The Children's Place, Inc. (PLCE) 19 Aug 222022 Q2 Earnings call transcript

Good morning and welcome to The Children's Place Second Quarter 2022 Earnings Conference Call.

On the call today are Jane Elfers, President and Chief Executive Officer; Rob Helm, Chief Financial Officer; and Josh Truppo, Vice President, Financial Planning and Analysis. At this time, all participants are in a listen-only mode. After the prepared remarks, we will open the call up to your questions. We ask that each of you limit yourself to one question so that everyone will have an opportunity.

conference recorded. this reminder a is being As The press release issued its XXXX earnings second quarter earlier Children's Place this morning. A to section and have copy presentation materials for release of today's been the the of posted Relations Investor company's website. the call

section fiscal to morning's would risks statements The are hereof. well the reflect company's XX-K in circumstances after press of cause the company release, begin my to could is that forward-looking the statements these Harbor release year. SEC materially. obligation events today actual participants the the or call now to over like no to as we recent report These to any remind publicly Elfers. filings Risk Annual Before found to statements and on uncertainties Jane It pleasure statements date subject its Safe undertakes for I differ the forward-looking to any involve made results in Factors including company's turn this to revisions as Form most that forward-looking

Thank everyone. you morning, good and

The early short through QX to projections our and profitability projection in our from inflation-driven and the margins fell of sales versus of AURs combination and sales mid-single pressure during promotional ended and consumer quarter. significant quarter competitors our unexpected up meaningful activity flat reported well retail increase period on the miss from the digits. slowdown fashion internal widely a our expectations key downward put July. to Our early significant an of the our in due June AUR

our teens planned. from a significant low our negative down was basics mid-single as fashion Our a digits, positive miss internal was while AUR projections, AUR

two supply $X channel in This imbalance disruptions. further other our as remarks. a significant of in Rob chain rapid of West ports, unplanned East their our inbound shipments We inventories from to required during issues move the addition, more stemmed the this our caused margins. from quarter address to had his Coast retailers a late detail majority unplanned which cover million address In scrambled the in expense The Coast. these was backup to disruption. will pressured expense by prepared

XX% Moving in XX% of e-commerce up and well traffic versus retail Digital in QX represented XXXX. sales XX% Digital. on our XXXX versus during X% at quarter US year. last to in held positive the

traffic was lapping e-commerce Canada of last due closures planned, the store As the to down year. temporary

based We is our our margin channel focus by increased the continue of reset to results. of our to highest since the our deliver sales. our and this is on supported operating channel pandemic, our Digital optimizing projected Digital our on results channel, in investments and of investments industry-leading our Digital XXXX structural and retail XX% the Digital represent strength combination increased marketing business

consolidated approximately to Looking XXXX we represent Digital retail year are full ahead, by total of Digital our top-of-funnel of awareness. Digital to full grows brand back XXXX. by end year for we revenue With in projected total sales our And when XX% versus marketing, factor our focused of our five beyond expectations XXXX, almost growth Amazon, of penetration retail in end you in investing are years. in the only on XX% penetration doubling of sales projecting the XX% digital

particularly of last base XX% acquisition mobile during the for customer Acquisition with versus in was base strong, We the device Digital with positive the are XX% store and on store of positive X% across quarter. results retention our lower realizing transactions occurred year. positive of second early increase X%, a QX. reactivation acquisition, acquisition a despite and

represent among our customer XX% strong members, mobile loyalty drive to our continues app app mobile of especially who Our engagement, transactions.

than higher transacting is customer frequency on sizes customers customers our and of than app customers. non-app basket is XX% higher mobile spend our non-app XX% Our app

back-to-school broadcast current campaign philanthropist, Kevin focused our on with partnered for children's making resources actor, our We education and Since back-to-school Hart have author XX, accessible. and we XXX content billion that and on digital Our and campaign. outlets. digital is photo media. XX fostering across rich important launch and print, syndicated earned July video packed amplified This over with garnered is paid is campaign and both impressions almost being across

In showed strong X.X video to with engagement results site. completed addition, early over robust clicks and million views

and quarter-to-date continue search consideration sleepwear with last With and trend to have assortments. micro positive celebrities already product and both categories. XX% searches, brand over show drive site our see across to in in influencers, seen strength for macro, increase increases respect our special Results, year a QX, assortments. Halloween Christmas across We moments partnering and we to and holiday key awareness Holiday

targeted a Our having driving ongoing Children's are consistently back-to-school established as on holiday We our increased believe campaigns product our at these have quarter and third and that merchandise loyalty traffic. already sales. offerings, further efforts brand positive offerings assortments Place brand targeted leader special market marketing our superior product a impact and The in

