The Children's Place, Inc. (PLCE) 16 Nov 232024 Q3 Earnings call transcript

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

On the call today are Jane Elfers, President and Chief Executive Officer; Maegan Markee, Brand President; and Sheamus Toal, Chief Operating Officer and Chief Financial Officer. [Operator Instructions].

The Children's Place issued its third 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.

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

presentation reports in Securities that most please statements, refer company financial Exchange Also, being the is company's It financial For measurements non-GAAP is factors to actual the posted today's measurements. is non-GAAP GAAP to recorded. pleasure forward-looking could a presentation to Elfers. discussion the now the vary website. On on the results over of and annual financial call measurements these company's will filed and Commission, turn and the materials. reference quarterly to Jane the recent the cause and this of provided from call A with those contained materials various in the my call, to reconciliation company's release earnings

and you, everyone. good morning, Thank

with and results driven our and Our was outstanding line. Back-to-School categories top increase top delivered The expectations a digital And e-commerce the October. August of wholesale in fueled another on quarter. beat double-digit in traffic our by our of in Amazon, by another line performance the quarter by led success exceeded industry-leading September strong seasonal QX channel,

Importantly, our QX ending XX%, expectations. inventories were our down exceeding

but the factors. were in a distribution negatively third results of driven line impacted combination addressable by bottom unplanned, quarter by Our costs largely higher-than-planned

an increase under our size than volumes, shipping lower from increased stemming planned, in significantly units environment. the packages, utilization e-commerce pressure as fulfillment of outsized the resulting with current third-party from First, higher remains higher due coupled to consumer in services, costs, more including transaction fulfillment

market. fulfillment costs planned than the delay third, very and demand a labor increased tight savings. higher certain freight to due and e-commerce And planned labor a significantly Second, of

costs to quarter. continue this these detail remarks. increased will we cover more planning are distribution in Sheamus fourth in prepared ahead, Looking for the his in

our by a double-digit were For low third traffic. sales single quarter, up the e-commerce increase e-commerce in digits, driven

industry-leading Our retail in XX% XX% of XX% in represented e-commerce QX, channel XXXX. up and year an sales last from our

are her channels to overwhelmingly prefer And the millennial data, based where core will is transact. customer future moms digital prefers our shop Our Gen current kids. clearly digital where our for Z to on

native X Almost to million expected all are will XX be digitally new from buyers our Gen from is we to demographic million digital Z Gen business at laser-focused digital over Gen the of core buyers ensuring future do. importance today everything cannot Z. digital away. remain come short surge years to XXXX, only XX Z of The on the we in underestimated, that nationwide and

ability pressure, we drive above under significant customer top core our pleased with third While quarter. expectations our line remains to our are throughout the

digits strength momentum has start our sales single quarter-to-date to accelerated year, digital QX the our as versus responding enhanced tactics. off business. and line top of with to our a Our from up running assortments by customers trend-right is strong driven our retail marketing consolidated November last into continued low QX

an our she inventory, Our update service QX our us company better including online to shop accelerated more consistent time. to and positioned on the with and us have less fleet allowing less stores, what over sustainable translate to turn operate strategies expense, results. digital provide to to less it will transformation resources, less results now less you. And we to believe strong customer over Maegan in optimization and prefers where marketing people resulting Thank I'll

last morning, key transformation. pillars X of our good Thank everyone. Jane, On we marketing the and call, our you, covered

we and how the back will contributions optimized our in our the Our measurement, those strategies have utilize real-time QX marketing supported shifted partners top half marketing. pillars spend we XXXX, tools, way have state-of-the-art launching we results. Today, marketing significantly focus revamped line traditional on Since nontraditional of partners, media by marketing and and supported best-in-class media. versus our

are in a mindset rooted purchase which the traffic. driving filling funnel, qualified by strategies Our customer-centric and starts

