20230930-DK-Butterfly-1 (BBBYQ) 1 Oct 202020 Q2 Earnings call transcript

Welcome to the Bed Bath & Beyond's Fiscal 2020 Second Quarter Earnings Call. All participants will be in a listen-only mode until the QA portion of the call. Today's conference call is being recorded. The rebroadcast of the conference call will be available via webcast found on the company's Investor Relations website. At this time, I would now like to turn the conference over to Janet Barth, Vice President of Investor Relations. ahead. go Please,

good second and Welcome our to Thank earnings morning, call. XXXX quarter fiscal you, everyone.

On with Gustavo Tritton; John of Chief Officer the Decorist, CEO, President Hartmann; Financial and call and Officer Officer us and today Cindy Chief and and buybuy Davis. Treasurer, of Arnal; Brand Operating President Chief BABY, is President Mark

detail we Form our including the models subject are Investor we to actual to such differ This our any for and materially presentation no refer could to to our statements the our quarter filed including earnings to X-K call in uncertainties, second at we internal we references or Risk outlook let SEC Form can risks just during the filings today. call. regarding All found long-term statements. or and risks section as what ahead the on Before of cause slides statements, about our be conference XXXX uncertainties the exhibits this begin, may company's of that me fiscal forward-looking remind Report Relations update revise in our contain The to most our and these and www.bedbathandbeyond.com performance, company Factors results call obligation on XX-K. statements from recent Please refer the objectives. and website undertakes you forward-looking slide section that Annual and to release periodic say more

of that included discuss prepared directly accepted to that that amounts in most accounting subject exclude with information amounts comparable adjustments we measures are generally will effect the accordance or Additionally, contains today the measure financial certain the principles. in have are excluding

call accordance earnings my our It available an most comparable the to reconciliation with over exhibit as to our to our Form refer to in pleasure a the today. is X-K on release now website to For included table Mark. in GAAP, and presented turn measures please the filed

Janet, good everyone. morning, and you, Thank

a for of quarter comparable management. strength achieved and to growth, We organization, first of pivotal strong line quarter positive X%, are growth We flow second with through our today. top strong pleased financial you results effective with as delivered profit cash high debt with coupled was within our generation expense enhanced and this and share as well believe We $XXX of sales the quarter since quarterly the XXXX. million, quarter the fourth sales comp

in strength improvement delivered we gross digital the our business. Additionally, with of even increased margin,

adjusted years. EPS in flowed Our the strong strongest adjusted earnings bottom $X.XX, with results quarterly over reported through line, of to two the

While a to we XX. share at will to detail our are quarter excited we our overall Day today, runway serves this how on as that plan we second three-year quarter Investor our performance October will virtual share most

for our our Financial and Officer perspective. quarter President, will Then do Arnal, Chief the the President, today, financial call customer our then, Treasurer, and speak will will Officer Chief During same and Davis, Hartmann, Cindy operations. results. BABY, Gustavo quarter second Decorist, review a John and commercial from Chief Operating buybuy And Officer about Brand

We will questions. then take

our where cost said are a build manage customers action our financial financial in we've home strengthen authority these investing including As the through strong and and we matters our our base, uncertain it further to most We've before, financial as confident reducing space. position we in taken enhancing times. ability very our our flexibility to structure, to

than times on such have flow generation. approximately focused we to With debt improve and from a As including our now on costs, outstanding and ABL, you'll hear optimizing sheet. investments Gustavo, balance liquidity more our cash strong billion we cash ensuring X plus of liquidity actions balance $X.X remain

significant Together a With on which margin, in drove better management improvement curation metrics, points performance significant markdowns increased several margin we including gross also of seen including second XX% approximately month the have omni-channel key year-over-year. the ship-from-store continue data-driven and Buy-Online-Pick-Up-In-Store of represent business. By our trends with benefiting in total the represented our of continue of September. and capability, sales adjusted continued adjusted driving and these mix driving margin of gross of product second our will channels filled our impacting capabilities delivered We've quarter, to total profitability focus expansion actions now of quarter. curated Curbside favorably coupons, digital expanded and approximately further also sharpened our enhance throughout digital orders in strong while digital XX% digital stores XXX enhanced a and which gross over other overall from XX%. and the also including promotions, are our sales, Pickup, total sales the These XX% We basis of fulfillment of capabilities, comp digital our growing. our end growth

the spend and to are of of customers lives, and merchandise service continuing, center as terms time trend we been in agility we've We this this with our become have changing responding our our needs their of in more During our both well-placed see when and offerings. unprecedented the home lifestyle. homes customers,

and this kitchen We it us. important strong the our with and in maintenance. very From new this our are to back-to-college contributing different of pleased bedding, service completely new during performance has new new services customers even food new quarter, to & perspective, categories, fortified with Delivery are online who actually These launch million which customer are prep approximately including X life as making XXX,XXX are season, Beyond. These Same easier delighted core merchandising week, shop we in our curbside are BOPIS authority home stage. approximately the and services a we the Bed Bath and from continued gained including purchasing recent product cleaning response customers our this Day to growth to new by our bath, higher-margin quarter this

