Hibbett (HIBB) 25 Aug 222023 Q2 Earnings call transcript

Greetings, and welcome to the Hibbett's Second Quarter Fiscal 2023 Earnings Conference Call. [Operator Instructions] A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Gavin Bell, Vice President of Investor Relations. Thank you, sir.

begin. may You

Investor note under that Please this along remarks. have a These or help via prepared slide bottom may at Good the materials News of will that our & refer with morning. deck homepage the hibbett.com on we is investors.hibbett.com prepared follow link to slide discussion found deck the and morning. at available we Relations the during you The section. our Events

Act like would comments events I views It begin, and remind and call everyone in forward-looking in management's may and we Before the to to statements, and uncertainties current the be of subject should some differ to of anticipated are statements. XXXX, company's made Safe the reliance during of materially Litigation Harbor provisions are future risks. future that performance, with are discussed respect company's forward-looking that conference on this financial which the noted the statements. Private those results from Reform Securities These reflect

the of find the may the Web on site. Some non-GAAP earnings you financial our could other are contribute We have Exchange sources discussed differences noted comparable reconciliation refer to this GAAP Commission. information. most such morning the cause Securities slide directly issued call, Also extent on described of and for measures with you to to Form more in on measures XX-K, two that those and to been on news the are and and report or presentation release factors company's filings the annual this the in a

management's based webcast date, information nature of of to believed this call as of and on call the the call conference Jared now today's this are limit President and Because like conference policy during Vice Chief a archived Vice Hibbett Longo. will would time-sensitive remarks Ben to over I of is the the it this Operations. information, XX-day point the Officer; Officer; to replay XXXX. understandings Senior accurate Merchandising; out XX, of August on that participants Lastly, Bob Executive and of President Mike Bill and to Senior President Digital; Briskin, President, Executive The I of period. President Financial Vice turn Knighten, Senior Volke, call Vice Chief Mike Marketing Longo, and are Quinn,

Good morning.

quarter Our and of as a we enter well-positioned second we team solid the year. are delivered the second-half

We guidance guidance. earnings are full-year increasing full-year our diluted share and previously comparable sales per our total stated and reaffirming

an inventory and As execution report excellent discussed stores compelling on our and on position, the the external that control, was macroeconomic are pressures. to aspects was We I'm the did in omni-channel strong. that sale-through platform. job in-demand managed executing improved and necessary of Overall, pleased respond business this selection our outstanding successfully first by we of We as inventory supported adjusted a the quarter team quarter. our under you to call, this of our product had to

to Moving things. a of to I'd four, like slide on reiterate handful

to be profits in levels versus noted. sales rebasing at levels is Our success higher and our pre-pandemic

the last over growth were us we've long-term. the changes and years improved While the also impacted fiscal underlying positions for model in competitive two stimulus which by business positively the landscape,

believe we're the demand. of inventory well-positioned our We the back-to-school meet million, able with Looking we $XXX back-half year, at goals. is ended quarter believe of we the to full-year to meet which

customers. excite of are addition ready we We're amount of that to inventory. fresh, in-demand will quality about our products inventory, very the the In with positive our

prior weeks back-to-school have from QX of the saw QX. we're now. shifted customers a This the customers shift We closer Historically, to release, begin sales start three take of these mentioned favorable some today's start purchases into we're that place includes those timing late excited to As for two to pretty back-to-school and as school somewhat and school. to the back-to-school trends result favors shift in we're saw shopping. shopping their sales that. seeing started and press season, about a year, until QX, their we This seeing shopping trends

we result, high-single negative digits. the a and to low-single from are our second-half comparable As full-year guidance the increasing from digits sales the the positive comparable digits low-double low-single positive guidance positive to digits, the sales

look In forward top the improvement line, comps we an in perspective, chain addition supply these expect positives a second-half. to for the to from easier and

higher year-over-year return to in result leveraging fixed expect sales a We which our will costs.

model we business to committed our to optimize move year, over executing through remain long performance we our proven the run. As the

our now over organization, like whether service in stores, daily business logistics sales omni-channel in it's facilities, and merchandise best-in-class with that support forward, their Jared. customers, our, the represent assortment and across the and that the in members approximately, and they're their finally, the to Our marketplace, our the puts to our our compelling commitment advantage partners, to I'd excellence and And team competitive our appreciate vendors, turn a XX,XXX us strong and in model, provides differentiation us of customer It's thank and our the vendor values communities. deliver a efforts brand or the years. center, stores, in store eyes the coming in consumer position superior the I efforts. to to call will us their creates I'll profitability propel our

Thanks, Mike. Good morning.

the merchandising overall you quarter, our with the turn for merchandise line performance our across our categories. five, slide, second expectations slide to in was If

calendar compared comparative fiscal stimulus-impacted XXXX, standpoint in the fiscal expected, the to the the low We most believe of second were digits, team men's, when teens. From in standout continue sports period. in to and declined kids' when stimulus and category a was growing all high Specific XXs, XXXX, grew compared growth was fiscal Footwear and declined, apparel growing categories compared category the impacts declined sports in our XXs, single of growth in with low up last-year meaningful men's low XXs, fiscal footwear years, Women's single-digit comparison. last going 'XX, compared XXXX, 'XX, in range. the quarter of calendar XX%. the that XXs, to the to calendar up to comp low team against to high footwear while in as the apparel by followed sales When is growth the in XXXX. the grew two calendar to and of women's, When the due the during XXs. and kids' all XXXX the fiscal significant upper 'XX, showed and apparel, high COVID 'XX, fiscal

