At Home (HOME) 24 Mar 202020 Q4 Earnings call transcript

Greetings and welcome to the At Home Fourth Quarter Fiscal Year 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Arvind Bhatia, Vice President of Investor Relations. ahead. go Please

Good us Daryl. year and you thank earnings Thank for afternoon, At joining today conference fiscal Home's for results you, call. everyone, fourth XXXX quarter

today Officer, Peter and Officer, call On Chief Knudson. Officer, Corsa; Chairman and Operating President Chief Executive the Chief Lee are Jeff Bird; Financial and

tariff initiatives level year you lastly current quarter on actions fiscal the the will financial and and beyond. year environment year review and sourcing Lee updating COVID-XX results then update followed in our an our on will the provide with along begin we mitigation, upcoming preserve by Jeff liquidity. results situation, our are and inventory for of and XXXX, key Peter provide will taking strategic initiatives, reviewing for the and by running to quarter the the to through high an in-depth respond the

remains our call be Please guidance their discussed the the team has the we today results final not will questions. to we made remarks, of note will financial discussing After and the open subject completion to today. that financial audit

and are future global of our future impact which recent potential for openings, and the begin, our made flows, outbreak within the remind and I and need strategy, capital statements certain to, long-term as real outlook about as Reform statements. In in store that made initiatives, of fiscal pursuant the Private of the performance we this opportunities, Safe assumptions impact cash Act of, Harbor XXXX we Litigation year new call provisions constitute the statements Securities forward-looking markets you meaning targets, during expenditures, and strategic may COVID-XX tariffs for XXXX. liquidity, growth particular, about Before expected comments forward-looking to the are well statements growth of operate, the financial estate of

makes and from could differ statements actual Such of in SEC. call does forward-looking risks are results undertake forward-looking and to At that any forward-looking statements. unknown materially both the the update date Home Home's and such as are press not in referred At to filings statements Home and to statements. any issued uncertainties The this cause At that obligation subject today with today are Those to made known of release

may financial is Finally, EBITDA, Home's the certain adjusted call, schedule press on versus adjusted as forma At per speakers release reconciliation A or GAAP operating adjusted earnings pro available income, to and in refer income adjusted non-GAAP showing such net forma the measures issued financial measures today. adjusted share. non-GAAP pro this

do you at of of today's If not visiting the Investor page website have may a press by one investor.athome.com. Relations copy you release, obtain the

expects addition, page the reference Home its from Relations time certain for provide website. In Investor At to presentations on to investor or materials supplemental time, of

turn will I over call Lee. the that, Lee? With to now

Thank for our to fourth us you, the Good Arvind. afternoon, quarter discuss joining fiscal results everyone. for Thank XXXX. you for

want Before to the I evolving our results, situation. COVID-XX I discuss rapidly address

how truly who time. to we member and the weeks ensuring customer, continue well-being together over few like I First, reexamine our serve unprecedented would last this while team to and has thank customers during to our entire safety come team

liquidity taking preserve while of steps disciplined communities, are time. to our We an managing this our the during business and thoughtful and to several health taking also approach safety exceptionally

circumstances at planned We continue change. office and to adopt our recommended as stores home safeguards as

Sunday, our As Saturday of through temporarily closed such, XX XX. from the all stores have country we March across March

closure continue planned needed. we and compensating associates will and as for actively reopening the during this monitor to the planned our situation reassess We are timing

our allowed local roll out an can pickup store curbside order An customer now of the BOPIS don’t store teams form measures, each pickup. calling a curbside, mandates. by their their associate together cars. the ready needs effective to will already this by customers wearing in and during stores for Pick is order solution ever the Buy to Up for that text meet or when At delivery or customer website. our completing place work as our needing Online, their safety at enabled, customers’ customer In order order their have load that to continue curbside stores We’ll on then products without the leave payment, majority state is our a local serving gloves process time,

have process order is BOPIS, easier. the even For that stores

and so from are positive the curbside pickup and has feedback small, strong it’s While has early still very far. been been sales relatively customer engagement

state, monitor continue remain needed. committed changes as and or implementing additional to federal local the as agencies and We guidance from to situation evolves closures