quickly to moment new the brand a plans of at of provide pandemic, before, say wake true sales successful market time the elements college We of achieving mobilized lean into and more to intent COVID-XX details to we prior compared our to a pandemic, the to to our this some the staying back-to-college changing me and planned campaign. our season, proposition. XX% same while enhanced heard year. you've were the highly will growth In our the able and showcase we of spirit in had adapt strategy conditions, customer Cindy last value As back-to-college the moments. on few to heavily

investing our to our essential core improving success to this we in commercial rebuilding addition also and our foundations proficiencies of operations, business. strengthened In quarter, the

highly retail technology experts now more joined be to this operational the in of well several our leaders growth. power team as John leadership further as areas, we're pleased talk about place. is accelerate by And to even senior will experienced diverse the further. investments Our next-level such are to as we making new transformation in

we long-term against base success. built could review. asset the In our is be baby, assets. to focus quarter, developed have financial opportunities there of sale value sales, a within completed net to of results our optimize PersonalizationMall.com to believe in a abnormal continuing committed we the we're first and that quarter second with backdrop framing we further As million, reviewing strong August, wellness, our early beauty efforts we for which growth of noncore and delivering highly We home, and to continue an through unlocked approximately significant $XXX blueprint remain proceeds

in and transformation results Gustavo performance. strategy our the Our quarter seeds are of detail. second review journey has call turn unlocking to our financial will early the to begun, improved now growth I over Gustavo?

Thank you, afternoon, good Mark, and everyone.

gross strong sheet liquidity strengthened time, second And flexibility and solid well our balance expansion increase. we even Our EBITDA a the comparable this, we cash performance financial quarter growth as with At showed significant flow margin debt. generation. as in meaningful and gross unlocked reduction our greater and sales same with

significant including We generated working the earnings paying During million and strong capitalized than discount flow of capital of this coupled million. from $XXX PMall. cash improvements, we proceeds approximately purchasing a cash, our quarter, $XXX million million $XXX by a also and from over $XXX in this of in principal operational investment sale more and down capital $XXX loan million generation net on with in bonds value by bank of at approximately

With first these $XXX at this $X.X million, over quarter. the debt to the our end reduced $X.X or quarter billion end from of by XX%, gross actions, billion of we at the

of a liquidity our facility the point million $XXX at than quarter. net surplus had has financial quarter is $X.X during balance, outstanding. a moving we our to billion at and Together billion, the debt. end net million debt our the with $X.X secured ended in of our cash we pivotal to cash bonds a We shared times from the investments, position over our of by of Further, higher first quarter position in second first with quarter Importantly, the $XXX approximately call, position earnings above our two lending well in June. cash asset-backed which strengthened as end

comparable up were X%, Turning XX%. increase sales our now results. which grew benefiting digital from sales, a in sales comp to significant Total

of context, from channels sales some sales represented For this our digital total one-third about quarter.

were And to of store positive of decrease the positive, XX%, BOPIS June. net digital the our year, sales consistently comp positive and been XX% August, Our comp $X.X In of in the performance the our at to total stores looking by And penetration first has all quarter. digital May in sales sales down net of June, from with due monthly began Curbside of decline tripling in comparable of of recall last divestitures in last Lane. reported the quarter. X%. its a July, In reported sales were sales by from the was positive, net of comp X% offset sales above growth introduced. were Pickup represented the from the reported sales, opened. and in sales quarter billion, despite each when sales quarter, early strong that we during generated comparable was sales which reopenings were sales also were approach growth Kings sales July, the phased Digital Starting divestiture Net with service BOPIS our services. again Encouragingly, quarter sales impact X% we virtually driven growth through One delivered stores. were expansion month the further versus progression partially X%.

per sales second comparable $X.XX also to and quarter basis, earnings we digital compared review a loss net results. accelerated positive of per sales and trends. $X.XX growth Importantly, basis as for GAAP reported financial the the period. now with on preliminary monthly share in a second quarter our prior I'll in year net and September BOPIS diluted share store similar diluted show of On continue a to sales

non-GAAP earnings year-on-year items; to $XX special business. favorable on a the net $XXX on trade earnings store of of better per names excluded $XXX items as results. will pretax, diluted of from impacts reported last share of impact and represent were Consistent partially costs. as disclosures, charges includes gain a include other with and from the $X.XX related net of adjusted approximately basis, earnings million per offset performance on million, On costs restructuring impairments These to our are an basis with certain gains PersonalizationMall.com from increase our an of net to mostly GAAP adjusted noncash $XX share extinguishment and two tender. references initiative unfavorable transformation assets million quarterly following gain diluted of a including approximately This XX% a sale year. million Our results level compared the prior the gains our well debt the of adjusted be which special bond $X.XX, were to by

