Q1 2020 Destination XL Group Inc Earnings Call
Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience.
[music].
Please go ahead and keep them.
Thank you operator, and good morning, everyone. Thank you for joining us on destination XL group's first quarter fiscal 2020 earnings call on our call today is our president and Chief Executive Officer, Harvey Cantor and our key.
Financial Officer, Peter strategies.
During today's call, we will discuss some non-GAAP metrics to provide investors with useful information about our financial performance.
Please refer to our earnings release, which was filed this morning and is now available on our Investor Relations website at Investor Dot see XL Dot com for an explanation <unk> reconciliation of such measures.
Today's discussion also contains certain forward looking statements concerning the company's ability to withstand the impact of the cobot 19 pandemic on its business and result in fiscal 2020 and to manage through the pandemic, including its efforts to restructure and reduce cost manage inventory negotiate rent.
Sessions or rent relief, how much landlord market to its customers to encourage shopping online and maintain sufficient liquidity the expected piece of store Preopening and expected liquidity for the next 12 months.
Such forward looking statements are subject to various risks and uncertainties that could cause actual results could differ materially from those assumptions mentioned today due to a variety of factors that affect the company.
Information regarding risk and uncertainties as detailed in the company's filings with the Securities and Exchange Commission.
I would now like to turn the call over to our CEO Harvey Cantor Harvey.
Thank you need so and good morning, everyone.
There are several topics that I would like to cover including the current state of our business.
Our response to the covert 19 crisis.
Progress in reopening stores and our plan to reopen all stores by the end of June.
So before I do want do wish everyone continued progress in this recovery.
Good health and offer our condolences and prayers.
These have certainly been the most trying times for us as a nation and across the globe.
Well I also want to give the great big heartfelt. Thank you to all our associates.
And a few quick shout outs for the teams perseverance during the pandemic.
Most importantly, those on the team who could just actively engage in commerce and supporting our consumer base.
For the past 12 weeks or so our guest in Sagent Center, which includes chat email and the call center, which read through for two as our G E C or warehouse team our store operations team and our management team have all shown incredible resilience.
And we've adjusted to a new working environment, while keeping our eye focused on what we need it differently to keep servicing big until guys across the country.
This includes everything from how we engage consumers the GE Si and they continue to fulfillment of E Commerce orders.
For both the distribution center and 30, plus some stores to the safety precautions. We are taking as we reopened stores and how we are re engaging with our customer.
So let me get right into it and start with an update on our business operations.
Before our stores closed we began responding to a significant perceived impact expected for the pandemic.
We triangulate it I consumer data from Asia.
From retail is doing business in Asia and wholesale partners.
We made relatively big news early.
In mid to late February we cancel all travel.
We cancel all our store management national competence put a whole than all open positions and began canceling plan receipts of on order.
In mid March we began to evaluate closing stores that March 17th we close all 321 stores across the chain.
We began to repair for a more stringent demonstrative level actions that would enable us to withstand the inevitable loss of revenue that comes with a prolonged store closure.
As already noted we were very fortunate to keep our distribution center operational and we were able to fulfill E commerce orders uninterrupted throughout the first quarter.
A huge shout out to what will be several I cannot say it enough and here that shut up goes to the GE Si and the DC steps.
Thank you for staying engaged with our customers. Thank you ever given the lights on and for shipping.
Our online business and to a lesser degree wholesale became are only source of revenue while stores were closed.
Which was critical to keeping a minimal level of cash flowing into the business. During the first quarter. However, as you might expect the online businessmen only mitigate a fraction of the revenue loss, we would experience from closed stores.
Accordingly, we acted quickly and decisively we took additional steps and measures to preserve liquidity and keep our business intact, while we waited for stores to reopen and resume some sense of normal operations.
We have made a great deal of progress this quarter by strengthening our financial flexibility by realigning our inventory, we see platts and by reducing our overhead costs.
Let me give you a quick rundown of some of them more significant steps, we took to preserve liquidity.
On March Twentyth, we initiated a defensive draws on our credit facility a $30 million.
That cash is being held and used for working capital needs as we slowly rebuild our spring sales momentum.
At the ended the quarter, our cash balance was 26.1 million compared to 6.8 million a year ago.
We took this step to preserve our financial flexibility.
On April 15th we amended our credit facility to expand our borrowing capacity, which Peter will cover in detail in a moment.
