Carter's (CRI) 24 Jul 202020 Q2 Earnings call transcript

Ladies and gentlemen welcome to Carter's Second Quarter 2020 Earnings Conference Call.

On the call today are Mr. Michael Casey, Chairman and Chief Executive Officer; Mr. Richard Westenberger, Executive Vice President and Chief Financial Officer; Mr. Brian Lynch, President; and Mr. and President Vice McHugh, Treasurer. Sean remarks, After time take as will today's prepared allows. questions we issued XXXX Carter earlier second its has quarter this earnings morning. release press today's on A have at of ir.carters.com. of the and website materials copy release the company's been Investor the for posted Relations section presentation call

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

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

Good Thanks the call. for everyone. morning very joining much. you Thank us on

our we you with business on to you. presentation through some on the share our Before thoughts walk like website I would

in meaningfully the expected. than performance Our second was quarter we better

purchased our and demand children's last stores United closed XX% closures consumers of nearly online have in our only following in of the source Thankfully we was bought for in of States mid from XX% closed for and surge store our a a recall second in apparel perspective apparel the children's stores March saw and market online. stores may year, our revenue safety the to nearly was largest brands. the quarter. XX% March for employees you remained business of our in As provided our of they Historically we

below retailers able exclusive and significant remain date marketing significantly inventories were a and day weighed has the offering with we expected. after we spending In margin. that improved and we prior enabled year, realization pandemic year reduced open. with successful the also has saw you growth better price levels our less other Target, our quarter demand far and bond Walmart, with previous higher for May. highly profit to We this than gross improved We which strategy second been brands liquidity impact essential had Amazon, our to Though and the the planned in update on a the

In April. sales trends Canada had are wholesale June sales our with the in of and By with our and June terms we in States XX% stores reopened. end of our earnings customers consistent sales in XX% the of in May of sales We and prior XX% to about year returned improved In of over saw business sales the United about July with consolidated in about of drop largest year. last stores of most year. to profitability June trends together last XX%

are newborn our online. earnings was off product offerings for We until typically second did the to our confirmed high child our sleepwear In the also gradually home the on will casual Assuming play demand robust not our quarter you in dressing. across offerings baby online core basics our offerings XX-year-old far From that well the dressing no good support to Skip learning. timed fancier product expect That time is of from with earnings of to prior spike of and thoughts product relative launch baby, is outfits. the quarter corona offerings product late meaningful demand continue home for We'll in playwear a offering and saw this focused product levels. age share distance product delayed offerings. staying store sales the morning. ranges best-selling and expected the baby newborn the little recent and for well from offering start. achieve sleepwear, product improve in in at we perspective in of year and Products second States. the We with more June reopenings. disruption said currently a sold together. in all second to offerings sales outlook from time Hop's refreshed product year our casual the a school playwear Thankfully with balance performance. our home in percentage very the cases our That our virus quarter This half of product apparel the children United to a on outperformed is family spending May to strongest

accessories clearly to which looking Not rate drove school made we our sales made closed for for designed holiday. us. off summer also it for our mindset start outfitting with celebrate offerings. to With product most digital to offerings consumers to demand profitability. a higher We we in July saw to very of surprisingly, delay stores together, good we reasons were tops, a the match Xth be had Through highlighted easier for reopenings. product our believe is to and Consumers bottoms, websites a shop that purchased quarter, the slow of first disproportionately and back-to-school due of

and the will will first the teams this Spring designed be previewed product marketed our week. offerings, sold design, beautifully opportunity our offerings last XXXX merchandising, facemasks Since foreseeable preorder our launch continue a which also We for have to We best as future. sourcing to fourth our the we within nearly children. our a quarter customers completed and update of component Facemasks in product year. for facemasks out the

team our travel digital sales virtual Given using with its images. had restrictions, our customers meeting first sell-in wholesale product

very responded teams and customers to offering. product positively retail this new wholesale Our

the Thankfully, the for environment XXXX. more favorable all we this and first firm costs input the our of XXXX May, In to forecast a excess product given will we're week forecasting stores States. costs Asia, capacity up in United of We reopen for for manufacturing in year. later Spring began Spring lower

by did to job co-workers excellent team XX,XXX of Though for our traffic We to purchased those returned rates, stores preparing better realization work. levels, who pre-COVID back and and increase in were over fewer operations, an price stores stores not per bringing our visiting came buy. to retail to conversion resumed our a including Our yet saw driven promotions. our has units significant transaction,

in sales. by store were stores other tourists the our card guests open focused year and our promotions, of back seeing our tourist benefits all teams time, of after the our sales. retail in moments programs. between XX% our thoughtfully over walked Sales now effective same quarter. the locations our stores the tourist XX% XX% store enabled stores international and in they comped about better in quarter meaningful second and a At marketing are orders stores. margins historically of enrolling reopening. located contributed our nearly XX% period, store rewarding which chain less down on the substantially we and difference in Our credit in comparison With opening up our non-tourist Last on By driven locations post of represented