gross margin. to Moving

to XXX coupled product XXX favorable of fulfillment and increased distribution basis of coupon and basis points margin of lower points gross expense mix, cost basis approximately and XXX points. XX.X%. markdowns, driven optimization leverage This by Our promotion including with was

of offset XXX partially impact channel from mix of of were benefits basis points from channels. proportion these expected, digital the As the larger total sales by

the will significant Our said margin gross progression low that last remain closures. ensuring abnormally We margin on gross gross a have impact company's quarter due from management focused time. store we was healthy over team to margin and

increased more reflects and benefit an base potential our Our return digital growth second our of proportion shows quarter unlock to margin with representative sales. a of optimizing gross by a product efforts the to margin

action by stronger points from a Considering to of to XX roles our initially included unprecedented expenses, to as This workforce next upper sales of position. estimated an previously plan support $XXX million behind In we realignment, further as of was SG&A approximately decline restructuring in fees prior basis this our professional the organizational And SG&A. offset our you'll advertising generate announced period. John is few annual part from an COVID-XX, million at which approximately $XXX steps the impact our in reduction even which which net Moving of pandemic to taken in savings to operations minutes, our payroll, to to pretax emerge and project, $XXX million, a a of the implemented end have company's is decrease as This the plan. our X,XXX range teams is reduce in decisive August, of and approximately optimization the transformation. store in of restructuring a stated SG&A support XX.X%, of simplify year phase increase costs, was payroll-related partially hear annual we the a already from compared savings. underway. includes future percentage

of This margin drove coupled transform durable business the business improvement with performance, begun. and pivotal significant build to growth XX%. model already efforts our EBITDA line solid a Our EBITDA have modern, top that shows expansion,

now Turning flow items. some statement balance to cash

We of the first capital ending continue quarter. approximately end than lower to this carefully quarter, $XXX or billion. of a more $X basis, X% manage compared inventories On the by to sequential with million working inventories were

to and inventory subsequent the from in quarter strategies do projects years technology such as with include ramp to customer million, the digital-first We XX% expect of and levels to omni-always our capabilities, expenditures capital advanced omni-channel capabilities. support improve our transformation. of allocation to $XX related expense management spending replenishment CapEx logic our these in warehouse Our experience. improve were current in up These

on perspective plan month. later allocation this our capital share We at future Day our Investors will

and and quarter significant suspended, While remain see deliver our to remain demonstrates our financial expect committed our second we share to clearly performance during capital and our perspective and repurchase quarterly to Day. Investors pathway dividends creation. and summary, EBITDA business. as value We return agility we share a In growth discipline transform expect our

transformation multiyear initiatives Brand XXth, over will call the growth of along will financial Decorist. with President the We our and upcoming Chief Davis, at share our map I already Cindy underway. our Cindy. and turn the road on Day Investor strategic to now Officer

we customers comp XXX inspired gross the saw the the In compelling plan was potential and growth channel both it quarter, over communicated Thank with a sales and key focus second with significant drivers quarter and delivered increase that a unlock omni-always and and visits mix, representing By our deliver you, promotion going than made created and new alike. margin approach. to product more we were able Digitally, easy year. expansion to to sharpening to our existing value in mix, second inspiring forward. by last Gustavo. on margin, of million We sites, in both and our we exciting with XX% growth pricing

online of conversion prior an increase addition, In grew our the to we period. XX% year X%, versus

gained contributed From standpoint, to and X we overall younger to approximately was and Our are mobile to launched this customer quarter, new new than enhancing in less our brand. new which online customers from as customers they demand on quarter, the channel. app customer existing times mobile XXX% six XX a million during These increase profile these our XX% our coupons. years are customers average customers our use new were likely million of

during Curbside to a is approximately has associated eliminates key, gross grew But is over engaged, highly us respect XX% the over customers this for XX% order. solutions X addition, our shoppers shopping customers shipping time online three more our are times quarter. in our digital Omni-channel became omni-channel and us first two usually rating and great This shopping earning are X-star of prior in-store since with us penetration and often the these enabled services Curbside from In the year. these orders. with BOPIS per on more us our million financially these since strong, with results. digital approximately of customers, BOPIS million with benefit Customer been times in response to for margin, over spending $XXX and customers. XX% and has to of it generating quarter Pickup a single-channel what BOPIS expense contactless new year the than sales

Our customer-inspired, increase our momentum. this confidence that our campaign, integrated college September successful fully data-driven, way sustain looking the to no gives drove better at us omni-always, ability sales to about in those than which product illustrate a back-to-college approach is most by There through May X XX% X.

for has and are insights, back-to-college for destination response, We this with college. results, And long country as pivoted market. as and what plans plan a the these to plan reopening especially pleased We universities major been across Bath & known has stronger and Beyond during an unusual our Bed even unfolded. year, season. customer we developed data the monitoring most colleges season the started with the then especially college serve been

