Q2 2024 Shoe Carnival Inc Earnings Call

August 29, 2023

Speaker 1: Good morning and welcome to Shu Karnival's second quarter 2023 earnings conference call. That its conference is being recorded. It is also being broadcast via webcast. Any reproduction or re-broadcast of any portion of this call is expressly prohibited.

Good morning, and welcome to shoe Carnivals second quarter 2023 earnings Conference call. Today's conference is being recorded there is also being broadcast via webcast any reproduction or rebroadcast of any portion of this call is expressly prohibited.

Speaker 1: Management's remarks may contain forward looking statements that involve a number of risk factors. These risk factors could cause the company's actual results to be materially different from those projected in such statements.

Managements remarks may contain forward looking statements that involve a number of risk factors. These risk factors could cause the company's actual results to be materially different from those projected in such statements forward looking statements should also be considered in conjunction with the discussion of risk factors included in the company's SEC filings and today's earnings.

Speaker 1: Ford Looking statement should also be considered in conjunction with the discussion of risk factors included in the company's SEC filings and today's earnings press release.

This release.

Speaker 1: Investors are cautioned not to place under-relines on those four looking statements, which speak only as of today's date. The company disclaims any obligation to update any of the risk factors or to publicly announce any revisions to the four looking statements discussed on today's conference call, or contain today's press release to reflect future events or developments.

Mr are cautioned not to place undue reliance on those forward looking statements, which speak only as of today's date.

<unk> disclaims any obligation to update any of the risk factors or to publicly announce any revisions to any forward looking statements discussed on today's conference call or contained in todays press release to reflect future events or developments I.

Speaker 1: I'll now turn the conference over to Mr. Mark Warden, President and CEO of Schu Carnival, for opening remarks. Mr. Warden, you may be.

I'll now turn the conference over to Mr. Mark Worden, President and CEO of shoe Carnival for opening remarks, Mr. Warren you may begin.

Okay.

Speaker 2: Good morning, everyone. And thank you for joining us today for shoot carnivals, second quarter, 2023 earnings conference call.

Good morning, everyone and thank you for joining us today for shoe carnivals second quarter 2023 earnings conference call.

Speaker 2: Joining me on today's call are Carl Chavetta, Chief Emerging Officer, Eric Gast, Chief Financial Officer, and Steve Alexander, Supporting Investor Relations.

Joining me on today's call are cautious order Chief merchandising Officer, Eric <unk>, Chief Financial Officer, and Steve Alexander supporting Investor Relations.

Speaker 2: Let me start today by saying that conditions, impacts, and customer trends improved in Q2.

Let me start today by saying that conditions impacting customer trend improved in Q2.

Speaker 2: As the quarter progressed, we saw encouraging signs that the impact of inflation on our customers was starting to moderate.

As the quarter progressed, we saw encouraging signs that the impact of inflation on our customers who are starting to moderate.

Speaker 2: Customer engagement in-store and online picked up, average transactions climbed to a new second quarter high, product margins were robust, and customer conversion remains strong.

Customer engagement in store and online picked up average transactions climbed to a new second quarter high product margins were robust and customer conversion remains strong.

Speaker 2: Based on these improving conditions, we see an opportunity to invest, to increase our market share, to accelerate sales growth, and to grow earnings per share results, compared to the soft market and results in Q1 of this.

Based on these improving conditions, we see an opportunity to invest to increase our market share to accelerate sales growth and to grow earnings per share results compared to the soft market and results in Q1 of this year.

Speaker 2: As such, we accelerate investments to fuel profitable brand building activities and drive our excellent customers.

As such we accelerated investments to fuel profitable brand building activities and drive our excellent customer experience.

Speaker 2: We continued to roll out our store modernization plans and drive customer engagement with new stores in new markets that capitalize on improving conditions.

We continued to rollout our store modernization plans and drive customer engagement with new stores in new markets to capitalize on improving conditions.

In Q2 grew approximately 5% versus Q1 2023 to $294 6 million.

Speaker 2: Ernst Perscher increased that an even faster rate of 18% growth versus Q1 to 71 cents, demonstrating the success of our investments to accelerate profitable growth as the year has progressed.

