Q1 2020 Express Inc Earnings Call
And gentlemen, thank you for standing by and welcome to the Express Inc. first quarter 2020 earnings Conference call.
I'm all participants are in listen only mode. After the speakers presentations will be a question and answer session. If you'd like to ask a question. During the session you need to press star one on your telephone if you require any further assistance. Please press star Zero I would now like the on the conference over to your Speaker today, Dan Aldridge. Please go ahead.
But of course, all good morning, and welcome to our call I'd like to open by reminding you of the company Safe Harbor provisions any statements made during this conference call, except those containing historical facts, maybe deemed to constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1990, but actual future results may differ materially from those adjusted import look.
These statements due to a number of risks and uncertainties all of what you're describing the company's filings with the FCC, including todays press release Express assumes no obligation to update any forward looking statements or information, except as required by law. Our comments today will supplement the detailed information provided in both the press release and the Investor presentation available on the company's Investor Relations website.
In addition, you can look at a reconciliation of any adjusted results discussed in our comments to amounts reported under GAAP on our website or an earnings release.
With me today are 10, Baxter, Chief Executive Officer, Perry, Berkeley, Chief Financial Officer, and met Moellering, President and Chief operating Officer, I'll now turn the call over to Tom.
Thank you Dan and good morning, everyone.
I'd like to begin with a word about the extraordinary times in which we find ourselves since the onset of the covert 19 pandemic.
And now also the recent in serious demonstrations in protest taking place across our country.
Our families.
Companies and communities are all affected.
2020 is certainly proving to be a challenging year I.
Hi, I'm hopeful that we will all come through this time with the new perspective, new understanding.
In new ways of operating in the future.
In a couple of weeks I will come to you end up my first year as CEO of express.
I could not possibly have imagined a state of retail.
Much less the state of the world like this.
Speaking specifically to the impacts of Cobot 19, I don't believe the word unprecedented has been used as much over the last decade as it has been over these last 10 weeks.
Even as our country and its many industries continue to reopen this time still characterized by uncertainty.
The future of our economy.
Retail businesses and up consumer confidence has not yet been written.
With that said I speak to you today with as much optimism and as much realism as ever.
The optimist in me knows that consumer demand will return.
And the real us knows that it will take some time.
And it will be different.
Let me tell you about our first quarter.
Specifically the decisions, we made and the decisive actions we took to protect our company.
To preserve the foundational aspects of the course, we have charted for our brand and our business.
The reasons why I believe just as strongly as ever in the future of express.
Our first quarter unfolded in two distinct phases, followed by a third phase that began in the last week at the corner with the reopening of some of our stores.
Leading up to and including what I am calling phase one express was in the early stages of a transformation.
Our new corporate strategy key expressway forward with its emphasis on the foundational pillars of product brand.
Customer and execution had been set in motion.
And while much work was still ahead of us a great deal had already been accomplished.
We had completed a comprehensive restructure of our organization in order to better align our teams and our objectives.
Implemented a more streamlined and efficient go to market process.
Established a new design and merchandising vision called the express at it and developed a new brand positioning to stick our claim to territory, our customers told us would be relevant and compelling to them.
And we had identified a total of $80 million and cost savings opportunities that we expect to achieve over a three year period.
In addition to this transformational work we began the first quarter with a high caliber executive leadership team almost complete.
Combining the right balance of institutional knowledge and experience with new voices and viewpoints. This team is comprised of results oriented strategic thinkers, who bring different complementary skill sets and perspectives.
And at the end of April we welcome to Mike Reef is our new senior Vice President and Chief Human Resources Officer.
Before the Kobin 19 pandemic, even had a name the decisions we had made in the actions we had taken had created momentum.
And it already begun to change the trajectory of our business.
We had significantly reduced our expenses.
Meaningfully improved the health of our inventory.
Our fleet rationalization plan had begun to rightsize our store portfolio.
Our new approach to product design merchandising and in store presentation was delivering encouraging early results.
Our new brand positioning was beginning to reveal itself and our creative content and customer engagement was increasing.
And finally, we have launched a new set of corporate values and had begun to build the culture that would support enable result and enable results.