week e-commerce expect same ticket the from of year. quarter X% of of be to tourists Online demand half markets virus devaluation. came and technology day to balance second the up lost brands The position. affected online increased domestic Increasingly, international the online the dropped with online will by international fewer that we from high our enables for the been sales Thankfully, Brazil apparel. contributed to demand by our their currency guests service. last our California been XX our now By quarter significant increase the and XXX% In store sales growth purchases. recent good to in more biggest our pick consumers baby in have saw largest international comparison, demand a online in quarter, two and choosing corona e-commerce resurgence the especially guests increases buyers demand margin significantly are of in which demand big brands These sales. total triple-digit and Profitability corona promotions stores was invested online in the a year. given in online from continue XX% through the in closures than in second tripled sales international pickup more Given compared robust. stores. guests quarter. second period. Argentina, fulfill in are had our in our Florida, from websites of for on we've virus purchasing international In our X the Many demand this needed U.S. to only the the purchases prefer and under consumers pressure Texas, years, we than offset XX% over on inventory Historically, guests of in and due strong quarter

accretive also the orders. their for As increase serve able which saw store of to The consumers These to reopened largest our the will we a consumers up center increase from picking also in e-commerce better to relative have purchases end August, stores came XX% we shipping of curbside our orders service, new stores online XX% fulfillment relatively be from expect and is our available. consumers provide distribution to shipping have to better over experience our during omni-channel margin of our nearly capabilities date shipping purchases transactions. curbside home. at made pickup our online To XX% for the from stores a By XX% pandemic homes. our we their of to our accretive e-commerce stores home. fulfill To our of relative the to margin opted sales from customer's

shop spending who times and nearly channel those three customers, customers online, annual single amount basis. omni-channel stores value a our of customer Our on an highest the in are

slower orders distribution within to returned speed of Delivery days. to than normal quarter. from Many e-commerce delivery retailers a of center, the four were has earlier similar generally thankfully, online experience. speeds five in Our had desired our

our have center demand us of whom ensure during co-workers, safe grateful been environment ensure of March. centers the we the They've of for end thousands ramped for closure our many of helped online also since employees. our the holiday level As the safety surged in period store staffing all carefully our dedication distribution We're for demand supporting work our distribution of up employees. to a brands

centers. Given populated in stores the to areas for to next COVID the numbers over In we Prior the about declining We States demand be round re-evaluation close years brands, years. XXXX. to standalone in mostly previously would by plan. we plan planned that had stores in store XXX plan to Based more to of we brand we of online co-branded stores a than by planned now had to our about our close on we densely outlet have XX% continues portfolio stores experience, United or XXXX. five exit stores, the our next decided over and stores, open XXX continued open also close acceleration in the over more to our stores five stores XXX

than years, We term and of two those a kick take less more to average as Our is provisions half advantage exit termination plan and early expire. options. out lease including stores leases early

fewer, we buyer's we located more few be to that expect the market is better, of locations other store a years, online closer day to on pursue among plan focus Our those same opportunities. for the consumers will purchases. better and things, stores profitable In retail pickup it enable market and next

we competitors our a as of stores stores, will as well believe closures As and ours. benefit wholesale those transfer we customers closed from some see

wholesale orders very We and store Those of XX% hold for wholesale encouraged given was markets. second we previously adjacent over demand order we to the certain margin In the that stores customers in about pulling wholesale our second we demand fixed quarter, brands. high sales structure on our flow over close second retailers were last continue in related from stores E-commerce our other largest top in XXX% to in of due our our sales placed through sales to saw each a the of at in decrease stores. saw year, the see cancellations. closures cost growth by March. forward quarter in In four transfer segment online to up triple-digit

brands certain demand. For planned with offerings receipt up year. we our been customers than a higher moving exclusive see of chase service some and expect where to balance of continued we we're have the in largest possible the Collectively, of product growth our to mode the in

expected operations to demand, balance brands grow Anticipating closures in pandemic commitments there's retailers last second XX% are the sales our our store shift those of believe the are store exclusive this to to the now for demand. quarter curtail Our We to and expected customers. reduced up due risk year, from wholesale changes to in about the wholesale suspended year. certain in who of inventory Other online higher additional XX% year. inventory a of planned we commitments

encouraged in stores scheduled its international the of open Walmart the stores. throughout due tripled covered the we've we're year certain by about of contributed world. component lower lost largest balance keep Many our also sales in own to from with our sales. Simple of Accordingly, brand wholesale of decreases profitability store seeing of quarter, Canada e-commerce off realization other lower. relationships and at seen and store in better second year our through inventory brands a the year about closures our that Amazon's component higher are this better of down last the planned close in international price third profitability. were sales demand Historically, total several smaller With in drive the of was levels quarter to to plan The to excess with in sales of temporarily inventories representing Canada The from in X% the growth We're price our retailers and launch XX% our retailers. we our wholesale Joys from International the Europe. Mexico. business wholesale largely our and sales moving