The earlier, largely in-stock we are and confident of referenced Mike for increased inventory during attributed back-to-school. results the a key better levels to we're As with seeing inventory in position footwear franchises position. appropriate were our are

to impacts of 'XX, fiscal sales in inventory balance our XXXX, XX%. about up of my believe regarding is the of inventory also our as meaningful footwear comparing As as were XX% commentary, unit inflation. mix largely we to price inventory When end well I fiscal sales the fiscal levels quarter XXXX, the to levels were XXXX, gain. calendar compared XXXX, comparison is inventory positive When to referenced most XX% XXXX. calendar This our calendar to due in increase compared the of at

elevated continue cover give quarter-end with now inventory consumers. financial Our in to confidence merchandising we hand strong Bob results position it results. that in I'll us our second the our how to quarter working to over toe-to-head strategy our combined serve our and is

and Thank QX titled slide Please you, refer good Jared, morning. FYXX to six Results.

from the sales report As our for million 'XX. Gear $XXX.X the and a we Total X.X% a net quarter million, both reminder, results brands. basis second includes fiscal that decreased of of consolidated second City on 'XX Hibbett $XXX.X the the to fiscal quarter

e-commerce net decreased XXXX. then, XX.X% XXXX, three-year increased points stack. to fiscal have versus quarter of comp cost second to in Brick-and-mortar factors. sales approximately E-commerce and X.X% by sales quarter, of the and sales Increased the necessary $XXX.X is total year. the the due and store accounted XXXX, same decline result A fiscal million transportation increased the quarter current quarter a of in wages, capital and administrative We sales decline three the and $XX.X by increased XX.X%. was XXX infrastructure for the relevant prior comparable and $XXX.X second than XXXX. any fiscal was XX% of the per mix X.X% amortization the second to were quarter investment revenue of activity The in $X.XX XXXX, this fiscal compared fiscal cost on last fiscal to the quarter. primarily sales expense Diluted on supplies with quarter. utility costs. a In and year's current e-commerce quarter were increase brick-and-mortar million the sales $XX.X fiscal Store quarter, of for in XX.X% increased quarter XX.X% year's sales selling, year. to product quarter second basis recorded the prior X.X% that increases, versus by income year comparison of and prior the in net XXXX. to comp and of sales of was compared prior share of the second basis second increased due the of of Overall maintenance, We period sales particular second have fiscal 'XX, repairs Depreciation to period expenses quarter [contributed] XXXX. primarily years the and did in margin same increased during approximate million mix the organic point decline. general benefits, compared in in and of in However, rent mainly costs, for E-commerce $X.XX as last sales expense general compared million reflecting XX.X% XXX of net of per of and decline quarter such the or looking deleverage XX.X% to sales shifts although of points, second for the and XXXX, approximately the of for the quarter, lower XXX to $X.X of comp or XX.X% quarter second prior of of sales in growth net to categories versus year-over-year approximately support 'XX non-GAAP Gross occupancy to second store a higher share the year, second back net second quarter points, prior currency higher XXX sales quarter and basis year, larger approximately comparison in events. decreased to freight period. lower net XXX.X% million not earnings in in were the [Ph] items launch employee period impacted X.X% due sales prior negatively to compared point of XX% base operating delays XX.X% sales, compared following higher in the projects. approximately fiscal This deleverage generated opportunities coupled margin product to basis of which of the of the year, second were margin quarter operating, basis second XXX they second increased second pandemic, in the fiscal by than sales the XX.X%

delays in cost. and decline occupancy increased general decreased base for will year-to-date in amortization from in opportunities mix basis $XXX.X comp discuss the Total XX.X% In fiscal three months fiscal fiscal 'XX. current XX.X% increased fiscal $XXX.X months months sales, 'XX, fiscal the accounted increased 'XX six results, fiscal period net supply fiscal shifts mainly projects. sales such same reported year. current versus increased margin in 'XX. months Brick-and-mortar is were And and impacted. basis fiscal the six versus this decreased infrastructure e-commerce of operating million $X E-commerce in six fiscal This points increased to in six was the to first Depreciation or $XX.X for decline category year's rent of We XX.X% I'm period increased e-commerce comp sales primarily in the 'XX, of any XX.X% of of sales 'XX on or points year generated in advertising, of net fiscal the period per In six deleverage of was due the 'XX 'XX, freight the of year. the XX.X%. XXX.X% basis XX.X% year. comparison have the the last gross seven. primarily capital XXXX were again store to in decline in and investments million Year-to-date fiscal support of same now compared current first-half product Sorry, to have a fact same in points period the first We approximately expense fiscal the year, and large fiscal comparison sales sales to million period long but year-to-date approximate of first prior the margin first-half fiscal items Deleverage $XXX.X million decreased six to result expense cost was XXX mix I XX% reflecting fiscal per to share sales $XXX.X store not the by fiscal Overall general non-GAAP months then, fiscal year months. sales sales $XXX.X for basis referencing organic $X.XX XX.X% first as XXX of higher the XXX last same that basis the by activity fiscal due income and approximately net of of sales cost sales 'XX than negatively Year-to-date revenue, year. same net the first-half six the of million of months XXX the of earnings SG&A professional comparison wages, to of in utility and sales million and XX.X% XX.X% first net first-half in Next, XXX compared and growth XX.X% 'XX. for XX.X% diluted 'XX, compared either of necessary approximately for E-commerce I mentioned and decreased months six versus $X.XX points. sales last sales transportation to point XX.X% period share total the term. first to cost XX.X% for to in product quarter, our same of of deck. and with 'XX. against prior in compared slide comp same in XXXX fees, of of of 'XX year-over-year for was was approximately with compared million of to -- increased was lower net increase second lower due This in approximately in 'XX. increases, X.X% sales in X.X% of compared did first prior net