Jane increase experienced we mentioned, a As our digital in double-digit QX. strong traffic in

and Our our of our capabilities. by positive enhanced to direct digital quarter customer audiences are result marketing brands how qualified to traffic channels, trends utilizing of a for the family knowing deep drive knowledge targeting

to partners we and brands. digital as continue into tools millennial business marketing and our Gen family by tactics, scale acquire Z utilizing customers our to of us ability competition our Our puts our digital ahead

our to of performance. recap Now I'm funnel going top

manifested Our very the in important in our time and and contains QX. holiday our the brand of X brand our both for campaigns consumers, QX equity beginning periods Back-to-School itself business top-of-funnel season.

earlier events core digital a in customer As browsing purchasing know millennial leader savvy digitally the we for the emotional that of by children's in lives. all ahead space, than special and our our in-store shopper further their plans

this in market campaigns X behavioral in-market seasonal we with demand share. shopper with Combining our position first-to-market holiday family goal and the dressing leadership pajamas, launched and matching knowledge capturing Back-to-School, of

mobile funnel benchmarks X for is a well superstars, earned and efforts downloads a The billion performance. return media top as impressions driving a campaign on Jonas we ad global with as Brothers' reminder, for Jonas in industry of delivered lift As and spend Back-to-School, pop app partnered paid across XX% above the the the Brothers. well over our that

campaign, a a synonymous Music first-to-market first fashion and holiday its of consumer. which highlighting full was campaign blockbuster in X-part For Gymboree our holiday, Children's This family The expansive concept trilogy X with launched holiday kind our engage core Children's family millennial space. fashion. The to brand assortment music, for brands, we and combining retail campaigns, include Place is

focus Carey, McLean, holiday partnered Queen our Dogg herself, Holiday AJ Wanya a Joey we Bass, in the for campaign, this with Snoop music on with year's Fatone, Christmas position of Morris, and market-leading So icons: course, and PJs. Dressy of Lance Mariah

continued collection the for Moore partnership with the Mandy winter long-standing designing For with season. ambassadorship and we further her our our brand, her with expanded and a engagement brand by Gymboree capsule

Across our Gymboree, efforts. impressions translated line media in holiday XX across top incredibly garnered paid campaigns we for to our the positive billion disruptive over also results. Children's These earned brand Place and campaigns

every dollar made invested, we we For that in over back revenue. $X line top

the been social by presence and has holiday In of communities, addition, the loyal growth very our engagement through start season our of the explosive. driven

brands the our XXX,XXX our drove interactions. social holiday launch Since over of campaigns,

brands on social apparel children impressions has position Our Children's the XX% amongst total competitive set. performance of our the kept social in Place to representing close leadership media, resale

as strategy acquisition retailer. critical our success a A digital-first to is digital robust

acquisition with growth work digital X% media ongoing during coupled integrated QX fifth quarter our year brand was fueled Our fully last to strategies and of up our XX% increased digital consecutive QX. up to acquisition with acquisition XXXX. our

strategically of in Our strategies drive transformed result media that acquisition. addressable positive acquisition market direct and a marketing the order to our is mix target total trend new customer

our to marketing spend. than industry respect less versus our XXXX, was X% the to brands revenue marketing spend total average X%. of In of multichannel With X% for

printed as marketing sites, creative costs celebrity only with marketing, loyalty the and well advertising, program our also as as our signage it digital Our reported materials. associated in-store not includes for partnerships our and spend, includes

were in the in our mid-single-digit investment peers. in marketing QX with range, line Our specialty

audiences scale to environment this new We challenging engaging traffic incremental family qualified have to when traffic, ahead existing digital capitalize drive our ability of on have proven improve. progress us and our brands. acquire gives the in of able the begins been into that show opportunity to audiences macro we our net while us the penetration, the The we've in consumer confidence environment significant shopper