half Our up above running single XXXX. on quarter-to-date retail the weeks higher trend AUR is our positive And down XX% outlook July. are based running is versus sales assumes, Total digits, of versus up trend uncertain XX% currently two for last our the AUR high sales environment. than our XXXX now back and

of last down up quarter-to-date and year, efforts assortments than very our last our quarter-to-date versus shattering considering are fashion be Digital the responding strong, Digital curated and our increased last running significantly our higher year we to X% had anticipated, sales assortments. traffic continues is and X% versus fashion August over year. business record combination back-to-school respect to back-to-school to basics our Our customers with marketing

e-commerce year, quarter, demand, basket growth return which about QX percentage to credit projecting represent the year, business, the just outsized our of the and learning combination significantly to tax As sales child in to August higher of in-person represented about sales, have This XX% due third we're August of stimulus. the the XX% generates XX% quarter, an our represented continued over retail sizes. historically pent-up the August to sales. to typical shared, we Last due

Moving on Amazon. to

Our investments to and the we marketing second quarter. the Amazon strengthen. partnership made inventory continues outstanding business was and very is delivering have strong from in Amazon results our

a partnership Coast continue of we We had Prime and significant environment. customer Gymboree iconic continued amazon.com, necessary inflationary their brand I Amazon As income Prime had quarter, brand Amazon due launched late have pressure Amazon our to to outstanding the supported driving with every to July. we week, the to in Day. back-to-school, to as DC inventory the several Amazon TCP East believe support out across exclusive new and including building their and Gymboree to website landing overspend customer late into Prime port with the We key this unprecedented encouraging sales look Fashion, Amazon congestion since is our Amazon advantage years placements homepage our the are to pages, Day trend as well fashion results our to come. as in traffic forward is launch results on customer Day. arrivals gateway. build feeling and mentioned, kids higher for provide and in core the the Early outsized coming that from the

Gymboree. to on Moving

back-to-school pleased very our to addition we Gymboree product launching on the launches. are Gymboree In reads early with QX, in Amazon on

increase quarter, we customer For per $X.XX spend experienced the versus an year. second in last

page. advantage and TCP is higher sentiment first volume, which revenue, year Uniform search customer which she to launch, social scale a continue holiday we an collection to We increase so earlier Gymboree strong The the brand. on week. customer let terms drove income in introduced wanted our we Gymboree drove our and for Xx that also core in the We us Since ad search holiday on than holiday will our XX. collection launched that product last product each in site collection a visited QX customer be this we year-over-year the it believe engagements continue that as grow top this Gymboree the was the time know July significant season, click customer first know home

consolidated growth QX that year you during X% anticipate and operating of be In will and compared remarks. to up EPS approximately prepared XXXX. when that although XXXX outlook will anticipating XXXX pre-pandemic versus the XX% be closing full up be perspective, are mid-teens important to will Rob levels be positive 'XX we an XXXX, continue also down we sales a will Gymboree part versus income increasingly versus walk high-level We now our through From confident are will our his strategy. approximately

would to our With the be since multiple due the the the pandemic. business headwinds facing, are reset possible structural model start these currently to of we results only

to cotton our AUR significant We the the have gross the normalize. pandemic a we maintain focus when of clear realized on increases, have costs since which will benefit continuing start margin double-digit

to continue optimization e-com upon our build will strategies. freight We

our occupancy priority our secure remain our will channel. operating highest to margin savings in growth continue We will and expire Digital leases top as

I'll over to Now it turn Rob.

After I our review Thank you, QX QX 'XX our morning, Jane everyone. and I results will full and outlook. year provide good

decreased million X% and in results million in $X.XX of million per QX of For versus delivered XXXX. of versus quarter, $XX million earnings in decreased second the our $X.XX XXXX. share XXXX short our $XXX X% by Net and adjusted expectations per versus and an million fell or $XX $XXX sales or XXXX loss QX, fiscal in we $XXX share operating $X.XX to

$X and negative million $XXX Our XXXX. X% or million were or QX, by year to year. million XX% $XX net positive versus and sales by to decreased versus our X.X% net versus US $XXX $XX million X.X% sales decreased Canadian retail million Comparable million last XXXX sales QX, versus $XX last

driven competitive prices, unprecedented significant levels fuel were negatively and our demand particularly in net with set. promotions QX increased combined to sales by Our the respect the in food of by across increases slowdown consumer inflation impacted the with

our up on to AUR mid-single last digits As was plan AUC we our quarter, the increases. shared second offset call, for

the our promotional demand in-person year's million quarter The which AUR June, combined our consumer our a versus AUR were of and environment, unplanned represented million for to consumer representing sector, in of internal sales However, started sales we the last credits, activity pent-up resulting learning, heightened impact approximately the slowdown the channels in tax July of to And significant starting slowdown the the approximately the impacted promotional top impact the quarter the planned, return projections. quarter closures, child permanent pressure combination flat. sales across $XX of the enhanced was for store the from of as had impact and negatively elevated in combination last from for actual and and quarter. lapping with lost by retail line the led the the the $XX also

