The Children's Place, Inc. (PLCE) 24 May 232023 Q1 Earnings call transcript

Good morning and welcome to The Children's Place First Quarter 2023 Earnings Conference Call.

On the call today are Jane Elfers, President and Chief Executive Officer; Sheamus Toal, Chief Financial Officer; Maegan Markee, Senior Vice President, Digital Marketing; and Josh Truppo, Vice President, Financial Planning and Analysis. After the prepared remarks, we will open the call up to your questions.

The Children's Place issued its first quarter 2023 earnings press release earlier this morning, and a copy of the release and presentation materials have been posted to the Investor Relations section of the company's website.

Before we begin, let me remind you that statements made on this conference call and in the company's earnings release and presentation materials about the company's outlook, plans and future performance are forward-looking statements. materially projected. differ may results from those Actual

annual For results in to of and factors Exchange most the the the filed cause on actual that could the recent company's vary the materials statements, Commission refer a quarterly Securities please reports with discussion forward-looking to and presentation from posted and those contained website. company's

provided these GAAP the non-GAAP release materials. financial reconciliation is of various financial earnings company the measurements. to reference non-GAAP the will call, measurements and this Also, On is financial company's today's in measurements being A presentation call recorded.

now the call is over pleasure Elfers. It to my to turn Jane

everyone. you, good morning, Thank and

Our February expectations and in power. month. their results macro-tension, purchasing below negatively on was ongoing March respect was by the which outsized monthly to Easter. the limiting QX With resulted post strongest cadence, impacted our were April by pressure core decelerated further consumer

was trends we line top macro top For from have our continue our retail we line pressure what consumer. inflationary trend QX, lower a be bottom to our stores will e-commerce tempered environment, top expectations on income the significantly and Based for our have balance the with of both better continuing on Quarter-to-date, than believe line April difficult year. decelerated trend.

thinking product. more our pillar strategic on update the I'll with year on back first provide we're strategic provide brief a after about pillars. how detail half I of the our Starting

dress-up in the quarter. our kids both and to across product with space product dress-up Gymboree matching one exception. was the no holidays of of Easter and the family for assortment Easter Starting Our were highlights TCP, no TCP the compares

us power of to in of but demand product with celebrity also Easter of respect only customer some dress-up for our with year. provided to learnings Easter was Not our top of with many outstanding, spot-on from the sell resulting next depth partnerships. With styles Moore line which respect ownership, Mandy respect excellent collection, to Gymboree, outs our the for

sales on traffic versus artificially Moving last Digital from retail After Transformation. XX% retail the year. compare in QX pillar, represented in and of and our store Digital sales April. the March to year, due second our surge XX% Omicron sales for to last Digital of inflated February represented XX% accounting

deliver digital We leading continue and channel results. margin on to our marketing highest supported industry initiatives our by operating penetration optimizing channel focused

We Digital the she are space that kids leader customer clearly in versus to and online continues to shopping retailers among our traveling stores. prove the prefers

acquisition further is of XX% channel to Digital Approximately our demonstrating customer. QX, came our our through core how important millennial in Digital

clear moms Our convenience and millennial here preference stay. to her for the online is of ease for shopping kids

important that Digital puts And channel and next market acquire advantage an work become as generation of competition to are us of successful to number starting and one competitive our gives our rapid we to us years moms we the customers. our as Z who acquisition our cohort retain now and shift to millennial of begin the ahead Gen believe to and oldest

to shift our relevant of success stores on sales years, in our further customers in retailer. Digital growth are Digital focused our Digital our of XX% six projected retail sales our XX% who or Digital first based Digital channel, channels, laser is total Digital to to sales over in As the channel. our highest to margin over our by XXXX, full our our of successful and transition year cementing penetration represent strength XXXX, a Transformation, on and business investments in $X the billion retail historic doubling versus and their and online less millennial less operating become mass increased and of And continue we opportunities Digital

strategic to third distribution. of our pillar, channels on alternate Moving

and engine, projections to core our in our key contributor than vehicle lines higher margin partnership. growth these customers. Our further significant customers our customer Amazon a outperform is with an our acquisition top income strengthened business continued bottom levels operating second we Amazon having channel, our Amazon many of a highest in and to QX QX. Amazon and is important