in in other of the We year. on receipt focused the deliveries they some and We're healthy in suppliers. Asian Carter’s while the of market Asia our also late seeing employees weighed our supply manufacture expect by respect and With our our those of dollar, West to higher The from is is the to balance Asia, of delay some be stronger products. the challenges compounding retailers which the from chain some their risk balance shipments we're local ports, from sales delay keeping in will Coast backup suppliers seeing down normal year. the a are safe than pandemic, like product at

end together lower excellent much Our an than and inventories to losses. channel leaders, related of team, were job our supply Inventories lower second last chain our exposure year. done planned excess quarter the with reducing than had and the at

our holidays. in of on supporting chain the levels inventory year. team the run for now year-end lower the expect Among We other to things, through is than demand XXXX focused balance acceleration e-commerce supply the

is surge in the March the iconic since we're of of consider most demand young heading believe into We expected. ourselves year. we've we to this apparel. we market believe own In With prepared summary, children's the seen children's disruption than the better Carter’s the fortunate holiday in two had apparel better brands season weathering we

products sleepwear, largest for in life. on by a a bought Carter's basis multiple apparel, playwear years and years. brands frequent core children. Our been We baby B'gosh for and early those enjoyed quantities essential focus consumers of XXX OshKosh of own markets generations the child's We the have in on of past young the share multiple

Our price than a providing less $XX, value are to weaker in average economic consumers great points environment. a

the to largest We the largest in children's of retailers supplier North apparel America. are

sales of also support We specialty largest young The retailers online retailer largest and by growth the best-selling year. their United frontline our employees the representing to the Carter's caused families the of this we apparel of brand young the I'm $X expected for online with Together virus are corona the apparel, Canada. on and children's have of said, and in grateful of brand all children's of every through to children. in our brands dedicated we balance billion the young day serving livelihoods. to is That needs of with States disruption apparel the exceed is expect in the the the this children's of all our Carter’s on thousands significant had and we lives year. brands planned weigh supporting the employees our disruption

Rich believe support in their providing this walk very emerge now you through from stronger will presentation pandemic, it, best I continue children's the experience outperform value on apparel. website. through Carter’s market With our young and and will the the

Good Thank with materials $X.XX X We EPS quarter had on than the you, Page second much $XX XX% for sales were quarter. to $X.XX, Reported of year. income a and stronger ago. delivered everyone. begin operating down statement compared year Mike. expected. $XXX XX% Net million, down was I'll from morning, million, we GAAP was our a reported our last income

expenses, comparability. results second XXXX reported as items COVID-XX include to for quarter contains XXXX My unusual year's first and had We've Page have which some quarter costs. these an organizational adjustments Recall treated reported items, impairments. these store second on we meaningful greater intangible for our restructuring additional will results charges non-GAAP lease our Our related excludes In asset speak items which on that and X. impairments, today goodwill we remarks to quarter detailed and basis, this in items. these to related the results adjusted

on sales X year stores in occurring quarter. XX% Turning lower in for net last across wholesale $XXX significant due the to from P&L channel due adjusted with to and sales the to declines business down our Again, Page COVID. our the second sales most our million, were

in in with strong in As exceptionally demand e-commerce Canada. bright quarter the U.S. Mike triple-digit a said, in real and was both growth spot the

progress as expenses While to including about inventory. was changes basis rate year, $XX margin pricing product Spending good from due Royalty store we're in most growth Operating fulfillment in last up last last year. to $XX adjusted in retail operating compared $XX expenses in sales XXX through the as in revolving and margin categories, category million quarter. expenses to Royalty second financing X%, excess particularly were last primarily well distribution, store of significant moving lower $X last to closures was realized in year-over-year. gross trade, the only year achieved of by channels. such profit because insourcing. income basis low model given versus Adjusted across in new the down improved compared higher declined in million wholesale expense up marketing. We spending was lower income as driven borrowings costs million down $X this X.X% income our the expense $XX improved related by and million to both points on e-commerce, from down closures channel. operating given our quarter, down million was the gross quarter, credit $XX managed We and the facility of decline quarter the on interest also million, million points in well to sales, XX was due year. spending business The executed which and lying to year due was an the

in share count driven last to average XXXX. lower Our repurchases by compared X% was share year,

part improvement suspended of share our quarter. As liquidity we first the repurchases initiatives in

to were we had bottom our better year. were expected. the than earnings substantially share Again, last adjusted per these line On $X.XX results $X.XX compared

some a the with and ended Turning to capital very strong second highlights. part inventory position in our and working quarter with which flow sheet We improved Page initiatives. X balance cash balance reflects sheet,

the total. substantial, facility. liquidity revolving credit of Our borrowing quarter at and $X $XXX We million the million billion approximately $X.X on in available $XXX capacity billion end cash total hand had under our in of was

of we declined QX net the by have the compared to accounts We is was less substantially than year. forecasted. balance whose of high. affected The to end balance which Quarter operations majority X% last X% of previously had quality last year, been receivables date inventory comprised compared from declined COVID-XX. QX receivables our to Our believe better is retailers receivable

were $XX quarter we planning tracking is balance million accelerated next quality higher We excess issues packing of anticipated. As at now our appropriately second believe inventory because working than demand reserved. wholesale good our our progress customers update sale of and of were some of inventory. million. on we through discussed, known were made sales holding approximately year. Principally from high, is the inventory, the end $XXX to with about this told last you We've also In our we for

