remaining repurchase authorization as of today.

This morning, we also declared a <unk> <unk> dividend to common shareholders.

Speaker 4: This morning we also declared a 23-cent dividend to common shareholders.

Speaker 4: Our return of capital is driven by our consistent free cash flow led by our flexible operating model and a robust balance sheet.

Our return of capital is driven by our consistent free cash flow.

Led by our flexible operating model and a robust balance sheet.

Speaker 4: consistently converting over 70% of non-gap ebit to free cash flow in recent years driven by the structural changes we've implemented. We under the quarter with $2.1 billion in inventory, which was down $333 million compared to last year or approximately 14% or 12.5% excluding the divestiture of inventory health for sale.

Assistants, converting over 70% of non-GAAP EBIT to free cash flow in recent years driven by the structural changes we've implemented we ended the quarter with $2 $1 billion in inventory, which was down $333 million.

Compared to last year, or approximately 14% or 12, 5%, excluding the divestiture of inventory held for sale.

Our inventory churn of one four times has improved considerably from a roughly one time turned five years ago.

Speaker 4: Our imagery turn of 1.4 times has improved considerably from a roughly one-time turn five years ago.

Speaker 4: We still see opportunity to improve our inventory turns over the midterm as we leverage AI.

We still see opportunity to improve our inventory turns over the midterm as we leverage AI.

Speaker 4: to drive perfect merchandise, a store and buy store, leverage flexible fulfillment and continue to optimize our product life cycle.

To drive perfect merchandise assortment by store leverage flexible fulfillment and continue to optimize our product life cycles.

Speaker 4: Each point one turn improvement translates to approximately $100 million of additional free cash flow. Our leverage ratios remain.

Each 0.1 turn improvement translates to approximately $100 million.

Of additional free cash flow.

Our leverage ratios remain below our targets.

Speaker 4: with our adjusted growth debt leverage ratio now measuring 2.3 times or 1.8 times on a net base.

With our adjusted gross debt leverage ratio now measuring two three times or one eight times on a net basis.

Speaker 4: Additionally, our net debt to EBITDA ratio is only 0.2.

Additionally, our net debt to EBITDA ratio is already 0.2 times compared to two one times in FY 'twenty.

Speaker 4: compared to 2.1 times in FY20.

Which highlights the improvement to our balance sheet over the last four years now lets look at guidance, we are reaffirming our FY 'twenty outlook, excluding the 15th store asset sale in the U K.

Speaker 4: which highlights the improvement to our balance sheet over the last four years. Now, let's look at guidance. We are reaffirming our FY-24 outlook, excluding the 15-store asset sale in the UK.

Speaker 4: The updated outlook reflects the removal of approximately $25 million of revenue and $5 million of four-walt ebit for the 15 store sale in the UK in the fourth quarter.

<unk> updated outlook reflects the removal of approximately $25 million of revenue and $5 million of four wall EBIT for the 15th store sale in the UK in the fourth quarter for.

Speaker 4: For the full year, we anticipated these 15 locations to generate approximately $60 million of revenue and $8 million of four-walt EBIT this year. Our top line outlook for the fourth quarter reflects expectations of a continued elevated promotional activity over the holiday season.

For the full year, we anticipated the 15 locations to generate approximately $60 million of revenue and $8 million a four wall EBIT. This year, our top line outlook for the fourth quarter reflects expectations of a continued elevated promotional activity over the holiday.

Season, we expect engagements to be down mid to high single digits compared to the previous year versus down mid teens year to date.

Speaker 4: We expect engagements to be down, mid to high single digits, compared to the previous year, versus down mid-teens year to date.

And the last three weeks, we've seen a more than 300 basis point improvement to engagement trends from our Q3 exit rate and we anticipate further improvement as the quarter progresses.

Speaker 4: In the last three weeks, we've seen a more than 300 basis point improvement to engagement trends from our Q3 exit rate. And we anticipate further improvement as the quarter progresses.

This outlook also reflects black Friday weekend results in line with our previous guidance expectations for the quarter. Additionally.

Speaker 4: This outlook also reflects Black Friday weekend results in line with our previous guidance expectations for the quarter.

Speaker 4: Additionally, we have a 53rd week in the fourth quarter, which is worth between 80 to $100 million in revenue.

Additionally, we have a 50 <unk> week in the fourth quarter, which is worth between $80 million to $100 million in revenue.