XX% the year, College all of this September signed over season transactions. the back Savings levels with brought Given We to and average for Over that Pass and XXX,XXX in-store drive and XX% increased on an merchandising back-to-college storytelling basket Pass the and Savings the students this site, integrated larger marketing both college off driving in other better transactions, plan, as our targeting we We size value of modernized well uncertainty XX. assortments, higher our purchases as students more College offers up XXX,XXX year, way through strong engagement. our curated marketing with competitive online. communication, an their created than pricing

kitchen in it to significantly And Curbside ever result, than from Buy-Online-Pick-Up-In-Store digital their college college more perspective, available than were market. than in up flatware our brand kept As trending return while and for college contactless making which on our and two-hour housewares, categories we top recall, on the XXX%. lift up our was nearly or goal their students the electrics, and ad the parents more spend easier above season, XXX%; services norms. home we're; finger favorability our XXX%; Pickup this pulse a and which media, doubled increasing year with ad up shop store town, kitchen drinkware and product assortment at From industry categories, were us. a we Throughout of

to announced to we to we miss Decorist in variety adding disappointed milestone, not school students Bath students own at insights, these We inspiration home. of from transition key COVID design to and season alike value the college past year. team perfect a & our out our over online create experience. high develop As college. Despite the from were of and many may the their yet And on heard that both inspire to back-to-college learning, the a campaign our room schools impact at college-from-home tapped research destination business interior plans according conducted, recently with another designs over help our for the six remote to Armed launched Beyond college they August, parents remained dorm Bed to unprecedented be room months, we on this yet. ease

that going they first do. XXXX In campus surveyed of to fact, will and the data the to shows time shopping for be said, XX% student they have in

their will with inspiration, ready and to needs be value We meet ease.

As will we no look other. important forward like one year to season, this holiday the be

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month space. of to forward have rebuild again when into pillars. with our and plans later our we our Day dive under home strategic key our at Investor the to I We one five in speaking robust authority look pillars this these each deep house framework you

seeing our turn Hartmann, in I of and our the President Operating over are we will are John and already call John? our Officer about Chief buybuy impact BABY. growth excited that, the We With results. positive plans to

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total to a stores. three the baby of We open XXX additional stores the expect of for by end year

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fulfillment We to customer technology and like to more platform of platform deliver and adoption digital omni-always BOPIS have will and with experience. of end-to-end strong we transformation. new responsive, agile, our by modernization infrastructure further this growth to multiyear Curbside. supporting substantial Google is and relationship, personalize shopping an a and announced Today, a a insights our we shopping and enhance platform omnichannel experience combining our exceptional initiated Deloitte expertise range our platform Google deploy services easier expanded to Recently, our new supported By the in Through provide, and customer-inspired cloud digital it of capacity, exceptional markets, for demand their at agile, that even with optimize and beauty and capabilities customer-inspired and with forecasting. the experience, wellness we planning and Beyond. expertise home, making unique Bath capabilities customers, that merchandising and with capabilities our collaboration data baby, home shopping & Bed responsive accelerate solutions feel

of As capabilities, to strong foundation we we a will long-term support build our omni-always have systems our growth objectives.

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capital savings Our and during will long-term virtual review AM reinvestments, will provide we our this financial X anticipated incorporating at allocation meeting, our Investor comprehensive starts plan three-year shareholder multiyear journey October metrics progression of in that key Day of XX value. full building strategic performance transformation cost goals, a a the track framework a and and to

including increased this solid transformation is take performance and now that cash the reduction your strong and that, our comp expansion, gross us gives With underway. sales liquidity margin will confidence questions. Our we quarter, growth, debt

from [Operator our And from is Peter Baird. Instructions] first question Benedict

– good from first, ecommerce maybe just questions; some a that’s same-day to into announced and kind my the e-commerce you you and frame the the partnership Hey question? guys, kind think the Can traditional DTC? of to also plays you're with that first then profitability, savings of And related maybe dynamics. fulfillment how of the getting on Instacart two the economics, fulfillment that, you morning, Shipt store-based relative

you. Thank Peter. morning good Yes,

can support. start, Let John me maybe

large environment. fulfilled sale us, XX% a about BOPIS those our perspective. growing for are margin in-store On fulfill, profit which in to the So and by goods performance store faster we've being DC of rapidly talked with fulfill chunk the equate base. cost to versus orders being of our store speed of moved customers terms create get the and Curbside, store currently during a a economics, an economically from store from to much work structure of to cost And able actually phase the we of agility into this we're on and we're as COVID continuing their

of of -- by a coffee sorry, fulfillment covered direct-to-customer the The and cost shipping an order sale really day, cost fulfillment as same-day cost fee, the is order well. the customer $X.XX shipped to spend of cup a nominates the get cover that and nominal through we in-store goods, of is by the covered the of – terms that's but equivalent same to is cup the basically In to for the cost customer.

-- Okay. That's go and great. Thank you then ahead. sorry,

No, go ahead.