XXXX Amazon represents a beyond with fleet and pillar and our major fourth and to optimization. growth opportunity in final respect

we our As XXXX. optimized we the shared This store close with an we leave stores approximately to of on occurring stores fleet last approximately are call, XXX more will in these bulk us with enter anticipating as XXXX. XXX of closures

Digital is has and reset a very to data preference projected this critical a part strategy with with increase parents. only have company's and strong our Gen clearly been and Z for Shopping customers, of optimization fleet is clear. to structural The Millennials Our preferences. shopping current future continue aligns our online

we I and penetration a think newborn important single-digit note to in that it's business. baby have our

grandparents share So other their younger a pick the we on example, in-store for heavily including of whom, who X gifters. our Boomer customers and and overwhelmingly gift. millennial are the stores Z customer customers self-purchasers Gen out an they larger rely to still Baby versus do, acquisition and Gen have for store baby as of prefer to and than retailers who drive perfect much their still experience Many

believe and aggressively We mistakes will been size time online customers and with a too the Gen to mass at come channels of the pandemic. the millennial migrating many Z that when have XXX projected help costly to beginning approximately of that us avoid stores since fleet our stores having the

capabilities is growing margin servicing will our maximize channel. our while us, shop us believe they young, We and penetration prefer with and digital our digitally fleet which operating optimized savvy online highest customers where industry to allow our leading our to that omnichannel

the more mentioned it's I share half. regarding think our for detail back important I to underlying earlier, assumptions As

line year. net the their and will that initiatives in by and with marketing trends stores driven strong QX and first from in anticipate declines traffic by continuing balance top QX levels supported We Amazon and half both improve the secular Digital growth branding for of sales

and From will traffic grow traffic year. continue opportunities. the a double-digits up wholesale and perspective, we our digital in anticipate was traffic to progress our on throughout as focus let's e-commerce So we QX low

e-commerce believe initiatives very will continue. Easter our been of this customer e-commerce AUR, traffic very up strong have acceptance by we dress-up our We in in our AUR driven successful slightly assortments. through was QX, driving and marketing

are that leaders assortments holiday equally be holiday our upcoming the We category anticipate we will holiday dress-up and received. and QX our in QX anticipate we assortments family that upcoming well

pressures permanent this We key will come the We've core balance AUR start lift ongoing the improved QX raising are pandemic counting as a made since our on any customer. the significant on the structural is be cotton progress year of costs versus on e-commerce and and for not we in profitability believe of of inflationary AUR in that the down. change of drivers the one based

to impact both improve inflation QX, Conversion, our conversion Black year. rate we core historically from of due outs categories in our on key TCP customer last e-commerce highly in planning resulted and online low Friday an are of Gymboree XXXX, QX post and in record believe in stock conversion the channel to which across for we marketed

XXXX. As both in respect the we Amazon we improvement discussed, versus are significant digital and to in for on positioned and business, well of we funnel a strategic inventory will Amazon back learnings, QX are meaningful for last higher our conversion QX. growth planning investments year's upcoming season. result in holiday our this have this With have marketing we year believe levels of based top half And of plan with

bottom significant our last abating management. the pressures to On we making versus expense and results anticipate year and we line, the progress a in inventory are cost due the improvement in

to discuss to now Maegan And over Amazon. turn and marketing to our it I'll you. Thank respect with progress

of our strategies. Thank you, Jane, start and marketing three the Since focused transformation, good on been we've morning, everyone. key

the accelerated our footprint. e-commerce First, of growth

Second, marketing acquisition our differentiated brand via of family our And compelling and brands. mix on media new awareness. top customer fully third, an of integrated funnel emphasis with and

Let's recap with results encouraging accelerated growth. e-commerce strategies, key across beginning our these

QX channel. low of of largest and QX media total e-comm in in our brand fueled traffic XX% up family of traffic represented our XXXX, XXXX increased in up making of traffic top traffic, e-commerce from XX% spend XXXX, brands was Consolidated our our digital by XX% Consolidated campaigns. versus and funnel across double-digits

of our digital QX, XX% Digital mobile device. occurred transactions a strategy. US represented and XX% our XXXX. XXXX to Mobile sales continues from in up digital XX% in of our on be In of cornerstone retail XX% QX, in the

mobile significant mobile targeted a in app app users. strategies increase have driven app transactions Our and mobile

for increase year. our digital of mobile XX% XX% of transactions XXXX US app QX, versus an of In QX app impressive customers in X% XXXX fueled accounted QX last in mobile in versus our and by XX%

non-app customers app more non-app spend XX% than more mobile than users and users. XX% Our shop

our in leading proud and drive amongst XX% Our engagement, customer of penetration mobile funnel app over of balance the and who we're continued our app strong industry the members planning of channel media mobile of our represent loyalty year. to digital of We're by throughout very transactions. continues our especially the growth campaigns increased back top spend this in half fueled for XXXX brand