biggest on of resulted significant resources another move the building pandemic since week quarter. have our on time in in outstanding let's our we the Now event, have Children's October Amazon business. beginning on history. wholesale Place our towards to Amazon, The in Back-to-School dedicated Day Coming in that participated the marketplace of largest off Amazon resulting the our Prime and we ever

made The Amazon favorite fourth Day today we Amazon's and one of transformational. sides we have X believe we ahead continued highlighted progress for deals has versus our We When both the compare top quarter release. pajamas our pre-pandemic, significant were the wholesale beyond. runway as the in Children's on have family been that matching growth with relationship in Place Prime press Christmas

we our for at in the channel partnership Walmart Amazon. the opportunity XXXX, scale growth to it opportunity additional Sheamus. Thank turn wholesale When and I with drivers to the will we're look The and focused international on you, over

geopolitical million million $XX.X our good the loan concerns retail everyone. resumption challenges, face were persistent third payments decreased and high including other macroeconomic $XXX.X on exceeding our domestic business. and and of end concerns to in sales confidence. driven inflation, by Maegan, of or quarter you, environment, Thank results consumer the student of over These strong X.X% for Net a highly e-commerce guidance, weighing the promotional morning, continued the

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

Our was e-commerce traffic down approximately quarter, our store traffic double X%. up for was comparable the while digits

Our down continues comp store traffic almost XX%. be XXXX versus to

Our X% and promotional consumer due is to intense our the the approximately consolidated under pressures we for AUR environment. decreased by quarter, largely believe

significantly remain strategies. pricing than validating restructured higher of our AURs levels Importantly, pre-pandemic success the

and resulted but year. fulfillment The orders and attract overtime higher rates profit net largely decreased of XX.X% This addressable XX.X% Gross offset and fulfill to reductions associates. talent e-commerce prior net margin which processing of sales process anticipated, the orders, wage third retain expenses increases stemming cotton increased expense of to in compared the to from in quarter driven added higher the shipping costs, volumes anticipated as company to were supply impact costs the sales by incentives the and than compensation unplanned, distribution partially incurred higher for to in incremental chain significant by to new in premiums as costs. distribution reflects

fulfillment at rates. to to company experienced increase operate increase freight size decreases in freight due the of number in the also third-party shipped significant continue expense. an pressure an packages partners, deleveraging utilization increased and of which addition, face, company which our given the of customers costs The order outsized also resulted In in average macro the higher in

a delay experienced negotiate company of as and the we planned continue long-term to savings certain freight fulfillment best pricing. Finally, the

lower In SG&A impacted of growth also which operates the rate wholesale company's and was to is but the addition our by margin, at gross the margin costs, operating negatively lower at accretive operates margin. to our gross business, distribution

wholesale a recognizing and on As our record cooperative a commissions, discounts, of reminder, revenue chargebacks basis, net revenue advertising. we net

of offset as which compensation, expense have by the compensation in million planned been $XXX.X equity and quarter result office top third to SG&A for in line million was and last the traffic year. $XXX.X incentive very store reductions marketing, driving digital payroll, partially successful in Adjusted period the was This compared home investments expenses, comparable in growth.

for the year. $XX.X to $XX.X million million $XX third the Adjusted the income the was operating in third quarter quarter income last period to as $XX.X for as third operating quarter Our comparable last compared year. million was in compared million

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

discrete earnings on the Company's accurately Company $X.X applying this million taxes $X.X more that reflects believes GAAP million the by The reflects of adjusted a for basis an basis on due the benefit provision method of The rate. method and a estimate method. small annual jurisdictions annual rate interim on changes tax than of ordinary the to income the of different in and mix taxes tax effective the sensitivity in effective tax

quarter as prior negative rate year. tax approximately X.X% the was the compared to adjusted in Our XX.X% for

reflected comparable third net income Adjusted to million share per For or the million prior period we of $XX.X income to $XX.X year of $X.XX per the the net $X.XX as share $X.XX net or in million million per diluted was in last third diluted income or $X.XX per quarter, year. or share compared compared $XX.X $XX.X share diluted quarter. diluted

million, onetime recorded amendment company a from a the a transformation costs of to $X.X store of As with which and, lesser model depreciation digital-first to model, our includes its legacy facility. severance, accelerated credit charges associated we continues extent, operating the

