Ross Stores (ROST) 20 Nov 182018 Q3 Earnings call transcript

Good morning. And welcome to the Ross Stores Third Quarter 2018 Earnings Release Conference Call. The call will begin with prepared comments by management followed by a question-and-answer session [Operator instructions].

Before we get started, on behalf of Ross Stores I would like to note that the comments made on this call will contain forward-looking statements regarding expectations about future growth and financial results, including sales and earnings forecasts and other matters that are based on the Company's current forecast of aspects of its future business. These forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from historical performance or current expectations. SEC. in XX-K release XX-Qs and on with included fiscal the and are file Form XXXX fiscal the factors today's and press Company's X-Ks Risk XXXX Form

over Now, to I'd turn like the Barbara Chief Executive to Rentler, Officer. call

morning. Good

Officer; VP call Executive third performance, Kao, the of our call Michael any Afterwards, and me We'll today with Group Vice our O'Sullivan, you to Connie President Gary respond year. President, for questions Investor President, Call, begin quarter we'll Hartshorn, Executive may Stores President Relations. a outlook to and be and remainder Finance the are review followed and Joining today our Financial Michael Legal; of year-to-date happy Operating Executive and Chief by Vice Chief our Officer; John and on Vice Cribb, Loss Prevention; have.

per sales ended year. As earnings multiyear forecast being release, XXXX. $X.XX up and against million of quarter $X.XX million, for weeks up XXXX, $XXX for Net from were prior XX, the Earnings for in noted press up strong our in to were ahead ended $XXX November grew despite share from the today's the very earnings X, October the XX both quarter comparisons.

offset merchandise of for as planned year's was from increases men's freight quarter, this wage store strongest the XXXX. the a plan, November same-store the in prior third than investments. regions margin up operating was Our in of ended $X.XX comparable to Reform per $X.X X% for by year quarter third to weeks benefit margin The the share. over XX.X% compares XXXX. ended XX X, quarter earnings third XX, were sales year results October above Legislation Florida X% last XXXX merchandise with sales the include more billion Sales Tax performing the from of top Though and was and while approximately quarter This rose higher period down category. Midwest gain for X%

tax For earnings up include from XXXX. share earnings ended nine billion comparable prior to compares $XXX X, were year. last of up to an Net $X.X the XXXX. X% results with for compared year-to-date XX the sales benefit months, approximate to store $X.XX, per first rose $X.XX earnings The in per year-to-date the billion $XX.X Sales X% over reform year. ended from $X.XX November the months for X% share XX, October legislation. weeks This nine gain million

compared total in inventories As year. last we with enter X% to third up the were up inventories consolidated quarter, X% average store

increased as expected than continue Ross, period. Thanksgiving to inventories planned, to total XX% year. gains sales last to the Similar operating both these in earlier profits store the this of for year. and Packaway to post inventories discounts due XX% As a was percentage compared better

XX expansion opened XXXX our program. to our Turning and Ross XX DISCOUNTS program, new opening store locations third dd’s in the we completing quarter,

expect We with X,XXX fiscal and for year increase for XX stores XXXX. locations DISCOUNTS net Ross a XXX dd’s to of end the

of remainder details on Michael Now, our year. a the provide quarter for third results the will guides and Hartshorn color further on

Thank you, Barbara.

our Let's with start results. third quarter

Our increases was and X% of store in average basket. size gain by traffic sales the driven comparable the both

investments. previously the due were flat to XX points expenses. for Occupancy and increase of as XX a of down quarter quarter. of was and during basis than higher third points each year, more and basis basis in basis for increases freight offset was points better mentioned, margin administrative margins XX buying of goods rose expenses from forecast. than wage XX.X% merchandise mentioned by quarter XX general Selling, increased points last operating costs from though the Barbara the Cost XX As by the cost point distribution period basis sold

total a repurchased of $XXX we quarter, XXXX. bought on of price shares for $XXX common million. aggregate stock price a back an purchase a $X.XXX to total million. common shares stock remain million fiscal of we during the for total billion in During X.X of X.X We Year-to-date, have million track of buyback