We're also lapping UK strikes last year, which is worth a point in comp sales.

Speaker 4: We're also lapping UK strikes last year, which is worth a point in comp sales.

Speaker 4: We continue to expect cost savings in the range of $85 to $110 million for the fourth quarter. Finally, we expect somewhat less deleveraging on fixed costs in occupancy and labor on higher revenue. Before we move on to Q&A, I want to thank our team for their commitment to our customers as we head into the peak holiday selling season and wish them all a happy and safe holiday. With that, we'll open the line for Q&A.

We continue to expect cost savings in the range of $85 million to $110 million for the fourth quarter and finally, we expect somewhat less deleveraging on fixed cost and occupancy and labor on higher revenue before we move on to Q&A I want to thank our team for their commitment to our customers as.

We head into the peak holiday selling season, and wish them, all a happy and safe holiday.

With that we'll open the lines for Q&A.

Thank you Lee.

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Speaker 1: Our first question comes from the line of Ike Birchow from Wells Fargo. Please go ahead.

Our first question comes from the line of Ike <unk> from Wells Fargo. Please go ahead.

Hey, Thanks for taking the question.

Speaker 2: Hey, thanks for taking the question. Question for Jenna, then I have a follow up for Joan. I guess, Jen, I just had a high level. I think you've done a good job kind of, over the past couple of quarters, giving us kind of your state of the union on the consumer as you see it. You know, you got in third black Friday, probably a pretty high volume. Here you guys, just how are you feeling about the consumer today, the state of the consumer? Is that much different than what you would have seen or thought three months ago? I'm the love your perspective. Thank you.

A question for Jonathan and I have a follow up for Jim.

Just at a high level I think you've done a good job kind of.

Over the past couple of quarters, giving us kind of your state of the Union on the consumer as you see it.

<unk> gotten through Black Friday.

Volume curious if you guys. Just how are you feeling about the consumer today the state of the consumer.

Is that much different than what you would have seen or call three months ago would love your perspective.

Yes, hi, good morning, Thanks for the question.

I would say we haven't seen a lot of change in how the consumer is approaching the holiday season, we have for a while now expected it to be a late holiday consumers are very deal conscious.

Speaker 3: We have for a while now expected it to be a late holiday. Consumers are very deal conscious, really waiting to, you know, make sure they're getting the best deals they possibly can. Our Black Friday weekend results were in line with our guidance range. That tends to be a lower priced part of the jewelry category sales.

Really waiting too.

Make sure they're getting the best deal they possibly can.

Our Black Friday weekend results were in line with our guidance range that tends to be a lower price part of the jewelry category sales.

Speaker 3: That's not the area that we compete in as much, but we had strong results across all of our banners on price points under a thousand dollars Banner performed particularly well that plays more in that lower price fashion

Not the area that we compete in as much but we had strong results across all of our banners on price points under $1000 band term performed particularly well that plays more in that lower price fashion.

Speaker 3: I think the good news is that we're seeing the recovery and engagement the way we thought we would. The milestones are tracking, Google searches are above year ago for the first time in a couple of years. And we're definitely seeing engagement ring sales begin to increase. Now, we still have a plan down for the quarter. It's a gradual recovery over three years. But I think that's definitely a good sign for us.

I think the good news is that we're seeing the recovery and engagement. The way we thought we would the milestones are tracking Google searches are above year ago for the first time in a couple of years.

And we're definitely seeing engagement ring sales begin to increase now we still have a planned down for the quarter, it's a gradual recovery over three years, but.

Think that is definitely a good sign for us.

Jonathan and then.

Speaker 5: And then maybe Jones, so it looks like the implied comps for the quarter or somewhere like down mid to high. So a little bit better than ReQ, you know, and the slide back to you guys have given it. You guys are forecasting engagement trends to the up double digits next year.

Maybe Joan so it looks like the implied comps for the quarter somewhere like down mid to high so a little bit better.

Thank you.

Slide back you guys had given you guys are forecasting engagement from the double digits next year.

Speaker 5: Just any any help with the shape of next year, I just trying to understand there's a comps of obviously, you know, they've been negative double digits and 3Q, not still negative like

I mean, hopefully the shape of next year, just trying to understand because the comps obviously.

And then maybe the double digits and <unk> are still negative.

Speaker 5: How do you see the cadence playing out? Anything at a high level might be helpful for us. It's just going to be thinking about how you guys might be planning this.