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

XXXX fiscal us We by further continue of borrowings versus sustainable to for of expect growth. to end XXXX, long-term end decrease the the positioning

enter position, Our the and third holiday as cost us levels quarter quarter down which expectations, our exceeding unit healthy end inventory ending were in a XX%, important enabling selling is we the to period.

be versus We end levels year. XXXX to the our we percentages as inventory down continue expect to double-digit fiscal

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

the the end X quarter the XXXX XXX During total closed we at now stores. XX third bringing for ending plan with stores to our XX locations, an closures close to stores. of quarter, We additional QX,

As initiative, plan rightsized end we with we to XXXX our stores. come approximately the of a decade-long fleet to optimization of XXX enter

to return pleased the and back are half the We profitability the year. third for to of in quarter

So let some of me through take our you outlook.

as of million XXXX, be net to the million, $XXX expects now to year in fourth single-digit For a Company fiscal of the compared $XXX sales the year quarter range to prior low representing increase fourth quarter. the

net quarter fourth of sales. expected be reflecting to higher to approximately fourth the the approximately is $X.X impact X% is to quarter average and expense interest X% Adjusted of expected rate operating million, increases. the again, borrowings Interest profit for be for

fourth rate per per XX% expected to the for fourth $X.XX $X.XX be be diluted of share. to Our calculated share effective share tax the per for is quarter to applying the in are net Adjusted expected earnings discrete approximately method. quarter range the by

an quarter color the down the reduced store payroll week. million due SG&A expense home million QX, provide equity to prior reflecting To and compensation the expenses, benefit lower we're to reduced XXrd $XX despite fourth some year, of of on to $XX week that expect we fact incentive to dollars office the approximately and additional including be

an During that and quarter, time, versus to size continue the third and stemming sales rates, over gross pressures expected increased that freight margins pressure. increased points in we packages shipped we X,XXX expand from the parties to negatively consumer fourth e-commerce by and including utilization by the lower experienced basis in wage are impacted fact prior profit of year the distribution the expect third despite approximately increased under margins as to quarter, the higher higher remains transaction increase be

XXrd expected period our expects share be a ranging fiscal low-volume full $X.XX $X.XXX to to net negative very calendar. company now the impact week $X.XX X.X% in to per net $X.XX on For sales the XXXX share. based range Adjusted adjusted operating in sales, year of is to occurs net billion. upon result, billion profit These operating of from This to in impact with projections of have a the week include loss the as of diluted during on XXXX, modest negative expected the X.X% retail range a clearance results. to be revenues and the negative nonpeak impact and a per

questions. for the $XX of call significantly have And be digital planned $XX year, like to you. turn expected Thank in reduced which the now support full to to capital your We primarily expenditures to now fulfillment range over million capabilities. for also our million, of enhancements and we'd the are initiatives our our

Our with Riley. question Lick will Instructions] first B. Jeff [Operator come from

kind Congrats if top expenses. help was could better-than-expected line. the us you of on increased unpack the wondering I

the $XXX incremental million, Just in million of to [indiscernible] expenses back of terms flowing are $XXX really in I kind kind we're think at of in. that million the $XXX

a just this permanent just caught business you tell interrelating? increased footed, then and X and we're where could the can of are it." model "Hey, change And those see at is If how versus you us is, the would flat we then there what this adjust in reconcile expense, us kind

Thanks Yes. the it's question. Jeff, for Sheamus.