We were pleased that our bank group was quick to work with us and to find creative ways to generate additional liquidity.
Next we took several steps from a cost management perspective to reduce our cash outflow.
In closing our entire store portfolio in March 17th began the unpleasant process of initiating furloughs.
With a few days of closing stores, we furloughed almost our entire store operations team.
And the company's non employee directors temporarily suspended their compensation for the second quarter of fiscal Twentytwenty.
Effective April 2nd we began furloughs in our corporate office in total.
264, corporate associates, which represent about 60% of our corporate roster were placed on furlough.
Effective April 5th we instituted a temporary reduction in the salaries are named executive offers by 20%.
Other members of management team had taken temporary reductions in the range of 10% to 20%.
And on the first we further restructured parts of our corporate workforce, which resulted in a permanent reduction that's 34 corporate positions.
We've also worked very hard to partner and work through payables in regards to payment to merchandise suppliers.
Vendors and landlords.
There is an old saying that the strongest partnerships or forge during the most difficult of types.
And we've certainly seen our business partner step up to the place.
To work with us on the merchandise side.
Vendor side and the leasing front.
We have aggressively council merchandise receipts for fiscal 2020, which we estimate to be worth nearly $150 million at retail.
To give you a sense of the scale $150 million and cancellations is worth approximately 28% of our total fiscal 2020 receipt plans.
We have it very productive conversations with our vendor days to extended payment terms and in some cases weve entered into short term promissory notes to extend payment terms with some of our largest merchandise suppliers.
We did not make our April or may rent payments.
And our leases for stores and our home office and distribution Center.
We're currently in private negotiations with a landlords for rent relief, which includes rental abatement.
Rental deferments for April for May June and July.
And lastly, we either have eliminated most or capital improved programs, all discretionary spending on store improvement projects and non essential IP infrastructure.
Overall, we have reacted quickly and decisively to do everything we could to avoid the liquidity crisis.
We're not out of the woods, yet, but we are cautiously optimistic in the course, we have charted to get us through the next 12 months without any additional cash infusion.
To achieve the plan, we need to see a gradual reopening of stores and a gradual ramp of customer traffic and conversion.
To that end, let me share with these some of the details about how our stores have performed as we have slowly begun the reopening process.
What are the most critical and quite honestly delicate actions that we've undertaken like other retailers is the reopening of our store base.
Our first hurdles words, a clear and adhere to state and local guidelines for each reopening.
Once it has been achieved our attention turned to making our employees and customers feel safe before we open any doors.
This has been a very thoughtful and pragmatic process with associate and customer safety being our highest priority.
We've also worked with numerous retail cohorts sharing our plans comparing notes and leveraging their plans to make sure. The very best thinking was in place for all of our associates and our guests.
Before opening all stores received a safety kit, including face masks disposable gloves.
Cleanup and disinfecting wipes and hand Sanitizers.
Our store managers have been trained on safety and cleanliness procedures and it will perform regular maintenance and system checks order necessary supplies for shipping products and fully clean incentive say source before opening each day as well as an ongoing basis throughout the day and at store closing.
We can maintain appropriate social distancing throughout the stores and have developed procedures for the fitting rooms, and checkout to limit any contact or exposure to others.
Overall, we have been very pleased with how things are going in the stores and I want to give a second chewed shout out to our store managers assistant managers key holders senior readers your management and the store operations team, who are all making this happen.
Now, let me give you a little more color on how it's going in the stores.
As of June 2nd we reopened 201 stores across the country that are fully opened in operational.
Most of the stores opened today, our throughout the middle and southern regions of the country.
Some states have just reopened or have yet to reopen.
And they account for some of our biggest markets that are located primarily along the coast.
On April 20, Eightth, we began our reopening with three stores in Murray, Utah, Columbia, South Carolina, and Sioux Falls, South Dakota, plus three stores opened for curbside pickup only which were in Texas.
That is how we ended the first quarter. We then followed up at 14 stores on May 5th under the 33 58 and 39 over the next three weeks.
And just this Tuesday opened another 54.
We expect to have 100% of our stores opened for business by the end of June and we are well underway.
The important question you want to know is how our stores performing.
We're making great progress at a high level initial openings performed at minus 72 mind is 80% call then minus 50 60 and today, we are tracking at approximately minus 40.
But we'll continue to see progress as more consumers enter into the public space.