to quarter fourth outlook. Let's turn now our

to per This the the additional range in operating $X.XX approximately share to our for to tax XX.X% matter. margin from $X.XX taxes forecasted last better, while favorable is comparable guidance related release, X, earnings ended $X.XX benefited onetime increase the benefit we week. XXXX be and resolution the is $X.XX, forecasting fourth revaluation margin weeks of the in As by to to prior reported be estimated X% are includes to million Net of and X% holiday assumptions last per Total updated hope range which negative nontax press share we guidance $X.XX be include following. deferred benefit the $XXX We're $X.X from in operating and XXrd a statement to to XX a continue for This our guidance income which of period X% one-time $X.XX, interest stores per of XX million. The which by do sales impact projected to the about our to strongest to share February gain XX.X% per of on to earnings X%. of of reflects points. a to sales increase X% of share year. versus a XX.X% compares the included sales store comparable now project year, versus quarter week operating sales year basis

per we $XXX to our XX% is shares rate for range projected on the includes be now XX be And XX%, share aforementioned benefit. at guidance, about full tax average year $X.XX a in earnings diluted and week Our basis quarter planned on to to expect to fourth Based tax one-time which planning $X.XX. approximately the of are results million. the outstanding year-to-date we

I'll closing comments. to for call the back turn Now, Barbara

Michael. you, Thank

quarter. a to entering conservative Looking prudent fourth ahead to we we year's hope posture while maintain this somewhat holiday the better, believe season, do it's to

to of robust top on As previously X% multiyear of mentioned, is sales gains. our growth projected same X% store

another off-price our in of well and we mortar addition, we In to sector. both importantly, perform season, expect in holiday strength Nonetheless, remain and within the most online. brick competitive intensely and this confident ability

as we earnings we of we in like would on you open might the and to the and now. believe solid respond up long our and both continue any sales point, remain careful for gains have. to some strategies, we As have achieve as this focused questions execution At time to call

Siegel instructions] [Operator Instinet. Simeon from comes question first Nomura Your from

a within Mike, XQ gross And and you going then could share forward. for just of speak the the off, you you channel retail mind you anything First margin do keep maybe have in holiday? then to on view pieces expect could into moving to health broader for the

the the of health of View retail channel? broader

full levels, inventory Yes, you're thinking just about price pricing channel… how and the

And will as competitive be quarter in as this been the past. it's fourth fiercely

still So that people and the in terms would to that's tremendous business. use be would of there'll what be pricing, promotions is my expectation drive

just promotional. to but so of more would would to again, terms spending. that's think the I again, be AUR there's and economy one overall believe highly remains expect be really money it mean the And that promotional I In of health it be general depends consumers and will the in I I think going seen. channel, obviously, be the But

offset deleverage. would of to going that that Freight continue of guidance quarter margin was basis by XX and trends, will points fourth fourth driven down ongoing and by we a some as at same On also was the in for mentioned higher continue was so remarks, the inflation. into the margin We'll merchandise freight cost quarter. wage see be I more the quarter levels. headwind cost the to expect similar gross

we reminder, increased in to $XX half. is so the greater the front mid-year half in than a minimum As impact wage our back the

packaway moving expect? any that And you'd just pieces within

was neutral the assumes in our and it neutral relatively quarter, QX. be packaway guidance for No, would

next Morgan. Boss comes Matthew Your from question from JP

Is should On in the the larger was move would XQ? leverage expect year. similar beyond what maybe investment any make as SG&A? in not just continuing tailwinds front, the X point headwind it or to And And be of headwinds magnitude about different? think this then a we to comp a to wage picture there any that about for we reason the expense Just any XQ? think

XXXX business and costs. to by at maybe in higher control SG&A efficiencies We was investment. to some on slightly this wage say looking point continue good early we that expect a points guidance wouldn't wage On versus have going more And in call but forward. SG&A we for bit lower was our cost be -- we'll to That said, as those there. inflation, basis year-end XX QX. to actually we mentioned, comment would our conference expect to XXXX. about similar in offset freight on and we'll also have it QX, had in I'd de-levered We that as

from from comes Stanley. question next Your Kimberly Greenberger Morgan

on freight years. Michael, going could has couple for here which of a back I know look you inflation, the at been

providing out of can't about and how would But think any not think potential pressure I retail ask inflected more are the overall I the XXXX just wanted QX. then it I I'm about freight in know the And wondering remember in really year on guidance. second magnitude you quarter picked great? the environment. cadence in help here years. be I or to to if really up of this it