of us, there in clearly overall and cost. quarter, despite wins are saying were terms some the challenging there out an to chain maintain close you're and that but I rate AURs we to some addressable also think, But of also very think, margin pleased for disappointed were you operational highlighted extremely holding while I would first the I merchandise hinting big strong environment. were challenges as original bright plan first, margin, with that clear one spots in we're them just our start relating margins, for pretty the foremost, macro supply our to pretty and

your the costs, very freight versus the merchandise with up margins did planned as question, then first were strong supply costs, us year. for that well anticipated that and reductions costs coupled inbound the in in cotton prior to as of chain part And result

did, caused e-commerce and pressure summarized bit, costs upon second your which significant the some into the part during X little a elevated To quarter. margin by were the on external our of an talked question, primary and that experience I factors basis. as however, on distribution overall costs, stronger-than-anticipated we us gross roll These fulfillment really for were magnified Jane rate growth all about based

So putting order pressure on from our a increased volumes was change the first, profile further in customer.

transaction-by-transaction macro did we extremely we great stuff less top a far packages, line than didn't Given the while at which to discount significant purchase volume drive shipments in when pleased we an the environment, certainly to that with were bit and higher so had more growth overall on was resulting little challenging top margins, increase line coupled see Customers a basis, in anticipated. growth.

labor we've and in in throughout process a fact our incurred DC significant forced in incentives attract we competitive and talent some for were to addition into We put increasing where ensure these to that in expected us, overtime QX our are really challenges holiday. talent. orders. wages QX we're to is created retain That talent, to the operating, through to retain And elevated market, we labor very that

volume. as we a orders process to but think provider, at cost, we volume third-party our a to were higher earlier, more also, able which shifted that comes higher talked as we that I result of

process still believe out, to some we're And the we quickly just short-term it's pricing. And where that to then but longer expected. and securing to on be willing looking will the we able originally sign up not best that squeeze and long-term of to just we're savings had a finally, really savings, get than the we're future working contractual

those lot I competitive probably us. our challenge is I get by think look by X Certainly, we increases center, we like structure next our we But of peak addressable rate and in Back-to-School, the my reasons a the shift us one come to up lot of back think that a the becomes increase. time at that with and time that's so revamped a over environment of thing the are our temporary securing distribution described, affecting incentive, allocation that terms in when a operate talent, the of permanent that them in we in in are half many of I wage year. that challenge the

And improves. the think normal environment as return our customer time, then over to macro I will purchases historical

won't we So terms believe increase in in same and of outsized savings economics face contractual order we and an pressures then still orders the the in.

the for move attack we are at think pieces, I we're to addressable us I next into we we and those and think look and next as move us, short So individual peak aggressively attack peak. affect have in to us very they're through holiday, going those, will and they before them solve I'm while affecting going as in the year certainly as and QX term our

Monness, Jim next with Crespi, question Our comes and Hardt. from Chartier

follow in of for And to permanent. year back confident that, gross mean of be peak kind of going that kind is I of are what is profit? just these place the think be wanted are fixes, will terms factors half I by on Back-to-School? you of impact way the there next timing do And percentage any to of then that quantify season this up. what the the total to then in of you how

Jim, Yes, that. I'll take

look to as easiest then it QX at probably in and how to on. changes what it's think we it in move continues QX, evolve I

I impact issues in the QX, I quarter just So that think first I during biggest described. our the think clearly was

X/X change margin of I and bucket were contract take, As the or experienced impact, those, in that give of savings, the would economics terms of about I in the say pressure. what we delayed each order

to about The process increasing labor the both pretty combine because terms those I other they're third, almost impact. X their average they're an and transactional order. the in combined And and equal represents cost utilization, of our third-party both

move As in terms QX, of those into we to some reduce pressure. of start

start savings, contractual some of will the think we to see I that.