Our organization was galvanized behind our new strategy and our cross functional teams were aligned around our new operating model.
We were on the expressway forward.
Moving with confidence and speed to our destination of long term profitable growth.
And then the world changed.
And we entered what became the second phase of the quarter.
We had to make a new set of decisions with information that was incomplete and rapidly evolving.
We did so with the overriding objective for express not only to survive the pandemic, but also to emerge with the strength and resources to return to the important work of our transformation.
And to be well positioned to achieve our goals.
We responded swiftly and decisively.
We follow government guidelines and closed our offices and our stores.
We quickly shifted to work from home and experienced no interruption of service or productivity.
We put in place a robust communications plan to keep our associates informed engaged in connected.
We took the actions, we deemed appropriate and necessary to protect our company's future, including securing $165 million from our existing credit facility to support the business during the crisis.
And making the extremely difficult decision to furlough the majority of our store associates and approximately 10% of our corporate support team, who either could not perform their responsibilities from home or whose role solely supported our stores.
Throughout the period of store and office closures, our teams maintained momentum on key strategic initiatives through a combination of determination.
Innovation.
And at times sheer force of will.
Let me share some examples.
Express at a design and merchandising philosophy came to life through virtual co creation sessions between our designers and our customers.
Our marketing team conducted virtual research to stay attuned to the customers mindset and needs. During this highly unusual time.
And then created digital content to deliver the most relevant and appropriate marketing messages for the current environment.
The team tapped into our roster of Influencers, who hosted a number of live virtual events and connected with our customers and an authentic and conversational way.
The top performing event in the series generated unique views three times higher than our previous benchmark.
Our new brand positioning create confidence and inspire self expression was realized and in fact accelerated through the launch of multiple content series under the heading hashtag expressed together.
Our marketing team worked closely with our network of Influencers brand advocates and customer ambassadors to develop content for our social platforms web site and email messaging.
Some of this content drove our highest customer engagement and direct sales levels to date with Instagram engagement up 35% for express and up 62% for express men.
And Instagram story completion rates up as well.
And on April 19th we achieved a social media milestone when our out express Instagram account reached 1 million followers.
We expanded our live chat feature so digital is digital stylists and select district managers could provide real time product and wardrobe assistance to our online shoppers.
And most recently, we began testing curbside pickup at our eastern location in Columbus, and select Chicago stores.
End of implemented enhanced buy online pickup in store functionality in select reopen store location starting in mid May.
We plan to expand this quickly across all of our stores.
During the period when only our online channel was open for business. We of course saw declines in men's suits and dress shirts and women's suits in dresses.
With professional and social occasions for wear to work and where to go out categories put on hold the shift was immediate.
We saw strength in casual categories, such as leggings, and jogger PANSS driven partly by our new work from home and essential shops, which resonated with customers as they adjusted their usual Monday to Friday work wardrobes to suit the new work from home dynamic.
This reinforces our commitment to offering customers versatility and value as they continue to take a more modern and even more casual approach what their wardrobes.
And our focus on women's tops paid off with strength in both casual and video conference ready fashion tops.
We continue to see increased interest and engagement from customers as they settled in to this new reality.
Phase three began in late April as announcements from federal and state governments allowed us to start reopening our stores.
Our team had been a waiting and preparing for this moment.
And we immediately shifted gears to begin a phased reopening.
On May Onest, we opened two stores in South Carolina quickly followed by several more in other states in accordance with local regulations and mall guidelines around the health and safety of our associates and our customers.
Hi Memorial day.
We had reopened 242 stores.
Today 303 of our stores are open with another 58 expected to open this week.
We plan to reopen all remaining stores just as quickly as is safe and allowable.
We have taken the responsibility to protect our associates seriously and also to make sure that customers feel safe and comfortable in our stores. So we took a number of important steps.
Prior to reopening we thoroughly clean each store all fitting rooms and bathrooms.
Installed protective plexiglas yields at the checkout counter.
Indicated line queuing, an appropriate intervals and other reminders of social distancing through forts through signage and floor marking.