at the Turning period quarter the end inventory fiscal of the year. to in of And with the quarter and year. beginning ended 'XX beginning the sheet, higher fiscal in XX.X% same of than $XX.X and balance cash a million at higher the was about approximately $XXX equivalent, million we higher cash the $XX.X second year million last fiscal than balance XX.X% of or

quarter the Capital inventory $XX.X technology, quarter was $XX.X store expenditure of million year. build is in of this $XXX debt million. outstanding credit end of short-term over expenditures have the year-to-date second and Capital projects. $XX.X primarily infrastructure first-half will during total result the development, bringing of We million and at line the maybe million

count During new XX and and of locations, XX the second closures. closure. increased our quarter, by increased XX we locations units a store count net On have one store rebrand, new one comprised by basis, two of year-to-date XX in with net of

a million. of recurring cost $X.XX we about of We total share On In the the per with repurchase of second $X.X of dividend authorized purchased just cost total quarterly common a paid as XXX,XXX million. year-to-date count with outflow approximately Our total at repurchased shares under over stands a approximately store have we quarter. end $X of the total second shares a a X,XXX XXX,XXX basis, million. $XX.X at quarter, of program

[Ph] months For some amounted call dividend the discuss first have the 'XX, six to fiscal Bill over payments to I of [$XX.X] million. consumer to now will insights. Quinn

to versus of versus year. have shifted above structural two, year a QX, how FY'XX. we Longer-term rebase customer grown; sales particular Entering portion recent substantially this us base customer XX.X% in keeping Comparable line back-to-school, One, are perspective differences back-to-school a customers on re-baseline not retail. in shoppers that seen a customer to of number on we to of Bob. well last pulse the more averaging pre-pandemic and footwear. FY'XX. levels. the keep Also customers QX average of Through versus see changed and above purchases Thanks, majority customer increased to we timing plan our continuing gain two significant two as our keeping have our know in feel. FY'XX. research, business the From trends on factors spend has nature, fundamental ticket increased has of due these We

e-commerce year gains increased last approximately FY'XX. E-commerce to QX, over sales year's our at customers in quarter continued the our traffic year-over-year. XX.X%, in experience versus of represented XXX% our XX.X% customer total last to business, for by website versus ads increased Turning improvements XX% X.X% with sales total for versus

include back-to-school QX For run now I year. in low will accelerated and the guidance. rate. QX investments footwear produce back this continued Bob Key in the of to has strong factors drivers robust turn gains These discuss versus our to retail. our remainder unit and digital will growth sales, double-digit average tracking, call sales for digital

XXXX summarizes updated nine fiscal guidance. Slide Bill. Thanks,

the the fiscal to This in now challenges updates there to business to potentially guidance full-year updated, are of our single-digits single-digit 'XX. while our expected continued the Comp increase full-year. to in in comparable full-year elements compared to may growth in is e-commerce be sales need be be double-digit to low the certain expected remainder be that we of margin, in six Total projected fiscal to significant feel be by behind single-digit response. anticipated flat positive in positive sales range revenue comparable range and us, to of be low the XXXX, positive months net implies the range dollars sales SG&A for the sales gross Full-year single-digit low range, Although are to of the some Brick-and-mortar in economic are low with impact range. back-half the year expected are sales positive year. flat, of

will XX.X% forecasts spread of challenges, approximately was store of occupancy throughout still to and an guidance assumptions time rate range are inventory rate a is results consistent the years store count range inventory back and supply has Diluted growth sales, XX to above a again of Brick-and-mortar based margin gross $XX margin strong. down technologies decline, low of anticipated sales infrastructure share headwinds, we in this pressures average sales percent more as that fiscal million. in projected the larger as fiscal Operating fiscal $XX.XX the XXXX the a becomes although SG&A and margins new with The still in a chain higher levels. margin of e-commerce favorable investments. expenditures estimated continue of contribute sales compared infrastructure range sales with projected is year be 'XX are will consistent to store in levels, to receipts Wage to anticipated decision new relatively are estimated XX.X%, in focus remains the growth, to to 'XX inflationary office predictable, potential Our to are of XX.X full-year inflation in sales. on Fiscal to of tax overall ease, to to with constraints attributable The on previously. lower pass. of all still pre-pandemic still range our to weighted $XX percent progresses, higher new million fiscal more favorable points gross to additional net in believe XXX of be stores costs the estimated Capital store 'XX. year-over-year XX.X% contribute XX declines count associated global the to as growth supply increase. and levels de-leveraging approximately XX the range and remodel by be made and expected to points, consistently units million XX.X% pre-pandemic basis gross the to year. become Net to chain of $X.XX of adjusted and XXXX percent is in to anticipated than range the XX.X% basis the slightly remain income following continue double-digit provided using with investments and annualization in e-commerce, XX as EPS XXX been

strategy capital the Our allocation that That will repurchase shares our year for dividends. the we of to continues prepared recurring pay and throughout questions. concludes remarks. line expectation open the please remainder Operator, quarterly include the