Now awareness move our successful on QX. initiatives let's and to the marketing from and results brand

funnel we family brand brands Children's full Our Mandy The spring launched our Gymboree Easter years. Eli brand highlighting featuring two key and of focus Moore. for Manning over work been recent This for has us top Place expansive a campaigns assortment and

media billion our to Place, featuring Remi PJ disruptive in brand. translated These disruptive results. garnered including earned our Gymboree brand We and sisters campaigns also line positive impressions efforts. XX and our made Rigsby, her star Olivia Children's for focused The more we and Culpo Place our a and continued paid for millennial studded Place, PJ Across over strategy spring cast, Bader across campaigns top Cody

five our the ad of on for made return times and For every line top we blended funnel in well to dollar we spend top close industry revenue benchmark is invested, back performance. above

us driving the traffic, brand and of for campaigns. the in a with our back-to-school a healthy these further positioning have meaningful year impact In addition campaigns on holiday half success return, back to

our top media acquisition. growth new influence customer successful third customer also heavily Our strategy, brand funnel of through activations

year work despite strategies our integrated first the up Our brand XX% of fueled have of coupled during impressive of XX% stores, digital through validates our up acquisition. which was last fully acquisitions acquisition compared quarter when XXXX successful with media versus Even total US further our Digital. with ongoing significantly to QX strategy. fewer those XXXX, is acquisition acquisition coming more X% having

half be we've leaving this active healthy back and newly pool the past an of will to year. growth us that in we quarters, results, several consistent of with customers acquired these the With shown acquisition marketing over

only of believe that us but the for remainder success growth. this up sets our future year, e-comm not this for We

brands. credit and and our private label overall our programs to feel continue the inflation spend. quarter, strong retention vehicles is of our be this Our to apparent in for Much like customer pain last loyalty continues customer

have making on ability the driving proven to focus that of Even versus to is traffic, to drive scale going for meaningful we through QX QX qualified spend our incredibly have Customer us down our it to be which in now on new of was that key and digital to brand. this we propelling XXXX, net X% challenging more new customers important capitalize and this audiences acquire traffic much our incremental family drive environment, reach, results. penetration future our to brands, trial

leadership Children's a position differentiation trend providing our right through hold The product We in and unique industry, Apparel market assortment.

have a clear love vision customer. for a We and our very

we We and how to our she is of brands. know who invite trial her effectively efficiently is. family she to and where We know know

The dedicated in Now our strong we another that Amazon resulted have let's onto significant building Amazon. time towards resources move quarter. and marketplace have

of increase site in by a up in increase XXX% versus QX customers of XXXX Our XX% QX and fueled sales traffic XXX% QX over were an XXXX. Amazon

Easter thousand dressy basis over during penetration points of particularly with growing Our QX XXXX. to fashion a QX compared was our assortment strong

ad be to sales sales were XXXX XXX% traffic. continues QX are XX% a with marketing in strategies successful the of Marketing the up to Ad XXXX, and Amazon versus return of strong business on double-digit total driving Amazon channel driving key significant attributed component a year-over-year increases our for spend.

for for performing Amazon Amazon fall, our Campaign, has consistently QX garnered our time XX business and we Gymboree our Celebrity on the XXXX. exceeded since million NFL the featured and QX. over Our during of on launched impressions period ads iconic launch expectations built Amazon Last brand top which our

XX% the spend, Gymboree incremental enhanced sales opportunity fueled were the signals an behind momentum advertising increased built in marketing at visibility ad total strategy to impact significant placements. maximizing the launch Ad sales quarter return brand's a drive sales by on high through attributed very The which ahead to investment. for continues be healthy of around the

increases rate collection drove featuring Moore versus units conversion Easter ad Creative. XX% Mandy a non-Easter

the to ad addition, generating brand a Mandy be In XX% total QX. driver strong orders acquisition Moore new units customers, of with during continued to

in well continue our the more opportunities plan of and partnership Opportunities. business we about the anticipate progresses, pursue to grow but to strengthen year as to Amazon of International Channel half talk with will Amazon year. the back as We to see expanding continue through brands that We'll for our as Amazon opportunity future significantly the Growth family this