Removed fragrant sent strips and personal care product testers and trained all of our associates on the new health and safety procedures.
We have also brought our store associates back in a phase manner calibrated to these safety protocols and best practices as well as mall traffic and store activity.
Upon reopening we instituted an ever adhered to another set of protocols.
Each store has been designated with a maximum capacity.
Verbal reminders of social distancing, our played through the store audio system.
Sales and non sales areas of the stores are clean throughout the day.
Fitting rooms are cleaned after each customer and signature capture devices after each transaction.
I'll try to ignore returned product goes through a special heat steaming process or a 48 hour hold before it is back on the selling floor.
Reinforcing sales associate awareness and practice, a personal hygiene such as frequent Handwashing self health assessment immediately prior to each shift.
And all of our sales associates must where face coverings.
While we're of course pleased to reopen stores and welcome back associates and customers. We know that it will take time for our sales to stabilize and we're paying close attention to traffic and customer trends in our reopened locations.
These are still the early days of the Reopenings. The new reality is still unfolding and of course, the protests and riots create even more uncertainty about how things will play out.
And at that point, we have had as many as 39 of our stores closed since Saturday with eight sustaining damage over the last few days.
I'm relieved to report that no express associates were harmed during these incidents.
Given these circumstances it we'll certainly take time for consumer confidence and shopping behavior to be fully restored.
We do not typically share our in quarter trend.
And it is premature to make any predictions about how the current quarter will unfold.
But let me share some of the early indications.
The competitive environment is extremely promotional.
Our new receipts are selling well.
Our store Reopenings have been phased and we have seen consistent improvement in performance week over week as each wave progresses.
Traffic and comp sales are improving.
Sales are outpacing traffic.
There is little doubt that the retail industry has a long road ahead, but I am confident that the actions we have taken and the strategy. We have implemented puts us in a strong position to achieve our long term objectives.
Unlike many other retailers, we entered into this crisis and position of financial strength.
And throughout its duration, we have kept a sharp focus on maximizing everything that is within our control.
Let me now turn the call over to Parry, who will provide additional detail on our results and further explain the liquidity actions, we've taken to ensure the health of our business and then I'll share some closing thoughts.
Thank you team.
I'll start with our first quarter results, then discuss our liquidity position and the actions we have taken and are continuing to take to ensure the long term health of our business.
First quarter net sales were $210 million at 53% decrease as compared to $451 million last year.
Rick filter sales were negative, 51% and express factory outlet stores Hill with negative 61%.
Our sales will materially impacted by the onto the corporate 19, and the subsequent closing a full up our stores on March 17.
Once sales to 100% online estimation, we saw the shift to more casual options as customers. We suddenly spending more time at home. We quickly people did our marketing efforts to support the shift which gained traction as the quarter progressed.
Our merchandise margin contracted by approximately 1500 basis points and was mainly driven by increased promotions as we shifted to highly competitive online only environment.
Higher valuation reserves related to our inventory as well at higher levels of reserves I consistent fioptics commitments.
Finding documents expenses were relatively flat on an absolute dollar basis, the benefit from our fleet rationalization rent savings previously announced the organization and the actions we too that's part of 19 were fully offset by a 14.7.
Million dollar noncash impairment charge related to certain stores in store assets.
During the first quarter, we had a gross loss of $46 million with gross margin rate of negative 22% down approximately 4900 basis points as compared to the prior year driven by the sales decline.
It's you in a expenses were $99 million, a decrease of $36 million compared to last year. The decrease was driven by the previously announced cost reductions associated with a corporate restructuring and Friedrichshafen rationalization. In addition, this includes the media.
Jason actions, we too in response to covert 19, and the reduction of certain variable costs associated with operations.
As a percentage of sales SGN eight came in a 47.2% de leveraging approximately 1700 basis points I say result of a significant declining sales.
Yes.
On a GAAP basis operating loss was $145.3 million as compared to last years, all put any loss of $11.6 million.
On an adjusted basis.
Our all pretty loss for the quarter was 150.6 million dollar.
Adjusted operating loss excludes the impact of the previously mentioned noncash impairment charges.
