Q1 2020 Tillys Inc Earnings Call
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Greetings and welcome to till these incorporated first quarter 2020 earnings results Conference call. At this time all participants are in listen only mode. A question answer session will follow the formal presentation you any once you require operator systems. During the conference. Please press star zero on your telephone keypad.
Please note this conference is being recorded.
I'll now turn the conference over to your host Guar Jackson you may begin.
Afternoon, and welcome to the Tilly's, that's called 2021st quarter earnings call I'd, Thomas President and CEO, Michael Henry CFO will discuss the company's results and then how secure an age Sasha for a copy of Kelly's earnings press release. Please visit the Investor Relations section of the company's website at least dot com.
On the same sex and shortly after the conclusion of the call. You'll also be able to find the recorded replay of this call for the next 30 days certain forward looking statements will be made during this call that reflect Kelly's judgment and analysis only as of today June 3rd Twentytwenty and actual results may differ materially from current expectations based on various factors affecting telling.
That's that's including impacts and the company's actions in response to the current covered 19 pandemic. Accordingly, you should not place undue reliance on these forward looking statements.
For a more thorough discussion of risks and uncertainties associated with any forward looking statements. Please see the disclaimer regarding forward looking statements that is included in our fiscal 2021st quarter earnings release, which was furnished to the FCC today.
Form 8-K, as well as our other filings with the you actually see referencing that disclaimer today's call will be limited to one hour and will include acuity session. After our prepared remarks I now, we'll turn the call over to.
Thanks, Guar good afternoon, everyone and thank you for joining us today.
First we hope everyone listening and their families as well.
We continue to be an unprecedented time due to the covert 19 pandemic, which has had significant a hell social and economic impacts throughout the world.
I'll spend a significant portion of our time today updating you on how this panned out there Mike has impacted our business today.
Following my prepared remarks, I will turn the call over to Mike.
Well go into more details about our financial result.
As previously announced we temporarily closed all 239 of our retail stores on March 18.
And through the end of the first quarter in order to protect their employees and communities from that continuing spread of covert 19.
We also shifted our corporate offices from two a work from outcomes data.
And substantially close the door distribution center.
Driven by the temporary store closures, we experienced a 40.7% decrease and total net sales for the first quarter.
Net sales and physical stores decreased by 57.5%.
Well the first quarter due to being closed for the final 45 days.
Of the 91 day.
Quarter.
Comp sales and dogs were up 1% and February then down 23% during the period from March 1st.
Through March eight days as the impacts of the pandemic on I business and the retail industry in general meaningfully began.
He commerce responded very well with the 54.2% increase.
Net sales for the quarter accelerating significantly falling out of store closures by month ecommerce net sales increased by 9.6% in February them by 49.3% in March and by 90% in April. However, these increases in E commerce.
Sales were not nearly enough to make up for the loss of store sales in the back half of the quarter.
So far in the second quarter local governments have eased restrictions that have allowed us to reopen they six never got a number of stores in the last three weeks.
Following the implementation of certain new health and safety protocols, including significant restrictions on customer traffic within our stores.
We began the reopening process without first 25 stores on May 15th and I've now reached 160 total stores. We opened as of yesterday was 67% of <unk> totaled 239 stores.
Overall, the sales results in the reopen stores have been better than we expected so far but with a very high degree of disparity between individual stores and markets.
Generally speaking, we opened stores in California, and Arizona have been surprisingly good.
Well, we opened its doors in Florida, and Texas have been very weak.
Mike will provide more details a bit later.
We continue to carefully monitor a local state and federal government orders as well as announcements made by mall landlord to determine one additional stores, maybe able to reopen after ensuring applicable health and safety protocols are in place.
With regard to store leases as we believe is this is the case with many other similar retailers in order to protect our liquidity in this completely unpredictable environment.
We elected to withhold payment of our contractual store lease obligation for April and May given that we could not.
Safely operate out of stores as originally intended when their respective leases was fine.
And we did not know went out of stores would be able to reopen.
Well stores that we have been able to reopen we have paid German ramp.
We intend to continue to work with all landlords to attempt to find an acceptable solutions to address the impacts of the pandemic on our respective businesses.