Thank you.

question-and-answer conducting session. [Operator We Thank will be you. Instructions] now a

the your with Our from of Sam question. with first question Trading. comes Williams proceed line poser Please

what give taking now, at back-to-school or us Good can us you're my specific run back-to-school, far the morning, percentage that -- -- everybody. for right is questions. to seeing how more Thanks On of rate right please you give in now? and

Sam. I'll part the morning, first Hey, handle good Mike. of that.

us. minutes the to it's consumer So, will we're well. the talk then going of we the curve net stores -- shape two-thirds of some sales occurred, how the shift to did a few bit. Bill Overall, right when curve somewhat. a surveys think has the -- up, that amplitude behavior going of the net-net, believe changed, and in you all the we of a behaviors in terms There's it's we'll know it to back-to-school, that of it that going have about is through be timing, Not seeing that about in -- changed positive and has that has sum very we back-to-school be only but, for little that were changed

QX to knows of and terms volatility results, because know, the moves historically, in we this of that talk call So, about back-to-school exception how the everyone on very the rarely of calendar shift the being, intra-quarter QX you it.

our mentioned was. back-to-school in comments that it be of the this historically, meaningful, and case we'd typically could so, And timing in and

but your it up sales, for are And put inventory, you So, shifts, move you you payroll, of the you set remember, it. costs, and we're setting and you end for those sales the for still us. incredibly if up as in get plan, profitable QX, got sales. in you your And the incremental you put the don't back-to-school at know,

So, not rather. operating of but QX QX into -- sales, only the into moved from or QX, some profit the

want a follow you And then, couple up if behavior? about what will, talk on saw you Bill, minutes to in for Ben, the So, that we've consumer what with of seen you the stores.

Yes, morning, Sam. hi, good

So, impacted the been but to it. customers found manage some of by have they inflation, ways through

They a for delaying So, few seeing they're behaviors right that And customers now, purchases a in shopping back-to-school. shift their and deals seeing then cutting we're are the We're of until of that need little They're no it. net-net bit back-to-school. spend commentary. plan more. absolutely more also, other is for in they that discretionary back I'll very spend back it to the few customers trading we for holiday and customers over turn down. to Ben plans to have spending for cut all, outside retail. current at But have more

visit it said, to and the the Bill stores tag middle season. what of back-to-school some had in opportunity I to their last Yes, in kind happened just on to Arkansas week, of

is And so, exactly what just behavior. reporting, in Bill also actual some but the is shifts shifts saw back-to-school days, we in calendar what there

good understand matter] so goes maybe until in talking to in some on about in so, even starting what how back-to-school, shop to [Ph] and there] our back little what's to and where after consumers can they saw [Ph], they consumers days about spend prior few bit the and school the associates [needs the [won't to pretty towns those then going to I school able system, go felt talking a a And those bit see understand there. to about a no late -- little but to

about that has that? want some do things yet a the up shift of we also one been there didn't follow lot Jared, And Yes. calendar you product. was [indiscernible] talk to on

Good Sam. Yes, thanks, Mike. morning,

some as forecasts, unfortunately [indiscernible] the coming at of promotional QX. were all the our along both starting our Mike and mentioned, up QX, as we the again volume looking you of for pushing of plans at chain, wound well sales expectation calendar as we as know, into] the that that [leaning all into putting with supply as [indiscernible] so, [Ph] and end of our together QX, ending launches So, impacts

all an QX. we're impact has So, somewhat those now on things impact negatively, but pretty QX a of on

I would appear during on Bill pressure mention, launches to down, The the second not [purchase] do [Ph] number although other of some and are on. significant thing perspective, able price as inflational the some that our incredible, been The early that of we've also add that going products from they a seen have franchises. does said, consumers been trading it in quarter we've part quarter, increases slowdown, that, like-for-like, and we've has no in third key seen fact liquidation increases certainly

and So, now. we're stand confident we very right comfortable where

a Bob, wrong? better, that am the did you year that larger in just quarter business? anything have just follow-ups -- their because holiday, Thanks. are vendors that seeing a up comps the you levels map the do -- QX, that anticipate based I If your in of are lastly, comp I large stronger the that comp further in or you from benefit you compare, be from about on the same the will the third against for the One, should and can there. two you're way allocation that how I in are the you And by thinking than because harder falls, that? seeing fourth impacted one two, do of doing you'll vendor And -- quarter inventory -- benefits by

activity. the with I'll so All right, start Sam, promotional

the had two promotional years activity. So, we've certainly, essentially last zero

at second near-term. of revolving around slow to least certainly there's don't some quarter in -- apparel, we some So, down them activity been was shift, primarily we promotional expect that in the the had

consumers. has a to couple So, in having regard just be still from still consumer I battle and perspective significantly been footwear it we've [indiscernible] that enough really is our with for a a standpoint. the what the of of good particularly inventory said, pre-pandemic not activity frankly, And and less all within than experience inventory, the and fighting our experience not we And, stores saw been my expect promotional years for inventory, in footwear. to

with working getting full. team that excellent our and full, getting driving our but the heat sell are an are that things it our really is So, pipeline full vendors, traffic, getting done of not just closely that And has it really quickly. things right high the through things, the job in

So, the stand we as we're our now, for where well as with plans confident back-half.