First quarter loss per share was $2.41 on a GAAP basis compared to a net loss of 15 cents per diluted share in the first quarter of 2019.
Adjusted loss per diluted share was $1.55 cents.
Excluded from this loss was the tax benefit from the care Sac.
The valuation allowance recorded against our deferred tax assets.
The non cash impairment charge previously mentioned as well at at 2.7 million dollar noncash write all of our 2016 investment in homage.
Our effective tax rate for the first quarter was negative 4%.
The rate reflects the previously mentioned valuation allowance recorded against certain deferred tax assets. This allowance was partially offset by the care stack benefit of cutting back 2019, and projected 2020 net operating losses to prior tax years with a higher.
Federal tax rate.
Turning to our balance sheet and cash flow.
We ended the quarter with $236 million with cash and cash equivalents as compared to last years $144 million.
This reflects the corporate 19 mitigation exports, we have realized to date.
Our cash also includes 165 million bulletin proceeds from the revolver, we drew down in March.
And to be clear, we have no other borrowings and still have approximately $68 million available under this facility subject to certain borrowing base limitations.
Operating cash flow was negative 151 million dollar and capital expenditures were $4 million, resulting in free cash flow of negative 155 million dollar for the first quarter of 2020.
Inventory were $269 million at 6% decreased as compared to last years 286 million dollar. The decrease was primarily driven by our inventory position as we started that first quarter, which was down 18% year over year.
In addition, as we began to see the impacts of Cobot 19, we immediately took actions to reduce the balance of second quarter deliveries and adjust our plans for the full season.
Our goal was to maintain the integrity of our assortment, while minimizing our exposure due to excess inventory.
While this level of it to completion, it's not ideal issue put us in a much healthier position by allowing us to increase the penetration of new items in our assortment as we head into the full season.
Due to uncertainty surrounding the potential impact of Cobot 19, we will not provide guidance for the second quarter or the year at this time.
But I do want to review our liquidity position in more detail and provide some color around the cost savings, resulting from our public 19 mitigation actions as well as reductions we announced in January.
Once the crisis began we took immediate action to help ensure sufficient liquidity throughout the duration of these crises.
Including drawing 165 million dollar on our credit facility.
Reducing second quarter inventory receipts by over $100 million.
And immediately adjusting our full sales and inventory plan accordingly.
In addition, we identified cost savings of approximately $75 million.
Including the impact from our previously announced corporate Nentin mitigation actions and a decrease in our variable costs. I said result of the declining sales.
These actions included fairly well store associate in a number of corporate associate adjusting store labor plant.
Spending married increases implementing a hiring freeze and cutting all known business clearly got caught.
Furthermore, what did you capital expenditures by $25 million by postponing second real estate 90 projects.
Additionally, we expect approximately $20 million in cash benefits from the care Sac in 2020.
However, the majority of the Cures Act benefit will materialize in 2021 as we get to came back with additional 2020 net losses to prior tax years.
In total these actions I'd expect it to result in approximately $385 million and improve liquidity in 2020, I live Leach 195 million dollar was realized in the first quarter.
These actions are incremental to the previously announced $80 million in profit improvement opportunities as part of express wait for what strategy.
We continue to expect $50 million to beauty alike. In 2020, driven mainly by the restructuring we've completed in January we expect the remainder of the savings to be less than 2021 and 2022.
It is important to remember that there are headwinds associated with these opportunities, which we previously communicated as part of our investor event in January.
To summarize.
Based on the immediate actions we took in response to covert 19.
Our strong cash position, an absence of debt coming into the pandemic.
The early trends from the reopening of our stores, we're confident that we have sufficient liquidity to support this through fiscal 2020 and to set us up for improved result in 2021.
We 303 of our stores now open we're cautiously optimistic but of course it will take some time before we reach our long term goals.
As Tim said, we have confidence that the actions we have taken and that strategy. We haven't played with allow us to achieve our long term goal of profitable growth.
I look forward to adding in our progress and now we'll now turn the call back to team.
Thanks Barry.
Cobot 19 was certainly an unexpected detour omni expressway forward.