include, on decisive At and preserve taking uncertainty flexibility focused to time, and the reducing of we and capital These financial our suspending our unprecedented spend initiatives, enhance reducing liquidity our omni-channel period to actions cost new store deferring are all action capital in and during consulting are accelerating. near-term. which by except this requirements projects the and operating QX advertising same we remodels, store support openings significantly

of and down option. as drawn are $XX additional sources facility supplemental proactively million our a also ABL liquidity pursuing We've of

from like now into around have seen heightened color put the a to up notable flat. demand our approximately customer that leading supply discuss around in perspective, seen some that we’ve the comps COVID-XX has inventory the recently will the dynamics, weeks with coincided year-to-date concerns to virus. share in preannouncement, traffic impacts I'd a are perspective, Jeff To of downturn to-date. that but we

practices. and social two cleaning seen have home over supplies categories began weeks store furniture office our few distancing However, as uptick so, like closures weeks. temporary last quarantine to past across the prior meaningful in turned we certain comps a for the said, country, customers the negative That or implementing materially

it’s results. our circumstances responses With of financial and on impact or on the virus for speculate the on us early basis daily changing operations simply too to

the at magnitude taking are unable will liquidity to this Given outlook color outline quarter the the XXXX give actions the first Jeff right are we duration time. fiscal preserve and uncertainty of some provide we of now. disruption, and shortly to and

and team is customers. while adjusting pivoting prioritizing lightening team Our and our speeds and health members safety the in of

QX results us the comp the quarter. exit the of in back half fourth to quarter, improved momentum. to solid of Turning with the enabling year the performance

were we in pleased clean position our also improvement free flow. with significant made cash We the inventory and

As environment noted had call, we shortened season. last in to our due to a from start significantly is part promotional soft holiday the large in which more QX, a resulting

our accelerated action holiday price decisive our cadence value move competitive We to leader. took as product to the through position markdown our maintain typical and low

press weeks ago. shared deliver allowing Our teams worked just well, challenges results our expectations in most release these two a and to hard recent us above which navigated we

our comps important and season, weather reinvention, our our cannibalization as the were opportunities fiscal and move short of our of execution year on down clear price were steps forward, one for number customer adjusted fell perception year terms for of first and results year, was select half like but going challenging year as and store our a full compressed XXXX adverse a we result response, full the incremental In tariff faced a the tactics of control and some, these Others, took address new for us expectations X.X% within the our challenges, company are holiday of the tariffs category as were including we to headwinds, through external.

share. performing new top-line on been in XXXX performance, and class fiscal store their we has faced the market our grew class million year our the fiscal XXXX first $X.X Despite solid weak very of us a comp delivered sales our internal XX% in expectations. back gain which helped to challenges our Despite last we average year close performance,

response of to shareholder we store expansion We but have continue value. growth over and in temporarily term, the the driver primary openings long will the current store believe our suspended that to remain new environment, new

our to reduced cash addition flow versus positives key our members increased inventory new and $XXX under We in our several budget, XX% on delivered free improvement members, and X.X performance, XXXX. significantly new store In position, DC meaningfully and million to fiscal loyalty million fiscal time over in shrink, opened by delivered our XXXX. team improved

market to future and once near-term return on nimble. Turning of momentum normalized lost to the initiatives drive are the to haven't regain time, centered being success environment. At same current sight we our key challenges more priorities XXXX, a designed we and fiscal navigating our

continues great strategy great at be overarching value. products Our to providing

with of EDLP an start Plus. Plus out to sell-through. select is use we We to merchandize four how around successful advantage. EDLP important campaigns in comps our improvement great an in efforts in value our pleased the our clearance through Home’s Plus around storytelling highlight Initially EDLP and highlighted campaigns is driving categories. five COVID-XX, At – creating Let’s within customer and excuse our proposition me sell-through clearance Driving stores of prices that were comps in prior categories. were

we the time, value over disruption, COVID-XX product our the a give assortment, during campaigns these EDLP paused of temporarily exceptional appreciation our have better will prices. we and for newness, While Plus most low importantly, everyday breadth believe continuous of customers

sharpening category which historically, but comp focus critical had driver Second, for a for our XXXX. us have on in mixed been us fiscal results reinventions,