How do you see the cadence playing out anything at a high level might be helpful. For us just because we think about how you guys might be claiming the business next year.

Speaker 4: Sure, as we said in the prepared remarks, when we look at engagement for the fourth quarter, our expectation is to be down mid to high single digits.

Sure.

As we said in the prepared remarks, when we look at engagement for the fourth quarter, our expectation is to be down mid to high single digits with respect to engagements now that's an improvement.

To Jim's point of gradual improvement coming off of.

Year to date numbers, which were down.

Mid teen now moving towards low double towards the end of the third quarter. So we can see the progression happening. So we would expect that progression to continue to improve as we move into next year and do you expect for the.

Engagement.

Speaker 4: overall for the industry to be towards that 2.4 million incidents of engagement next year. And we have roughly a 28 to 30% share in the market. So we would expect that we could continue to hold on to that share as well as being shared with the many competitive advantages that we put in place notably.

Overall for the industry to be towards that $2 4 million.

Incidentally of engagement next year, and we have roughly.

28% to 30% share.

In the market. So we would expect that we could continue to on <unk>.

Hold onto that share as well as gain share with the many competitive advantages that we've put in place.

Notably personalization targeting customers at the right point in time in their journey. So we can be most helpful to them as they navigate the engagement journey next year.

Speaker 4: personalization, targeting customers at the right point in time in their journey. So we can be the most helpful to them as they navigate that the engagement journey next year.

Speaker 5: a chance you're comfortable saying when that would equate to the comp trend stabilizing or or selecting the positive.

Hey, Jack you're comfortable saying when that would equate to recall from stabilizing are inflicting Baldwin.

Speaker 4: Not at this time, I thought we appreciate the question. And as we move into the fourth quarter conference call, we'll be really pleased to share that view.

Not at this time I thought we appreciate that question and as we move into the fourth.

<unk> fourth quarter conference call, we'll be I'm really pleased to share that view.

Okay. Thank you.

Our next question comes from the line of Mauricio Serna from UBS. Please go ahead.

Speaker 1: Our next question comes from the line of Mauricio and Sonan from India. We still had...

Great Good morning.

Speaker 6: Great, good morning and Secretary Kimber question. I just wanted to ask on the operating margin, I think the implied guidance at the midpoint for the fourth queue is roughly 150 basis points expansion year-to-year. And that's an improvement of what we've seen over the last couple of quarters. Maybe you could walk us through like the put the takes at the growth margin level and also in

And thanks for taking my question just wanted to ask on the operating margin I think implied guidance at the midpoint for the <unk>.

Roughly 150 basis points expansion year over year, and that's an improvement of what we've seen over the last couple of quarters, maybe if you could walk us through the puts and takes in the gross margin level and also in <unk>.

Speaker 7: And in the SNA, just thinking about how each of these are going to move to the first of the previous quarters. Thank you. Sure.

And the SG&A just thinking about how each of these are going to move.

As in previous quarters. Thank you.

Sure Mark Thanks for the question.

Speaker 4: We spoke about, and I would say, prepared remarks for third quarter of breast margin, and we expect that trend to continue into the fourth quarter. But what we're also expecting is...

We spoke about on our prepared remarks, but third quarter gross margin and we expect that trend to continue into the fourth quarter, but what we're also expecting is the benefit of inventory.

Speaker 4: the benefit of inventory related costs continuing to improve in the fourth quarter, as well as the sourcing opportunities, the assortment strategy that we put in place to optimize margin. And as we see, you know, bridal recovery begin to occur, we'll see a little bit of dilution there, but what's really important, I think, in the fourth quarter to note is that the digital banners

Related costs, continuing to improve in the fourth quarter as well as the sourcing opportunities the assortment strategy that we put in place too.

Optimizing margin and as we see.

Bridal recovery begin to occur.

See a little bit of dilution there, but what's really important I think in the fourth quarter to note is that the digital banners.

Speaker 4: are expected to recover as we said from our synergies. We're expected to gain roughly 50 basis points related just to the digital banners alone. So sourcing, inventory related costs.

Our expected to recover as we said from our synergies.

We expect to gain roughly 50 basis points related just to the digital banners alone so sourcing inventory related cost.

Speaker 4: Marked-on Management Services as well as the Digital Banner Recovery is what we see in Gross Margin. Cost savings, again, which do affect Gross Margin as well, are related to the same things, inventory related costs, but the very disciplined inventory management that our the 10-second category tends to work well. Once more you have to have your straight bone, monitor your supporting coughing to keep increases onion always from weight ???????ly, destroys arms to CBS .