And as you all know a detour can add time to your journey and it can alter your route but it does not change your final destination.
Our strategy for express is the right wing.
And our destination remains the same.
Long term profitable growth and a mid single digit operating margin.
The executive leadership team and I are focused on the work that will return our brand to relevance and our business to financial health.
So despite this detour.
I am as confident as ever in the future of express.
Our brand has high awareness and is known for delivering quality and value.
Our product portfolio offers breadth and depth to cover a wide range of consumers across an equally wide range of wardrobe needs and wearing occasions.
Our customer base is large and we are engaging them and compelling and relevant ways.
Our financials and liquidity our solid.
And finally, our strong cash position and low inventory levels at the onset of the pandemic as well as the decisive actions. We took will allow us to bring more newness into our stores more frequently as we move into the fall season.
In the most admired companies there is a third component that sits right alongside a clear corporate strategy and the compelling brand positioning.
And that is a strong corporate culture.
The corporate culture reflects the way and organization operates the way we show up conduct ourselves and treat one another.
The corporate culture, we had begun to build prior to the onset of the pandemic is encapsulated in six words.
Express yourself.
Express together.
Xpress success.
Expressed together is about acceptance respect and trust.
It is about listening openly speaking candidly and inviting dialogue.
I cannot help but think about this idea of express together as I bear witness to the events that have transpired over the last week.
From peaceful protests and deeply felt pending to outrage and Ryan.
Because express together is also of course about quality inclusion understanding and compassion.
And it cannot possibly include or condone or tolerate discrimination heat or violence.
Express together means that today and every day, we stand in solidarity with all of those who also expressed together.
There has been a frame quote on my desk and every office I have occupied for the last 20 years.
I've thought about it often since the onset of the pandemic and over the last week.
It says when written in Chinese word crisis is composed of two characters.
The first represents danger.
And the second represents opportunity.
And is never easy to consider the opportunity when the danger is so present.
Throughout the Cobot 19 crisis I have held tight to the view that there will be an opportunity for those with the fore sight.
Conviction and resources to realize it.
My commitment to our associates, our customers and to all of you is to continue doing everything possible to mitigate the danger to express.
And sees every opportunity for express as we navigate our way to the other side of this crisis.
I appreciate your confidence in our ability to do this and I. Thank you for your continued support.
I'll now turn the call back to the operator, so we can take your questions.
At this time I'd like to remind everyone in order to ask a question. Please press star and the number one on your telephone keypad.
Your first question comes from the line of Marni Shapiro from retail tracker. Your line is open.
Hey, guys.
Tim well said.
So I guess two things first of all these stores I was in yesterday. They were open I love your sanitation stations at the expense logo and could you talk a little bit about you came in this period very lean inventory you've cut receipts.
The stores look fresh actually so can you talk a little bit about late summer and into fall looks like in your ability to balance new versus what you need to clear through the next couple of months say.
Yes, absolutely marni so.
Yes.
Ill explain pretty clearly what we ended up doing when we closed stores on March 17th.
As I said, we had to take some pretty decisive action and as Perry said.
From a product perspective, our number one objective was preserving.
As much of the integrity of our Assortments as we could given that the assortments that were flowing in were actually improving delivery after delivery.
Given that we were on new on new path. So essentially I think the reason that that you see freshness in the stores now is because we actually took what would have been our April delivery and made it our may floor set.
And we took our may floor set and made it our June floor set.
And we then.
We didn't put into production quite honestly, we said we cut the receipts we did cut them from our plan, but we Didnt have June and July in production at the time, we were making these decisions. So we did not put them in for into production we put.
A limited amount of product into production for July.
We'll continue.
Summer and also transition us in to fall. So what I would say is that in the second quarter.
If you are visiting our stores on our website you will continue to see fresh product.
You will continue to see product that is more reflective of the express at it and where we're going in the future.
But you won't see.
Likely the best product that we had developed for the second quarter because that was the latest deliveries and you may think that some of it doesn't look exactly like you'd expect that to look you know during that period that that you're seeing it because.
Because it wasn't intended for that time period that being said I think that in the world of fashion Theres been a tremendous amount of conversation about how.