Okay.

guys you around other are my category in establishing just Just kind follow-up a where was roles – and from of merchandising then standpoint.

introductions going have kind to curious are of consumers. own to most you all the impact which you see when plan and these this how kind Just to categories communicate year of next brand

lot us just can that you. this but a here the Thank you I with at investor meeting, guess, help on come Now may front? what of out,

-- double storage, the expand they are fall bath, and those really we'll fourth in Peter, a deeper ahead. is looking the I brand forward own and understanding surprise But what throughout the of into is really XXXX we've category And and Yes, beyond. that the and done lie trajectory that we'll for category we there brand sharing areas. own of research to deep bed, all and you down amount as no QX kind doubling and XXXX. is been strength that our kitchen areas third our we've our will in opportunities quarter, for down definitely And there details opportunities tell and of but launch of currently and

and tracking So more definition We're categories category ease very to and have each a the but clear distinct on of plan. in follow have and convenience trips we and traffic goals. of discovery, that,

Okay. meeting Great. weeks. Well, forward so to look the few thanks I a much Thanks. and in

Thanks, Peter.

Guggenheim Steven question Securities. next from is from Forbes Our

in somewhat what Maybe presentation. in fulfillment XXX Good it at better a mix the that? sort help -- look sort fulfillment margin blocks would refer building the better you points don't Curbside distribution of ability here? the you Is of sort cost morning. to? quantify methods, us change of in of gross differences us of Or it you but as the as the different we I leverage, in help can that's of follow-up or year? have fulfillment relative The drivers know understand BOPIS, us understand or the last walk to basis the the across opportunity those shift build continues of if methods that want the And to to

Gustavo here. Hi Steve,

And costs, So gross each by to channel improving clearly, margin, that we're planning we labor XXX expect benefit BOPIS. for, costs, of we're and to really mix to costs. scale includes continue continued offset driving of impact, our of driving being that your some deleveraging distribution on And fulfillment which those. the the specific points, focused question of one on of basis components cost of our

the elements Cindy heard one her be how You remarks key focusing we of talking BOPIS is in about will on.

year-on-year, by So made we mix. fulfillment more And we're only gross also Does product the that, by in by than but progress not we we've leveraging that very margin improving costs, the also channel. pleased digital with anticipated help?

right? broader to Yes. any Or I higher you running Curbside So penetration or do sort the can sort regions No, over talk subset. expect a I retail about of XX%, think look if that at hardlines, differences penetrations? you have retail -- sort BOPIS, in we obviously that range do at two-to-three-year horizon? certain across time of regions where are of go if there's mix, I if you know don't or of mean,

What supply we're the chain, responsive ensuring is chain that is have reinvention. we which reason talking part focused supply about a on of very we're

how will and the demand. perspective show will to we to from we are get of mix that what to In store, BOPIS same-day and -- out mix delivery, customers et going more different from markets, digital So Day, want. the the is we the optimize address how that cost satisfy direct route fulfillment Investor we it we whether see demand our on cetera. direct channel vendors, that consumer, to our customer playing plan the And to customers our

Okay.

plan real part mix. to increase a our XX% sustainable a Steve, has too, begun third we basis. building this into penetration as during customer. BOPIS. just fourth that that we've a We're the regular also Yes. No, with our the And I'd We're strength seeing this say of expect a quarter. just see become journey new on being and

look forward Investor the more So sharing to Day. at

you. When can, out relative about in sort performance Is nature? the what build, on somewhat strong are to the a the a as for Or and right, I we profit about, transitory obviously, to Mark, you two-to-three-year profitability in quick sort margin just the think should think horizon that's profile we the people to profile. we here business? second right, for that call a really there anything underlying of expect look time guiding margin If then the quarter at of third just of here, a quarter and follow-up, improvement plan, quarter,

No.

this Steve, the a discussion we does we'll that fair I discipline gross bit mean, of be these with really deploying down easy what when modernize in is you're morning, new margin customer, usage us moving are go seeing, our help through word doing careful it our both services, think and think I to I used forward. the what terms margins. engaging in then but merchandise and and convenient, and coupon. and curation in of communicating promotions doubling How offering which our we're mix, profit on we're

going we've that of where is and what the up And now of and even applying growth third as our we brand those business, quarter substructure I through So, see go further you're evidence cetera. think to fourth disciplines that practice to you're the gross we the Day, best the and beyond. layer applied into and et more sourcing opportunities our through margin Investor for seeing

we that forward you. with continuing to discussion look So

KeyBanc our Markets. next And question Capital Thomas from from Brad is

if my that question. about for evolve much a I here. thinking could you little in. bit was which the you're wondering participating taking you may so Thanks are environment how Hi. And in competitive talk

you're forward to October you. As in now. Prime particularly we've Day falling pull moving holidays, and the seeing promotions Thank retailers and holiday been as October

Yeah.

to where we're truly an Brad, is pleased, it competitive. in think, I really environment be

how to diesel. the Our And are stores open. compete actively in we first We're versus able we're firing could quarter. on

be environment. unlike really I with are pleased how and with There's I a no the that important. we're Bed will and to this Bath their and no think lengthy what quarter, fourth new is relationships doubt relationship both think is Beyond, to And third it's in engagement really going a very current be customer competitive other.