late about is from our about assortments and We teams them highlighting these our successful and emphasizing reinventions prices to forward. apply highly year execution, to great product pleased our reinventions planned sharpen primarily delivering of While breadth, of EDLP performance last with our several primarily were reinventions, learnings Plus and category our newness. are going the take

ago on loyalty of on membership have upon our us. growth our was build marketing while program, to better Also, most X temporarily productive Perks only is perks for efficient pulling and launched back rate and the campaigns years grown penetration spend our spend, loyalty insider advertising performance. members continue we’ll and higher has initiative, with a already third towards comp The this a and we nearly to year CRM million two-and-a-half which relative members focused typically been deliver are Insider media

new a forward. expect we store reduction in moving cannibalization Fourth,

classes in comps. comp higher denser drove fiscal our impacted therefore, and Our outside’s on volume in friction XXXX stores stores and markets more base featured new XXXX that mature the

growth hold reduce While comp impact our plan fiscal on long-term on XXXX XX% COVID-XX to for our to future. store are currently of moderate our should given the in openings cannibalization new the the performance rate situation,

to If this strategic response pickup vision we we build it as capabilities, transactions XX order BOPIS omni-channel trending prior than and our our began COVID-XX, earlier January our quickly planned. in initial and accelerating we on were roll to initiative services are is in in above across taking and launched to six expectations stores BOPIS continuing are curbside as COVID-XX. size with results pleased the testing and We markets out

back to the group the of but have launch a that accelerated in BOPIS of plan stores XXX year, BOPIS larger stores planned environment. expect light current April. initially We We now in with capabilities half of over in the enabled to have we

This moving quickly In have by delivery of are as state partnerships. solution at the and forward addition, these how is pickup strategic challenging local customers, our establishing added fine as prioritizing times. during execution a while a better with curbside serve adjusting are our I we the effectively we to stores mentioned of of allowed mandates and majority earlier, health long-term example our initiatives also and safety

continued including sourcing turn initiatives discuss I'll over on diversification Peter Peter? and the to operational our focus call to management. our team’s inventory

and focused Thank driving good growth. you, At afternoon Home on is everyone. Lee, profitable

Our strategic operational our in savings time, expected initiatives drive turn reinvest in enable key to are fiscal and going help forward. which priorities drive XXXX efficiency over should us to

fiscal second supports Our in half of over launch Carlisle, now which stores. biggest accomplishment XXXX center in our was distribution the operational of clearly Pennsylvania, our

productive as fiscal Both so ramp we more the of transportation to and across highly into up our get to see through ability quickly. Carlisle centers of proud gross track, am Carlisle are facilities stock of DC back team’s the XXXX. flowing on margins from savings post-COVID-XX, expect we our distribution I

mitigation and to throughout We also a around by our supply sourcing our strategies expand making our sourcing. XXXX, particularly our adjustments tariff put chain strategy direct fiscal to substantial effort diversify

Chinese countries purchases our reduced on We increased of our and some from reliance alternate products.

opportunities look to XXXX. and further make to We continue in diversify progress for fiscal expect to

quality. to increased sourcing On of direct higher us enabling oversight product and sourcing, of shorten between Direct also exited consistent ensure concept production XX% customer. at to more production we the cycle XXXX purchases, fiscal gives and us life

Our year with direct fiscal to exit the sourcing penetration. XXXXis even goal for higher

been our efforts returns enhancing also on and cash have focused management keenly improvement. drive flow better We to financial inventory

scheduled or weather to flows the COVID-XX. in flexibility As which ongoing an seasonal us gives and events impact including trim fiscal orders more example, increased we respond XXXX, product the number customer changes adverse of behavior, of to for

should inventory ultimately us This and better manage levels help markdowns. potential

in reduction also analysis improvement our significant shrinkage underscores anticipated, to business As forward fiscal drive XXXX constant to process our and efficiently. during our commitment

we in-stock categories, improving And initiative. to rate expect on our Over on finally, carry the this number SKUs with key we items. are of time, we in build continue rationalizing certain along to

Jeff, performance the that, to will With QX Jeff? I'd to our fiscal like recap XXXX. over and for financial who turn call

afternoon Peter, and everyone. you, good Thank

As illustrating Investor which of is release, fiscal results and XXXX. new information a posted website our earnings in our reminder, our Relations have non-GAAP as standard available lease accounting additional is to in the been includes reconciliations effective

of will call Our impact. basis recast on adjusted be discussion metrics rest on the with fiscal results standards lease-adjusted illustrate to this a the of XXXX