Now I'll to it over turn Sheamus.

and you, morning, Maegan, good Thank everyone.

the first be a to a period continued due discussed, core perspective Jane from environment quarter As to which line difficult to impact from demand proved challenging top a our macro customer.

were negatively advantage on ending our with through fall down significant progress we than levels, of We some to X% winter sales QX enabling AUC make took us the weather higher inventory While inventory of cooler to more liquidate work goods. our additional to impacted, continued originally planned, year-over-year. inventory

decrease tax continued XX.X% challenges, decreased the $XX.X including or for macro-economic government driven and in million, of a million quarter sales first lack $XXX.X refunds. by Net to inflation, the primarily stimulus

or Canadian or to million XX% sales $XX.X $XXX.X by decreased Our million, US to net $X by sales million $XX.X our million. net and decreased XX%

decreased X.X% quarter. for sales store the Comparable

store up e-commerce comparable X%, up traffic double-digits. traffic was low Our our while approximately was

traffic store February in surge the a comp from by double-digit which driven Our we COVID year. in was increase last lapped

AUR by X%, driven our season liquidation of declined prior While by merchandise. approximately the consolidated

forward go product and was on summer spring AUR flat. Our

pay chain in levels, decline significantly the transactional XXXX purchased pricing restructured success half as to XXXX. come Importantly, liquidate move our validating of into in significant than back goods as surge strategies, we which down will and the believe and AURs higher we to AUC remained input we our costs dividends continue pre-pandemic of costs supply after as the continue

to environment. decreased input including our guidance, profit in increase sales margin still of quarter and compared the retail reflected prior chain highly combination was net cotton supply first of impact This of net year. of as the sales prior the a XX.X% XX% to promotional for better Gross costs, costs an the in unprecedented and than but

in expenses the million and year. compensation. quarter reduction result planned Adjusted a in as SG&A of was first compared by increase million the period mostly comparable $XXX.X as was modest investments for store $XXX.X a offset reduction initiatives last Maegan and detailed primarily equity a This to in was in marketing

Our variable quarter rate was was facility the due revolving increases. million and expense $X.X market the expense The rates increases $X.X prior term expense and versus in borrowings quarter. year's in net net by for interest rate higher driven in first of interest loan credit upon to adjusted associated increase average million interest higher the interest with our based

certain decreased Our adjusted approximately to in quarter income. tax for year, to reflecting as rate XX.X% XX% prior compared the the taxable a shift in

loss period $X the an to For diluted net $XX.X as the net million or share comparable reflected year. first adjusted quarter, million of $XX.X last or $X.XX per share adjusted profit per we compared in of an

debt, We and and the quarter Moving of million. investments million million to long-term sheet. $XX.X ended with and our the cash borrowings balance of credit $XXX.X with $XX facility modest amount under unchanged short-term which at revolving of remains a

inventory efforts. progress we reduction continued make During in our significant quarter, the to

includes were we portion purchased inventory. pleased when still of in QX cost peak. XXXX at inventory higher and quarter able were we was Nonetheless, liquidate and unit we input a that fall average are this seasonal ended As in previously inventory costs that of discussed, with importantly the levels holiday of lower certain their inventory to significant our

ended we to position year, X% unit up costs. X% Inventory higher had been the as we down a healthy the as the approximately were in end us enabling carrying levels, entered which quarter, despite

increased costs, the units disclosed, of prior we and quarter. down year but supply to higher the chain have in unit periods which double-digits including costs, inventory we cotton an first are the reduced inventory previously investments, in versus experienced As average which our recent increase due input cost

high inventory, AUR mitigate with quarter. Our in inventory a over the in of which basics first dedicated key no several end to inventory at risk, markdown risk inventory volume on-hand accounted includes for low which helps categories limited This periods, basic XX% portion than of larger a our is to prior category. the of

expect throughout expand We fiscal significant free down opportunity flow. a XXXX, investments to be to providing cash inventory

use QX and versus operations year. $XX in flow liquidity, $X from million cash a million cash onto in of Moving generated we last

well we free discuss generate positions year. outlook, will in ramp As which of us up first flow, our the digital to cash expect in second the will our we half model

in QX expenditures million. $XX were Capital

As focused as part discussed, remain significantly we of we year. the a throughout compared prior throughout our XXXX, for on inventory XXXX, as plan to investment have year management of previously which and result have our will purchases operating level inventory reduced reduced the in