as just in some summing with last about but minutes, guidance I currently couple QX be [Ph], both last the a to we think strong. the less we'd too, had some struggle very bit QX sentiment real holiday, [indiscernible] see with to as [this And just belt. shifting do would guess comp into QX liked of we're well, year individual if not was follow inventory thing] I the again, remember the to a if you up, have and we than far think of sort QX because, expect giving quarter, consumer you little of

couple feel both be you consumer the fairly and when QX that think QX that should inventory together sentiment, and of position, the I shifting strong. again, QX, confident So, the pretty sales to

very much, appreciate Got you. it. Thank you

Advisory. comes with Fernandez next Please question from Your question. Cristina your Telsey the proceed line with of

of be this year? bit you a us back-to-schools better the why helpful you thank about the inventory thinking the the And and we for to the explanation give better shifting? high heat better are availability comp or is with morning, question. back-half. increased if It the wanted the early for I being mostly understand can calendar in good outlook launch better it taking in Hi, my little sales would or also outlook

is Thank you, -- and of it this. this I'll off, Cristina, piece lead then everyone a is Mike. else and has

is So, good for in has shift. how a going the it's second-half the that part very to increase led than back-to-school to start, more the year, start good But the is the That -- sure, is to in also of it's that. of the comp -- a quarter.

and So, model model we established, about about things we've competitive like that the think our improvements significant business the business that our we've we've the business talking the and to if made model. really been you differentiation on

combine out context there, who of the we doesn't, inventory our the when that the and that competitive wants, consumer products increased it's in that valued and the who inventory, major that So occurred covets fact that, with decisions that on turns you to have together, the are high-quality those distribution favors you brands product into the that combine improved in When made with with the has significantly regards us. transactions. carries two that fresh of changes

And manifest increased that, transactions to a of talked amplify Bill? those those ways you want so, has sales about And any in couple Bill of in comments, do

absolutely. Yes,

has pretty customers, of A for year-over-year per I and our on Also, First to some in loyalty growth particular, very loyalty well a omni-channel having that's last focused we fair year, so we've seen and also grow to and of more launch revamped well, program, our and think all, a extremely process that's us. positive continues to which purchases us. customers sign, got to sales, as result also member, very continues and continues that be draw do actually in couple incredible program. members greater new

confident programs had e-commerce very can those two inventory, an deliver. have we're good into So, we From and we very good traffic. well, very perspective, back-half the what

we the and focused we're Mike said, on experience, very confident there well. feel customer as As

impacts Jared, that's and how comment AUR to so side. the on Yes, ticket? transaction the you that do want

would the a increase with kind so of quarter, in going marketplace. it an But top happening. challenges got significant we've best-in-class one distribution consumers changes. There we comp of our from our have a of Mike this importantly, much we're increases. supply than of of driving necessary especially believe vendors chain so back-half that so happened that current Yes, some our near and we had inventory just down for of of without two better high that a quarter. our along And that, footwear the a excellent will second in or portion premium a additional consumers the change the footwear, been last a we would those fourth that inflation store expectation toward the changes inventory, distribution little really AUR stores that shift a distribution that respond be referenced are on are to large out launch saw, But very impact. significant feel of by inventory. our rotations, year, impacted with the very the an is year to very, with be all did during do that more having was there not later On back-half the certainly some of to things of are absolutely increase couple amount the starting inventory year, back have all not the those beneficiary change, and distribution you the the is a expected on is strong in price during not trade are price a And than and AUR; that in to component we to that's the due things. of what very, some be satisfy calendar, really draft increases, seeing significant it's the seeing then heat that's

you be also Thank you, provide guess, much very I is in a color can product color. you that see noted incremental the And helpful on product -- pressure, that average there perhaps or the or would inflation, gross I that's it the on promotions how margin, is product it underperformed, cost particularly to then any higher understanding carries if color margin of -- wanted helpful it quarter, mix, I trend? guess for margin more apparel

take thank that Sure, Jared, It's you. I'll one.

end of back-to-school on as apparel over now, had some of in advantage we with of of expected on made quarter we particularly had discussed along back-to-school certainly peak materialize activity couple line. earlier some shift put sales third traffic, the We along the we going there's the the and where margin earlier marketplace the take the those the based some quarter with did some in into and of the that holidays the a and end QX the then more offset and the decisions in But some that launch two focused right things, shifts and quarter run pressure margin some quarter. absolutely to promotional essentially to some to into at around the last we referenced, than some have years, somewhat occurred earlier of the on had launches, promotions of So, that we in some none. Mike more those

pressure. little a put that So,

As look health year, saw in more fiscal And to of environment ahead exceptional. and perspective, what is our age last really starting than second-half, again, from see the of into nothing we inventory, the we're a the promotional anywhere to we 'XX. close

we the has product maintain levels that to in above significantly last expect something terribly year 'XX. to two concerned. years, [remain] that margin Don't not fiscal certainly or us saw we So, but expect [Ph]

footwear, relative related And expand the mostly to on note? receipts is anything else to or can during you the to it the apparel inventory performance quarter

about to Yes, high our business it in I had would say, if XXs. think year, declined compared apparel you last

look, really, when disappointing. compared it you So, at really at look grew XXs. 'XX, to first really the in you go, But would apparel that's well, fiscal

footwear money we an because there outsized apparel frankly, footwear you So, inventory. had not business year, last from enough had inventory, -- was absolutely and consumers have really stimulus, certainly

a the into back, more with of seeing the meaningful the in to becoming again to that footwear certainly same as that we balance back-half year. got So, expect quarter, the we're be and second category

just year-over-year we under have that area feel very an is clean, premium focused overall, control. concerns is our inventory the like apparel it's some good at so again, have unsusceptible based not But very, off we promotions. comps. it So, to about we levels incredibly pretty And