During the store primarily guidance an X.X% in base. year. the by most million, last to $XXX.X was of in which X.X%, QX driven fourth quarter, net our our increase sales XX.X% sales Comparable increase to recent store decreased above and compared increased

of toward quarter. guidance upper-end expectations X% of Cannibalization X%. from still us, with line new down In QX updated were the with that trending store ahead for we our our you down the of mid-January, weeks expansion initial two was to in comps

potential volatilities and our have mild balance of us that in we markdowns targeted the Weather points above seen Christmas XXX ultimately factored of with relatively the comps guidance. outlook the quarter nearly historically basis weather-related remained helped January. for Our success in combined report

profit the contraction new more in offset down XXX declined and quarter points XXX improvement points standard due deleverage, margin gross margin for normalized was basis was XX.X% partially levels. or lease $XXX.X X.X%. basis to adjusted by to Fourth shrink Gross year-over-year product and occupancy million,

XX.X% quarter sales respectively. As we’re and our and X.X%, year during Lee pleased of we growth increase full was with fiscal which XX.X% sell-through exited XXXX clearance inventory of our the mentioned, quarter well fourth of below with and merchandize

partially Fourth investments SG&A in of compensation incentive basis versus favorability last year-over-year costs, $XX.X and XX.X% SG&A up X.X% was quarter was sales labor points to and year. QX improved offset adjusted million, XXX Adjusted advertising. due and by in preopening

quarter a operating penny XXX at income operating XX.X% X.X% Adjusted decreased above $X.XX forma basis share by points the of of of upper-end million per end and Fourth outlook. adjusted to to $X.XX our high decreased was earnings pro to margins $XX.X the our adjusted outlook. $X.XX

of exclude metrics impairment adjusted $XXX a QX Our million a goodwill of result a charge impairment non-cash interim as test.

our accounting asset the As XXXX purchase private price acquisition in equity a or the not time by company. sheet business of our reminder, to our any goodwill relates by at on acquisition the sponsors purchase the balance and from

X.X% new $X.XXX weather affected year to first the Turning primarily year. store sales. offset holiday full XX.X% billion, selling a by year net promotional to decrease half fiscal store XXXX driven QX Full and of year, were comp environment more and the growth approximately conditions sales partially increased by adverse by due sales in shorter in comparable in to a season the

decline with XXX cost shrink down markdowns, offset was lesser basis associated points by X.X%. and margins year-over-year The increases certain lower primarily by saw distribution to an which in customer we on to to improvement. partially adjusted due center cost unfavorable tariff-related our gross margins deleverage driven call second year occupancy December. discussed our Full response a we in extent, also operating categories price were To QX

the driven year and offset incentive our EPS a largely adjusted favorability improved by recent labor in pro advertising. by investments penny basis comp $X.XX, Adjusted for Full most in forma SG&A outlook. rate points above year XX was

One XXXX pleased flow. I with made t he of cash fiscal highlights most the significant in is free improvement am we

to in the capital the react we prioritize COVID-XX implement initiatives to believe a despite roll For sale liquidity reduce fiscal strategic has was XXXX decreased sharpened $XXX the working during a the fiscal and proceeds. which current flow $XX cash leaseback million $XX capital helped an efficiencies XXXX of improvement million developed in disruption. investment, procurement reduction full out versus to year, us need free focus million We

for all With go the and XXXX. detailed on the are guidance the States out the implications by the to of Therefore, across United practice we COVID-XX current Turning suspending responses changing those impacted fiscal financial of XXXX, to and both fiscal know first, providing quarter our globe. full our normal virus time-being, circumstances for it’s financial business. the soon thoughts to and our daily, too

operations as That few key resume. are underway said, preserve insights, share to a until as liquidity our normal prepared to we initiatives well

health time, we unprecedented this and prioritizing team are safety during our of Importantly, members. the and customers

Lee customers by accelerating to rapidly closing As better taken temporarily stores have in serve action we mentioned, capabilities environment. this and omni-channel our