Mark down management services as well as the digital being a recovery as what we've seen gross margin cost savings again.

Do affect gross margin as well.

Related to the same things inventory related costs.

Very disciplined inventory management that our teams lively provide.

Speaker 4: as well as the clearance.

As well as.

Sure.

That clearance and the clearance related to that we take leaner remarks on our clearance because of our strong position and we're able to leverage in a strategic promotions that provides us margin expansions, while I would note. There is some offset for fixed cost large, but given given the size of the quarter it's less.

Speaker 4: The clearance related to that, we take leaner marks on our clearance because of our strong position and we're able to leverage it as strategic promotion. That provides us margin expansion as well. I would know there's some offset for six cost leverage, but given the size of the quarter it's left.

Speaker 8: And so there's less due leverage for occupancy costs, if you will. And then the cost savings are just continuing. We have marketing opportunities. We have indirect procurement costs and general overhead costs that are, it costs out for us. There are structural changes in our business that we have put in place and implemented, you know, over the last, you know, five years, we will have a close save $135 million of savings.

And so there is less deleverage for occupancy cost. If you will and then the cost savings are discontinuing we have marketing opportunities, we have indirect procurement costs and general overhead costs that are cost out for us there are structural changes in our business that we have put in plants and <unk>.

A minute over the last five years.

We'll have close to $835 million of savings.

Speaker 8: just over the course of our transformation. So we'll continue to drive on cost the customer's done care.

Just over the course of our transformation, we will continue to drive on cost to customers don't care about.

Speaker 6: Got it. And then maybe you could just elaborate a little bit more on what you're seeing on the lapron diamonds, dynamics. I know there's been concerns about incremental capacity and maybe some pressure on the prices. Maybe just update us on that and how where does that penetration is in your overall, you know, jewelry business.

Got it and then maybe you could just elaborate a little bit more on what youre seeing on the lab grown diamonds dynamics I know, there's been concerns about incremental capacity.

And maybe some pressure on the prices, maybe just update us on that.

Where does that penetration.

Is in your overall.

Jewelry.

Thanks.

Sure Hi, Mauricio.

Speaker 3: Sure. Hi, Maricia. So a couple of things on on lab-grown diamonds. Number one, the cost has come down considerably this year. We think that growers are now pretty much at the bottom of the cost curve. That, you know, the cost that we're seeing are really not much more than the cost of the ingredients, the power to make them and a small margin on that. So we don't see much movement in the future on cost.

So a couple of things on lab grown diamonds are number one the cost has come down considerably. This year, we think that growers are now pretty much at the bottom of the cost.

Curve.

The costs that we're seeing are really not much more than the cost of the ingredients the power to make them.

Small margin on that so we don't see much movement in the future on cost.

Speaker 3: What we've been able to do really effectively is to keep our ATVs up.

What we've been able to do really effectively is to keep our atvs up we've done that both on natural diamonds and on lab created in.

Speaker 3: We've done that both on natural diamonds and on lab created. In part, that's because of the average price of a typical diamond sale for us. We're able to trade customers up into a lab created at a higher ATV. And we've branded lab created. We've brought innovation. Our team has done a really nice job strategically managing that so that it's become a margin help, but not a revenue headwind.

In part that's because of the average price of a typical diamond sale for US we're able to trade customers up into a lab created at a higher ATV and we've branded lab created we brought innovation and our team has done a really nice job strategically managing that.

That has become a margin help but not a a revenue headwind.

Speaker 3: I think as we go forward, you asked a little bit about penetration. It's low teens as a percentage of our total diamond business. So still not high, but we have seen it level out a bit. It was growing much more quickly earlier in the year and over the last couple of months, we've seen lab create and level out quite a bit. And in the preparatory remarks, I talked about the work going on in the diamond industry on natural diamonds.

As we go forward you asked a little bit about penetration.

It's low teens as a percentage of our total diamond business, so still not high but we have seen it level out a bit it was growing much more quickly earlier in the year and over the last couple of months, we've seen lab created level out quite a bit and in the prepared remarks I talked about the work going on in the.

Diamond industry on natural diamonds, their special right, it's finite supply et cetera, and so we're really seeing a lot of good work going on that is causing I think some of the pressure on natural diamonds to abate, we would expect that to kind of level out to a more normalized.