We view these solutions as critical to our long term wellbeing of the business.
As they have a direct impact impact.
Upon the preservation of our liquidity.
And this uncertain environment, which in turn impacts on landlords.
Our normal cash burn for all of the contractual store lease obligations is nearly $7 million per month.
At this time, we have reached compromises with a small number of landlords, but cannot predict with any certainty what solutions will be acceptable to any other landlords if anything at all to help reduce our cash lease cars.
Scores remain closed or with sales activity remained significantly below prior year levels.
Upon reopening.
At this time, we believe the most likely outcome is that we will have to pay these weather withheld ramp sooner or later, although we didn't I believe that the payment deferral alone is unacceptable long term anthem flora.
Moving to on to inventory management upon closing stores in mid March a significant portion of our total inventory became largely inaccessible.
To us for several weeks.
To avoid creating a bigger inventory problem going forward, we canceled or deferred substantially all orders for new inventory receipts from April through Joan and significantly reduce future on order for the remainder of fiscal 2020.
The only exceptions to this wherever items that we consider to be essential to maintain a ecomm business ecommerce business and key programs for the potential back to school season.
We have from time to time and able to access certain stores to ship small portions of product back to our distribution centers and serve certain E commerce orders to help supplement our E com dress business.
Yeah. We ended the first quarter with total inventory is up 10.8% on a per square foot basis compared to last year.
However, given the amount of order cancellations, we have already made we ended fiscal joking with inventories per square foot down 10.5% on a per square foot basis compared to last year. We will continue to closely monitor and adjust future inventory commitment as we determine it to be necessary.
Relative to our expectations for the timing of store Reopenings and subsequent sales levels.
We expect that industry promotional levels will.
We'll be well above normal as stores are able to reopen and light.
Have a large amount of military that has been idle.
Within close stores for the apparel industry as a whole.
Turning to payroll management, we furloughed approximately 91% our employees.
Workforce following the closure of all our stores in mid March.
And all corporate management agreed to take a temporary pay cuts.
On a graduated scale according to end and according to annual salary ranging from 10% to 50%.
Our executive Chairman has in Chicago.
And has the capacity as an employee in the independent members of our board of directors have elected to forgo the entirety of their respective cash compensation until our business substantially resolved.
Weekly cash burn from employee compensation was reduced to approximately 24% of normal resulting in a weekly savings of approximately $1.4 million per week.
Since the first week of April compared to normal levels, while stores remain call. However.
As stores the reopen we have brought back our store teams and portions of other corporate.
Support functions necessary to conduct a business.
There can be no guarantee that sales levels will be sufficient to support our corporate infrastructure profitability over the near term.
Beyond compensation, we have implemented policies to reduce or eliminate non essential expenses where possible.
Well our stores remain close this includes our travel all all forms of print marketing all stores services typically utilized under normal operating conditions.
Among other expenses assuming these policies continue for the remainder of fiscal 2020, we estimate that these reductions will save up to approximately $10 million over the remainder of fiscal 2020.
In terms of new stores and other capital expenditures.
We had nine signed new store leases before the pandemic hit us, but we are seeking to do for all new store pony openings into 2021, given the current market conditions.
We continue to invest in IP infrastructure and other customer facing projects. During this time to help enhance our ecommerce business and to promote further improvement of our in store experiencing and customer loyalty as stores reopened.
We launched after pay online during the first quarter, which allows customers to deferred payment over several weeks.
Well, we receive payment for the purchase within days.
We have been very pleased with the result, so far.
We also just launched a new financial accounting system at the beginning of the second quarter to replace up right system.
Assuming all new store activity is deferred until 2021, which is not guaranteed as it requires landlord consent, we would not expect total capital expenditures for fiscal 2020.
To exceed approximately $7 million.
With no deferral of new stores, we would expect fiscal 2020 capital expenditures.
To be approximately $14 million.
Finally in order to increase our liquidity in light of the uncertainties caused by covert 19 brand that up to bend Dominic.
We borrowed approximately $23.7 million in late March under our revolving credit facility.
Which was the maximum amount available there around there.
Turning now to merchandising I'd like to acknowledge the significant progress.