our deferrals. very and challenges up inventory reserves second approximately than successful significant to first year. be we from was at to carry extraordinary managed second financing We've received Given cash given pandemic. in we were extension business to and outlook end our $XXX the terms from our notes. current raising increased planning to coupon for These year's inventory reduce were executed third took will end position, that Accounts presented the senior $XXX the the for $XXX $X.X year-over-year end new million quarter-end improved significant support and inventories payable second reflects a in last the fourth down approximately lower both of increase of net Based Factoring $XXX XXXX. $XXX the the compared quarter. we this year vendors lower quarter ago. and net million commitments, inventory we've a transaction, payment the debt the last excellent quarters. Long-term million successful notes half rent at our landlords at $XX in our This mature as quarter. approximately approximately by X.X% are actually on million and position, through million a In the million of our of steps May, of in debt our billion, compared

of excellent transaction the demand of good portion an outstanding incremental liquidity. our thought was the We our need forecast to saw prudent, not uncertainties further it the financing, for advantage to essentially new on pandemic surrounding our take achieved package. did opportunity balance the we We notes to the the for down we the used pay While bolster given indicate our covenant grade of and investment revolver. proceeds a

invest on bank XXXX for covenants we which most from continue adequate of be on operations our group, support of our manage strong and we've to while our update, balance Based recover broader current the year. outlook, begin liquidity under importantly, and next to from our to we to relaxed of the have COVID-XX. than approved waivers last and told received anticipate for revolver will marketplace covenants able As our we'll you financial business that our more we

cash last at strong flow liquidity was as working lower more have operating earnings. year than and million, half from $XXX initiatives up First offset million nearly capital our $XXX

decline profitability with about we segment of was actually results segment This down second Now sales million. were just moving about was summary the consolidated $XXX X the a our to as said quarter, Page we've for our in sales, $XXX posted in in also store was which over Consolidated growth e-commerce U.S. Wholesale of international million down the offset sales. and quarter. sales by declined just U.S. decline with retail the international basis sales. margin. of Corporate a over during consolidated, down consolidated I'll margin adjusted well a versus operating million million, and last the $XX which in XX saw expansion at point expenses were We segments more X.X% fully year in in margin $X operating and managed operating wholesale, unchanged moment. our declines quarter, in describe U.S. and

second with to quarter than began good collectively reflecting After customers After QX Turning on compared We they in in business. traffic. XX%. our disruption last later significant sales X. quarter stores in approximately the year, in of quarter. Reopenings open saw in offsetting ended declined up segment retail once Total closing reopened. X% and for employees, from second all our accelerated XX% conversion in to our in early comped for second May. we in store the quarter stores We Page gradually the values momentum the stores June higher mid-March and strong the retail with declines XX% results to safety with June particularly over segment the good more up reopen comps of had reopening U.S. closures stores transaction we and demand for stores of

quarter, over last year. e-commerce increasing XXX% with said, in demand sales was As very the we strong comparable

to During principally up the U.S. segment that's orders consumer’s $XX store retail adjusted $XX we to lower quarter deleverage. activity, homes last and in in million omni-channel million year, to shipped It was profitability. the saw in the picked orders stores. second from income compared overall including store our quarter due significant is acceleration closures customers by and expense

adopted been have social expense employees. quarter, our a safest approach in As increased leveraging our saw we've and existing commented, as profitability our we've stores sales, Mike meaningful been XX, realization, the we've fulfilled other In most good online significant X, On distancing reopened retailers, the we've cleaning practicing e-commerce in stores. through approximately and all providing improvement have driven environment in major XX% the second and for We're capabilities. we new stores. our Page This as quarter, orders and masks our much provided to omni-channel a possible principal leverage activity during XX% e-commerce ability certain center. quarter. focused second the the points The metric capacity customers high price distribution was stores also in in as at our protocols. increase Page on Like our for a the On our as by needed boost we improved of constrained leverage. of

the which increasing approximately to proportion at masks. want Page day by curbside online XX up local make available store. current we've obviously familiar an their in stores. to same pickup We've need their orders customers pick see begun The also months continued the to On of stores, who We visiting of is appeal available and wear great currently with to become is recent service all reality in environment. XXX given the the our

merchandising, said value consumers, have performed with from for a products was regarding develop and bestsellers. quality collaborated of supply extremely an This received have these favorable price instant and a masks very, feedback of work timeline, design, very children. and We've become particularly $X. on to point chain face line Our teams accelerated

intend in advantage more been marketing moments overtime troubled that a pages On and our emotional our several to a develop and occupy and was parents. have connect competitive team with craving these activities, the We in of beyond. brand into during and has we hearts for the knowing one more Carter's our next ways times. our innovative marketing to were leaned the working connection, especially and of we way in updates and recent We families building in company support, finding in that and moments QX of brands which customers. believe throughout XXXX on our some This place meaningful marketing unique new minds further joy OshKosh a closely