channel Our by sales wholesale impacted with net sales growth our outsized in positively were Amazon. our

for quarter. month by sales at Looking the

As we stimulus lap versus and impact QX, as sales trend weather. May discussed on in of improved our outsized our last unseasonable we call, the

by of driven as our in the promotions credit were lap For lower necessary than summer but inventories. were address trends fashion heavy June, return our sales to sales the to we stimulus. set competitive expected, the and year, impact as last child through of to clear enhanced demand, further pent-up the combination the learning improved, our meaningfully tax And in-person July

sales digital retail of versus by QX XX% QX were penetration sales X% with of sales, growing retail XXXX, Store down XXXX. XX% terms XX% consolidated of to XXXX. total In in versus channel, Digital our decreased sales sales in our net versus XX% and XXXX

traffic down was XXXX. QX Our comp X% store versus

fixed of points to Adjusted traffic compared for versus XXX gross remained decreased basis margin significantly rates basis our versus the as deleverage with XXX margin coupled XX% resulting store in points was QX, projections. QX, decrease internal expenses in XX.X% AURs, net gross First, XXXX gross to The decrease, internal below However, and comp unplanned rate in basis traffic down competitors, pressured the margin, plans. sales, point, in from merchandise the XXXX. sales our sales store as versus our XXX combined net from with XXXX versus consumer follows: Adjusted gross top projections. of a unexpected our margins lower-than-planned demand X,XXX original promotional our QX lower resulting levels lower activity with of Approximately both margin. margin, The slowdown merchandise by channels pre-pandemic our XXXX. line this point XX.X% in unplanned points QX deleveraged basis key XX%, in down in in and increase reference, the fashion

margin as support in to rapid of position significant chain, Second, for supply level of deliver the significant incremental our basics rebalance These congestion basis delays, our most inbound DC from additional domestic additional disruptions and million plans. denim, an force uniform chain which have chain delays. had and resulted primarily impacted channels. supply in strong us to We chain, and our notably to we XXX to channels well at the further to planned points revenue inventory as further domestic large ports, our our within basic Coast Amazon properly in in shift an amounts supply our businesses inbound buildup versus and unplanned experienced inventory between impact to vendor East the $X supply DC, our across QX. delays, by gross These and our the Digital our us basis of

inventory second combination exit short of with in to quarter inventory seasonal in our us and our quarter second enabled positioned key success fell to spring the basics both products, position well getting in the us, channels. operating results back-to-school QX, strong to our for better a Digital and wholesale respect our and behind balance While selling of through the summer expectations, our channel late and cost our

duty for the also outsized while accretive Amazon our which with a Amazon rates; to the back-to-school lower from The the SG&A. our to channel. levels operating trade but plans overachieved Adjusted net we and XXX business the our sales year had a operates and The at lastly, our was XXXX result sales response freight basic high the lower incremental margin, last transportation net our gross as to As of expected, freight costs container items in and the expenses. Adjusted elevated to higher gross following by impact basis by of it air customer margin operating digital quarter our mix a overall in margin, programs. driven sales million, for compared significantly AGOA SG&A the resulting as we planned and gross loss operates internal XX.X% Ethiopian, delivering higher consolidated of of flat in fixed our versus and year. strong shift million the significantly of owned nearly in $XXX on quarter. $XXX is The deleveraged margins was sales net benefits. And impacted margin, of reminder, decline at Amazon to points to primarily last XX.X% sales as wholesale, QX, growth driven deleverage inbound

As amortization deleveraged spend year $XX was operating in sales $XX was Adjusted QX operating million, negative versus a higher last income in in X.X% and in basis was inclusive X.X% million brand in loss. Adjusted in the sales investments decrease of and of million QX the quarter of net $XX XXXX. quarter million X,XXX $XX of marketing points to and compared last quarter XXXX. $XX sales operating million and year Adjusted -- XXXX loss net versus Interest the marketing. million was planned, net in depreciation $XX to X.X% in for expense.

year to this The for quarter interest interest last lower $X.X the expense rate. QX last in lower driven and a was expense Tax decrease was balance adjusted million year. rates $X.X by interest due Our outstanding versus quarter. loan refinancing million term in our