To salary COVID-XX, impact during the chosen feeling are help his our has half to supports financial difficult the to of of members our team generously time. Home times team members in who of Foundation, Lee this contribute At hardships program that

helping members focus our challenge. through to team to are this on will other continue We committed we each and

As Lee social the the customers in virus. measures as control quarantine and spread last weeks, store the practicing mentioned, traffic notable saw to over began two we distancing a of slowdown

As you States. sales a outside are retailer with no the domestic we know, United

have saw closed. However, and Asia and we some initially exposure shipping supply chain do factories we China as delays to

most we and there. the that information expect to China Based are receipts with However, on majority have capacity for arrive virus U.S. in time, disruptions. full factories approaching of we March has logistical April in operational work absent of we off the our further as the today, and on the the leveled

would stores. of Quarter-to-date, swift touch for and new planned the in the I to three XXXX on we to We opened first stores initially actions fiscal the growth implying we preserve are bold year. taking open unit have rate like XX% a liquidity. Now quarters to new six XX

million in for new the could and openings all which of store if by we do year. resume light we the However, expenditures projects of capital our $XXX developments, investment to have remodel COVID-XX lower not store the suspended rest new over

as appropriate. the result, to also our we’ll suspended store accumulated any and stores inventory stores a redeploy accumulation have for unopened we existing As inventory new

customer as initiatives. to orders. for prudence extreme on reduced to distribution orders eliminated labor We’ve purchase have receipts to exercising demand. store other product better any with and We near-term We’ve also we new our spend discretionary better align hours omni-channel are respond trimmed to center and demand relates than current it capital

move with monitor thinking half our of the situation respond best orders but we’ll year, as to and closely Our forward is seasonal the to current continue the back for appropriate.

spend, team have short-term. expenses consulting member projects, the non-essential We curtailed QX significantly advertising and operating hiring in

increased As ability more on and to have give drawn draw facility also we needed. a million down $XX flexibility ABL us the if we have to our precaution, proactively financial

including we improve normalizes. incredibly the pursuing could that situation term additional actions solution financing business unprecedented longer fluid are and until currently we liquidity supplemental Given facing, evaluating are be a to

and to the decisions of liquidity make moving interest preserve team Overall, our customers, executive Home’s nimbly is investors. members and At quickly in best and team

With pass over for it remarks that, Lee final Q&A. I’ll to before

and Thank you, throughout headwinds work Jeff. exit with teams’ healthy our I to and successfully us incredibly am inventory last to various efforts position year, for navigate today facing year the its enabling we long-term grateful unprecedented community COVID-XX on a the but Obviously, near-term together current times to a in confident and take potential. remain challenge. are business uncertainty, model our we as

white a positions will we steer highly are concept team enable and Most us challenges facing a us that compelling the talented economics and through importantly, opportunity. have with for store we differentiated to bright short-term We a have space future. significant a

that, please open line the With for questions. operator,

first line of the from [Operator proceed come questions. your of Please Gutman Morgan Instructions] Stanley. with Our questions Simeon

– in them, I one - I’ll good – have two Hey, everyone. answer here. afternoon sorry, ask in two-parts I’ll questions. them

you of right curbside mean, The and Can are your time. tougher when are guidance realize it’s open, then, closed, open we we doing economic in know and likely a it’s sense you a situation. uncertain they’ll a are direction, first, do don’t give when give now, and I you very I we can’t but specific stores

chain then supply in pressure now is cost we the what the I on to question you side. supply quantify are or questions. the And expecting sales of are Can you And don’t can – think inventory? if flexibility you do so terms Those disruption, there dimensionalize that know second are a there is orders on can talk are cancelling through planning from of that of side? about are type you that and or you so, the

worse Lee in to downturn we’ve stores weeks this our Hey take two the Simeon, take what traffic the did weeks in second in we preannouncement approximately and and I post the up see then will Yes. that a flat. first saw were question. then, would leading preannouncement, post is was our the week. the say, than the week our second I’ll part in first notable And is Jeff. announcement comps

are now stores closed. our So,

are Saturday XXth. to the the enabled allowed. be We planning have through curbside We that’s where closed do

very We are fluid on than or can’t are any guidance we following we daily today and more why that’s going situation through give government mandates. any you But a this it basis a that. and really color is