Speaker 3: They're special, right? There's spinoid supply, et cetera. And so we're really seeing a lot of good work going on that is causing, I think, some of the pressure on natural diamonds to abate. We would expect that to kind of level out to a more normalized place next.

This next year.

Speaker 6: Got it. Thank you so much.

Got it thank you so much.

Speaker 1: Our next question comes from the line of Paul Ischwey from City. See you, go ahead.

Our next question comes from the line of polished.

Citi. Please go ahead.

David I, just wanted to be clear on your fourth quarter guidance.

Speaker 9: David, guys, I just want to be clear on your fourth quarter guidance, are you saying that you expect your engagement sales in fourth quarter to be down mid-high single digits and then if that's right, how does that break down in units first pick it and also curious if you could talk about your like to like changes in pricing of lap grown and that.

Saying that you expect your engagement sales in the fourth quarter to be down mid to high single digits and then if that's right how does that breakdown and units first ticket and also curious if you could talk about your like for like changes.

And pricing of lab grown natural.

So I'll take that Paul So engagements you are correct. We said that engagement, we expect to be down mid to high single digits in <unk> compared to.

Speaker 8: So I'll take that Paul, so engagements, you're correct. We said that engagements we expect to be down mid to high single digits in 4Q compared to mid to high teens for the year today kind of performance.

Mid to high teens for the year.

Year to date kind of performance.

Speaker 8: So as we continue to, as I said earlier, move into the first half of next year, we would continue, we would expect to continue to see that decline of A and we would move towards that 2.4 million incidents of engagements next year.

As we continue to.

I said earlier move into the <unk>.

First half of next year, we would continue we would expect to continue to see that decline.

And we would.

Move towards that $2 4 million.

$2 4 million.

Incidents of engagements next year.

From a pricing perspective, we are you can see through our results and as you look at the <unk>, we have been able to manage our ATV.

Speaker 8: From a pricing perspective, we are, you can see through our results and as you look at the 3Q.

Speaker 8: We have been able to manage our ATV, relatively flat. It's at the point when you consider Blue Nile. And what the team has been able to do is really balance pricing very nicely through branding of LCD product.

Relatively flat it's off a point when you consider blue Nile and what the team has been able to do is really balanced pricing very nicely through branding of LPG product.

Special shapes, we believe that LCD in fashion as an example is <unk>.

Nice way for us to expand our fashion business.

Speaker 8: So we are feeling that the teams have appropriately addressed.

So we are.

Fueling that the teams have appropriately addressed.

Speaker 8: the market position of pricing within diamonds, balancing natural and LCD. And we really haven't shared units versus the versus dollars in terms of that performance. But we believe that we're seeing the uptick, we expect it in bridal and encouraged by what we're seeing in fashion.

The market position of our pricing within diamond balancing natural and.

LCD and we really haven't shared units.

Furnaces versus dollars in terms of outperformance.

Yes.

We believe that we're on we're seeing the uptick we expected in bridal and encouraged by what we're seeing in fashion.

Got it what kind of cost.

Speaker 9: Got it. What kind of cost the changes have you seen on on lab grown and natural? Like if you look at it on the like for like base.

Have you seen on.

On lab grown in natural like if you look at it on a like for like basis.

So on last round we've.

Speaker 8: So on last ground, we've seen, you know, what everyone's seen in the market is that lap room costs have come down. We believe that they're likely at their lowest point, given there's a, there's a cost of making the lap ground. There's labor, there's energy, there's, you know, other, those basic costs that go in. So we've seen those costs come down.

We've seen.

Everyone's seen in the market is that without roaming costs have come down we believe that there is likely at their lowest point given theres, a theres a cost to us.

Making the lab Grounders labor, there's energy there is.

Other those base of costs that go in so we see those costs come down.

Speaker 8: within lab and our pricing, we've been able to manage this earlier with the special costs and the branding.

Within lab, and our pricing, we've been able to manage as I said earlier.

With the special costs and the branding.

Speaker 8: Now for diamonds, we are able to balance the absorbent, we, as you know, sell loose diamonds with ball of finished product.

Now for Diamonds, we are able to balance.

The assortment, we as you know Sal loose diamonds as well as finished product and between the combination of that and our customers design business, we are able to.

Speaker 8: and between the combination of that and our custom design business, we are able to manage what we're seeing happen in the market and we, as you know, have a down in marketplace.