-- And do to -- you that in Thank co-location in not shut was here you where the do opportunities whether largely co-location the I your benefit additional Are year? new upcoming any think you retailer? that there may over think or develop with a got to seeing that Midwest or operations. you store or brands department acquire the stores inventory have give you. you've

all we'll some when hard Kimberly, hard like to be. equilibrium. On It's that markets, freight point, to it's cost, at say predict some reach will

driven which are costs driver capacity, and driving helping -- the regulations XX% improved year-over-year by monitoring electronically economy and this up obviously XX% impacting capacity; third there aren't number that, things higher that year drivers; is rates costs diesel quarter, in and at year; then is are very know, you highs. freight tight around the Trucker three of shortages; As

but happens So see QX at we'll look year point, expect a what to this lot QX. we'd wait to next like

some In has at retailers. other would Kimberly on your to go help And when to I the another retailer -- help tend somewhere. about That remaining to closes then general, question retailer. it say business the closures tends whole store

retailers the expect to some remaining you'd benefit So degree. to

that precise other over business. win quantify long to retailer that's hard of to beneficial. liquidate, It's be we in to likely as close year it's the the not think So expect retailers any material. impact some or term given other as we'd But stores

usually supply. supply, of of closures terms form in generate And some store

Your next from Bank question comes from Royal Brian of Tunick Canada.

as Barbara, about what to levels a et do this you from maybe you it's two Thank healthy curious what here how marketing, year's they about talk I doing whether maybe inventories, would flow, guess product the three mix up strong you're from two comp much. very that cetera, year timing one been fourth the quarter, maybe in-store organization into Thanksgiving Michael things heading ex have guess in inventory perspective. in-store are want and performance. very questions, you X% differently the lap X%. last about year's I Curious And thinking last or lap to philosophy is year, then next

And Brian forward comparison that slow be beyond Thanksgiving to did we XXrd we'd year, for on -- have week week is our flat. the inventory so levels relatively in-store a remarks, in business, earlier flat. running as inventory, inventories would inventory going expectations far the expect we relatively Without up been so as inventory as about mentioned this X%. without was this year

things comparison, quarter. out for in we're robust the building against fourth to what many we've of past, works out terms had gains In the be In of really us. strong doing the we're years up

strong is entire box, were so we there's the as were number. the that. something quarter this and And and feel first gift and upon further obviously, last successful really is where giving, place what we're So view against drives we in in strong But year the is areas in that gift opportunities giving goes building giving what home that on the time that building always we in opportunities. we really gift sales the we're isn't because on fourth up other

Your Hutchinson Merrill for Lynch. America question comes Bank next from from Lorraine

a I seeing in the Good packaway afternoon. inventory. you. as just or with what flow going immediately? hold wow the on to of what follow you're second anything which percentage in were down on Thank you're for there versus deciding packaway market wanted to up in Is the numbers, quarter a

No, in actually strong there's market. availability the still

what out off. we There’s say is comes feel drop month-to-month appropriate. in we from about So out. can criteria haven't what's packaway it based haven't have availability it we're seen fluctuate on comes we it as put good you out of lot But that I when No, there. packaway to think I the about in -- what quarter-to-quarter as putting wouldn't packaway,

any shift we packaway. And week earlier wouldn't thinking I year it you're that's this as as a part seeing quarter, say Michael said, is our shift then So that to there's the pertains in Thanksgiving really earlier, parkaway so obviously this slowed right now. of

question from Paul Bank. from Your comes next Deutsche Trussell

On compares, said comp very lagged. XQ, the solid men's X% tough in I you know against

Just especially to in beauty curious XQ, top on the outerwear. it and kids line of any other relates efforts details takeaways and as home and or