XX%. was rate tax adjusted Our

balance the to sheet. on Moving

driven spring and initiatives to the East growth in due the our disruption & Jade. of positioning cash revolving back from higher facility. Amazon, the XX% position to the increase port we including exit remaining the increase a inventory transit to inbound in worsening were $XXX of to versus and XX% million. follows; ended in at strong ended demand, the and higher freight the down with investments units XX% unit costs; the credit driven year. consumer costs; due quarter We place inventory on the the year, summer increase with input quarter down million AUCs, year was support Sugar support and XX% XX% Despite quarter increase breaks impact times, resulted higher growth XX% inventory was as increase Coast; Our for of our with of able last elevated seasonal versus us in $XX Gymboree, up outstanding the short-term the slowdown better strategic and of investments by to quarter the was by the the Inventories last the ended half

XX% accounted current which us over to high-volume at will believe our categories for be which we inventory no quarter end, year. includes on-hand for of risk of the half environment the throughout markdown with basic Our to continuation what the of back limited positions several key a inventory

liquidity, used versus cash to last QX in in on operations million from Moving QX million. cash cash flow of we $XX $X and were XX million Capital expenditures in flow year.

During outstanding million authorization. repurchased the current our second we shares $XX $XXX million, leaving for quarter, XXX,XXX on

XXXX. business next sales, for we of traditional on a coming in footage stores provide close to to our QX XX% us in up we for versus store with action XX With ended with supporting stores retail of from our important our that and XX% total a from planning for our retailer. digital-first respect sales from coming to financial off-mall. of update meaningful in activity our XX% an months, malls second short-term highlight to come planning of our continue our provide coming XX% also feet, retail for flexibility for sales reset to sales our optimization industry-leading fleet from the with structural we closed million are maintain X.X compared occupancy of strongly XX% Digital strategy, square of to XX% Now, are off-mall, will continue planned our store With XXX lease retail XX% to QX total of the and X% the the quarter. We and XXXX, to XXXX of store decrease XXXX. it's quarter locations year full optimize lease XX I'll a portfolio. square continue an to With our quarter leases fleet seven in plan we total our We to stores flexibility These costs. over the

now the outlook. a XX% our the decline for on to are planning current in versus sales we on XXXX for environment, of net Based approximately year. Moving

now by inventories trends. to are positioned channel demand Our better the current meet

will the elevated the are continuing back half for of that However, remain to inventory we anticipate and levels. we promotions proactively manage year our

benefit promotion levels. than pre-pandemic are to pricing and to higher reset. planned continue from AURs We significantly remain our

projection based increase our low on AUR of year high However, our single-digit the half single-digit positive now increases. the positive environment, back outlook original for versus the current assumes AUR a of

sales The business QX that sales a approximately earnings to our decrease in XX.X% income with by expected investments outlook double-digit QX XX.X% comparable in and continues per versus be anticipate per in be XXXX QX to representing approximately to expects compared Our driven company decrease our in as XX% net and to This million operating $X.XX, increase sales. significant low to Amazon adjusted primarily outlook. the We as comp quarter Starting be XXXX. share and QX single-digit the outperform, compares both a share inventory XXXX. XXXX, to third diluted in quarter QX $X.XX assumes in by $X.XX $XXX diluted marketing. earnings supported net XXXX Adjusted versus in sales, adjusted our QX of in approximately for XXXX. positive mid retail is compared to

Our primarily input at end costs the to material transportation inbound higher total elevated, inventories are higher of remain raw QX costs. XXXX by driven and anticipated

full outlook. on to Moving our year

of low approximately decrease of as per diluted e-commerce and approximately We company increase net in in in full operating XX% $X.XXX XX.X% to expects expected year We total positive sales comparable full full earnings For year for to in compared will XXXX income and and fiscal adjusted in net single-digit mid project XX% versus XXXX. share XXXX, $X.XX to year approximately that year to XXXX XXXX comp fiscal anticipate is of be XXXX. a sales, be share earnings penetration versus retail $X, in XXXX in and the adjusted fiscal compared diluted XXXX Adjusted $XX.XX as double-digit to reflecting to XX% XXXX retail per sales X% versus XXXX. increase billion, X.X% be full XXXX. sales a

QX current the of levels. inventories are at end Our moderate anticipated to XXXX from

full a for range year rate planning to tax are XX% the XX%. of in We

lower impact lower occupancy lease as of of of from outlook well year lower resulting due last our store Our favorable cost balance sales. as the year expense and the permanent closures the assumes versus to negotiations planned benefit the for variable the occupancy

not moderation current levels. Although there some significant been transportation year contemplate a full our costs, container outlook does from of has improvement inbound and

freight than anticipate However, the half $XXX current the actions in be versus costs and significantly the year environment, are SG&A year response that the SG&A compensation lower million year year. the with year. in incentive full the of we XXXX planning half taking were program We the back our of for be will lower to planned the to Due fleet first XXXX the air full benefits expense. we from for combination the of to approximately optimization lower slightly

ability back secured for of favorable return well interest as resulting investments planning momentum expense the we loan goals, continued for of our capital facility believe and in in are and the in in We We're as our acquisition with norms, half we to to reinvest we revolving line significant refinancing to the of year, the in operating year, our businesses. In business. for from Gymboree providing the the continue the the term TCP will generate support the year, interest quarter with significant to marketing back continue cash half historic to as us expect sales rates and XXXX. planning Amazon flow back support half of fourth shareholders of credit which lower the and the part

the planning and to are the year for to being allocated we you. million million support questions. the we And call balance expenditures for capital with of digital of approximately supply will fulfillment the $XX year, $XX open your XXXX initiatives. Lastly, chain for Thank fiscal now remaining majority