Thank you.

line question. Kleber Robert Please of proceed W. Our Baird. next question your comes Justin with from with the

taking good for questions. the everyone. Yes, Thanks morning,

First the on full-year here comp with a just struggling one math the guide. is bit I'm

guiding, If single-digits you me double-digits, the year, couple guys flat correct puts me low a the wrong do I of there, but to up the for if over down back-half I'm low the full-year guess is a that full-year. XX which, percent, you're

the XX% or you simple So, the run back-half comp XX% about a math to to be flat. year just the need I over mean, assumes of

what I So, am there? missing

this Justin, Bob. is Hi,

not all, two First of half equal. the year

the just the not year. mix the do bit simple heavier the average it's a So, have in little we sales of of two, back-half

you have account So, that. do to for

math thinking again, low the double-digits, you still the do about. felt the how weighting of So, kind about that we're do when that the we QX, back envelope of we between comes second-half, math, first-half, this,

we So, as your think I comfortable that would have accurate. a little but feel might be higher anticipated than guidance again, is numbers just bit the we still what

strong. about a that after retailers Obviously maybe is guys event. And can follow-up is from on completed. then, risk a a think back-to-school offline low Okay, the question of we how distinct is We're Bob. you there, shopping hearing several shopping back-to-school

these the the given down macro well you bit that handicap here? So, a pressures? once do these, how consumer all past, risk documented that hunkers Just

quarter in coming And assortment we're pressures, we the lots good of. coming is we the heat inflated in we're consumer business all happening our that. what's and to high is the this and a we which that again, same there have with model again, in of prices Well, is what get our very product, in macro launches people witnessing live inflated certainly we know there's product seeing all that stores. we're what proud all hard of And wages, back-to-school, supply. get the not and enjoy are paying with experience see along next, we world, But have we compelling that of the

compelling, is that Jared? think that often I pretty

is think inventory question. off In lot really and we of products have to right 'XX to I the fiscal an we the we don't confidence that similar early XX% of back-to-school, QX, quarters. top question, the Great things comp for of a a gives right thanks QX now really, lot position. and and by this we Yes, was compared on posted really that frankly, the get off think fiscal difficult. comp us our that is, based our typically in historically, XX second question case, about If of one of driven results

also QX So, results me we're QX what we confidence. gives lot a into From then us back-to-school confidence excuse for the in seeing coming have QX. of lot QX, but and of a

mean make That didn't you All Okay, makes there. I both. you right, thank to off sense. cut

is Justin Bill. this Hey,

social efforts. media, of we've text, that, above information customer et have just to So, our more email, 'XX, push obviously more acquisition to cetera. line through rebase than top ever than through customers add On that, have so we and we ever FY retention

early to So, have And us communicate is with also purchases structural, customers also do still to On elevated some with of top to increased intend than we inflation. avoid from shop well. AQR, there's some ever their there. surveying just which the And gives more just availability as that's And future concerns we're for holidays. some doing out spread out more that, product able the confidence that customers, before. expenses,

step-up the see freight and on And remind over year, the increases. we of item? think on transportation you line last lap Thank back-half this that about started to those you Okay. and pressure me us Can you. subside might one when year, as last when in the this for costs just the costs just

Yes, sure.

talking about freight, So, year in we and here, decline a back-half different just for pressure kind to couple of into of going reasons. see the that the

The us first opportunity that gives one reduce an is and carriers, expenses. with multiple to we've worked

The percentage AUR the second of reason decreased freight as big a increase. is It really that sales.

very in for AUR of shipping box works a out So, think if about us. economics you that unit a the with higher favorably them,

All right, best the everyone, year. the thanks over of back-half luck of

Thank you.

next Please Our Perry with with America. Bank of line proceed of the your comes question Alex question. from

for just guide? a to ago guide sees comp sales. on thinking the Is you clarity from of you is guidance raise are sort your versus were more different questions the but I visibility a of expectations changed that to asked the that flows and seeing maybe what Thanks. in guess trying what that, so, your versus wanted follow-up few slightly questions, inventory that way. take year, initial days for sales about earlier, up the on on very do in think XX through encouraging, guide my asked it taking is you year? I Or get better terms like know launch for products more of you're back-to-school sort that just you thanks to expectations? and Hi, led What the

Bill?

thank you. Yes,

your spoke, is time changed has last we what versus the essence So, of question.

So, chronologically. do first we'll and foremost, it

sales. that happened it that you should back-to-school, the a don't I meaningful cetera. think XXXX-'XX say, moved a that out in well, just The from bit some That been you figure past history was able shift could shifted, have is unexpected et thing first to was number. of from an Sales Well, that.

some buy to was good QX. arrive top thing that's that launch really going we have products into some sales. that to pushed of sell that, to opportunistically help inventory, were drive were been On there QX, due Second us in able and some

then do an that job to capitalizing so, allows And on differentiation. even us better competitive our

competitive begin is, rather, will drag landscape in from thing didn't it other to was QX, spite QX. we that did pickup we it of a help lot in that changes the on would say the anticipated that I QX, QX, actually a up fact The that of the not but didn't show in in us see in show up