Just on being curious sustainability just what ahead? up, gains can those also potential talk you the for you're the additional margins about just drivers seeing And fronts? if merchandise on of

average; shoes chain were and we home remarks; mentioned for relatively -- the apparel also On similar in in quarter. was our terms in top above our; and performer line; a was performed non-apparel, the performance of comp relatively quarter, the versus they for accessories then men's the during performance as

on we up margins, driven business better above being to merchandise XX plan and basis that mentioned also about As buying. was chase and it was by sales able points the

conservative merchandise margin. we Our to business, always with strategy has can drive and we comp go also the chase can if a in more been

So way would we going about that's think it the forward.

from Jay question next comes Your from Sole UBS.

which My and competitors the talked about And going environment. very to how or bulk been relation see margin, Do is better more exchange XQ merchandise secondly, more price would willing be you be price trade to about for strong pretty has question it's emotional much that off how sales? to in in you competitors? the you from

think, promotional. environment, historically full Well, in the price, I promotional it's been

be it promotional. will think I

I last think promotional we're in more few watching to get it the weeks.

nobody the they're In putting mean know were terms their thing nobody of way out the if promotes, the our same that values don't putting no off consider there's -- I I out values we prices, I POS.

Obviously, going the feel second to have we to going that my very good that it off-price compare think strong And we I'm on feel was I competitors. about floor So comparison. of we values the what out question? part and two your other not

like could felt sales? much for merchandise drive to wanted you to you If trade how margin you try sales,

for trade margin sales. Actually, need I we think to don't merchandise

merchant I strong team think, big getting the merchants we -- out every the base week. large a have really of and are they values the and vendor day

compelling the of money that's much not the think a offering always that retailers customer I there's you're bargain fine where can. so And line how art that science deciding versus you what the

think so that. of to think every that's And are the I attuned what do we merchants very day the week. And I very,

the shopping, out getting what really the that, line doing. So IMU I tighten we'll up doing, the they that there are are have there's just just out, don't I at stores a price think line bulk they looking because best merchants values. something competitive at possible of I are looking think what the And off say to are prices other direct to or if direct --

value strategy the strategy. would each think don't we really that a I And going would gains in our to forward. that's be So we're use other and

question next Lejuez Citi. Paul from from Your comes

to the Curious if quarter, mentioned that the during weather if you you impacted? the or sales how could talk XQ. just west, cadence you? sure or are also impact to you and And do the any If you fires Thanks. material make not hurt stores whether be expect near-term, about I’m am can helped any out sales? weather curious many XQ from And impact comment on during I not any

point. the impact just wouldn’t fourth we at on quarter on Paul, this fires, comment

moving a quarter, terms back bounce lot third year impact year. obviously, not and the afterwards then of hurricanes this it weather two southeast hurricane then in last parts with meaningful In and major and a did of a the have

Late trend, weather so stronger comps in hurricanes terms two neutral up and In quarter, in quarter trends of for overall from quarter. bounce QX the earlier against year. the then back major were were the the last during the

from Binetti Suisse. comes Credit Your Michael from next question

I look about some a fourth further though. little bit talked I drivers. know the want quarter just you cost than of at to

analogy we do to the behavior accounting industry competitor we us on period that could help like global you to put if it macro next at issues you an business next own think the from also tariffs how what think in could business As year? any situation the look help I changes about is. think look then mentioned you how lease some have can like can if impact I’m just an that we tariffs, about you that the inventories into think us point your the year, industry help to here? that guys there’s about And the inventory impact related past for to need wondering build in in think If a what have guys and us think the events like about radar? border about players the how

next year, yes, those accounting. we to look costs. again, non-cash Its to the find offset impact. would related. On additional lease areas business accounting It’s there in And some purely is

tariffs, environment on there’s How any be an Michael, in to last? to situation historic general, tariff in analogy tends all I we uncertain uncertainty. tariffs historical environment, point would things well the event tariffs. event to that will good as tariffs, that on terms it will creates comparison. don’t a could off-price will long but comparatively -- do be And we really on Well, Other which in than tariffs point think that a no have them? saying, there And there’s anything of could that in