While are versus inventory levels prior year. down the

requires We selling are support back-to-school significant capital. our to working a currently critical which building of use period, inventory

peak near to working project we plan and we the the be of period will reduce few end which next to that flow, pleased capital generate weeks begin debt. this cash we are then to to We in use significant

half As back combination of the to in of cash flow reduce the we expected and debt. free significantly we is through due intend return year, progress when inventory the expand to to profitability, our sequential reductions to

more expect borrowings long-term of further the than We to continue the by million year, by $XXX to decrease us sustainable growth. for positioning end

first ending closed the the XX XXX we with locations, stores. quarter quarter, During

lease We with store carefully our fleet continue next XX% in up financial action portfolio. unprofitable volume flexibility the for we coming are meaningful of months, stores to XX evaluate maintaining close our and fleet in lease lower over our

to Moving our outlook.

a have which consumer an tempered Given the and more we including consumer lower cautious the continuation on significant inflation record outsized have power, customer macroeconomic income impact our outlook. sentiment, headwinds of purchasing now

a we bottom as year. have for company our and is the expectations both result, the to the remainder And it prudent believes top of tempered a line line more As take a result, conservative approach.

position and reduce in the margins we are strategies well helping operating planned back to expectations, achieve designed as double-digit as our us further of risk line capital top inventory reduced As half These investments the year. to we have reduced expenses. while have our

Now me for back you the of outlook half take the through let and our QX year.

indicated, six be costs, spring in will XXXX in our XXXX embedded are the the As the most negatively to of notably which in These inventory cotton. negatively continue impacted margin months has cost QX. summer half headwinds, rates by input company previously impact high and first temporary input of will several first

year to expects the compared Adjusted of $XXX to range operating be For to high single-digits to company of sales low range a QX, the net X% sales. representing be $XXX prior as percentage quarter. double-digit million, the in net decrease is loss in approximately the second expected million to

rate is similar loss during per We QX. to will The decline in be per approximately to basis QX is rate goods per for $X.XX be tax to XXXX sold the Adjusted points, gross margin rate expected input approximately QX that reflecting on anticipate quarter. share net higher be by to expected experienced expected $X.XX share the the to costs share. XXX

in Selling, general with in last by expected and investments in marketing and administrative expenses rationalization initiatives. be line year, offset due reflecting increase to lower store are expense planned reductions store payroll count to our

on expected rate to the to impact due are However, revenue. expenses of deleverage lower a these basis,

which of to than continue macro reduce from more benefit experience an sized to In the seasonal back At with expected on to and estimated high high half the QX, inventory a despite input revenue need the a reduce to expense the be wholesale softening more pressures which top XXXX, single-digit expected pressures are to of versus is in in represents down year $XXX the of and costs, increases impact clean optimized in annualized acceleration an million structure. the prior year-over-year the investments, expenses end with goods liquidate line, the from continued quarter. inventory quarter, appropriately expects second drive company range second of percentage

of adjusted $X is double-digit and half EPS which to achieve the us to expected of net operating over in margins All enable XXXX. of back

compared the in be percentage profit be consolidated be year, in the in is to expects company single-digit expected a following. The net of prior low billion are the range. fiscal to expected the Net high X.X% year. full representing rate the range sales to the to $X.XX sales. Adjusted now $X.XX full operating For is for range fiscal the approximately XX% billion, now the expected to as to decrease tax of X.X% year

our XXXX share Adjusted results to of the net diluted $X is modest a is retail earnings week low include the result per on share period per insignificant on a impact These a to $X.XX per range in XXrd the expected occurs based operating non-peak calendar. revenue very to as results. upon and of expected impact during This volume share. week have be impact in clearance an and

our $XX fiscal our happening now significantly DC million We also bulk of optimization of the leaving initiatives have an to for enhancement be digital in are to our the primarily in anticipate fleet stores. stores full reduced part XXX capital range of ongoing XXXX, $XX of our to and capabilities. the expected million, the year, expenditures We which planned support initiative, closing approximately as optimized fulfilment XXX fleet us closures with with of expansion,