begin we're like data for earlier for seeing many will adjusting we're our value customers I holidays. And the accordingly and points shop retailers. to think from

So be to be we going competitive. to it's different. think going It's

and built And to and are We agile our plans flexible. are ready we've accordingly roll.

of really been hits into the the we that seen that, encouraging. changing to behavior. So, well Thanksgiving shopping getting from onwards, pattern looking when forward the as we've and we're month road first side, we see rubber have But the really through said September

which I cadence Very helpful follow-up on, more disclose could was were the color so very perspective? you if you a you that a what you Wondering traffic Mark. share from seeing helpful. think monthly some a little on Thank And of much.

picking think sale. obviously, and a great that's From the Yeah. perspective, I can be by buying overall a omni-channel store. our door represented okay in It traffic someone up lead digital us, result, sales digital traffic for

of So omni-channel results. really the is power sales driving

good. was real traffic Our

seeing think customers with tentativeness, in grow. we’re regions shopping specifically some data we we're that still comfortable will store. shopping I certain seeing getting suggest about return think to a and in And that that, more

into become at of where We’re not circumstances favor. I think ways power this all, truly is our accelerating back on to your out digital really but normal and is the balancing linked to

where need. when are when they they the So needing are, what customer ready and

and ongoing we going to those. I think watching seeing be we're but So think traffic differentials, that trends see we're changing,

question from And is Michael from our UBS. next Lasser

the was Good morning. quarter. best Presumably, for questions. August a taking month lot my Thanks comp within the

full the do has slowed Your to quarter, trend where would think August that to September equal the versus September the comp -- you in case? was September full that's commentary the Why equal second suggested that suggesting trended.

through the at evolving quarter stability to we're and August, against thing down digital store trends levels, the One against rates. margin both of and our and month is the BOPIS

a with. We seeing any ensure the a that this were moment pattern developing in saying further comment time being won't our with is one that the just home our we're QX we very industry. on based that. to on but customers we important a stability was with mindset, And comfortable that feel not wanted in So, customer in results,

quarter? probably of September or versus in September want to say clarify, -- stability will September, second you So August there you stability lot be in stability discussion because versus just entire do in about When this. a Mark, the mean versus

here. is the stability Gustavo consistency growth we What Michael, in mean Hey rates.

in the specific and So into growth digital September into encouraged quarter we saw third the second the digital And similar in question too to growth seeing and within far in Mark quarter. XX%, seen consistent each both as the again June, second are prepared saying, quarter that of we're north quarter, get saw very to growth don't growth we're months much growth, of in said, want is in a every basis. and comp in the three my the of remarks, we one by are the about than growth because your other as August trends results to consistent on said, we're rates rate digital seeing so that. basis we July, we've I second terms in

the you're Okay. in? will to the To that next -- because less what two was factor think of gross up gross be are the should on models going your incorporate the shipping freight and into calibrate how that that And much. And lower So, and environment part moving you as promotional? much margin, we then so Thank considerably as forward? do year costs in of probably you expense the we fourth just able to more much fact the overall how be extent our margin. going coupon quarter

I terms and on, I forward. shipping Michael, frames there's in again, think, be mean, Yes, moving to of pressure going time

I think we've calibrated into We go-forward that good that. feel plans. about our

yes, really promotional strategically. In journey the that market on and for we we're that. terms us, more on embarking margin costs, feel in solid total resources in less was for how But the of of accounted and a gross coupon, use we we terms effectively our

and strength correctly. it's a is us for coupon opportunity an So used

did the in to real we through QX, and coupon. we it, iterating use benefits as how careful the we curation upside see testing So of

about our them both And market so intent in of was more strategic but it favor. the was worked it than our dynamic,

next from Stanley. And our question Simeon Morgan from is Gutman

up then ramped able a morning to given I will everyone. short-term and expenses it, in guess, fully that, My that store quarter. have think first, if share a short-term be how QX, SG&A Good dollar growth about -- Thanks. is more by you're I a medium-term. to

What active can Look, down say not our committed we first Gustavo continue in going provide QX. the we're specific is here. Hi, I quarter. SG&A beyond a as we're guidance in to components driving our results, Simeon, fully saw P&L to

the going that And and of We up ramping the into announced some recently second quarter. we've the interventions in the also mind that keep are restructuring some quarter. third to deleverage saw in start fourth

committed continue and cost optimizing to structure we're more to our now So come.

assume markdown gross on also management, ticket helping the Or line? the that more it margin is Is lift? then efficient top And to the more just meaningful I and more promotions line. that's impactful a the

impactful margin our to on gross how more we at as coupons. how line. much becoming we We're the data, look more It's promotions, Mark optimize manage disciplined we how said,

the in reflected gross margin gross improvement part line, of more basis that is driver. margin see which You'll the mix, product XXX points