Made on our merchandising initiatives led by our Chief Merchandising Officer Tricia Smith.
Despite the impacts of the pandemic on our business. She has initiated meaningful changes in our merchandising approach.
We believe will serve us.
Well to remain competitive during this pandemic and as the environment moves back toward normal.
He has worked towards changing our merchandising teams mindset towards thinking digital first.
Which has had an impact on our online business during those pandemic.
This has resulted in an expanded selection or merchandise.
And new categories launched online, which has helped produce higher sales incremental customers and improved E com merchandise margins.
For our impact has also helped US a track no ground.
HM two our merchandise assortment that we could not get previously.
He has only been here for eight months, but she has made a big impact so far and we're excited to have her as part of our team.
That's our story for now so much remains unpredictable at this time, but we are excited to be re opening stores and bringing people back to work.
We hope everyone in the tell his family is well out there we are and have been thinking of all of you every day with every business decision we make.
Mike will now provide more details on our first quarter operating performance balance sheet.
And liquidity and we'll discuss certain forward looking items concerning the remainder of fiscal 2020, Mike.
Thinks it good afternoon, everyone. Our fiscal 2021st quarter operating results were severely impacted by the cobot 19 pandemic and continue to be thus far in the second quarter.
Details of our first quarter operating results compared to last year's first quarter were as follows.
As a result of all stores being close to the public from March 18, and three ended the quarter total net sales decreased to $77.3 million a reduction of $53 million were 40.7% from $130.3 million last year.
Total net sales from physical stores decreased by 57.5% to $47 million from last years $110.6 million for the first quarter.
Net sales from stores represented 60.8% of total net sales for the quarter compared to 84.9% total net sales last year.
Prior to the shutdown our stores delivered a positive 1% comp in the month of February but sales began to quickly decline after the first week of March.
Ecommerce net sales increased by 54.2% to $30.3 million from last year's $19.7 million for the first quarter.
E Commerce net sales represented 39.2% of total net sales for the quarter compared to 15.1% last year.
We ended the first quarter with 239 total stores, including one rescue branded pop up store all of which were closed at the time in response to the Cobiz 19 pandemic compared to 229 total stores last year, including three rescue branded pop up stores.
Gross profit, including buying distribution and occupancy expenses was $1.6 million or 2.1% of net sales compared to gross profit of $35.7 million or 27.4% of net sales last year.
This unusual result was primarily due to an estimated inventory valuation reserve with $4.7 million insignificant to leverage of buying distribution and occupancy costs on significantly lowered net sales.
Before this estimated inventory reserve our product margins decreased by 160 basis points due to increased markdowns.
Buying distribution and occupancy costs also delivered significantly against lower total sales.
Occupancy costs de leveraged by 1200 50 basis points, despite being zero point $5 million below last years levels.
Although we withheld actual payment of April and May Rins expense recognition continues as normal.
Distribution expenses Deleveraged by 440 basis points, primarily due to an increase in E. Com shipping cost a zero point $9 million, which was partially offset by labor savings, resulting from the near total shutdown of our stores distribution center midway through the quarter.
Fine cost you leverage by 70 basis points against lower total net sales despite being zero point $1 million below last years levels.
Total operating expenses were $30 million were 38.8% of net sales compared to $35.5 million were 27.3% of net sales last year.
Although SGN any was reduced by $5.5 million. These expenses deleveraged against lower total sales by 1100 50 basis points.
Store payroll was the largest single expense decrease of $4.9 million, resulting from all stores being close beginning March 18, and aren't Furloughing. It was substantial majority of our store employees in late March.
Most other expenses were reduced compared to last year, but the decrease in expenses was outpaced by the total sales decrease.
The exceptions to this were increased E com fulfillment and marketing expenses of $1.3 million due to the significant growth in E commerce orders and noncash store asset impairment charges zero point $3 million.
Resulting from the cobot 19 shutdown impact on certain of our stores.
Our operating loss was $28.4 million were 36.7% of net sales compared to operating income zero point $1 million or 0.1% of net sales last year.
This decline in operating results was directly attributable to the impact of the code with 19 pandemic, resulting in the closure of all of our retail stores on March 18.