Our best today, thus far has been a comp for stores at minus 31%, but pockets such as or outlets have a days a plus comp performance over last year.
Fergie Excel the good news is the majority of our stores are freestanding no store isn't a traditional mall setting.
We're adapting and evolving our customer service and store operational practices to thrive in this new environment.
The environment to which I refer at this time includes limited store hours of 12 to six Monday through Saturday and 12 to five on Sunday.
Direct fulfillment by stores is materially higher than it's ever been in our history and were BOPUS has turned to both pack buy online pick up at curbside.
We expect it will become a multiple of what BOPUS was in part in penetration.
Like many other retailers our business in direct and specifically our DXL Dot com business has been strong and performed well over the past several months.
Traffic door side has been volatile, but continually growing and conversion has been very strong and exponentially greater than ever in our history.
It will be very interesting to learn where it settles in as we begin to learn the return to what is the new normal.
We've been encouraged as our sales trends have accelerated as warmer weather settles in across the country.
The web business could not substitute for its running 21 stores closed, but the growth rate on the DXL Dot Com website. Initially tripled from what it was in the low double digit growth year to date is now over 30% and for the quarter to date Q2 period, we're experiencing accelerated year rate growth.
Over 70%.
Now, let me shift gears, a bit and give you a few comments I'd inventory status and our merchandising strategy during the pandemic.
As I mentioned, we took an early and aggressive stance on inventories through a combination of order cancellations.
Significantly reduced receipt plans and we instituted a heightened promotional pace to convert inventory to sales.
The accelerated promotional efforts were particularly oriented around our spring seasonal goods.
We have created more value and the reason for him shop with us by driving deep discounts. The good news is we've experienced meaningful new customer growth in our direct channel, providing an opportunity to expand our loyal customer base.
With regards to our assortment highlights we experienced considerable shift and buying behavior, we strengthened our core and basic categories, such as active and lounge wear.
We expect the current shifted buying behaviors, including what they are buying will for the long last for long time, and perhaps forever as the concept of work from home is likely here to stay.
Our clearance inventory represented 11.5% of our total inventory as compared to 10.6 a year ago.
As we look beyond cobot 19, our forward long term merchandising view is evolving and we see an opportunity to narrower assortment increased product up which will result in a greater level of brand pruning across categories.
We are taking a test and learn approach as we need to be sure. We can offer compelling assortment within that depth in sizes to meet our broad customer base.
More on this topic as the year progresses.
I also want to specifically cup cover marketing, but in reality. It is really not marketing per se, but the consumer who has evolved overnight and how we engage with him as well or.
Our belief is that the pandemic has meaningfully and permanently perhaps shifted the consumer and customer behavior in many ways.
What was the years in terms of evolution has become months in terms of change and revolution.
The digital landscape and the ensuing growth have been accelerated in a multiple of years and marketing to consumers will forever be different.
For the long term part thesis remains the same talk to cohorts archetypes and consumers overall, but in more personalized ways and wind by being more relevant and more efficient.
In a post covered world understanding the customer and their preferences and then marketing in a way that's relevant to them is going to be much more important than more important than ever and we will continue to build infrastructure to be able to achieve this.
As customer buying preferences change due to covert 19, we've already a ball some of our approaches and to ensure we are not only more relevant in the moment, but as we continue to build a long term relationship with a customer base.
Let me give you a few specifics about how we have evolved marketing and how we're driving productivity.
During this time, we have market into a customer differently attested many new ideas, we have prioritize marketing of merchandise that customers are more likely to buy while working and be remote marketing active loungewear and casual over tailored clothing and shoulder garments.
We've changed our web site functionality with agility to build curbside pickup fulfillment for customer orders and created happy hour type events.
We have powered or app with exclusive promotions redesign the web experience leveraging the highest clickstream and conversion.
Yes, I mean, what do you want at the top of the funnel.
In terms of productivity of marketing and expense, we have shifted spend even further away from mass media to more targeted digital only channels and ultimately leveraged our customer file to grow our web business.
In terms of expenses, we've renegotiated many agreements with media partners and vendors in both terms of the pure cost and the sell a.
In the short term, we have been very focused on fulfilling the customer's needs through the mechanisms and platforms. They are gravitating toward along with balancing the financial outcome for the business.
And lastly, I want to give you an update on our wholesale business the growth of our wholesale business continues to be a key initiatives in fiscal 2020 led by our business with Amazon essentially which contributed $2 million the sales in the first quarter.