What we're seeing happening in the market.

And we as you know have a diamond marketplace, which gives us real time pricing diamonds across.

Speaker 8: which gives us real-time pricing, diamonds across.

Speaker 8: the globe and we are able to really have a keen sensitivity on pricing in a dynamic sense. So we're leveraging those tools to drive our competitive advantages.

The globe and we are.

Able to really have a key sensitivity on pricing dynamics.

We're leveraging those tools to drive our competitive advantages.

Thank you good luck.

Our next question comes from the line of Jim Sanderson from Northcoast Research. Please go ahead.

Speaker 1: Our next question comes from the line of Jim Sanderson from North Coast Research. Please go ahead.

Speaker 10: Okay, thanks for the question. I was wondering, could you provide us what you expect on North American and international seems to resale to get to the higher end of your fourth quarter guide?

Okay. Thanks for the question I was wondering could you provide us what you expect on North American and international same store sales to get to the higher end of your fourth quarter Guide.

So on a.

Total company basis.

Speaker 8: Total company basis is the way that I would Express that for you Jim and

That I would express that for you Jim.

Okay.

It would be 7% to 8% for the high guide.

Speaker 8: It would be 7 to 8% for the high-guide, negative, negative 7 to 8% on the high end. Now remember, in the fourth quarter, just to give you a little color on that, our revenue position, not in the comp, but we have that extra week, which we have stated is $80 to $100 million. In the UK, as you mentioned, international, the UK is cycling.

Negative negative 7% to 8% on the high end now remember in the fourth quarter just to give you a little color on that our revenue position.

Not in the comp, but we have that extra week, which we have stated is a $80 million to $100 million.

In the UK as you you mentioned international the UK cycling.

<unk>.

Speaker 8: that strikes from last year. So that's reflected as they have a better comp than North America relative to that, as well as recall the UK sale of the locations for the watch showrooms. And so that is removed from the base as well.

The strikes from last year, so that's reflected as they have a a.

Better comp than North America relative to that as well as recall the UK sale of locations for.

The watch showrooms and so that is removed from our base as well.

Understood. So a lot of moving parts there.

Yes.

Speaker 11: Yeah! Yeah, but... Has his Prvent

But.

Bob.

Speaker 10: Just a quick follow-up question is following along on the recovery of the engagement cycle. How do you foresee the recovery of the engagement, average transaction value, and unit profitability as this recovery and engagement takes place? And that's given the changes in demographics that you've called out. Maybe changes in consumer preferences that are different today than pre-COVID.

Just a quick follow up question just following along on the recovery be engagement cycle, how do you foresee.

<unk>.

Average transaction value and unit profitability.

So.

Recovery in engagements takes place and that's given the changes in demographics that you called out maybe changes in consumer preferences that are different today.

Pre COVID-19.

Yes.

Speaker 3: Hey Jim, I think the biggest change will be in units. So we've seen couples progressing through the milestones that we've identified. We see a statistically significant growth in people getting to that last stage, which is when they choose to get engaged.

Hey, Jim I think the biggest change will be in units.

So we have seen couples progressing through the milestones that we've identified we see a statistically significant growth in people getting to that last page, which is when they choose to get engaged so units is where we would expect to see an increase atvs have been pretty stable for us across lab.

Speaker 3: So units is where we would expect to see an increase. ATVs have been pretty stable for us across lab created and natural all year. We're bringing innovation that we think appeals to multicultural customers. Yellow gold is a great example.

<unk> <unk> natural all year, we're bringing innovation that we think appeals to multicultural customers.

Yellow gold is a great example of that.

Speaker 3: They tend to have a preference brand names.

<unk> tend to have a preference brand names is another example, we haven't seen anything that would indicate that a shift toward more multicultural engagements would cause a significant difference in HGV, we'd expect it to be very similar to what it is today. The one thing I would say is that we do.

Speaker 3: is another example. We haven't seen anything that would indicate that a shift toward more multicultural engagements would cause a significant difference in ATV. We'd expect it to be very similar to what it is today. The one thing I would say is that we do know among Hispanic customers is that they tend to have a preference for natural diamonds over lab created.

No. Among Hispanic customers is that they tend to have a preference for natural diamonds overlap created.

Speaker 3: And so that will be an interesting trend for us to look at on forward. All right.

And so that'll be an interesting trend for us to look at going forward.

Alright, Thank you very much.