we would the we over teams, focused on and I say sales preserving of the we basis have about working the the side. that come store model and to as other Lee are mentioned, liquidity when five day-to-day comp right drive extremely are long-term, things help we we the a think right on out

did Let COVID suspending of due inventory me well with standpoint, we’ve is, actually our job say as the also managing our that year. delays end our China talk demand, and with trimmed reduced sell-down paused about the helped all inventory into I the have the only the we’ve say supply not to we side. What I due to store slight at nice really was planning would now but that a pleased I really because accumulation. flows from a from initially inventory inventory. us, actions the did going would year We

product orders We’ve have been and redeployed also that at inventory to We’ve new looked future thoughtful orders. our existing stores. our about our

day any inventory at thoughtful as demand We inventory reopen enough look demand are with have and as support demand where our enough positions to for are inventory them realized and at product for to been well. time Harvest the slow able that orders on and orders and our but for and store address some one about back-end inventory of a we assortment clip spring orders and we when benefit speak, the Christmas Halloween, our those planning spring to on and we’ve look in we we able and turn been the to we every also necessary are have summer summer as enough we’ve manage placing

Thanks, Lee.

lasting I they have outbreak virus is, were relationships they for working would our asking and ago, our the they when midst long were we the weeks with add and partners us were great through in as product to of several understanding that and factory and it now are through delays, with United to we we levels and States we our understanding work the through inventory appropriately the and asking them shutdowns their be reciprocate are trim orders this working in us manage as as now.

come Heinbockel Our of your the from Please proceed next questions line John questions. of with Guggenheim.

Two Thank you guys. questions.

On talk kind you labor. the with had how on the side, guess, OpEx of two about in much traffic, the will managing because little will volume much you maybe maybe you've depend of need store managing and how right a I bit, and talk Once I reopen, groups that you about folks know how but – deal that?

add the not And secondly, year, you If are that that benefit? growing down to size to could much with possibly capital, working this respect how CapEx and opportunity? you can then come

Peter.

Sure. This is Peter. I will take first one. the

for and two is store of Remember, only employees this where in that XX over benefit place staff So, us. our a we with part-time. actually model being our is average really XX% have labor only total exempt a employees

as our percent know you of So, we plan labor a sales. as

in we were and that. changes the began this when decrease in with very to we proactive So, saw demand, happen

a through reopen, in hours. we per reduction reduce when people to So approximately scheduled we’ll staffing store our four

are on do business, stores And all us stores because but are based allowed where closed have in that some appropriate we to closed, some demand. curbside. It’s allow

customers. We and in locations will do for our pickup to continue those provide that curbside

back $XXX improvement free flow year, did John, capital remainder by on the about working in gross driven with past of of say, this CapEx, was XX% this because we fiscal coming fewer we out we would Yes, improvements the leasebacks sale that drove and year. I working this side, million to that past cash look year, when the capital

spoke is trimming CapEx refresh and reduced forward capital we reduction say, additional look program. I that in about development remodel store million want this everyone that majority vast $XXX program capital discretionary new into is just of would projects, would of that of think from As is that the as about I to program. store outside remind that business be development the But just Obviously, development I year, our we the our out store other can the spend. new CapEx just there new

work less continue the have year. turns through two inventory times than side, We On capital working that. obviously we to per will

us So certainly an a normalized for opportunity in that remains environment. in

Thank Okay. you.

Thanks, John.

Our of next Matuszewski your Jefferies. Please proceed questions of with the come from line Jonathan questions.

thanks over some SKUs move just is, reflection few a Thanks. the of categories maybe Yes, strategic my one, quarters? a I of will seems decision versus others. that levels so understand thanks current dynamic elaborate and first correctly, for just evolve it rationalizing in improving mentioned on the for if what informed questions all guess, next and how it detail. the like I more and the you certain taking inventory and and It

our is we looked inventory looked on SKUs to said But SKUs our Sure. may on want more sellers assortment. XX,XXX with We This and best at duplicative. is at and and lot focused up inventory. seem backing last still inventory we win our turn slow a looked Jonathan, We’ve productivity there that Lee. at year. of looking

goal so, ourselves And We’ve we reduce of able next by to over last year, time. SKU year. set a almost over XX% that do to our been the count

bigger as with sellers. our our assortments we have now our reinventions are product our SKU ideas, buying our and so behind best out come And we a updates count, have lower most recently

was allows now starting are rate and productive been sure to record implemented and a high our on this that making at sellers situation but our COVID-XX year more inventory be us our best last for more as a We are effective in-stock now this that year. well strategic and plan before