This business the Amazon Essentials program was not immune to the impact of the virus and Amazon shifted to essential supplies and so did the customer in what they ordered.
That being said the business has also come back very strong in the past couple of weeks demand has been the highest of all year, even pre cobot levels with our sourcing expertise in factory relations in place Weve also launched a new wholesale light of business in the design and saw sourcing of protective.
Yes.
With sales beginning in the fiscal second quarter and already in the second quarter fiscal 2020, we have received commitments for the sourcing and selling a mass to fortune 100 companies with nearly 2.5 million mass ordered so far.
I will now turn it over to Peter for an update on the financials Peter.
Thank you RV and good morning, everyone.
I'd like to provide you all with a summary of our first quarter financial results and then talk a little bit about our financial position going into the second quarter.
As Harvey mentioned, our primary focus this quarter has revolved around preservation of liquidity and developing a path to the other side of the pandemic.
Actions that we've taken have been decisive and effective and we feel confident that we will emerge from this crisis well position to continue serving big and tall guys all across the country.
With that said, let's start with sales and margin.
Total sales for the first quarter decreased 49.3% to 57.2 million down from 113 million in the first quarter of last year.
Lastly store closures contributed to the majority of the decline, but we were pleased that our direct business performed well and made up for some of the loss in store sales.
Gross margin rate inclusive of occupancy costs was 23.1% as compared to a gross margin rate of 43.7% for the first quarter of fiscal 2019.
Our gross margin rate declined 13.3% from the de leveraging and occupancy costs against a much lower sales base.
And a decrease of 7.3% in merchandise margins.
We were more promotional this quarter to encourage customers to shop online into mitigate a buildup of seasonal inventory.
This increased promotional posture is the primary reason for the decline in merchandise margins.
We also took a 700000 dollar charge this quarter to increase our inventory reserves as a result of more aggressive clearance strategies again, our intention is to move through as much of our spring product as possible to being a clean position at the end of Q2 to start receiving fall product.
Now, let me move onto selling general and administrative expenses.
For the first quarter fiscal 2020, SGN a expense was 32.1 million versus the prior year first quarter at 44.6 million. This represents a 28% declined year over year.
This decrease in expenses was primarily driven by furloughs of both our store associates in certain corporate associates as well as several measures taken to reduce operating expenses, including marketing.
Corporate payroll and other discretionary spending.
On a percent to sales basis, SGN any costs were 56.1% as compared to 39.5% for the first quarter fiscal 2019.
We're continuing to assess and rationalize our entire SGN a cost structure as we start to reopen our stores.
Across both our corporate office in stores, we plan to bring back staff as we reopened and business comes back.
Well look to optimize store hours and staffing models based on customer demand.
We expect overall store payroll costs to 10 trend lower than historical levels.
The disruption to our store business model caused by coded 19, and the uncertainty surrounding it's continuing impact triggered an asset impairment analysis on our long lived assets as of quarter end.
Our recoverability analysis use projections that were based on multiple probability weighted discounted cash flow scenarios, assuming that our stores will gradually we open throughout the second quarter fiscal 2020.
But that consumer retail demand will remain substantially curtailed for a period of time.
As a result, we recorded a non cash impairment charge of 16.3 million for the first quarter of fiscal 2020.
The impairment charge included 12.5 million for the write down of certain right at use assets related to leases, we're carrying values exceeded fair values and 3.8 million for the write down of property and equipment related to stores, where the carrying values exceeded fair values.
Adjusted EBITDA, which excludes CEO transition costs and impairment of assets was negative 18.9 million for the first quarter compared to 4.8 million in the first quarter fiscal 2019.
Net loss for the quarter was 41.7 million or 82 cents per diluted share compared with a net loss of 3.1 million or six cents per diluted share for the first quarter fiscal 2019.
On a non-GAAP basis, adjusted net loss for the first quarter was 37 cents per diluted share as compared to an adjusted net loss of four cents per diluted share for the first quarter fiscal 2019.
Now I'd like to move on to cash flow in the balance sheet.
I mentioned, we took a number of steps this quarter to preserve and maximize our liquidity.
Our free cash flow for the quarter actually improved to use of 18.4 million as compared to use of 20.2 million for the first quarter of fiscal 2019.
We also improved our excess availability under our credit facility by amending the facility in April 2020.