Speaker 1: Our next question comes from the line of Lorraine Hudson Singh from Bank of America. Please go ahead.

Our next question comes from the line of Lorraine Hutchinson from Bank of America. Please go ahead.

Sure.

Speaker 12: This is Melanie on for Lorraine. I just had a question about the promotional landscape. Specifically for Black Friday. I know you said Black Friday came in, you know, in line with expectations, but how are promotions across the different manners and, you know, anything else you can provide on traffic and price points for Black Friday, Cyber Monday, and then still on promotions, you know, what are you embedding in Fort Geo for the holiday?

Yeah. This is melanie on for Lorraine.

I had a question about the promotional landscape.

Typically for Black Friday, I know you said Black Friday came in line with expectations, but how were promotions across the different banners.

And.

Anything else you can provide on traffic and price point for Black Friday, Cyber Monday and then.

Still on promotions what are you embedding in <unk> for the holidays. Thanks.

Sure. So it's been a different holiday season over the last couple of years, we've seen consumer shop early in part due to supply chain challenges. They came into the market to make sure they could get the holiday gifts. They wanted before they sold out this year has been quite different we've been pre.

Speaker 3: Sure, so you know, it's been a different holiday season. Over the last couple of years, we've seen consumer shop early. In part, due to supply chain challenges, they came into the market to make sure they could get the holiday gifts they wanted before they sold out. This year has been quite different. We've been predicting for a while that holiday would come quite late.

Victim for a while the holiday would come quite late youth.

Speaker 3: Usually the earliest shoppers for jewelry for holiday are women buying at lower price points for gifts and for themselves.

Usually the earliest shoppers for jewelry for holiday are women.

Lower price points for gift stand for themselves, we saw that as the primary customer during black Friday weekend promotion activity was very high on those lower price point goods, we were competitive in that context.

Speaker 3: We saw that as the primary customer during Black Friday weekend, promotionality was very high on those lower prides point goods. We were competitive in that context, both through the way we're able to do targeted promotions.

Through the way, we are able to do targeted promotions.

Speaker 3: given our CDP and our personalization capabilities, but also we offer a great value through our sourcing and our vendor relationships.

Given our.

CVP and our personalization capabilities, but also we offer a great value through our sourcing and our vendor relationships. So as we move through December we would expect to continue to see a high level approach promotional and I think that will come up into higher <unk>.

Speaker 3: So as we move through December , we would expect to continue to see a high level approach promotionality. I think that will come up into higher price points as independent jewelers are still trying to clear some of the inventory they had from last year.

<unk> points as independent jewelers are still trying to clear some of the inventory they have from last year.

Speaker 3: We have very healthy inventory, so our level of newness is excellent. One of the encouraging things that we've seen is that you're today, our newness is selling 30% faster than it did a year ago. So, you know, that's what consumers tend to look for in this kind of an environment. They look for a great value.

We have very healthy inventory, so our level of newness as excellent one of the encouraging things that we've seen is that year to date, our newness is selling 30% faster than it did a year ago. So that's what consumers tend to look for in this kind of an environment. They look for.

Great value.

Speaker 3: which we can provide because of our sourcing capability and they look for innovation. And we think that's an area where we will really stand out. So all of that to say it was very promotional and Black Friday at lower price points. We think it'll be promotional for the rest of the season and we're ready for that. Thank you.

Which we can provide because of our sourcing capability and they look for innovation and we think Thats an area, where we will really stand out so.

All of that to say it was very promotional in black Friday at lower price points, we think that will be promotional for the rest of the season that we're ready for that.

Thank you.

No further questions at this time I would now like to turn the call back over to MS. Joseph for final closing comments.

Sure well, thank you everybody for being on the call with US today in closing as a company whose purpose is to inspire love. We are committed to holiday season to doing our part to enable people to express love to each other in these difficult times.

Speaker 3: Sure, well thank you everybody for being on the call with us today, in closing, as a company whose purpose is to inspire love, we are committed to holiday season to doing our part to enable people to express love to each other in these difficult times. I'm proud of and very appreciative of our team who brings our purpose to life every day. Thank you.

Proud of and very appreciative of our team who brings our purpose to life every day. Thank you.

Thank you ladies and gentlemen. This concludes your conference call for today, we thank you for participating and ask you. Please disconnect your lines have a lovely day.

Speaker 1: Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask you to please disconnect your lines. Have a lovely day.

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