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second had for anticipated. pace a shipments XX in re-opened sales store in second demand Canadian we've more in sales $XX have net The sales and closures to both this is since result due online much a us new growth we year. the and ramp the U.S. consumer good to now seen in stores to of up reopenings quarter was we've reopening. rapidly while decline the compared Canada somewhat, store and in the Canada We store U.S. and wholesale the International E-commerce of $XX Mexico. international million Mexico last results sales Mexico, in Canada in our than in and in saw lagged business Similar lower good seen channel pandemic. to Moving a both and were quarter million Page of worldwide segment. for as rebound

Mexico, and around multinational with Canada to our in has wholesale the wholesale rest business Business as been customers businesses and Amazon our our world. the international Beyond relationships of largely good. Walmart, such relates Costco,

challenged as been effects keep have managing these the to in retailers running stronger international through with been largely U.S., and a in able by around the of have As business U.S. their economic retailers smaller under our has their conditions been businesses partners dollar. up markets, including these individual more remainder world. The pressure of the our

loss $X Page store largely the posted intended related last XXXX the to revisited good pandemic projects second in was We international on from extent When back income year of others our Our a $X to quarter due effects On deferred to XX, of in the closures. segment be million planned spending of the of compared spending. potential COVID-XX of million clear, scaled investment the we the another and disruption some entirely. business. became year,

the our outlook lean cut Given invest competitive liquidity, agenda few bit months ago. in and in have our now. business investment a having performance advantage of to envisioned back opportunity quarter many second is our the believe believe more we to We our ability had right the strength an than with a to into we others we so improved a for

and in capacity. cost to distribution capabilities the our key Page e-commerce, has overall morning. They Some It's of And contribution. year further this part to second summarized specific half the important our continued range this financial been we're significant that the remember the on optimizing most on accelerating finally, marketing, areas of omni-channel guidance continuing and not of structure the around profit investment given and are page. work develop terms sales the of to surrounding long-term historically providing pandemic, from XX uncertainty

continue We have on in COVID-XX our second expect impact half. a operations significant to the that will

move conditions, at number included to and year. as traffic profitable second with levels overall in these increased fluctuate may given consumer appendix half we the we're And monitoring and we as on information also helpful. which schedules remarks, We we through stores, the around last country. your including trends performance questions. we've year-to-date the the In we're and which of our the unemployment consumer a We're hope Most supplemental of economic be same notably, to albeit presentation, other we're take some our third the backdrop year. confidence, expect of that And ready you'll find not the fourth quarters, COVID-XX mindful the watching will of of cases especially risks and now. right

Thank you. Instructions]. [Operator

Our from with question the America. David first comes Buckley of Bank

thanks guys, question. morning Good taking for my

are then improved discuss to channel? brands And XQ XQ, off, First in think to the bit the detail the how in in sales the the to how for exclusive with and you a little how profitability more could much we of compared the the remainder your of rest margins was channel year? during channel just should due price, wholesale sales in lower about wholesale

Yeah, to as in QX are as were exclusive than exclusive last brands far higher in they QX sales customers our actually year. branded

lower. base account obviously So was the the of remainder

last were products Our Skip year. comparable Hop to

positively also had margins. we good made margin, of There inventory terms In the an adjustment impacted which overall. was performance margin

performance seen in Okay, you cases, with what just have and surge drop virus off in the states? have have recent states those store material seen you then in you in --

the about Your yes. connection No, seeing it. off a isn’t states your XXX% terms in in there's a we virus, where are drop been question clear, doubt corona but surge in

Okay, thank you.

David. you, Thank

you. Thank

comes Paul question from next with Our Lejuez Citi.

much Thanks about for more on about I just have be that you the think just back to of to Thank our back half about expect of you're the of a making are second about the just some we Kelly question. in the what dig half year is customers this the half the are largest business, when wholesale the profitable then year business how assumptions your year, you. taking up little how wholesale to And order then other in Paul. the the half of down? of XX% we and planning thinking of year? your should the other for that with back Hi, want XX% you're a

second growth a the in conservative exclusive of doors expect in for closed It's their that wholesale half. our quarter second the year. them on buying buys second more We've been the half. in brands Other we're the collectively inventory we like be the with they on expecting customers who in conservative more will had balance

how likely much expect should our including exclusive brand, other ahead demand in wholesale lower customers you the will half, will we still non-exclusive in second that We'll second price we're But Target, lower off lot on there's from them years relationship, because in the be wholesale Walmart, other customers assume a Amazon half. the So assuming lower of and the retailers. than models be of us. from demand comment the

we're that pressure. that Kelly, add expecting will be to under I the to would that stores continue

the good I in around think We've around in store momentum conservative continued appropriately assumptions we've traffic assumed been and comps stores. e-commerce.