Your next Goldman Walvis question from comes from Sachs. Alexander

specific the of other strategy any quarter, on home, to to question just of time. a had Thank for with in the some for the across drivers of the you category of categories home comp, that the business? the for the there rest some having thanks increasing business change can color on the line Is We the was some penetration talk anything of there outperformed you. or this

results years. Home last was up solid against its very few

with chain quarter the line for -- felt performance in sales above And the relatively so the okay. planned chain

In four and walls to assortments, looking businesses terms of new improve assortment. at future, to looking we’re always our grow at look within the looking

of into broad It’s amount conglomerate home but different into think is based are So there. products area. in a but specifics the we very go of terms specifics, large I wouldn’t growth do

So looking we again always do improve about it it. and feel good to

Boruchow Your next question from Fargo. from Ike comes Wells

you to in the if start I It consumer for guys the looked dynamics to consumer, like But ‘XX. ahead seems low favorable early have into them. very tax team, of your mainly just a could curious guess the end have cycle

curious wanted you to have had just at So guys into if any all ask dug thoughts. or that

pretty it. about guess we obviously, results I into next on year. that next say year. looked have we And has over rebate have that see dramatically build our cycle couple years, tax the when into next year but impact first more an have quarter The we to give of our changed beginning the we'll at would so expectations have what we'll to end at the going

Janine comes from next from question Your Stichter Jefferies.

the to I ask wanted composition just basket. of the about

being you've as the it featured in. in past, think you called I out

Just Thank one another -- in I tickets? think the of AUR call terms you. out

AUR for by comp As quarter. and traffic by flat higher The driven the was all transaction. was relatively driven of we basket. increase the units average mentioned basket X% per was an

Your next from Laura Capital. from question comes Loop Champine

just the it well question, share that apparel wondering, can Ross's its perceived good, Ross market in gained you was overall? surmise you we’re nearest what is to or as Barbara, this I'm can competitor asking sure quarter. extent Do share the although held context below And you think we tell. I'm was comp that the the that

comment obviously, X to our in two, competitor. and X, basis, a performance, terms XXXX. against In on X XXXX we our one, up of on mean, were and not in a three But going I a I'm

performance, So in was comp our terms overall, XX. of it

the year-to-year. versus say that over measure apparel So I of apparel gaining apparel grown in comps is I very think grown the terms significantly has years of years. gaining our quarter-to-quarter it's share for But share would us that to have as in or competitor, we're our over hard the

would us that apparel compare of but grow. for So to to it's I one I to to back really competitors back now hard compare continues obviously think our

question Your Securities. Guggenheim from Bob next comes from Drbul

men's wondering Just the toy women's talk and a couple you're what your see about category just in the I as if there, holiday? well. and just expectations about category questions. shoes, Can your shoes was that And in boots the especially opportunities talk footwear into and maybe you seeing you that could you category business,

business toys terms bankruptcies with a up for so we does will business grand get part a and obviously of recent mix Ross, In bigger and all a during total again of our bigger some the overall again But small in opportunity. be historically closures. toys, of year. toys still see percentage opportunity in the of small it's holiday But our is toys this for yes, terms but some

quarter In weather the chain business terms the businesses. our a for mean has our broad. in business outperformed business footwear businesses footwear three sure, average it's I'm now. boot based broad mix with terms boot been of I the itself, good the very years it's third again, And business, has in -- few the between boot of the pretty

in key So some overall strong opportunities. it's maximizing and I our think business execution

you the store just filling keeping you're seeing with openings And of terms of just curve the challenges with that in the new question you've any on ahead competitiveness? Do up investments employees? the your are you feel wages, like made. to And

people we the seen looking filling that Obviously, we with feel store-by-store, stores. today. our where good that's So we wages we're really issues workforce the news are about haven't And to good new we've for and hire. raised in

Your Chethan next from from question Barclays. comes Mallela

about can But just to how just the sizable impact inventory been and your X,XXX announced tariff on there's follow-up product versus the in what then are based know how how of situation impact give you a tariffs more you your many I that the I of prevention? if look vendors to-date And maybe would have or China? hard like think much with it's close the estimate, wanted to precise particularly frame So outs.