QX. of I alleviated in So that definitely rates, think the macro And in factored that pretty of is environment alleviate to will expectations, term, order pressure something then QX. we've some in would envision similar anticipating guidance being and I the say we're into terms economics that near the incentives things. in the that given and but some of probably get wage those our the to start we

those, order beyond peak I to DC wage think to competitive the operating get be of contractual these I the overtime As peak than we perhaps rate get the the our our in issues, year. we we than by the implemented solved in. just in that and to that economics environment time shift the the year QX, think would vast other Back-to-School, Other move third-party the majority all next increases would in as higher that we we're summer provider, will next generic savings

next Jay with UBS. Our Sole will come question from

Great. X-K debt covenant you earlier cash covenant sort is that just tell just free and done us us a today there little talked and flow a like in where the debt issue, on about you And current Can Maybe, quarter your where bit about a based Sheamus, plans? the on it you stands was an paydown calculation. -- the calculation year for how more guidance? of elaborate outlook give can

Jay, through to it. walk I'd Yes, be happy you

think this back last your I first in year, credit the we expanded our earlier June, So a step part Obviously, just facility. question. to of taking

base that set borrowing expansion As was entirely up. part calculation was of facility, credit that an there new the of

pretty the maintained in was that there calculation that facility. previously, -- credit new or but borrowing to they a was what of expansion identical changed covenants were base Our

I we information. should of between terms that that totally of that short time, to a And not look the a for, of with part terms issues in, in in, September, we should there be of was as of what which terms put as were of were there in bank, us communication inadvertent in any in a and exactly Unfortunately, trip and for the the covenant. our some time, format lead in new glitch putting expansion, issue information like July, but said, that period June us in what we caused agent, period short a August, covenant

was to it waive totally the with behind partners we quickly and would the some Once bank, of determined get banking one, so to reporting. we that that violation issue, as identified that that, have part give correct inadvertent obviously, created, any extra worked that us and agreed to

us a us behind So And forward. think the way calculations that's in change it at I does nonissue totally for going covenant and this point. any not

as been they've So they're same the exactly deal. under the always

think that given march strategy tight also laid and that year. to plan extremely terms quarter. first our that reductions continue our We reducing the in of this growth been purchases towards the of controls earlier this successful part I question, the top exceeded your exceeded as we in strong put we We've expectations. inventory part the we out of on inventory line

had So XX%, than was down we in to. about stronger with came which we inventory guided

obviously, the laid pressure fulfillment distribution down in digits of terms during double year. of QX, half targets in the expect in the inventory prior through terms out. versus progress with some we back that inventories of reductions, the we're to quarter, cash significant and QX, continuing provide completing the ending as year, year the But challenges terms originally I had our we hitting of did and think expense

in part today. debt from where see significant And are of that, as we will a reduction we levels

inventory of that or where today more. we expect levels decline are we debt $XXX from million as So the to declines, neighborhood would in

lower and as originally the move we it's strategy than us of for our -- better So a QX, towards to expected, but it's results future into continue had we march still positions XXXX. for we little believe QX which we debt, success bit given reducing

Our with Tracker. next come from Retail will question Marni Shapiro

when and right -- beautiful, curious way in pajamas, uniform buying by she's like to you or bit habits little one the really a or if we she's like could holiday what want her little but to else, time now. buying really, holiday buying at bit a It have line needs it. patterns maybe sounds I'm curious I'm everything dig item but looks a needs she

this buying versus is if the you're on seeing behavior you she's curious brand? just give And you've Amazon a is stores? the or your difference If versus stores past? online? I'm could between different how outlets with into in in seen behavior any And from her behaving little the your shopper is How us different your how if color

buying ADS have an Sure. in morning increase slightly we with extremely but we've covered as this Yes. She's transactions, the online. high less

have every we So several in units order.