Other income decreased to zero point $4 million from zero point $8 million last year, primarily due to having lower total cash and marketable securities compared to last year.
Our income tax benefit was $10.6 million or 37.9% of our pretax loss compared to income tax expense, a zero point $3 million or 30.6% of pre tax income last year.
This year's income tax rate was hired to the anticipated benefit from the current virus aid relief in economic Security Act enacted on March 27, 2020, which provides for net operating losses in fiscal 2020 to be carry back to earlier tax years with higher tax rates in the current year.
We cannot accurately predict what our effective income tax rate will be going forward as it is dependent upon our operating results in whether additional operating losses may or may not occur that could also be carry back to prior tax years.
Net loss was $17.4 million or 59 cents per share compared to net income of zero point $7 million or two cents per diluted share last year.
Weighted average shares for the quarter were 29.7 million versus 29.8 million diluted shares last year.
Turning to our balance sheet, we ended the first quarter with cash and marketable securities totaling $111.1 million, including $23.7 million borrowed under our revolving credit facility and approximately $13.3 million or withheld store lease payments.
This compares to the total cash and marketable securities of $109.8 million and no debt or withheld store lease payments last year.
In February 2020, we paid a special dividends to stockholders for the fourth consecutive year.
This year special dividend totaled approximately $29.7 million in the aggregate were one dollar per share.
We ended the quarter with inventories per square foot up 10.8%, primarily due to all stores being suddenly closed on March 18 in through the ended the quarter.
However, it was all of the inventory actions, we've taken to date that had referenced earlier, we entered fiscal June with inventories per square foot down 10.5% to last year.
Total capital expenditures were 3.5 million compared to 3.1 million last year.
Now I'd like to share some details on the performance of our reopen stores so far in the second quarter that had referenced earlier.
Since reopening in through June one compared to the respective comparable prior year periods for each reopen store customer traffic in the reopen stores has decreased by 34% collectively yet comparable store net sales have increased by 1.2% collectively.
The range of comp sales results by store is very wide ranging from a decrease of 91% to an increase of 160% with 78 stores Comping positive in 73 stores Comping negative.
Again these numbers I just shared are only since stores reopened and do not include the negative impact as a period of time stores were closed during the quarter.
In the aggregate, including E commerce in the periods for which stores were temporarily closed due to cope with 19 pandemic total comparable store net sales for the second quarter fiscal 2020 through June one.
$28.2 million, a decrease of $13.6 million or 32.6% compared to $41.8 million for the comparable prior year period.
Comparable store net sales from physical stores were $8.2 million, a decrease of $27.7 million or 77.1% compared to $35.9 million for the comparable period last year.
Net sales from E commerce were $20 million, an increase of $14 million or 236.8% compared to $5.9 million for the comparable period last year.
As of June one 2020, our total cash and marketable securities were $113.9 million, including $23.7 million borrowed under our revolving credit facility and approximately $15 million withheld store lease payments.
This compares to total cash and marketable securities of $113.1 million and no debt or with the help store lease payments as of June three 2019, which is a comparable date.
At this time, we cannot predict with any certainty what our financial results will be for the second quarter as we cannot be sure. If these recent reopening results will be indicative of future results or three open stores will be able to remain open consistently.
Operator, we'll now go to couponing.
And at this time, we will be conducting a question and answer session. If you would like to ask your question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is into question Keith.
You may price started to if you would like to remove your question from acute for participants using speaker equipment. It may be necessary to pick up your handset before question to start keys.
One moment, please let me pull for questions.
Our first question is from Jeff Van Sinderen from B. Riley. Please proceed with your question.
Hi, everyone. My first question really is about what you're seeing in the reopened in stores, particularly the differences in performance between mall and off mall and then regionally I'm. Just wondering I know you pointed out some some areas that were a lot different.
But also in terms of this stage that are reopening orally versus later stage reopening states just any more color you can give us though it would help.
Sure.
Hi, Jeff.
The first set of stores that we opened more primarily in Florida and Texas.
And those have been Asaf this results to date.
As we hope to open them out a geographic area as a result started to get better.