you business bulk a is to In our remember terms have vendors, closeout of business. of X,XXX the our

tracking of So buying close-outs, buying we're wherever we're not we're goods they and The and manufacturer of manufacturing them -- origin. manufacturer country them.

percentage of question So of in X,XXX have that don't information. what really the answering impact, about would vendors terms I your

In is I of home accessories we of impact, there have to-date just as as of not think vendor this and as minute, has comes lot left business. strategy. the impacted really to their could has when total, but vendor go the assessing the no road uncertainty impacts certain say but down in in what take tariff And I would that terms marketplace. the parts I think home. Obviously, think trade pertains the I classification don't And most follow-of own And the -- of clear of to some process this. each it tensions supply something it like there lead I everyone's vendors a think a strategy, is of really leave in tariffs. don't it actions -- to we're to with like

then terms our doing total the that are assess we do what's but direct we is mix of piece actions really appropriate and us in tariff, exposure in us. we home to area think And sale. a is relatively it small percentage for us can of I of So for to what of don't our disclose for

There's to a Again, think move -- comprehensive think tariff no larger then scale on necessarily I point unknown. it were on at of there's much If moving tariff many, everyone. we tariffs -- a the to years. were to much vendor have in haven't parts move strategy. community pertains time. for issue doesn't I obviously I seen Inflation apparel, just that's in in strategy, think So so lot it's many, many just apparel a vendor because vendor this there's to by the as

certainly think to get there. we attached I we'll challenges there's and when bridge that that cross So

Your next from question Telsey comes Group. Telsey from Dana Advisory

locations this As real on may to I What are with boxes either quarter. X it you. you of the provide estate, want of XX of available, or you with Ross? seeing even you basis was and compared Sears about or does negotiations? And flat occupancy dd’s renewals while leverage last points now leases four you part that that quarter as think think Thank the

implications in general availability say seeing. I the would Dana, of that we’re with the happy we’re

have last terms helped retail. locations and I expansion. a We that the we'd job and have a real be availability. by But finding respectable whereas for store years, our a of know they’ve other depends specific store several really closures great great it based retailers mean over Certainly, closures more estate done interest team retailers retailers. are and isn’t to contributed some that on location in you we're in

I we’re it they and the prices you’re pretty retailers But at looking when specific So depends overall, say that they would happy. have. have impact what really on real estate

think to fact was that occupancy or again this opportunity flat it? quarter. the And you Is leverage do there how about get

point Dana occupancy on So been X%. the leverage for the for year is X%. that’s Historically,

sales shift. year, this the the different comp that position this because are sales week two better a fiscal metrics year. and in are we Remember So of

year, back around half leverage higher we in But the first more costs the reverse -- were sales year, got You leverage than because half. of X%. comp in fiscal the and our the sales points occupancy think that for

Hofkin from Daniel Blair. comes from question next Your William

I guys you question Just are on the the conservative. topic again typically asked. But know environment, of clarification been the a retail quick has

first You’ve little talked or about And continuation trajectory question. every it bit Do my is just that full retailers you’re related where relates question some if more seeing you’re second even not is a directly bottlenecks my That’s that? categories steepening maybe then to price as a year port Are promotional of being have you to disruption? where more tariffs. importing any intense. see more there it

think year. promotional on it’s obviously, think the every environment, I Well we retail

it’s think that from QX I different So QX. to

is QX. and think retailer see so between QX movement so performance on will promotional, every their vary I performance. business think by I some might we their But again -- model and year their based in that

we of -- that. more we think I will see see will I So think

of terms any supply, port to the In don’t it's has one bottlenecks I think as completely that bottleneck and led place supply. port we’ve seen particular

is you’re saying one product. it one, So

because China where think everyone. seen it brought of to going many we into port the haven’t say everyone bottlenecks one them has business tariffs of earlier, country think I classification we'd manufacturers I pure the that’s they’re in the But be. and goods from affected goods get that it’s trying because bringing it to

I if it'll be bottleneck, based. result supply the of think there's broad the that’s