our So growth continue we'll in excess progress as and planning building working margin gross good for to major the year-over-year second in probably blocks. then expansion half pricing sales see we're through if importantly, and attract on e-commerce we inventory. we make are Those

this to or price in then in to it, do product recognize share? you just spring about think when take the the to you. do costs And expect Got plan spring, we year reinvest benefit AUC thank you next

spring cost for will lower. to product Our expectations be

spring. no We lower in to prices have plans

Got you. it. Thank

next with from Ike Fargo. Our question Boruchow comes Wells

good market. Hey, Good morning everyone. tough performance a in

me, us July Just over you of last July couple get to down color guys from of XX% I what that the to the guess has commentary XX% revenue there of overall? maybe more by year, is give of just year XX, so a couple of exactly could you volume channel initial some weeks last transpired

days about comp of three with left in news couple we've a to shared strong month retail go. and of I up comp think have had days is we a this of grew our I couple it July X%, got the good point, a fiscal at

demand to double-digits. be online continues Our strong

store sales Our are down.

to As and that we've in spots point think on COVID I in hot we at three about or about some time, got Mike XX July. they've comp stores based reclose this California. we've primarily got But COVID XX slowed we've said had got where

into now to DTC view look But larger Michael XX% given out an you XXXX of reach given imagine when e-com and the you ultimately were of where Richard, your guess by XXXX interesting now to And penetration about could could for more store you Got then longer-term be updated I now and mix I amount it's to had that's reach? so when of is the closures. hear ramp us or give sales. that expecting about us forecasted on XXX maybe kind to view e-com last of guys it, closings, you helpful XXX. helpful. higher

will year is when that we Well, it XX hit -- will things still my down stores. for the of It's was year the bought all closures. We But to be to you store year the love apparel last early in life. online. XX% core about XX%. online. in XX% those years settle the hit a remarks, likely shared growth particularly is essential that people need with All this child. with to my But over penetration when There newborn as comes guess the children's that go accelerated children's about Only stores. -- to is number essentials, e-commerce it products we be love will guess in XXXX I our in XX you about stores, apparel old a things the

expenditures, have a So we decision, the stores some up number years, be search to do coming for do renewal and continue sale we next capital we and co-tenancy. for have to will of invest point let all X locations, important. we particularly, make we But of portion do to better better as of in look years, leases at leases a we XX few refresh reinvest those the expire for or

portion years, XX% next those the more XXX probably stores. my few over so probably of of is some we'll or guess close And

years. closures. half to expired the analysis accelerate two a our leases need average we've are less out provisions, as there's with and no So a terms kick lease But done, than

early and COVID estate omni-channel real real a being exit more we'll to we opportunities. market day locations, for would and our online it our inclined the But lend options exit some same exit forward, So we store acceleration you've for the estate advantage after those will of to before older brands demand the going stores don't and favorable themselves product we'll than the able ones envisioned in of services, we're search we that experience. more better up pick take ordered online, with to

Mike. Thanks,

welcome. You're

you. Thank

comes question Riley. B. Anderson with Susan from next Our

taking maybe wondering for not Thanks open question. thinking you're reopen on was is the or only do the I though job morning. on how to my it your June and customer base. that helps bigger be are start And see children normally how the big in also to and Maybe Nice is must versus age curious would given Good school assuming reopened about flip non-school XX%. daycare back school to quarter. these then pickup? normally if back kind July it's schools of the side that

you'd a Yeah, are little It's Mike start. we we to off to back virtual Many off very but is as of new fact the pressing that slower so that for is needs I are early are now. right not would say, a I event a slower commented to going start, think go school clothes there where schools need, to mom I event that think in most expect.

receipts. school So to goes. did cut it falling We see back we'll how our

because out marketing to really this sensed and our happen product we our had shifted out back was we We We also yet. flows going started school to shipped haven't marketing.

next kick the weeks couple of it's think I we'll that in.

a going So I little be to think it's slower.

smaller categories is playwear particularly. on situation based and so think. be in business clothing business About school uniforms, on for could brand and event. where our OshKosh back Near-term us XX% impact to what us competitors. the less our school the shopping to of demand but the a actual baby of back It's there probably actual more our than that's have come than Our is to some changes in a going the on it's impact I some weather

remember June even in saw a weather you big demand As May, surge through spring, turned July. in late and we when the

to here and when sitting run think cooler to and impetus of weather of I to school a back more buy a get out and August. be change clothes does it's that going fall bunch versus the So in July

apparel. baby as over of in XX% a annual are And just sales our so reminder,

is the towels, business. bibs, So all huge everyday of part wash sleepwear, blankets, bodysuits, clothes, our essentials,

that good demand. to continue in business will So we be expect

kind weeks, deluded this to seen uniforms I'd when Brian pants brands. us surge And sleeves, it school weather just spreads never months. did in we just big demand as say back like said It As when a outfitting, been for turns, if many, start typically to turns, to a But and earlier a many year see our like school, typically can recent the experience. the weather we've back our think of be years, surge the long about when a in multiple it's see years, not long over over turns, we business. people in for But school of it part demand. weather

update October, So full we hopefully in to did visibility how we'll again when visibility to we have a have when you turned. the better weather

system? a is of take some obviously private seen think opportunity we've stores gained just I lot share And a you label shut down market then maybe forward Great, market maybe have to you but of on of been taken their brands that's in and think prevalent I to in smaller do also share there then you helpful. in guess not been the some of the that so had looking quarter, the quarter do lot think quarter the guys as is that's doors children's out that shut department