The results are a little bit better in parts of Texas him and Florida, I think part of Florida performance is due to the theme parks being closed we have a number of stores for example, in Orlando, which definitely get the tourist traffic.
So as we open across the country in different areas. We saw the resolved start to get a lot better, California in particular has been good.
Hi, and pro forma into off mall versus mall.
Off mall is definitely better.
But we've seen a wide variances.
And performance between mall in the off mall in the same geographic area. It really does no there's no identifiable pattern to either walk.
But overall I think the results overall has been better than what we initially inspect as expected.
Okay. Good and then if we can just turned to E commerce for a minute given the strong performance. There can you speak more about the profitability of that business like maybe in terms of how you might enhance profitability.
I know you mentioned shipping some product from the stores that you can get any too.
But just thinking about profitability is that business scales. It seems to be growing really well, maybe generally how you're leading into being a digital first organization job.
Got it Jeff It is.
A more profitable than it was at this time last year.
As we noted in our prepared remarks with a number of changes in new introductions that have been.
Brought forth our product margins on E commerce have been meaningfully better than they were last year.
And given the volume of business that's done.
At this stage it is more profitable than it was at this time last year. So.
Looking good thus far and we're hoping we can have that continue.
AECOM has been slowing down in its reduced gross I acknowledge as weve reopen stores, even though it's still very very nice right now.
We acknowledge how far how far up it is so far in in the current quarter, but for each of the last four weeks, it's been slowing down a little bit in its rate. So as we think ahead. We think the rate of growth is likely to slow, but we expect it to continue to be quite good. Yes, just to add to that are you know I'm even laws.
Dollar last few weeks.
We also decrease the amount of promotional activity on the site, yes. It was never drastically promotional but certainly it was more promotional a month ago that have what has been the last four weeks, but we're still really encouraged by the strength of our numbers on a comp.
Okay. So E com may not be up.
200 may not continue to grow at 260%.
Just one more one more quick one if I could squeeze and then.
Any I know, it's really hard is a tough question, but any.
Thoughts on gross margin for Q2.
We're both struggling or [laughter], Oh too many on too many unknowns too many variables.
To to say with any certainty it depends on how well the store comp results hold up.
If we're able to get the remainder of our stores open how healthy E. Com stays I mean, there's there's so many questions and variables in that that's why we're not providing any forward looking guidance. There's just too many unknowns at this stage, yeah, I mean why not.
Like many other retailers one other situations we have been faced with the most recently is.
Some of the stores that reopened that were very strong.
A couple of miles were shut down because of the protests that are going on.
So those types of things like that but I'm.
I am expecting it to stabilize over a period of next few weeks and we should be okay.
Okay. Thanks for taking my questions and best of luck for the rest of the quarter. Okay. Thanks, Jeff.
Our next question is from David Buckley from Bank of America. Please proceed with your question.
Hi, guys. Thanks for taking my question first off how are you planning for and thinking about buying for back to school. This year, you obviously done a good job.
Reducing your inventory intra quarter here, but how are you thinking about the back to school shopping period this year.
Well, we jumped on we jumped on the inventory adjustments very early.
Which is the reason why the inventory came in pretty much on line a better than what a quite a ban, especially with so much inventory being idle for so long answer to close stores, but.
You know I I would say that they approach towards inventory management has been very surgical and well continue to be that way until we get a little bit more visibility and tariff we don't even know at this point.
Went back to school is gonna be I mean, I'm sure you're aware, there's a lot of schools still on an ounce weather when they're going back to school somebody's got to start to try to stay ahead of schedule. So.
Well be okay in terms of away were managing to whatever we know and I. Thank our approach has got to in terms of inventory, it's kinda continue to be conservative, but Ah well thought out.
Okay, and then Mike just on X gene a in the second quarter and second half a year, obviously, you're you're entering the quarter in a much different position than that in the first quarter started how should we think about.
The potential machinery decline and GQ and check that.
Well again, just like the gross margin question at this stage, there's too many unknowns.
Depending on whether again, whether we get the rest of our stores opened or not whether stores are able to stay open or not.
We don't we have been bringing our store teams back as we acknowledge we brought back a portion of our corporate office.