Sachs. Goldman question is next Kate from our And McShane from

Thank morning. Good if back you. Thanks taking for question. comp my I I to question the wondered earlier. go could

that how the rest to big mention XXX year. fleet? XXX those quantify be a You there the and way store performance the of Is by closing of you'll did the the the stores comp of the gap between stores? And end is their

and we'll be third really pertains fourth the in performing how Okay. quarter. That to

that feel our of XX won't we on we're data other that side inside -- stores comfortable into We'll today can got the and than closure will be comfortable absorb have So we based have there, there. advantageous sales and that accelerated which sales, our we've be we plans. fleet, sharing closing built plans been the that

second question into about you year. then going in And half update is just could on quality the back the us you. wondered how the I my inventory inventories. in-stocks Okay. Thank if store, feel you on the of of

based on sales by partly design trading Yes. and of which accelerating the on We're is definitely leaner inventory, and inventory. availability partly

overall levels quarter. and is right of that we third the buckling the get think for down inventory ensuring industry and the I fourth

vendor our plans the very, quality the with working that place in our strong. of is We feel base. inventory closely very have We and

continue and third for items into our much as possible going quarter. key replenish as our We top-performing items. the and chase hyper-focused to on We're fourth

and better As we that quality promotional we through of heels. we will one of Achilles size with year, get know think was help us And last a inventory. that our which have cadence, better

So and leaner we're better. operating

inventories, right future. it the well the for bodes With

next Griffin Our James. Raymond is Bobby question from from

remaining, than first, the initial Appreciate already deck, sales in asset of called some further additional on taking guess, out everybody. for assets the savings other sales went If would plan? kind unlock in the I slide on Mark, restructuring non-core questions. you Good you've that potential potentially those morning, through, my non-core that detailed assets.

There each think a forward The that factored today, restructuring they've in here not terms but we've with plans, really, of, there, bit forward. asset our date, was we've factored we've we SG&A sales assets banked. that action was our non-issue into in declaring there been so which be of a and any because of the will going of we're action Bobby, already taken part if the inside to plan,

sales So comes benefit in in anything cash terms forward flow. asset of be will of that terms that just in

go then, sorry. And Okay. I'm That's helpful. ahead, -- just

you. to Over

It model, last bit just with X on next these store the three of or a I And trending? are as how up kind comps to we modeling of I help we is little think through this plus just looked us it things some – quarter. store for kind widen go to question assume line four is – guess in okay. of X Yeah. between and points that roughly should safe – quarters closures? tune And and to would to spread us closures our keep sales. my like a net going I one points assume the that's

here. Gustavo Bobby, Hi,

company, reshaping address the both to in as attention more continue I your stores. that. context growth, completely comp it's and and Let concepts one. paying a the me understand important of and portfolio of We're of question very more the terms we

me two address parts. let So it in

comp XX%. and we think store in of of quarter, right, quarter, it, First, the reported And June, between sales reported sales, in down first, difference the total big on had the second performance comp stores the month during store down XX%.

stores. So you're the in of June, stores. into that we were driven, gradually of X-point is of our because opening delta month starting this month the remember that – seeing in the June part And

delta store digits. only driven XX%, comp June, down primarily store to big by sales the while where is store were was that – month of So in close mid-single June down

be we are coming part leading, in the as productive. stores closing fiscal are So looking, this is that looking the less of John stores, year, we forward, that XXX the will optimizing program XX

what's rest growth our comp we quarter. will on report that perspective we going assured impact as predict to hard provide results very it's forward, Now I'll the that that call each but out.

our Horvers question And JPMorgan. next is from from Christopher

Morning. Good Thanks.

performance. prioritizing question true prior really closings. how to But I store didn't stores omni-channel you're of this on So about the historical you're year, you know basing first, platform. a have sort a the

So the you to first to Just this or might most how adjacency more store? you're of trying understand most EBITDA you where Are XX? the Beyond on stores, and & these the negative out prioritizing closest do they Bath of And omni, target? XX. the closing build overall think you another as sort those XXX, revisit then

is your for and our we've on question. analysis focused this Look, we areas. Thank undertaken several in you very Christopher, key network, Yeah, a around John. deep

The first is unprofitable stores.

we stores lease the are is that too that where profitability to third another. one close second to of have burdensome the And is store. arrangements The are the

we'll the be closing we've of stores And from the by to be So we've first identify there, undertaken announced, a closed. deep this should the analysis end year. roughly one-third that

deceleration if Got mix it. if quarter. comps given And and then trends back two disclosure, sure you're that September actually on to to true consistent, suggest Based in it down one-off but like e-commerce prior college, not goes store questions. third consistent in the commerce looks holding would I'm that's relative XQ.

benefit margin in from first have year-over-year. trying XXX did bps there's change accounting about an a gross just And if nuance to of a in there. the So see quarter, secondly, you

quarter was well. Thank this I was see So as that you. trying what in to benefit

Gustavo Chris, Hi, Sure. here.

above seeing the throughout months trend mentioned question First, seen the quarter, growth each have the as on trends before the your second and in in one on of the we in sales quarter, September. consistent continue that XX% of month we digital of

So that. about feel pretty good we

of refinement EBITDA. question revenues total we margin, in and it the impact or as numeric, an In doubled adjustment was about quarter accounting the that gross basis it was XXX quarter-to-quarter. was more points, no okay? on anticipated. change, quarter, On less fulfillment basis Your on margin, into half, the record XXX some how so given less was our has gross specifically our second it costs into than the It's points, impact first

very much. Thanks Understood.