Morris comes question D.A. Davidson. from John next Your from

You then expenses areas and second initiatives that. good using And marketing of if there? year. color can from or labor, the little versus those bit your for headwinds with job this to can spend holiday and they're to would all it really categories? at any get in and a What more with feel a question done offsets terms a about maybe on same coming managing color you mitigate the give be offsets. have also last us freight year help the so Wondering that Thanks. spending in that Is magnitude respect we

or have mean sourcing we bullet products. look efficient. products -- the is It looks and -- we we related -- And there's I is procure no when that there offset I On DCs silver more throughout whether the mean the either say stores on non-merchant in strategic services. related related company group on how how a its offsets. payroll I become and we products merchandising

in beyond. next efficiencies things. going death try cuts so continue to for of to looking X,XXX have curve and we always do inflation ahead into lot a year paper different by the And of a that that it's and we'll our we're stay and So business. And groups

of of fourth in spend the material marketing, part question changes quarter. on marketing in your second amount the So no

John comes Kernan next Cowen. Your from question from

need freight, D.C. increasing with any make So efficiencies? maybe store, just given around network you dynamic do you additional to the investments to foresee might the

to of On network an with to automation do next the over higher that wages, there efficiencies. center next the capacity time our invest and in in for over capacity the we as Right related. we years. presents The invest and reason opportunity we'll distribution couple now, next investments the start it have would DC Network, certainly is the think

bankruptcies. end benefit And feel with some going noticeable seem follow of certainly it's -- the like seen from you don't like of one these stores co-located just be to up. the bankruptcies? quick And any some are the of recent Have that

are you in disclosures. benefit increase if wondering any or any just noticing traffic from I'm selling So

is general Typically, observation. a I this would say as

earlier, going an going bit As out might business of I typically think it's actually over competitors us. a that stores. general be impact in through as for store good closures accumulate a material run then a typically it's is -- said I have see uptick. of local of tailwind negative we to just for business, But the business. we of to And store But closures it's the out given gone long year tend as a be out see in of a we in business we tend store any don't period, closing once to see or tends our

Your next Saad from Evercore Omar from ISI. question comes

in included. color, in a holiday marketing And little us? on marketing and this that with earlier -- again? be broadly Maybe pretty around bit know merchant lot And you any to what social going be the you sense inventories margins speaking spend holiday deeper offline Barbara, retailers, Thanks. care little on more seeing be will rise clean, to color little you yourself season the talked any being to wanted trying continue flat. the color from to a that to you're space, a me your share dig ask strategies, about then you give new us are promotional gives marketing digital promotional you that it's new I season. But update around bit expectations your or strategy. comments that gives or a of we're are very hearing

and we'll gets created terms leaner, aggressive the the and online things between in moving more online promotional. be early, been to on And faster. at look the department XXrd season of gets aggressive have based the is inventories stores, week, aggressive performances think holiday really traditionally, And it more I we are might in fourth Plus if brick-and-mortar we quarter have In QX I as holiday although, have equal don't think all brick-and-mortar, get also. store. season,

raise without are departments surprised less. to it especially the I last would department may overall, we come some days being some quarter as promotional, So But promote may the promote be if feels very promotional some out of the walking more in POS. has while the stores week XX customer more, again always. -- it's there it are been -- -- here, Thanksgiving people last been as increases we've shopping. weeks few But already the is

recognize potentially those and ultimately there But the at that are sales tells sales, inventory. end so and to drive you're pieces I that's together us. less And if drive put trying history I what the that's

So that's where it came to that conclusion.

And Omar into would pieces. it I your split question about marketing, two

that think the going that in evolved. the message, offer being consistent is terms fashions of that get apparel reach I what think that in we that customer over change. strategy of the to and time, all out channels been the very that’s message I to has best values from the to But marketing and using isn't we're message marketing changed message first have

that recognize always social the us we word we've few over represent we best have a marketing and of cetera. marketing. media, marketing. new those And et version mouth the of investing mouth And word of in years, various tools marketing, for is forms experimenting been find So that day of last modern

some we're there is still so the of stage, marketing that's I'd certain definitely describe the So -- moving it's things getting in. our direction at

our was closing I last Rentler over remarks. call Barbara the for question. turn back That will

day. for you Have Stores. Thank us for Ross your a and today good interest in joining

call. This concludes today's conference

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