Team at this stage you know to help calibrate we made mentioned that when we first did furloughs and pay cuts.
We were about $1.4 million below.
Normal.
Cash burn for payroll.
That is now at about a 600000 dollar level.
Just looking at last week. For example, we were just looking at those numbers yesterday or the day before.
So as we brought people back brought store teams back that's kind of where we are at them at the moment, but everything is changing by that day and even in the day at times as we plan to open certain stores in something happens and we have to defer it by a day or two.
It was just too many moving parts right now to provide any specific guidance.
Okay I understood. Thanks, guys.
Our next question is from Sharon Zackfia used from William Blair. Please proceed with your question.
Hi, Good afternoon, I guess, you're backing hi, piggybacking on on the last question I get that there's a lot of uncertainty, but what is your cash burn rate right now I'm on a weekly basis, just given the acute there were two thirds of stories out things, assuming we kind of stop at this point.
And then honest how many stores that haven't opened dad is there any line of sight from the Governor's I've been states on when they might be able to be open.
Yeah I'll answer the second part of the question, Mike can talk about the cash burn but.
Were going to have substantially all the stores our stores reopen by June 15th there's 22 stores that remain.
In question in terms of the timing, but the majority of chain will be open. So by June 15. So this is we've had to do a lot of different stages.
But certainly I think we'll be in pretty good shape I can address the cash burn yeah on the cash the way I mean, there there isn't any one number I can give you because again too many variables what happens in E. Com what happens in stores is the payroll week or not a payroll week and all manner of payroll items, so, but what I, what we tried to do in our releases we did give a.
Cash update as of June one so that you can see from the ended the quarter, which was essentially the beginning of may to the beginning of June we actually slightly increased cash over the course of the month. So that's a four week span of time, where we stabilized our cash position now some of that certainly has withheld rents in it.
We have.
Slowed down our payables intentionally just to try to.
Protect our cash position as best as we can but.
With the number of stores that we now have open.
We have stabilized our cash position and certainly do.
As long as things hold the way they are.
You know, we certainly wouldn't expect to have the level of drop off.
When you look at our cash position to take out the borrowed cash take out to be.
Withheld rents you'd see year over year that we dropped as of June one about $38 million. During this period of time that all of this has been going on but so long as things can stabilize.
In stores and E com the way the way they have during this last four week period, we we didn't lose any additional cash so that's a good sign.
We're just hopeful that everything can hold together, we're fearful of the idea that what if theres a second ways.
Cases, and all those things so we're still thinking very conservatively, we're still managing our business in crisis mode.
And trying to be very very thoughtful about every decision that we make.
That's really helpful. I think and my last question would be obviously its crisis not so this isn't.
Something you'd be doing today, but I know you've been very.
Diligent and stringent on your ideas on on whats reasonable rent you know for new stores and so on the other side of this tunnel whenever it and then how do you feel like real estate landscape will look for yield and is there an opportunity you know later on to be more opportunistic and grow faster.
Maybe you had been willing to do in the last year.
Well I think.
I think this.
A whole situation as kind of for us.
Rents to come down further than what we've seen them come down and that's not just for US. It's for a lot of Pete I think miles FINMA honestly I think that's the single biggest thing they can help.
The industry is forensic come down.
So I think that's a really really important factor as far as is you know we still feel the you know putting what's happened recently aside we still feel that this decent growth ahead of us I you know in terms of physical stores, but obviously the landscape has changed pretty rapidly and you're going to see vacancies.
Go way up and a lot of centers not just malls.
So it's gonna be as slow process before we really figure out.
We figure out how many stores, we do and the timing of the stores, but I think it's a it will it will play out probably okay is still gonna take time.
Okay. Thank you.
Thank you.
And our next question is from Mitch Kummetz from the pivotal research. Please proceed with your Ah yes, thanks for taking my questions.
I just want to drill down a little bit more on kind of the performance that you're seeing as your reopening stores. So.
Maybe just from a a category standpoint actually maybe this question goes beyond just the stores, but just in the last couple of months in that kind of a coven environment can you maybe speak to some of the category performance are experiencing other retailers have talked about you know when you stay at home orders in things like that that certain categories of pent up other what it's like lounge wear off <unk> fixed.