I got you've others. think Jared, those are the a big changes. couple of

Yes, in confidence been stores been a year. of wages But in I still supply the confidence timelines staffing and to think there's we've what inventory. in And the around our we visibility speak general. the delivery improvement as improvements obviously the the and only highlighted the us in our visibility that that just chain. to gives is and I've hire lot thing a We to that able people also couple in there's ability in to to back-half the and volatility would terms add of also accomplish, get of as to of in changes I

being it a market as a bit. spent Yes, couple it we last labor of lot is, mitigate over years, of a the lot there, as focus little of time the tight

be along planning been line line higher with we really expectations, Wages will we're kind are that And And seeing go as of that. a historically, work helpful lot we of expectations, the of on year kind rate so, knew than doing and they kind run for here. that's this to with in of in that our forward good in and and and some and our the go relative pretty gotten there year. is that level scheduling doing in first-half store things the on that things time, demand, of maybe of nature we're to bit store in and on, over the basis, in of controlling and meeting a better we're so rental little a

as QH in the like What's promotions expectations. talked And I prior Thanks. of helpful. the about, driver your in does you looks it really a in margins contemplate margin implied down follow-up, that product What the a that's of terms gross came key just the there? think Perfect, bit back-half? quarter, versus sort

on I think is probably, touched the to and I Bob. Chronicles, too we're he between he Bill when Hi But inventory of talked the customer, that out sold. break there. to distribution just though Alex, one about sheet but the the have the about and freight would even gets in the not we benefit obviously, as talked stores, on going things balance to say capture that this get when some kind of the see to recognize and break much

through costs those the from year. higher periods, of the back-half price need of flow when is to some So, the where still

of that's things a the kind headwind forward. of one gave us going maybe a So, little bit that of

fairly there across deleverage think extra piece. mitigating a I something is other a as backend. so warm comes run again back-half the to product occupancy Jared on assumptions on costs, The the a I just that positives probably is, have well comes and the of going bit But when we the Southeast, far little of hot, a it touched in to the Again, thing utility the kind say things, have again, as as bit we components. little the higher Bill it and would seen those summer, on we was of in some rate when it store mixed of there's two other which South are seen and and baked

finer Last a And a have first-half experience, don't to a an drove sufficient high year, those that Mike, didn't at and for so and at last through gross QX product we we get seen on that like customer things comparing point that they lay to QX margin. selling And year, before. I was rates haven't were rates couple lost. I'd a good this put is of comparing Remember, to level extraordinarily

and don't again, good don't we because don't expect a that we that's Now, want experience. to happen think consumer

and in the in stores have consumer front the of been have the is we inventory put that and and frankly, we our consumers now, put hard experience want, hit, want what and brands we making working that to to very what So, they what that want.

And normal that to through it being gross that back you to be to a comes levels, through would fiscal But down properly. to as want good a going back not sell rather consumer consumer and not result, experience, so, rate, we're we more expect for going don't back the when margin means a to because want serviced that come some just gross, the XX is we selling right, 'XX.

So, we inventory. we're feel very that on good about where at

merchants there gotten If who've don't out us. to their products, going long, who inventories get think other see I to you listen that's general with have going they're very, to to were gotten you're what promotional. types of other sell in

it's don't Our significant. target, we new, fresh, expect And it's Thank be to than to expect, we do it on for inventories so last expect do and more not it's be we improved. you. clearance year,

the me, drivers for your one sort where one versus looks original what any bit, it last That's are there seeing expectations? expenses areas like came And extremely sort helpful. ratio maybe a were less expense then, SG&A of key there, down the just you're of

Ben portion do. significant store which Bob, come in is why talk and you then, start labor what a about don't of and we

say it perfect Yes, I would just kind in. is of lead

some into in you meaningful quarters, QX out QX, categories course category static there's three that slip take changes. of And some weeks to start the kind in had back-half, some that, of back retailers of year-over-year. leverage, we higher of two the sales the of sales last with of the So, or start making

store of I that piece year. in we much, is much again, big back-half of some managing, are benefits see to at And other labor. especially The in that the we're going the think better

six So, little that we that we fact previous again run a keep leveraging second-half. a bit the felt more little we months, was for at due ultimately, looked can rate more the And as Ben? bit second in mostly guidance. the our our than favorable to

going that, Yes, things up. sales, stores, that planning you're do planning with too. said no we to there's you earlier, of in you're and are as for not And hiring. sure just But labor all show where exactly taking

so, for little And set a ready you that, that see you and bit. get and shift

shifts of expected you we're near. going you're to, gain course, remainder then to go-forward bit it the then, little a kind you're cost able kind going leverage And there. so, of and back-half what over, And as of eat on basis. And a of seeing are a of to that's

Perfect, going helpful. that's all about incredibly That's forward.

Thank you. Mitch?