We'll Jay from UBS. question first Sole our [Operator of Instructions] take

in about sort unusual second so quarter sort an want of you Jane, I Great. of of just Thank you this context the much. was ask quarter. quarter, to AUR

environment, a you fiscal how to not would able think of what look know As in just you and about normalized competitors for giving but from once you've gains high unusual at guidance XXXX, promotions how you're the gets like the think some levels? think of do about margin the the maintain, about gross to maybe a supply I sort been back that these level? of you some AUR chain should stuff regular of some

it to the to Yeah. take of and I'm Rob. first over turn that I'll part going then

But QX, AUR in Just worth it think which it. the from but covered quarter. about. softlines particularly early what two main industry-wide of in activity our question into the and June, we the up the unexpected from script, the meaningful diving which we had bit mid-June on started the really ramp-up discretionary and what and we've I deeper competitors, was through surprised and it's had read little really We all us June product, end the promotional slowdown a in in in in ramped

two issues our apparel in very you they're since missed hard had. But another to reach one for that it the matter had the wide of issue appeared it with didn't We watch. and I it's later It kid’s tough experienced a inventories a less tightly specific competitors see controlled a year benefits large wasn't retailers inventories them than it and us up was be in biggest top sector our goods reversion QX really the from competitors. our in think chair with And adult what two the end frustrating in all it's missed XXXX. frustrating. that, more think to to first-hand On to bloated I for made of back of a other. and that even

shop draw in one to it's And they a this area firesale have And to there while a so going mom for she's going when her she's clearly in. kids. degree, to

when us there when have our happens at EPS these QX price. and is product QX, no to in offerings, in product on our historically no our or QX other but our quarter and So what then holiday lowest any QX, you as quarter And has you really the much no there's compete running, as left promotional in look products there's like because and it more fact choice offerings large events fashion And QX. with that summer QX differentiated commodity so than operating margin. really is of product been

product mix to of of we the So where the QX back-to-school. in to lion's short carry and majority match up we what second is quarter graphic until the we our what second week vast and always categories is say, fashion made really and of tees, July get we of share convert the which in in we which sell commodity

commodity prices you have and competitors it firesale when room. decade offering at AUCs really leave are any So these at categories your doesn't highs,

get the the with mentioned hit almost our quarter quarter. for So the the for breakout was miss fashion And of margin. basis up points commodity miss lowest Rob low said our projections plan up planned retail AUR total planned we singles, and AUR because margin is and internal was a AUR basic our against was mid-singles. we we And that you in the was you had fashion basics teens. XXX up miss the fashion as of product year our by plan planned wide And when put sales, AUR the it low

quarters AUR projections QX, half. As for lowering feel back our you look to those forward derisked we've the like two we by QX and

and our we've taken singles. it from against So low QX, delivering projections, that And previous -singles we've continue what AUR we've it what to AUR were which were because against kept -- taken to our plan we're up for intact, deliver we've against up fashion that down what our of has done and high if It's significantly we've markdown you net is and our done QX year. product have they is AURs delivered And will. you if were. kind where will all zero liability immune basics

is up look into are holding are holding fashion both of basics mentioned the to weeks we the attribute a well. QX, this margin fashion from better as the our very than as that balance we based. point AUR digits we the different assortments about so year XXXX, into also certainly I spoke into in the that much marketing up quarter efforts single in really three and fashion we're QX and what is which assortments And commodity high on forward the call, And but AUR only at but of certainly view

to early think Christmas. and think product is some that the of I that So that forward we our responding holiday our like with around around on. look brought & differentiated that our and we and further to continue our fashion clearly continue offerings reinforces need And focus the to Halloween that which to the product customer some initiatives Amazon, diversify in we I respect as with brought of in we just respect that to Sugar Gymboree, like initiatives Jade, to around strategically things we initiatives