Sure well why mens womens category in general has performed.
Well for us on on a actually it down inventory.
A top so good its not just casual aware.
Mens has also been up.
And also a little bit of a down inventories since the stores real reopened.
And that's pretty much across the board with with teams being the strongest category for us.
And footwear has been a little bit is slightly down almost flat.
During the reopen period.
And there's no one particular brand or anything that's that's caused that because the brands that were strong as still good like vans and Nike.
Got it.
And then on the it's kinda store performance as your reopening.
Again, you called out 78, Comping positive 73 down you've got this huge variability in terms of the comp performance I'm. Just wondering again, if there any sort of common denominators between the stores that are doing well versus the stores that aren't doing well you kind of called out off mall you talked about some you know the issues in Florida with the theme parks, but I'm wondering if there's if you're seeing.
Anything whether its stores in a more more densely populated metro area versus for sports sparsely populated suburban area or something that's more to kind of a tourist location for a more more versus like when people I call. It communication or you sort of are you seeing trends across those is your sort of slicing and dicing yours pure store based into different Buck.
Yes.
From a merchandise categories standpoint, no we're not saying in terms of comp performance just in terms of in terms of kinda does the comp performance as you're opening stores.
Well, it's just I gave me an example, I mean I mentioned Orlando Orlando has been extremely soft for us.
Hi, and it's across the board all categories. Its traffic the traffic was down <unk> probably more them.
For 40 or 50% in those stores alone.
So it's very traffic related we're expecting that to bounce back where the stores haven't been reopen long enough to really say, okay. It's got a and we expect it to me back it was seeing it come back I think Orlando again, I'll just use that as an example, I think a Disney World Me opens on the 11th so.
So we'll see that lot of some of the surrounding college is there a close so it's really more what we're seeing as Wendell performance has not been good.
Its really more geographic and whats surrounding that geographic area like the theme parks on like more tourist related that not.
Okay, and then maybe Mike on the inventory.
I don't if you can access the quality of the assess the quality of the inventory is there any way you can sort of speak to you know the inventory that you guys holding you know what percent is sort of seasonal warm weather that maybe doesn't have the longer shelf life to it and sort of how are you managing any access of seasonal versus you know are you going to carry things over you just going away.
Good day to it and you know how much pressure might we see on liquidations in the second quarter versus what you already experienced in the first quarter.
Yeah, we're not expecting to have to slash and burn anything we feel reasonably good about our inventory positioning right. Now you know, we we acknowledge that at the end the quarter, we were up almost 11% we finished.
The most recent months fiscal made downturn and a half percent so.
As Ed mentioned, we're very aggressive immediately at trying to.
Limit the opportunity for a much bigger problem and now that two thirds of our stores are open that certainly helping to move through a lot of that seasonal merchandise. So.
We're hopeful that stores can stay open and that the performance. We've seen so far can can continue and we can have some.
Something similar to a normal type of approach to Q2 business. So long as that can be the case.
But certainly not expecting to have to slash and burn part of the reserve.
We acknowledged taking inventory was to acknowledge some potential areas, where we might expect some additional promotional activity said that was factored in and covered in that in that reserve.
You know because we do have some concern about things like swim and and.
Aboard shorts and more seasonal things like that but now that we've we've gotten two thirds of our stores opened and expect to have probably another three three dozen or so open here in the next 10 days tend to 10 days to two weeks.
You know, we're not expecting anything highly unusual in inventory area at this time with what we know.
Okay. All right. Thanks, guys. Good luck.
Thank you.
[noise] and we have reached the end of the question and answer session and I will now turn the call of <unk> Thomas for closing remarks.
I wanted to take a momentary express my sincere gratitude to our management corporate staff, both management and the whole team field management team and all of US store teams, who I've been working tirelessly tirelessly to support our company and to get our stores. So.
Safely we open.
I am so thankful for I'm proud of all of you for your commitment during this extremely challenging time.
Thank you all for joining us on the call today, we hope everyone stay safe and well in the weeks and months to calm have a good evening.
This concludes today's conference and you may disconnect your lines at this time.
Thank you for your participation.
[noise].