Great. And could an That’s if you update really give then fluid just competitive us landscape. helpful. obviously

expectations of that as and that kind few a are year, normalize in thoughts are players others throughout your are the we landscape there on So liquidating. just the challenged closing stores,

using the anticipate the as well I as So, of in home drive on headwind you XQ saw players category kind year the Thanks. think degree or of kind traffic. thoughts progresses? near-term there, dynamic to Do to we improve as worsen that mass any potential of the

Sure, Jonathan.

three As say, monitor We January we the competition we competitive December to continuing carefully. the it over continues the evolve, are to promotional even to I practices understand our look at and really a environment, study would this of past behaving as did fourth marketplace mass how past going the promotional the address and players how to see well our in in years players, alike market been was forward should how specialty they’ve the in given we category, and quarter.

the for you, we tell position. challenging we like very position The before, player but value a our category was would in that. everyone. player are think remains and price times in economic of We slowing environment does value like our we uncertainty I well and a

continue Our that’s focus. lowest the our be and the been in to prices industry

you, our would of some been I there tell seen pressures around we’ve competition. that has closures

customers opportunity Pier there store. but also know stores and their XXX the So Over the past a from closures. to store a X closed their that but headwinds a had their and closures, number customers lot of four that, cross-shopping some of inventory see us, store for in months. long store That’s to is we in our did we our near-term from store liquidation of theirs’

opportunity as that see for an we us long-term. And

and I net-net, will win be the players value the our position as over So, challenged, economy time. like

detail. all Great. Thanks the for

Thank you, Jon.

questions. Our next with of Thomas Brad your Capital Markets. Please proceed of the questions KeyBanc come line from

hoping guess, have variable taking about Good bit the the you afternoon. just could little that us think have? for I question. P&L you’ll and help cost versus was talk my Thanks you’ll Hi, Jeff, a I cost the fixed that through everybody.

Sure, Brad.

expenses. primary consider of labor normal office, as of operating we But a marketing And would occupancy obviously, would environment two then, store sales fixed we home So, percentage normal enough at I can look we our if operating now. in expenses and and emphasize a typically not as we are are a our labor environment, right variable. in that

this prior the the addressed past have we store. within changed operating hours week, We've to closing

situation are manage a the team basis on changed reflect great did minimizing and continuing were levels focus and to decisions – in we this daily to have we We demand levels on store a liquidity. job seeing the still to make through Peter’s staffing

the for As marketing customers drastically Lee his and with through reduced in channels on mentioned now the just website. are via our we communicating first our focused the to owned where spend our remarks, prepared point email quarter we’ve

we managing So, as through this. tightly as we can as we are expenses navigate

could squeeze couple And in I a housekeeping. other Great. if

today, leasebacks? environment? of you And or how you end be can for sale And a you normal worth the period, today of what owned? sale us tell As is there many that market leaseback could any think in stores do

Sure.

currently XX So, stores in normalized a environment, we today. own

fiscal past we in leaseback was $XXX year nine reminder, transactions this properties a we As did that million that a sold. sale

be think in So proxy roughly property. environment. would in that million $XX on future what operating worth be per would would own stores today XX average, We of the those we a that a good normalized

estate the and with market normal. have to market now continue right operating we And is canvas partners. our dialogue that real But as not

look be something to to in hopefully able we would year. do So, maybe, later the

much perhaps of how of from every as the Could one. much and versus much could this not how think Great. have one remind may of markdown do product risk us maybe squeeze the closed you assortment are that you of core stores a And periods is the where or kind risk? like business if at is seasonal day in I quick

It to square we business. approximates to of square XX% the footage allocate allocate our footage the we seasonal.

for in Christmas and the then about spring fall. and Halloween, garden patio Harvest the So and think

and patio garden carry through that of all year long. Some does

cut about summer, XX% more obviously for orders of looking for for So, about the it we orders half back and seasonal we spring are at of are and the Christmas the Harvest year. orders have our what we’ve and is thoughtful Halloween, and being now we follow-on –

much. you, Thank helpful. so Very

towards million for capital dollars the anymore development do well the the put rest what we that to to just don’t year, that given market reduction would of would do leaseback outpace to go the obviously, expected I sale leasebacks, if this the planned this year, say we store $XXX on back new amount Brad, suspending and have store sale development we by just year. that, new in the

Of course, yes.