So opportunity us more look it into huge, through AURs turn into half as the double-digit ended to particularly really to out when the mean that year I'll those we've huge significant, we on this thoughts AURs. I a over QX, for back year are is but number, on they highs. flat. certainly in there Rob margin some QX you significant the pointed for still moderate and to problem And those and is never significant hold given of costs as decade gross the at start even for cotton think I because XXXX tough us double-digit you We

back which anticipate I those during margin to significant our as got the the XXXX. huge we start hold that's is huge, in for And cotton behind and us, pandemic. when half intention to goal, our on that we of normalize, the we'll coming gross see continue AUR So to prices to increases is said a lift

the exactly Jane four right margin. really components. is There's, in gross

in gross the cotton our AUCs the digits. Right those of we're our summer high-single middle buy. by impact costs, First now

cotton and moderation back we'd year those costs in the expect half come of benefit So some down. the as

and next that We we've seen this weighed degree freight the cost inbound first the costs expect to half recent in margins that expedited our The second container air year. is don't component moderation expect And year, -- transportation so to continue. on we for costs. that

our leases with third flexibility done improve years. on We've is focus us really the over for The positions is future well maintain still up And of with fulfillment. we of financial traffic couple a we to that the well component of XX% our e-commerce in soft occupancy months. that the last amount And next negotiation significant And XX our on coming piece savings. think costs. that continuing last

you us in one little you focus you Amazon maybe ask a in what's And into the sounds just, year It that other improve. can to more as back initiatives. I of what confidence the importance you strategic you mentioned If and move dive give bit Amazon and evolve like continues saw year? more Amazon to about on, elaborate in just continuing and Jane of and that business the it. next Got because the half quarter? the giving Can business on

had aggressive we in we in increases with mean plan, every I a it significant Amazon into very came XXXX and and pretty XXXX, beating Yeah. quarter. we're

So plan the again, our we've in half. back Amazon in increased

now of made working a they together closely are their really lot voids lot to concerned. far sell with very as the have strides them with And white space us on they've is opportunity have have the They to different that key We clearly them think than to a as really is partnership they big help much of try they site. the fragmented very in, see And that I order in white now fill kids partner Children's space. in a that Place a they're been position inventory business. a

And an so, we had our up like Day. last a since. build great said think -- more has to had continued about year. We're outstanding versus I every week But XXX% I we importantly Prime business

beating doing keep projections. projections more just more, sales we and with internal our them and own beating So their for them and more, and

we overspend to really outerwear successful. back had be in the to worked them business able have. the we We basics in issues out them also to in Halloween started business. they They last in year. the business They it's year. in really forward, able and the in never to to the with ports holiday significant been but sleepwear that August categories another basics a that been to business. mitigate coming East year really sleep. into going Coast and we time. hard get able our September. hard stronger to saw very But do And continue in all much chain to inventory strong the supply So see of second worked them be the has really quarter. we some for the on into much, fashion Day, just Prime Footwear what is fill basically before. that We've get into but surface to now a have scratching we're positions this they've They have very, uniform this in They Christmas with thing had and We've gotten new had

basics of strategically on the top fashion big categories, keep we have. business of we adding So base the

continue get to we and XXXX -- that anticipate and as will beyond. build we that's into grow So

as be partnership excited exciting recently we then, them Gymboree launched well. we as about just to with and on really and exclusively talked partners very So

Dana We'll take Telsey question from Group. next our of Telsey Advisory

Your line open. is

learnings -- preparing through it? as then just, it's Good on about & quarter the initiatives, relative you store the from talk versus the about you your Did back-to-school morning timing, to online, pressures front you consumer of And whether at you. promotions you online? anything whether to everyone. back-to-school it did it's of the traffic? back-to-school versus other about any plan? for Sugar progressing any holiday think Jade is all see what went terms from change you're on Jane, how when Thank macro think -- you of as in how And holiday, as

Sugar Well, is & Sure. Jade small.

very, very so the And is plan small. very,

to we the through said, the testing have As are four quarters we of they what year want. see

the that. that want. we're now, able about learnings based spring and they for back learned And XXXX summer summer. about for summer seeing did some Jade. It's and a and fashion really thing, back-to-school, buy we lounge/sleepwear It's and with spring like in the strengthen backpacks, on learned categories wanted next really and and for not strengthen denim commodity strengthen to what into about lot then saw of holiday kind them. same we're commodities & from the in our spring so Sugar significant continued go And a we holiday they that We outfitting

with plan a small said, very was we're So it learning. I But as like, what we're happy to start with.

how So happening planned we it we feel with and what's good it. about

it was like pre-pandemic the to But it's levels, store a as traffic, down XXXX in been in X%. still has was far It XXXX. mid-XXs. better As compare to you compare when quarter you when second bit down traffic little it in it than

not great. as -- that's So as far concerned we're that's

we'll so continue that. to And watch

very tough in quarter. We pleased are very a

but are disappointed X%. pleased results up We held with QX, up very our were at we with in where e-com traffic

we on of was QX the year. And the surprises historically traffic quite you which good, in call as so if based will, weeks me we August X%, thought with two up e-comm last penetration we is particularly And amount last of that in had mentioned e-com shattering, July. those that frankly, the on pretty that record

obviously, So is digital, digital continues, focus. digital, our

it launch think a some delivering or question in September the we conversation, of lot I between for back-to-school for call problems are of of earlier late was it, supply than product of I'll October, This on our and year. X/XX. of planning ease we difference did and we until share X/XX and Christmas, build holiday, end TCP launching which Christmas year beginning didn't lion's Your the about this chain We last Christmas just on had the us. it we're