Among other things, we increased our borrowing base by delaying the step down in the file low advance rate until December 2020.
We also lowered the loan cap on our revolver from 12.5% to 10% and we modified the agreement to allow the company the ability to enter into promissory notes with merchandise vendors up to an aggregate of $15 million.
Interest rates under the revolving facility in the file alone were increased by 150 basis points.
At the end of the first quarter of fiscal 2020, we had a cash balance of 26.1 million.
Total debt of 96.5 million in remaining availability under our credit facility of 16.8 million.
Our inventory balance decreased approximately $4 million in the first quarter, two 108.3 million as compared to 112.3 million make fourth 2019.
With respect to the remainder of fiscal 2020, we expect to be responsive to business changes, but expect that our fall inventory buys will be below fiscal 2019 levels.
Our objective is to maintain a healthy inventory position, which will include narrowing our assortment.
While also continuing to manage clearance levels.
Let me second 2020, our clearance inventory represented 11.5% of our total inventory as compared to 10.6%.
Make was 29 team.
As we continue to navigate through these pandemic, we're taking a conservative approach to financial planning with a modest improvement in sales trends as stores, we opened in our customer becomes more comfortable with returning to our stores.
We believe that the steps we've taken this past quarter to preserve liquidity and maintaining financial flexibility represent the first steps on our way to a recovery.
Feel confident that we have a path to navigate through the next 12 months.
And as we move further along in fiscal 2020, we will have a more clear picture of what we can expect in fiscal 2021 and beyond.
With that I would like to turn it back over to Harvey for some closing thoughts.
As a close up the call today I want to quickly think the board.
Our partners and our investors.
Provided support and insight along the way as we steer through the business challenges.
Second and more importantly.
Although I've already discussed that pandemic.
I also want to address the disturbing issue of social and justice that we are facing as a nation.
And in which we have been remind that in recent days.
The extent of how volatile the tie ins have become it's hard to believe.
The issue of racial equality, and social and justice, which have been raised in the nation's conscience underlines the seriousness of this issue, which impacted us all as a nation.
At GE Excel, we are committed to inclusion.
Acceptance and support in our business.
As a business, we have a diversity and inclusion initiative oriented around unconscious bias.
But we need to continue to ask ourselves as the company are we doing enough.
Are we committed enough.
As a company we are committed to address the challenges of bias and justice and together we need to overcome these issues.
Inside Dx, Phil we will ask the question again, but also commit to push harder in the program, we have for diversity and inclusion for associates and our guests.
And now we will take questions.
Thank you, ladies and gentlemen, if he would like to ask a question at this time. Please press. The Star then one key on your touched on telephone to withdraw your question press the pound key please standby, while we compile the culinary roster.
Our first question comes from Eric better with as CC Research. Please go ahead.
Morning.
Good morning.
Thank you for the color.
Going forward.
To be thinking about in terms of the mix between kind of private label and branded product and how do you kind of.
Look upon that as the marketing asset order non asset here.
Yes, it's a great question. This is Harvey Hey.
Basically we believe that the private label product is still critically important and that penetration in our mix will not materially change that being said, we clearly have continued to see an escalation in the penetration of the branded goods in the collections were offering and the customers desire to buy more of those.
So the reality is we will continue to shift and most appropriate response of the trends the business, but I think that what we've seen in our recent let's say 18 months is that the ships are small and the magnitude engines load. Our private label certainly has really elevated in some respects.
Certain key categories in the coated the first quarter issues that we've experienced and that makes what would make obvious things like underwear basic lounge wear active wear and things that nature and then the flipside as some of our our nonbranded.
Items continued to decline via tailored clothing, or what have you and you can see those seeing trends in the branded part of our mix, but the red part of it makes has less penetration in brands by the shoulder garments and things of that nature.
Right when you look ads.
This new World, obviously online has become so it was important to use become even more important to you how is the function of once this.
Hey, how many stores you need and what is the function of the so we're going to change going forward.
The reality is we continue to believe that it's not for us to determine the way consumers shop and the reality is consumers want to have experiences in stores I think it's quite interesting I understand and see the different retailers experiences right now it's consumers.
History in some businesses desire to get back in the stores that have experiences.
Our belief continues to be that our store experience is critically important to the mix, but the question. You really are asking I think is how will that change in terms of the store experience not just for the customer but in terms are really the mix and what we've seen an eye, we've talked about pretty directly to.