Okay, you, Jeff. thank

Thanks, Brad.

of Please questions. with Our proceed Bank line Curtis of of next your from question comes Nagle the America.

and that guess, retailers trying of about to things that kind – deferments Great. did periods It’s bit obviously rent, closures. guess, dynamic. I of work taking a could examples are we start of on for of and be handful may guys But with you comment see could sensitive like during on comment very – landlords in Thanks to at question then you store question. thinking very perhaps able Anything you answer. much other terms things I how you – of the to all? maybe This a yes, a that not

there manner. decisions all are conversations, reducing we and would we’ve those actions no forward. as everything mentioned been would new having those made them but relates work as orders prepared the handled has capital, decisions remarks, marketing right how will say, there it other and on go else are our be to to Curt, decisions go-forward reducing a how we in now, And store on I the taken, with made has relationships made that been we’ve no we but our spend, landlord rent trimming

kind decision understandable. Totally Okay. again, of dynamic a point. person mandates be guys wellness by, you one this And something question this And – you be and just basically open But you do well, a could I would do to you I at and may of to make that, think when when state mandated your and too stores? answer expect this obviously would of the on customers? employees when guess, guess,

Yes, Curtis.

federal, and of really our taking government, and are this. officials both listening state and lead officials local We local on a

evolve. time, for this Our when the continues past the stores this we to to knew what our expectation week decided the time, we at we was had – at information close

their We rules we each of are of own those. each found and has municipality that set following have

open prepared you we the to. tell in our teams to team would That’s are when core I place. why need we kept that

members Peter or closed is there prepare either that the while it to four run we is reopen core team support store every prepared curbside to at even As that’s pickup mentioned, store. have at the store

our So soon is, as can health on But we a open to case-by-case and the is involved. focus everyone of safety that take really we hope basis. it going are as possible, our but

closed local out as add where that have week, that, but as longer be play appropriate scenarios decisions be that and I for week. longer Curt, than ordinances than liquidity is all would ready a stores Lee this moving could obviously we are make have and that focus Yes, forward, could due said we right to that we stores through closed a this, to closed those if then with now, scenarios are would obviously, for preparing on we our plan the managing would and and different number just of there

Of course. much very guys. Thanks and luck good

much. so Thanks

next Our Anthony Loop line CaXpital of from with Markets. proceed questions come the questions. Chukumba Please of your

Thanks the taking for Thanks information. all for helpful questions. my

a have question. two-part I So

second off, if mentioned exploring I little you you guess, So other you a you that needed. down mentioned that was measures, million liquidity just and ABL under just I you wonder more if remaining more is off, ABL? $XX exactly what can then what first And you wondering, and provide constituted? that other financing down color availability from and your that measures, drew could draw were bit I the on

Sure, Anthony.

that our with obviously, quarter. borrowing say, just inventory-backed within would I fluctuates an the So ABL and base

did the are could from that more actions preserved to just not we make did an any $XX fine So, we draw have there draw standpoint I draw would we with violate in million more We and with draw ABL. that operating do make that on the additional have the that and that we say all of we covenants. taken we covenants the and draw and that did room

in in color of are provide it. of you other the And then, terms measures if terms liquidity pursuing. could any Got that just just you

number there. primary would tranche source But of FILO of additional be I the mean, it there liquidity the is a options form in ABL. be different primarily a could on our

much. so you Thank helpful. That’s

Thanks, Anthony.

question now any closing to the over the back call management answer turn session. the end I and for of We have reached remarks. will

All and loved for Please afternoon. joining right. everyone this safe. your and of thanks take much yourself stay you care and us Thank so to ones

conference. today's concludes This

You and may time. a disconnect your great Thank have lines for your participation evening. you at this