surprisingly May Macy's children's Coles, major the data three Coles even stores quarter, have has no one demand were online improved though Coles, and our were through No suggest They the young have So largest relationship their as shipping repurposed. with was Macy's customers, because apparel. one our they has. and we we No those were share latest major from we customers, closed and the retailers Target, those like largest stores stores Walmart, retailers. closed. their second online we robust, relationships did has though purchases the market Amazon we even the others end in one do of just of that the of May. children's with positions Again, in the apparel through one not young our of from

more we my more with store shift customers, point, And more surprisingly us and going market. opportunity exiting an competitors the share. to a to stores gain of guess to share believe in closures, for not So your online we gain that's forward

one strong and strategy, which year baby we've on had pursue only that time one and age that the The in our for think gained share had XX year based a a to a in last number May. half months We've toddler. through have ago share market in the add, up started to and about old And I number the we to now the segment, first we kids seven child. five

excited we're and basis. us our working to age-up about to customers a for lifetime we on strategy and continued four value be a well seems that year the both of increase So seven

you the good. that Great, guys. rest Thanks luck year. of sounds for much, Good so the

very you Thank much.

Thank you.

question comes next Our from with Davidson. Morris John

interesting share or with of new brand, one you've in you imagine would of environment, think the environment really try the customer wondering can of period, Thanks. one you underscore if you you track us I'm do can good such on have if on kind through this track the with get intelligence think strength a things and that, really have be well. you a any what Mike we growth. to a that? seen really tough as the way and with congratulations, metrics the growth this read new is E-commerce But I customer on e-commerce that potential us, to well. would And if on as in share to growth, doing

customer, of closed new stores hopefully to only the folks biggest And leads a did since one I the before. were us new customers stores with that not can Yeah, in number And two metrics. specific the that, spending I were XX% about online some changes in before then their bought don't give tell of that also quarter. you shop online. that to kind our customers shifted that up

So customers with importantly, growth most concur say. online performance, very new I we're would was I with the that would encouraging. happy in the you

really on that the up strength, actually was back follow year-over-year. impressive Okay, it performance again, that's my gross margin great. And up

I'm to the integrity. if in couple gross different led strength can to and to quantify of you terms the the have here contributed a contribution the somehow different wondering that inventory or But factors pointed what of me factors just that contribution margin mentioned bucket for adjustment. also that, you rank price in the quarter? You has

without being I'm sure I'll specific. overly try

gross of positives big one puts the So quarter. and e-commerce takes there in in the are lot a margins. the improvement just I'd say this of margin line is

the we high margin reasonably historically probably quarter. a ineffective position higher realized had So has portion that's driven has the bit due sales the that line, margin profit inventory the as big so year gross It's Those our those. the had to improved. That's the less there's that the are rationalization meaningfully our store promotions effect effect the in a sales. a inventory the principally able forecast, driver, a which gross improved, next had line positive single significant and we retail we've two the of are positive significant ago. fact That's gross that's move well. that We sales, that I'd fact fact of reserved say big pricing, mix a that perhaps of the what of had for biggest good would were be through very on by negative we quality our to far fact were above effects.

are line. not and gross on of a have the mix They Those the margin exclusive sales robust margin bigger are brand as We operating great sales. wholesale.

are, those principal John, for effects margin say I'd So gross on the the quarter.

back Thanks, luck Good everybody. Thanks, fall. to school for Richard.

Thank you.

you. Thank

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

Good morning, for thanks taking my questions.

margin lower inventory, Any product reason of given on margin price half costs. following expect Just question. shouldn't we healthy up the Richard, gross the the lower gross in off up year? sales, back

expansion in margin year-over-year second gross planning we're now, right Jim half. Now,

then Walmart since have could through excluding you're you their stores at seeing And wholesale and sell reopened? customers, Great. Target your comment, where

a Let’s been demand I'd we share say number more had for them to wish inventory of them. chasing robust. they're and it's say, with

during some it demand had, reopening think product? the a with robust. been anything the But I experience would have fall maybe Chartier that to I then the think and to say to performance your Thanks. to of a been we years Jim guys of we bit seems the full product finally, to So have due done Great you has couple last the from perspective challenging, weather. - improve transition similar Q transition

I Yeah, our strategy We COVID of think situation. on policy. a based one couple One things. the on based shifted and

trends years the and consumer several much it fall the buying and that heat was brought in we appropriate the that felt really we last the too with So too selling early wasn't soft.

shifted we we and So shifted fall the cut receipts fall out. them receipts,

was inventory Our in inventory, is XX% more year. where it down stores is last our now from fall right than

So we've life extended the of spring.

of imagine, spring can as We well. really have and goods, plenty they're you selling

to more that the And of last in through mix over year So Labor responded years. is selling fall I the transitional planning kind we're nature August. think the trends and the as to that product we spring are to we fall weight this a and selling few goods going sell in taking traditionally bring in summer really having Day pressure July on off,

the the optimistic season. do fall we as see and will color. we'll and back So the cut that Q said, we'll Great, other we're - the That demand conservatively goes thanks move Jim how through we better. we did plan Chartier inventories it for

question comes from with next Our Jay Sole UBS.