The level of our stores capacity to create fulfillment are both pack program, which has shifted from of our both this program. Although the reality is the percentage of consumers coming to us to buy online and pick up like Herb is growing in the scheme of life. We don't know that it will be the most meaningful part and.
Nearly the other end to continue on is the level of film in our stores can do we kept 30 stores open approximately during the pandemic. So far until we started to reopen all stores and those stores were meaningfully important for fulfillment, they're really like 30 mini warehouses and our ability to leverage our assortment now across.
The chain exposing the customer to a much greater breadth of offer and giving us much greater fluidity and the ability to deliver much quicker to customers because basically you have they.
Last mile store in every city as opposed to a warehouse in Cannes, and it's giving us greater ability to provide a breadth of offer that as well beyond what is contained in the DC probably equally important is not more so is that last mile and the ability to quickly get into our customer or let them choose to.
Coming to the store, whether its curbside or in the story. It's also.
Nor function, we believe is critically important.
Part of the experience not just for fulfillment, but for the customer and in reality the fulfillment element has really rounds.
Period that we just experience.
Great and last question I see now you are selling math fall so retail wise do you plan on selling those.
In the stores.
I think thats, how is that business silly.
No. We initially pivoted, our alterations and tailoring department literally to make mastered the community and our initial intent was to do that.
Services humidity and literally give them out for free because we thought we had the capacity to do that.
With that process, it's pretty incredible.
Development work, we did around that.
Together FDA the recognition that and 95 is too big a week for us to get too quickly, but in that process. We developed the a triple later in that that actually was vapor capable of blocking and the micron element within that inner liner too.
Actually provide a level of protection and so we've gone out we've actually now so governmental offered governmental entities. The vast literally state governments, we sold fortune 100 companies and we're bringing it online we've been chasing a pretty hard in spite of the fact that we are ahead of it we the chasing a pretty hard and then sold out the first delivery.
In our online business, we're also going to put it as you asked in our stores and let the customer tell us how important it is what we believe that initially though was a more of an accommodation to support the communities in the reality of the situation. We all phase, let's turn to the some level of the business model. We in this case.
Particularly we haven't reached for the Brasserie and margin what we're really trying to do is continue to provide a service to both customers and businesses and we'll see how it ebbs and flows if you will and our belief is that it will be meaningful in the stores. Our largest part of the delivery is yet ahead of us in terms of what will really ramp in terms of unit.
That will be the story ended June and when that happens they will go in stores and we will let the customer tell us how important it is for the future of the business, we never consider it to the.
Game changing for us, but in reality. It is it will be more than a blip on the writer seeing with two and half million bass sold.
We had orders that are potentially pending for another 2 million and the customer will bode quickly on what we're bringing into the to the business in terms of online and more importantly in stores and we'll see how fast at risk in a more meaningful way.
Great. Good luck for the rest of the here.
Thanks, a lot for the question.
Thank you. Our next question will come from Glenn Krevlin. Please go ahead.
Good morning, and a couple of different questions. The first is coming into the year.
Our but you had a lot of initiatives on the direct to consumer side.
Get some software implementation some different tests going on.
Where are we on that.
Just in terms of is that project continued as the.
You tried certain things this quarter.
Maybe you can give us an update there that's my first one.
My second one is on the Amazon wholesale program has been expanded in any way in terms of number of items skews inventory.
And then lastly.
It makes some sense of.
Lease liabilities that Ics expire over the next year or two.
And how you're thinking about the real estate portfolio in the expirations that you have coming up.
Yes, I can take or all three of those and then I'll turn it over Pete if he has any additional comments on the high level marketing initiatives. There's no question that the direction, we embarked on really throughout 29 team.
And we got traction in 2019 fourth quarter and alluded to any acceleration at some level in February are still the priorities, whether it's the CRM system itself, whether it be that platform for personalization and talking to customers uniquely relative to what they want which we.
We referenced in the call itself.
Whether it be the digital marketing element and reducing TV.
I'm sure you probably didn't visit although you may have because not everyone might not be tracking the business is a level that we are but we were not on the draft. This year and the dress still was a pretty interesting media for people to watch, but TV and blunt level marketing given the pandemic did it makes sense to us.