So to we're accelerate looking that business.

was already collection our we site. the Gymboree traffic visited the number Christmas mentioned launched call, holiday which on site one I on As

things done and was it I if you a part and knit kind like QX woven what key emotional the and product stronger, through then categories. were customer if up strongest girls our think Easter, take will, QX, you it's tiny work behind while we've in by of dressing to QX, that tops like dresses and people saw far And even shunning, though boys business our continue even the be of item business, was we in again. the

it or match really or which clearing has be dress-up many categories. that, like things I had where necessitated buying and T-shirts up us so think see on knits mix those and in her is stocked the knits consumer again QX, over sleepwear them you the in pandemic,

Omicron. saw receipts week behind kind in dress-up would And well shutdown, on that continuation through And picking we then, right we currently what happened I year, why end the earlier the because then or if you were the I January emotional more think, Easter, in five way Christmas. launch bounce have, are we we're I apple did anticipated really have through the in or QX holiday, picking and when AUR also positioned in where so, the have, than from last seeing we we're December we of we I harvest think be QX of happen an all now, it for think back opportunity said, we product, pumpkin like is will, stores and which

are QX will of part improve why QX improve our probably we that's trend trend. sorry, think I'm our will reason our I -- the trend over anticipating QX

in So in dress-up woven a we're think our and are cycle, I in for we're definitely a definitely cycle positioned that inventories QX.

you. Thank

you. Thank

go [Operator Susan Anderson to Instructions] We'll of next B. Riley.

I want pretty morning. Good the out feel its being and just really -- the you basics up rational about promotions. It on maybe Hi. there. to follow sounds it's good like,

inventory categories sounds if there. pretty may competitors your there to, you guess, store like competitors feel purchasing the those guess, Would the back-to-school. I'm have promote. also you good, you need feel it like traffic is I curious, then, You that risk feel follow a at still on is product to kid’s there And to the what's during you other I don't be get basic suit? driving and like it's promotional

the year-over-year what's quarter feel about Thanks. just third freight you then So and risk coming chain. the about if a in I then promote risk expectations. issues competitor -- guess, quarter. It I'm third the just like, talk having and that's And supply to inventory And curious costs shipping in of you how to if sounds the more back quarter? the on that in lastly, could

Sure.

our you when at and ours, basics we're look two you us been being competitive pocket we're in some the where a main competitors, than competitors, priced on them. years. basics. versus at It's cases, clearly I as our look far we're think, them, line of the the in And I when versus As of well think, has much in lower we're and for strength very

able okay stay irrational we where So, that seen could QX bulk have happens business as XXX, what And think to our very the we if what in keep from AUR AUR August, it. confident back-to-school really to continue going kind of be the been we'll all environment we're year. XXX three basics in which I we've feel almost was that in we've be been through we a where in to weeks and to is I of continue to okay need

at a we've kept We've we and QX, you plan mid-singles the low-teens be down -- AUR look If to was the continues to our originally about down of teens QX taken AUR Basics from for up AUR basics mid-singles up total low plan to X. fashion AUR mid-singles. planned in and in X%. fashion had the

And promoted. over as have appropriately derisked competitors needs don't think the a I from competitors. where so, our to we kids is promotions of think be the said we the Yes, state fashion the in I that that, inventory it and that

doesn't where and them just talk think and be seem are other goods inventories. stemming women's what about But from the what They about we obviously about I see apparel. that stores certainly, they hard from and about in competitive -- we have And see don't have, we see complete talk their into issues what one kids. visibility online we to that the to talks from. listen talks when issues they of about don't them, you speak our

got box that entire competitive them. the So, I what is happened think in QX for

was to And as in and well drive -- that kids while traffic so there. in her mom they and said, have she buy as bring you in drive to over-promoted

we So pricing. that $X tanks saw commodity and a like things price like on of lot that $X and

served to And unplanned, the and was years with very read better were specific it East QX, from perspective. your when fashion in I particularly chain literally Coast have over used, What pandemic we to which it. us, heard which they the from almost exclusively on strategically Coast, the the up we've is for problems down tell derisking AUR decade down well and you, saw so, up I think in is, during supply the we months in would for on of mid-singles by about very West all ports to seen for was issues mid-singles question, an us the AUR the the that it taking backed part that

our disruption less delivery. crowded Again, XXXX supply their talking As caught in us, from in the we as for most scrambled we you the I got ports. large to most West particularly up mentioned the with about unfortunately East flowed I'm better what and of receipts was July chain our And ports important unprecedented the did that to move strategically Coast Savannah, port. may and competitors used our we have is remember, then as who -- our a merchandise less East stranded Coast than which Coast the And -- part an basic less backup. and lot caused that's probably

four we and haven't So weeks stranded have those some over for of arrived them even yet.