Cobot 19 has impacted retailers and designers fashion houses thoughts about how we flow product and when we flow product and.
I've actually been.
Very pleased with how relevant the product we've delivered.
Was our April delivery, how relevant it is in may.
And how where now it is in May and the same thing can be said for.
The may delivery, which will become June delivery.
That's part one so.
There will be freshness flowing in the second quarter.
It is more reflective of the express at it we are achieving very strong sell throughs on new product and in many of the categories at much higher average unit retails.
As we move into Q3.
What I will say is that I had said previously that I thought the composition of our inventory would be much more aligned with where I wanted it to be when we got to Q3, that's obviously no longer through because the composition of the spring product is not what I would have wanted it to be but as we deliver product in the.
Third quarter, I would say im very confident that it reflects very.
Really reflects well well the express at it and where we are going directionally, so with each delivery.
In the fall season, I believe we will continue to improve the composition of our overall inventory and the customer will begin to see much more clearly the express at as we've defined it going forward.
Netspend and you'll be able to live deliver newness through all the fall because thats not heard that wasn't purchase at all.
Hey, good aspect exactly and you know Marty what I would say.
For anyone on this express team that is listening, but also for all the view.
The work that has been done in.
Difficult circumstances, none of US win win this started could have imagined designing develop developing merchandising producing.
Fitting product in a virtual environment.
And and this team has done an extraordinary job I mean, it's actually I'm. So proud of the work that the team has done and we didnt Miss a beat in terms of of marching forward on on our product initiatives marching forward on our marketing initiatives on our customer initiatives.
And in fact, we accelerated many of our brand initiatives, which we had planned to hold until later in the season. So.
Really proud of the team and what we were able to accomplishing a new virtual environment.
Best of luck for the summer guys Im looking forward, you mean Bakken stores next week.
Thank you Marty I am looking forward to hearing your thoughts.
Your next question comes from the line of Susan Anderson from B. Riley Your line is open.
Hi, Good morning. This is Alec encore, Susan so hopefully everyone's family safe during this time.
But my first question is just related to the stores. So you mentioned that 303 stores were opened are you able to provide any color on the store traffic or just the sell throughs with that and then also on occupancy costs have you had any update on negotiations with.
Rent costs.
Or updating your lease agreements to lower cost going forward.
Okay.
Hi, Alex Thanks for the question.
Yeah as I said it is very appropriately.
In the reopening process.
For the whole country not just for retail.
To have to give any sort of strong indications of where I believe consumer confidence will land that being said what I will tell you is we have opened our stores in waves. So if you think about each weight each week is a wave each week.
State and local guidelines allow us to open more and more and more of our stores.
So if you look at wave one so and you think about wave one as the first week that we reopened stores.
That wave the the revenue and sales trends and traffic trends in that wave has improved sequentially week after week after week after week.
That's also true of wave two.
Of wave three and up way for.
So what we're seeing is very consistent improvement.
In each wave the longer that wave is open which I think given the circumstances, we would all expect.
But again, it's too early to tell I will say that our conversion is much higher than a year ago. So those people that are shopping in our stores and online.
Seem to have.
Number one.
Great or intend to purchase and number two they like the product that we have.
Better than than they have in the past so.
I feel very.
Confident in the product because of the conversion rates, we are seeing and the average unit retails were seeing in the new product we're delivering.
But still really too early to give any indication of what's happening in stores other than to say that they are improving week over week as at the longer they are open.
I'm going to Latin, Matt Matt handled the second part of your question, which was on rent negotiations. So high out. So we are in discussions with landlords around what fair ramp looks like for when our stores have been closed.
So they are active negotiations so we're not going to comment any further on on those because.
Still ongoing.
Perfect. Thank you.
Thanks, Alex.
Again.
Good question, Please press star and the number one on your telephone keypad. Your next question comes from the line of Roxanne Meyer from MKM Partners. Your line is open.
Great. Thanks for taking my question and I also hope that everyone is safe and healthy there.
I just wanted to follow up too much on your comments.