And we've alluded to pulling back on TV and really apply our marketing expense builds around our platform to drive the greatest productivity, but more importantly be the most are relevant to consumers in the pandemic. What we've seen is consumer searching and much more aggressively for specific dates.
And the ability to focus what we market around what consumers want is most capable digitally you can see that in our email program you can see that our loyalty program you can see that in our communication of what we actually are selling so the answer is.
Sadly, yes, we have that being said there are elements, which have slowed down based on staff not being cope completely available dynamics of companies and partners where business with the dynamics have.
Some cases impacted us, but the direction is no different in.
Reality is I think some of the things you'll see come to life to the greater way throughout the balance of this year, but in some cases have been delayed for sure in the first quarter in more than likely will move into 2021.
The second thing you asked about as Amazon and the Amazon program. It actually remarkable that what was published and I'm sure. Everyone is rented out was the degree to which Amazon actually had a requirement driven by need to pivot their entire business two essential services things like math incentive.
Hi, there and in reality because of our partnership with them and our ability to manage our business. We can see real time very much the consumers to shift what they were searching for.
And our business slowed down at a clip there was probably 1.13rd of what it was for a moment in time Interestingly enough is now returned in the last three weeks and the level of acceleration has been a remarkable to the point where were now exceeding each week in the last few weeks the highest level of demand.
A lot for Amazon essential product on the Amazon site in the spring season for our program and our program as we've already communicated we'll continue to expand within next level of goods Reds being part of the program that we're moving forward with so in reality, we see an expansion.
Yes, yes to happen in terms of skews, but the partnership and the belief and consumer oriented around Amazon. In addition to our core business is very much there now that being said I did also talk about in referenced that we're very close to another major retail account and as you might imagine I wouldn't say that comply.
Fell apart, but that came to a brick wall quickly in really though the end of that process and I don't know given the dynamics of other retailers and the as busy we're talking to if that will be resurrected and when it will be resurrected. So we feel very good about our Amazon business, we may or may not be able to it.
And in the way, we're thinking with another retail account at least for the immediate time being we won't and then the flip side to the growing mask business.
Remarkable that we've had and disease buying a million that at a clip for 250000 clip and we have current discussions that is part of our wholesale business that are being potentially extended driven by the expertise and our global sourcing initiatives that as we now are starting to work.
Good Fortune 100 companies and they are actually seeing both our Amazon business, and our mass business and our ability to build product.
A remarkable level quality, but equally so deliberate really quickly there may be new opportunity for wholesale that we do think about before.
And last but not at least in terms of leases and our store count and expect explorations, what we're continuing to do which I have to believe any retailer with that or wait and salt is doing is looking at every store and determining how that source reported.
I'm sure you recall remarks, where we have said that the great majority of our stores more than likely potentially more than others are four wall profitable and the challenge for us as we as we've evolved that shade and converted in place casual male stores, we still have a number of stores that are smaller footprint and what we're looking at it.
Question asked earlier by Eric is does the store count we need to be what it is and given the size of stores with natural lease expirations would we and should we reduce our store count to make those stores more aligned with the go forward platform and while we have an answer that than it did today.
It's certainly a consideration that we would reduce our store footprint driving being driven by those smaller stores adult the go forward platform and prototype, but yet our full productive and with the need to drive more online. It's a logical conclusion that some level, we reduced our footprint request.
How much is TBD.
Just one follow up so you're fully on the do.
You around platform Harvey the one that I think you've talked about last year being implemented.
No we're not fully on it and not only are not fully on it we are using it but what has been the biggest setback for us the marketing pivot to the number of segments that we could go after and we have identified and the actual implementation of marketing against those things Thats all give us the.
For instance.
Would it be remarkable to believe that our Ralph Lauren business and the civic collections part of that business and this is to the sportswear that what I might decide as fashion has not been as strong as the flipside of basic T shirts from Ralph the red or for that matter loungewear and accessories.
And so our ability to market based on those dynamic has been waylaid, because we're not marketing fashion clothing, right now where we haven't been in the Q1, where underwear and T shirt and literally lounge wear it activewear have been critically more important.
So as a result of that we haven't been marketing to those segments at that level because not every business had relevance in the last 90 days and as a result that we don't have the learnings that we had hoped to have coming out of Q1, which we talked about really at the end of Q4.
Great. Thank you.
Ladies and gentlemen that does conclude today's question answer session as well as today's conference call. Thank you for your participation you may now disconnect and have a wonderful day.
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