rebalance So in we a than planned that's had did to more our to we have. to have to us lot what DCs spend caused inventory

and which move we over-promoting. we additional to the inventory goes shipments more the had had moving freight e-comm DC lower also basket of of lot on puts Amazon the trend. take which digital sizes, around to And a to at all it and support channels to and So back labor pressure cost AUR, like a

XX. major the QX them the They from says manageable. should that they great from see as don't we think it And of XX then Port that should you know end not the we about by And in. have information be and supply every at don't obviously our look Georgia but improvement to day. to be you and been. into in might costs what's when chain mid a know but aren't that September, team reoccur everything or talks about why QX "normal" of going have where which to in to anchored Authority coming that port going certainly them think much clearly all I we I too increase We So Savannah, week projections those vessels is our And again. have come the we've visibility logistics through single yesterday, to in they is merchandise back QX,

normal go Coast that anticipate East calmed as as to now West back the things those kind don't of our back the to we So having retailers in ports to DC down. Coast other go have scramble again

from Citi. Kelly Crago is question next Our of

line open. is Your

on Hi. for Thanks. Kelly This is Paul.

if we the curious on of inventory. Just your could circle back composition

I an excess other you perspective. you're inventory not mean, clean through the versus units year. XX% you down sort season this much carryover get do you said of entered at have pretty to spring/summer inventory back-to-school are think that spring/summer In Does last words, point? from –

up missed sorry, much if And units how year-over-year? are your I this total

it what That's Yes. exactly means Kelly.

increase. and strategic have a predominant nearly down growth higher and increases tiny inventory our in really XX% of Jade. of spring/summer & inventory – driver Our are small our accounted increased just AUCs The unit initiatives That Amazon over Gymboree of growth XX%. amount costs. for Sugar the perspective, From relative to a amount is that's and we

And we'll take of question Tracker. a Retail Shapiro from Marni

open. is line Your

Hey, guys.

morning. Good

Good guess, just or three between And responding come be family customer penchant basics to of things holidays those is the sort what knits. falls talk Can like it either to I morning. I resistance online to But a because those other pocket just so or fashion buy clarify items and versus that in pockets other? back-to-school lot difference her sounds wovens you the need about or Jane emotional wanted or uniforms business in different you and the about event. clarify, the you've versus talked in your store. pockets, your versus dressy, the business so then

being It mindful could specific like way? it that across on it's very the put the So she and if in like shopping it sound for she's sounds I doesn't board is what fashion.

which this that from stocking bigger where them And a from point July for has of with mentioned we're business with onward. XXX% be AUR much of a denim plats still we're go about, uniform seen. They've happy you on XX you look basic the good we that of XXX% bring view a you the emotional of in those. and year. associated and backpacks business feel that actually and things. part We picking in product, of those part would obviously uniform at back-to-school. why Yes. online specific very strong And we've in a we're are time very been as harvest the all the and go been We you coming those When holding where AUR. see that up needs very always included you When like she things our to and types things. They apple a those better and she's I what think up did family that. the planned, looks, get our agreed She very is in QX. it well, lot and the mindful resistance than Marni and to the clearly responding is categories. agreement, fashion is in AUR then QX She

what year-to-date. so would the to back the has what happens have And knit be categories call half would categories. been this resistance and We'll see I the in

there that, be because the how naturally think pullback. types performers match, so the And they you saw the of those the subpar and sleepwear would in things, half in been mix T-shirts, all I have first a of outperformed XXXX, year, when

which you as those for to in QX sleeve for so big knits into And away are and long categories and is and think QX about things the you QX bottoms are what active for right and us move come categories the that big, us two QX. mind me

ourselves types if to are for on the to bottoms. she's and last and got wait watch sure so or if And think because to and to we have those still make that she's tops buy going she's those not to going we are again, enough her we that to mom to AUR, woven go to and that have of things categories to those carefully overpromising that we're going woven is see, watch start continue knits to into have

specific going going on needs is other happen, net change. the that to. until think again about knit up to that, categories to I the type thing talking to back before a get mom stocking I'm on weather category, have of track anticipate start is any do I not those definitely she is

idea is to mid think in I weather back perform change, – we'll we'll as through knits category much how have see when half the really in see hopefully mid-September of general September, so we late of which better the to a the in QX going a year. And

Thank for joining us you today.

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