So it's one question not a of unit. her buying

think to denim, we buying, what had uniform the by answer October. Back-to-School those one There she's ever strong wasn't question had suspects, I strongest the best about driven lot backpacks things. your seasonal continued and usual really We a quarters really But of Board. that our thing and into was that of selling. a month. one outerwear categories. far, We September was sold by across September

to positive able than comps be deliver to got to Obviously, one category. be we've in selling more e-comm,

marketing that put tactics this digital -- unique figure very out Maegan clearly #X digital acquisition traffic in to across obviously, So Maegan the in ability by clearly to by really in environment. driven broad-based has acquisition able which been to and and and it's team's is driven how our board to scale channel, the how profitable her make this

strength the driven look quarter-to-date, the QX, the business. again low So into I when as we up by call, of think digits said e-comm comping we're positive single you on

and that with And the the were traffic, worked on opportunity conversion fact what to conference several year. obviously We in third we coupled to styles assortments, wanted really again, the well. to rate and based that marketing Maegan we as that ability line, marketed last responding, we obviously, is year, owning quarter-to-date depth but doubled drive we calls really so on this the the strong the down she's also, had working not we trend e-commerce in and to had on on an quarter discussed her e-comm team's

how going turn like that Maegan, they I would over would I'm to profile, transaction, the an units versus buy Amazon an that be area. per say but that less GCP, expert in to there customer From Amazon who's

Amazon certainly, the of transaction Things need-based. Yes, very makeup different. are brands. quickly. a it very perspective, very from going needs is there She just an to She's trial

a why lower for complementary it's, we much ADS. partnership it's lower again, very So us. UPT, That's a much think

stocking operated and she's from she comes and owned in see to When websites. our strong to environment, UPT we a tough ADS website, continue even very up our

on channels. kind different So certainly, a those of how she's X very in just profile terms transacting of

question comes Dana Advisory from Our Telsey Telsey Group. next with

think As volatile growth. about the whether the margins, hood as very successful business the How XXXX under Because obviously, has of the what opportunities having through can what you see top of digital you framework side, on takes? margin do look the think you and do line, gotten it's the whether puts the like? it's XXXX,

Dana, Sheamus. it's

question. great think I So

we a investments, growth I terms initiatives it, at the really an think what's of competitive of digital the of the in pleasing lot extremely extremely driving marketing place as in see success is look to in we're strategic environment. putting that

that of lot seeing we are are. the So our not peers a same growth

the top we which that as line the think So we're direction. growth part, difficult in have right is excited we into moving I the move XXXX,

challenging for in that should was We're difficult, that things, bode and that are we margin macro which strong things environment the positioned are in in QX that well XXXX. and and well those very us inventories like us terms to excited internal a in maintain we're especially margin with of typically have fact today, merchandise the enable

pressures cotton, we as of challenges, think the had reduce. at and believe those in from increased in will fulfillment those challenges we in enormous And don't inventory. we built costs that half of are look reductions I we distribution said seen Certainly, XXXX, costs. chain gone. pressures first I up the as which think I supply anticipated we've We earlier, those the some have now costs, that our

year. the in top in first it half half margin, maintaining the much position bode XXXX, into our So the AURs, coupled a we're line, the that which, for with than well the moving started strong we better should internal a significant strong of of of first XXXX improvement the

gotten but year. would guidance, We first into in giving dramatic of haven't expect the certainly half the specific improvement

next up time these then terms believe I addressable and we in opportunity that issues solved terms by QX should have QX of said things move against next which fulfillment of in margin of we those and the peak, in as to And we is as get Back-to-School, earlier, see we'll our year.

e-commerce So the initiatives going we better and to look opportunity top across growth. stabilized said our And for fleet And at starts of us digital have the as success it the that of with reasons, from a each of quarter. only I we for also significant call, I all in drive are but different benefit complement stores right-sized well think strategic perform we're business. that more performing to the quarters year, for as line during the drive us, not in locations

So we are still believe believe I strategic in for initiatives, the ahead and the that days us. best

you for joining us today. Thank

have further call you If XXXXX. (XXX) extension XXX-XXXX, questions, please at Relations Investor

lines. your may You disconnect now