Thank questions. will you. we the to open call your And now up

to [Operator you. Hardt. Instructions] Jim go We'll Monness, Chartier Thank first with Crespi,

And savings kind of update morning. cotton cost the time you've promotional the Sheamus, if you're sales could then drivers quarter. first any structure given biggest if I shortfall? if Good with quarter to little provide can additional inventory, the going quantify an in freight on could there, manage cost bit gross the how with Thank and the margin wondering you of the and first more were in seen impact the of the Hi. of how you decline, the you. the costs that second about a you activity talk What kind company? was

Thanks, question. Jim, I appreciate absolutely. the Yeah,

First, rate had as remarks, our gross in QX's QX, discussed prepared came terms than in better margin of in expected. slightly we we

had input built in in purchasing when terms that year that chain basis cotton guidance of original the that, gave XXXX driven higher better higher and activity. we we up in talked, costs, given when gross experienced pressures largely pressures in impact discussions our last supply inventories, points a we AUCs we in margin I be our think as various by previously, little than bit in terms and down was guidance was came that original approximately the of our the to the

of As significant clearly QX, most towards it we cotton embedded high as of look bifurcating both was that. the the deterioration. was at in inventory margin It With combination costs activities was that almost In supply that as penetration probably incremental a anticipated as of higher well kind costs. chain receded pieces end higher exclusively were The of impact not result or that XXXX. cotton those inventory. a being was of a of input promotional liquidation of

result freight QX. the and higher decrease has the costs associated with margin because but costs, case costs As on margin some in QX, into move of higher much primarily we decline QX, almost in inventory nonetheless, have in level certainly anticipating to basis year, than as those experienced a exclusively we we of in guided, anticipating input last again, higher less we're XXX still this we freight compared That point is been but as largely pressure margins dissipated cotton, in about are the liquidated. also

the So is in more QX impact to related so cotton.

freight bit lower of terms of little of then it also in we of a terms us. a is in cost higher a margin business penetrate and still wholesale It's as gross for bit higher shift little a

we costs. same incur However, the don't

margin for us. a business is it strongly So profitable operating

margin is there of and business of of for bit gross does a around margin in structure the it but So higher some in strong the and expense penetrate It wholesale. shift as little higher margin. is profitable terms operating terms and geography us, a we shift

final the your to look question, of expenses. part we As

analyzing here, few have lot we the spent definitely my months in think I of expense first structure. a time

as of of our our implemented need some we to with more digital towards in as commentary, across a changes the board, that our do And initiatives, we estate hinted starting store understanding and in our do to believing number geared office home invest all real marketing. have believe some as rationalize initiatives, of operation activities, well we expenses and

As more there. digitally dominant a we've to dollars do we retailer, need become invest

positions well So dollars initiatives. saved of believe marketing And growth. us future structure board, of definitely into we expense for the those future in that success diverted across dollars some we've terms and

So us marketing it investment. in of we in should moves been with have line more where terms

So back we're sustainable we activities will half expansion growth see we'll the start dividends and significant free of with pay margins those year well of and serve believe where, cash the into generating more and as as that beyond, pleased to well and as particularly us flow. growth move

I had mentioned placed down year think due from question pressure asked, And significantly we before fashion we summer you to placed AUC. receipts versus had the promotional that Jim, we last we on the

Sheamus as anticipate element with AUC end high completely inventory quarter singles back-to-school. And and in a So fashion for plan will summer we behind goods the and us basics, we'll position with says, of spring to be which the down down the that healthy we high us. then up sets end

you. Thank

Lick Jeff B. Our comes from next question Financial. Riley with

have the little Hi, picking that the talked this guys. call year. show some you Thanks for that this period, up, weather May a didn't elaborate signs about, could was taking you generally, weak question. when quarter's Jane, a I typically in wondering of if you happen you deterioration maybe

kind half, this and back I'm kind curious things just good factors on factors. you're then like Amazon. with elaborate have I'm you the good getting also thinking digital those all of just if there'll up, could against moment that? seems aha overwhelm wondering wondering the kind going traffic be kind just about the of into the there that was a juxtapose I how that So of you little the where of on bad

I we had. Thank Yeah, think you.