America. Our Nagle is from Bank from question of next Curt

much. Good morning. very Thanks

sales debt. looking one net substantially flow just maybe too so stick the that I'll improved Kind quarter, from guys against and EBITDA and you So much capital on million had allocation. the at come cash cash potentially. books with to cash of question -- on free asset More arguably $XXX

So terms we could we guys still where the market? you in the in do we Are back restricted? buyback? stand of When reengaging expect

strong Curt. fiscal Thanks position. It's recognizing what Hi, the Yes. for been towards. we've building definitely

real us see clarity the cash can capital as well on our to and plan real month coming view end shareholders. full to three-year our strength in a clear as we expenditure of of our You liquidity That terms will for intend at provide having business point on the how to and strength and return and modernize generate use of allocation.

then. So we look forward to sharing more

just merchandising mix. I'll to Maybe one -- one in more Mark, terms you, Okay. quick in sneak of

merchandising in inventory. -- stock, of messy least, to difference looking can right of a think much out plans comps the better guys having and bit new And year, back you your early with How make? the of a not margin? the of back kind So some perhaps back in the of things were half half to of last say you do terms

mean, agility then, as skill mindset. has around wounds. a I And self-inflicted the team kind different results moved some and back Yes. with I detailed of think this quarterly were there strategic we've through

clear think in I you clarity end saw the So period, back-to-college between alignment caps and representing and and digital us saw on value as you stores.

saw in us items. of stock You key

best top in items fourth being needs. to curate the to different really think really You saw to going to very blip targeted to We've variability whole items a about quarter. customers, the the meaningful COVID, to I out a plan be that customers storyteller in-stocks of stock, it's customers promotions our of and built third robust were and on us the wanted. back than that meaningful specific their And fourth for quarter post that plan and coming to the getting to focus be of have promotional

how we cadence, and clarifying really our inventory, the So and blueprint really key sellers services third bring quarter. and great managing using price and on communicating look different forward omni-channel to promotional to of value focused a items, we're using our very best fourth

Basham one Securities. for time And more we the is question last And have from from question. Seth Wedbush

a morning. time. of in some on congrats very gross first been short which quarter. taking and Thanks underlying my is a order improvements Thank have a for made you strong great Good My you the margins, lot. just question question in of on

about the did about is year being think in in the of back know there not you'd providing half you're we in the the that we back year-over-year of anything but that sustainable, performance? elaborate plan gross not on guidance, in As here quarter go-forward year, I some financial half of should terms you margin the second of drivers think the sustainable the the and being

promotions and The rebalanced. to We've becomes Hi, efforts of for the and No, the very our QX coupon. think ready runway doubled period. we Seth, curation promotions We're gift-giving for promotional in on and ready question. that the had period. the We're meaningful fourth. down we efforts for thanks are a in third the talked mix sustainable and good our

mentioned. are as better, just I stocks looking Our

I -- see also, up as a we the day. the penetration BOPIS too, as and ramping of rate think that well of addition same

So nonexistent we there's see are that from be year fourth that to some and have shoots QX on in four just really quarter. play, and proof-of-concept good into green going were already that there third we levers three, prevailing in last and

you sticky, repurchase perspective. Are prior customers? forward? cohorts it acquired, some going you more great of relative seeing customers new new thus relates you've to And you them the activity seen that's then lastly, the as far and do to positive that them you've talk driver a can from to That's think of

and and very We're we're in customer they're a much And that focused who home. more engagement we're not them them. with income, engaged, but discretionary data is as definitely what seeing their seeing colliding younger have may on

quickly. going them, them be areas value them key early engagement. we seen home and for looking they're we've connecting going long-term so and think very at invest they're decor kitchen like investing We're and really and the to So engaging to with fly areas,

for that to and ladies Barth the we closing all the will you, I gentlemen, for -- is today call Thank back remarks. today questions, Janet time for have and now over turn

later you with or this on day to you with for meeting me on comments questions Investor will start month will Time. a.m. thank forward participating free Thank you, quarterly our or and all Have today. great results. additional affiliates Please for in details XXth. available our at be call our look speaking Eastern contact The We feel October meeting the to at stay safe. a X:XX Day Wednesday, soon. and Registration our virtual online again

participating, you Thank for conference. you and Thank may Ladies today’s disconnect. gentlemen, you. concludes this now and