Related to Marty's question, you know third quarter I appreciate that the composition of inventory isn't can maybe where you want it to be but you're you're gonna have a better.
Reflection of the direction in which you you want to go on how should we think about.
Putting aside the you know that dozens of scenario is in the macro backdrop, but from what you can control.
The timeframe for.
Feeling like your inventory will be well positioned at the merchandise will be largely in.
Its new positioning to really be in a position to generate results should the macro be cooperative.
It's a great question Roxanne.
I had pre release previously said that I expected as I said to Marty expected at that to be at the beginning of the third quarter, but as you know the third quarter is still driven by a tremendous amount of products that was that was delivered in the second quarter and.
So when I say I'm.
Not as as confident as I previously was about the inventory composition at the beginning of Q3, it's because of all of the changes we needed to make in the spring season.
That being said I believe that when we get to Q4 and we have moved through.
And most of the inventory from the spring season.
I have taken the appropriate markdowns.
And.
I believe when we get to Q4.
Our inventory will will very accurately reflect the composition of our inventory will very accurately reflect the express at it.
In both men's and women's.
It will take longer in outlet you may remember that I said on our last call in the last time, we talked that outlet. We are further behind on outlet. Obviously, my our first priority as a team was addressing our full price retail stores and web site.
But I still anticipate that outlet will be much more reflective of the new at it.
As we move into first quarter, so fourth quarter four.
Full price retail and online.
First quarter of 2021 for outlet.
Great that's helpful.
And then I appreciate.
The idea that you're assortments are going to be and are much more versatile and not necessarily labeled indistinct categories like they were in the past.
But that said I'm wondering if you could help us appreciate how your exposure will look to one I guess I'll call polished versus lounge at the height of kit.
End of label, though is as we move forward and and I I, certainly understand that might be different by season, but just to better understand that the outlook here.
Yes look I think.
Let me start by saying.
That.
The long term impact on the way consumers will dress.
Is still to be understood and written.
I think we're still evolving that being said, we've been seeing a shift to more casual wardrobes for for decades quite honestly in America, and I think theres no doubt that this pandemic has has pushed that forward, even more significantly and even more rapidly.
That being said.
[music].
When you look at our first quarter results. The fact that we are.
Dominant and have strong market share in men's suits men's dress shirts.
Women's suits women's dresses.
Really adversely affected us versus our peers are competitors, who may not be as penetrated in those categories. When you think about the spring season, we missed weddings.
We missed problems.
We missed graduations.
We missed Easter So we missed a signet all of those things were put on hold people stayed home weddings were cancelled graduations, where we're done virtually or in cars incorporates so we missed every one of those occasions in the first quarter and we will likely missed most of them in the second quarter.
I I do not believe that occasions that drive people to where suits dress shirts.
And dresses are gone for good.
Those occasions will still exist and we will be position to grab market share from some of our competitors, including department stores, who who typically Ben very dominant in those categories, we will be positioned to grab market share from them because of the strength and power of our assortment the strength in power of our Brad.
And.
And the reaction, we've we've seen from customers so.
So so that's part one part two.
His versatility add value you've heard me say that and customers are taking a more modern approach to the way they dress and that more modern approach I believe to your point Roxanne now also and includes a much higher penetration in a person's closet of loungewear or true at home where.
And we saw shift as I said in my comments, we saw shift almost immediately to that when we created a work from home.
Shop on our website, we created an essential tab on our website for all those products that we believed were most relevant for people who were adjusting to a new reality that was that was predominantly at home.
We still see however, our brand and and what our customers expect from our brand is more polished.
Our penetration of Loungewear is absolutely going to go up it's going to increase in both mens and womens.
But our loungewear and our approach to lounge wear will still be reflective of the express at it.
Which is more polished.
It is more refined.
And and we've seen incredibly positive reaction to the product that exist in our assortment right now that does reflect that so that's the direction will move forward with loungewear. So you will not see lounge wear that is duplicative of things you'll see in other places will have a lounge wear assortment, that's reflective of our brand at it and who we.
Our and I think our customers will respond to it really really well.
Great. Thanks for all that color Super Super helpful and best of luck.
Thanks Roxanne.
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