Mitch comes Our the Research. with Please next line from your with of Seaport question question. Kummetz proceed

taking for questions. thanks Yes, my

the Mike, you the meaningful. data, the that loan there? earlier intra I mentioned can the it to and, to you but QX, help anything don't in back-to-school On shift give know like piece you shift, us is pretty possible back-to-school quarter was out quantify that from to that QX

in I'm going higher. the are higher an to average of in quarter, anywhere little to be what reticent peak weeks said, be past significantly a they'll you imagine, from XX% the in range would I've to week but go as the XX% back-to-school

opposite falls incremental the three couple a great come time the said I it move an this, dollar you times, more be EBIT of revenue that in falls and two And I've of one on so, when way And line. those it's doesn't And meaningful. weeks, through or when through it at rate. a can know

meaningful when in it's yes, So, about forward November. again we QX to and speak it and seeing we talking look in

you at say the XX the and any you're embedded there substantial guide in comp it. step way to three-year, And then, from QX up three-year what as is think can on a you kind and QX Got now back-half? the in QX a said you of on about saw a we is comp full-year

Yes.

we on what your and at that we comp are three-year there three-year say be, math is done the And suffice trend the if you So, on QX, to QX actually are back for full-year trend are that right but I right. putting QX in The the continues. comp, results to trend. XX%. were go would on we finger right? haven't XX%, you So, and at

How more expect you some QX then, So, next it do fourth that just an kind changes. about think does well. so didn't first-half continue impact QX, that remarks us than QX. into through of you of that And of expect I Okay. the year think kind would But, into the QX. in it of then much so walk mentioned as build distribution you But would quarter? more have sort you on in of obviously, And the you Can that? flow? to how

[Penney's] what So, through I will We thought take quantify JCPenney's when several time that out effect would sales and we you to closed some back Stage [Ph] stores. Stores went went be. in

in to $XX -- think $XX were million average I we the of million $XX impact think. million I

the of Stores And we stores so when off we witnessed saw August was the were the day those the take typically we And today, in anywhere into those if retailers. what to bouncing four from closed shop Stage doors. end times happening experience with and it the three extend doors. the of consumers But in what's that, consumer their you a that them consumers years

those off door Puma have et hey, Adidas, stores. they are available Under and the bounced the now so, not out, Armour, Jordan, cycle Nike And in to go they figured cetera through one where

attempt. a that's failed then So,

through shop they if you have year, cycle. then a So with times multiple us go to that

always is And our for it. end took of absence the the from showing even effect and shelf. the And the lag disappear difficulties that realizing on longer the it in place the are between that year top all get over in straddled there inventory we we So, first-half some supply stores the last of that witnessed of and to and in of the up consumer the that, time. it year meant a of inventory to chain

we months things and expected to pull it anticipated. than anywhere JCPenney three compare extended together later those saw what six we Stage when and that two So, combine and was and back, you from contrast

began And that QX, effect. of we I that to the think Jared latter out Jared? pointed stages in see

correct, Certainly Mike. at inventory competitor that distribution. subsided the improved got saw lost that lot Yes, where the as in a these markets we competitors loss rate run that's of distribution, a

competitor of and brands As of or one carried. our a almost we have selling this that that more of occurred, as the we distribution our all relevant quarters reminder, three than types stores inside products have half stores miles as a changes And not before, said do zero. the of may three

referenced, feel increased absolutely of have And and that our customers we that So the that our in you go the Bill gives [indiscernible] back-half. is that a lot can really further partners. us of the community we ability combine with with and confidence we inventories, as vendor like to we get something take advantage

Thanks good Okay, great. Appreciate that luck. and color.

Thank you.

your Please Our next John the with line The from of Company. Benchmark with proceed comes Lawrence question question.

a the point morning, been years Yes, little really thanks. women's it guys. Good of like a would real strong a ago, since. take And of there the you please? guess made focal that and ever a just couple you I talk you it's comment on minutes business? part bit Couple Jared, business. Can seems of about

thanks, Yes, a I appreciate callout. organization very the that made change we Obviously all supports. significant our to John. and merchandizing

teen been a category focus get have business. ago each as footwear, We an merchandizing our more years few to within on department sports, from and away gender focus a example, based apparel, move

result, that we again all emphasis and So, significant and entire changed on a our teams, work that both of business. the the the organization, support put kids' women's as a

But lots XX. 'XX. have upper say So, it in Women's kids, the prepared you our followed to XXs, fastest I very results excited growing comparison, again fiscal of know, noise the off by was them. year-over-year area, based back very, with was would

super, [indiscernible] growing are So, are the change well as super seeing about incredible, what very we business, obviously really, women's excited are men's business growth, [indiscernible] the in really of kids we focus. we and

the Great. you And in business? did the Thanks. spike from little on across any it impact last that. you different the see any me, Thanks correlation down gas price, And gas when prices? for that with saw have question regions did

job per of a Depending impacts data purchase, increasing Whether the you've to a whether didn't think we do, that's we regional and got right? some pretty Again, all upon done Bill, and Hard decreasing it choices make or like how I significant you has you the and actual Mike. see amount variation. not. trips much know there. is that with tell, This consumer us our good making comp margin different or

Yes.

So, customers managing different ways. through several inflation the are

a purchases historically First also absolutely delaying until of products when [indiscernible] needed. all, is

customers we of there. spending we of very But in is becoming on customers office and see don't that who for plans any reminder, and have back-to-school holidays, spent few that down. retail. they a to trading spending as outside more delay And cut other Some back discretionary have back-to-school,

Thank you, Bill.

guys. Congrats. Thanks, Great.

Thank you.

with final Our from Williams the your of Poser proceed question comes question. Trading. Sam Please line with

Well, all my questions were answered.

much. you thank So, very

appreciate you, We it. Thank Sam.

would back the to now comments. turn closing for floor I like to to over management

everyone's and appreciate We you. Thank today. time attention

to make results. And QX. teammates possible. proud you. We forward you all our very our are who look again, this Thank thank We to of reporting

conclude this and teleconference. today's gentlemen, does Ladies

time. day. your Thank you You your for may wonderful And disconnect a lines participation. this at have