difference much. idea you what in what up and in maybe store is was the retail us QX? and gross want Richard, could gross I sale you to just so sale e-commerce follow give the an between margin Thank Great. it question. on margin

the costs has there the that a the ago, say reflected case line. significant shipping to delta I'd significantly Well, narrowed margin That fairly the in gross consumer are historically was In was say spread quarter a gross in year the for past, between there improvement year. relatively the second of the lot in because business. more was of a margin consistent e-commerce daylight two. this the because the they're I'd

you So the gross QX do which happening assume in buy normalizes, to the back that go shipping cost online, forward, improve omni-channel I costs sales more options or store, where you how order the margins, guess you to to that I with going does lowers fulfill hopefully it continue project the year? of shipping last mean, that to think the those as I their it helps environment use ship people saw maybe

before positive whether our think its the know trend I stores I So, COVID, restaurants. was accelerated because of COVID. or it's don't

gotten and need. online, have orders up people comfortable placing swinging think by, their I what picking they

guess see when order they on now often we my order their So that but something people more to when is Again, want encouraging what to up store continue. reopened, that they we that its because will in pick we're Every swing trend quarter catches they it. the purchase. accretive store. saw they the update and we're not, in that the we'll store, seeing than in the store, margin a increase surge by total online, they're you the And come eye

a happy of they instead run their their of out give them seat can excellent up So we've why who including was out provide might experience and way call way. the sitting to the team accelerated an two putting they the a into to job in over procedures pick make capabilities, in what us Curbside so or add retail of to our years child go and get backseat it invested stores. curb product this for it people situation the to the on They past is to few that curbside. and the have did because new to these we're having COVID car the need

Mike. Very interesting. Thanks,

You're welcome.

you. Thank

Our with comes Warren ISI. next question Evercore from Cheng

I Hey, good the focus want follow and up in up store few months. morning. the just to that to ship ask and ramped really question capabilities on the curbside last

share And stores? to that getting first, or plan store are are productivity you your the XXX boosting an So metrics your productivity XXX? from a how into of lot can of that idea, closure to that us give much it is how comps of there in of those second pickup, factor decision any the stores much curbside

being that closed tell you analysis stores the we I first, the low well, will that omni-channel of did, penetration a Yeah sales. part are very the on of have

from shipped where an swing people they're have inclined door. their store minutes the to product, and up outlet whether than pick XX most by to are So it people live, away located

acceleration of stores weigh question that the And omni-channel are omni-channel So low be its did capabilities that to There's then will that penetration and additive. the we no more likely comps of close. service additive. that where have it's offered, the its into Those productivity closed.

clarification, is buyer's store real just pandemic factored thank plan some just you one be And the plan? opportunities that Okay, got new opportunities. you. up market it mentioned unchanged, not into in of coming those the your But for estate these it -- are yet was could

it's So, early.

to opening this store take I plan. see Just up point, don’t reason any at the

be open adjacent for location. I in to shopping our better will stores these in stores. many there new opened certainly we're opportunities stores. experience for market better for that we're not stores center stores continue it's you think to Consumers know, it's love a important the newer, a it's to new closing because older with store has and consumers, of and closing in better cases many where an in access potency, same are And us

the to COVID to thoughtfully stores the things settle So time. post And environment. open store game of for now, this We actually the in see how year. just the over to plan continue is openings pace slowed down

Thank you. Good luck.

Thanks very much.

Thank you.

Reuter Bank will from Our America. William come final with of question

morning. have I just Good two.

regard do and some closures. Will meaningful leases only expect to I of expire get of this is this you to guess store out may the be or accelerated The first with these when pay leases could the be that of you money? a amount

expire out the date. it'll to advance the a analysis. for but of or expire. when store do it to former. us kick option accelerate We'll the closures be We've in when leases available there's lease expiry need no the No, well It's There's done us. leases

your your with were you secondarily, you that liquidity? At what essentially other things But very And okay. etcetera Okay, share hear. would cautious reduce repurchases that's or good issuing point consider dividends, to of kind liquidity. debt seem this to then regard improve to year

would year have a ahead the Sure, portion say all Bill we of I of good first us. of

would We just have position a next such out. we in if prudent. we year better that repurchases. bank see excess partners that bank we from next right with distributing or half a we're We prohibit capital be into the would year business. pursue and into distributing the moment, get envisioning have get capital we some on how plays see capital agreements that of restrictions have and great for us to that's read second share until loads a our we're our have be we and discussion dividends as could under not the again it If would do But at now

lot. Makes a Alright, sense. thanks

Thank you.

it to Thank you. I Casey would like back for closing turn to Mr. comments.

this morning. safe. updating then you progress of stay Best Until Thanks families. joining look you Thank October. on to us you on We for your again and forward all everybody. the very bye our to call all wishes much. Good to in