wanted see a break we we break had first our that weather quarter we last didn't get because a weather whole really the call mentioned think in quarter. I during to

how was was And so that would weather in allow versus us to happening much see the what how consumer. much was QX of

early in a in weather the So to see change not break our did trajectory. did your point, we get and May we that

on mentioned we've April. in May we we As in call, where versus were the decelerated

now that clearly right really So the and she's believe on it's consumer of the under pressure. we solidly back

in that see We term. the changing near don't

Maegan As less in visits. spending out, she when is pointed she's And inflation she buys. everything

heard Savings down. all. debt Credit is up. it card You've are

profitable least remember a she's budget. cautious her with is very our being QX so quarter. marketing And From that usually perspective, very, our

the in our We se QX don't up where mid-July. end have of until get marketing we a we start July in back-to-school per campaign very

is So for us QX Maegan and think what marketing anticipated what us and and saw do we we when you QX, it currently, doing it's about to which in us not outlined, what doing what for did last in QX year. not certainly from doing for it's

get than May business then And anticipate continue going we that. July, June tough. be quarter remember to of two weeks. the that to different to we that store the a July comes going to is of continuation others. be from is to month our we be is XX% The going of have continue tough. about of last when comes a cadence to a So from is and bit of XX%

is that I about like an us. it. we'll said point From talk going Amazon I'm important very to it be up of marketing. view, period Maegan So for to ramping turn over And to a

mid-July she about the think round on can that half. and your how right detail the both the and see more see in out into of how provide some Amazon now we question back kind we shift to back-to-school in on as front I low front we then marketing the improvement

Yeah.

that inflation, slowdown impacting that So caused demand despite an it's perspective, the we're business. not seeing by certainly from consumer in Amazon really

strong Our results obviously that a we've marketing made very investment resulted in in the and quarter.

year, the consistently we're current based And for really year. past planning in think of the growth. terms the quarter-over-quarter of been for significant seeing that back And Amazon perspective that about the trends when from on we've an we lot half it's a there's

Amazon QX investment, seeing over scale QX, marketing growth. that significant also continuing head fashion side. last increased into it to as very we're will on Our be year, the outsized and meaningful We're we

basis up with points to head that I a see in was fashion So as we into penetration QX our XXXX really we QX, mentioned, lends had itself the which opportunity as holiday. specifically

there's head really happening lot our as the for kind book already in we with the So there of head of into we of Amazon. seeing what a of time biggest we back-to-school Along good like as going into to feel in see we're balance of we're terms with sales what periods year. one

in business half in seeing back of for the planned a momentum the the there's So the business. lot half of back year that growth that's significant for the we're of

that digital saw ramp perspective, had head a we're as with as mentioned then relates mentioned, to kind in of back holiday. and campaign then it the our Jane we what similar remarks, we same really some back-to-school in time see to July of lot growth. when And the trend what's in marketing back-to-school the to digital about QX. a had significantly traffic prepared a There's brand as start we we period And fueling think we our in up into into to planning from as half

fuel against trend QX in is see really traffic coming that's slight through business. business as to marketing to planning a over going QX year. We're continuing investment, in digital our historically digital up that to our had specifically which through increased QX on based it that's change last And to really lowest being our last also conversion the year Jane converting relates quarter and and significantly So mentioned. and our scale as

macro saw looks. coming the up of we way obviously on a on really based QX that some in was environment, marketing of in last as that year inflation the big key well impact out-of-stocks And of

All we make all year a a) top those that then on and looks. made the in we're which key we perspective from of really we're terms feel investment in the of of this investment we've right-sized marketing product layering sure like to really of covering marketing

acquisition acquisition longer in seen we're has like been of a would line. really feel talking well. also to we I say impact we've kind really tail meaningful positioned that seeing third top So terms growth we've about. driver is of the really that And

when we're and quarters into trends, of really growth see of back we're we're positive assuming start that a the think about of this several from anticipating line impact XXXX. of to the lot to the going and the So to we acquisition the year then top past see half when in

Our Jay comes next with from Sole UBS. question

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that opportunity. tremendous believe we growth there's So

in put perspective important think well. I to as it's it

and a we're expecting that us business period year certainly base Amazon input be of business into While year we macro into is back us the high half go the the pressures time the for really half first of establishing the a that difficult that forward or Maegan of described XXXX, half due a and difficult new believe and as the period into move growth to move that growth, we and we anticipated base time new part that to of for for year. was as we're an back acceleration of costs

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strategy. of is So forward we Amazon part that an know go it's certainly think you important

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