Earnings per share increased at an even faster rate of 18% growth versus Q1 to 71.

Demonstrating the success of our investments to accelerate profitable growth as the year has progressed.

While the back to school season is not yet complete August results provide further signs that inflationary conditions have moderated during the year in Q3, while we are not seeing growth versus prior year, yet we continue to see modest improvement versus Q2 in sales margins transaction.

Operator: Good morning and welcome to Shoe Carnival's second quarter, 2023 Earnings Conference Call. That its conference is being recorded. It is also being broadcast via webcast. Any reproduction or re-broadcast of any portion of this call is expressly prohibited. Management's remarks may contain forward-looking statements that involve a number of risk factors. These risk factors could cause the company's actual results to be materially different from those projected in such statements. Forward-looking statements should also be considered in conjunction with the discussion of risk factors included in the company's SEC filings and today's earnings press release.

Operator: Good morning and welcome to Shoe Carnival's second quarter, 2023 Earnings Conference Call. That its conference is being recorded. It is also being broadcast via webcast.

Size and strong conversion.

Speaker 2: Competitive intensity has been high in both Q2 and the Q3 back to school season. With many competitors, deep discounting products, and running profit-losing promotion.

Competitive intensity has been high in both Q2, and the Q3 back to school season, with many competitors deep discounting products and running profit losing promotions.

Operator: Any reproduction or re-broadcast of any portion of this call is expressly prohibited. Management's remarks may contain forward-looking statements that involve a number of risk factors. These risk factors could cause the company's actual results to be materially different from those projected in such statements. Forward-looking statements should also be considered in conjunction with the discussion of risk factors included in the company's SEC filings and today's earnings press release. Investors are cautioned not to place under-reliance on those forward-looking statements, which speak only as of today's date.

Operator: Investors are cautioned not to place under-reliance on those forward-looking statements, which speak only as of today's date. The company disclaims any obligation to update any of the risk factors or to publicly announce any revisions to the forward-looking statements discussed on today's conference call or contain today's press release to reflect future events or developments.

Operator: The company disclaims any obligation to update any of the risk factors or to publicly announce any revisions to the forward-looking statements discussed on today's conference call or contain today's press release to reflect future events or developments.

Speaker 2: We remain committed to our profit transformation and targeted promotional strategies that are based on customer analytics and deep knowledge of our loyal customers. That's...

We remain committed to our profit transformation and targeted promotional strategies that are based on customer analytics and deep knowledge of our loyal customers that strategy is working.

Speaker 2: For example, the August Back to School shopping period accounts for half of the company's third quarter gross profit. August sales and product margin results were among the highest of any month in the company's 45 year history.

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Just back to school shopping period accounts for half of the company's third quarter gross profit.

August sales and product margin results were among the highest of any month in the company's 45 year history.

Speaker 2: With strong profit results achieved Q3 to date, the company is on track to deliver a full year gross profit margin guidance of 36 to 37%.

With strong profit results achieved Q3 to date the company is on track to deliver its full year gross profit margin guidance of 36% to 37%.

Mark Warden: I'll now turn the conference over to Mr. Mark Warden, President and CEO of Shoe Carnival for opening remarks. Mr. Warden, you may begin. Good morning everyone and thank you for joining us today for Shoe Carnival's second quarter, 2023 Earnings Conference Call. Joining me on today's call are Carl Chavetta, Chief Merchandising Officer, Eric Gasp, Chief Financial Officer, and Steve Alexander, supporting investor relations. Let me start today by saying that conditions impacts and customer trends improved in Q2.

Speaker 2: Given the inflationary environment our customers face, we are very pleased with this result, including our ability to gain market share and our customers response to investments in brand buildings and customer experience.

Given the inflationary environment, our customer space. We are very pleased with this result, including our ability to gain market share and our customers' response to investments in brand building and customer experience.

Speaker 2: As such, we plan to continue to invest in those areas in the remainder of Q3. Erick will provide more detailed guidance in his section.

As such we plan to continue to invest in those areas and the remainder of Q3, Eric will provide more detailed guidance in his section.

Speaker 2: Although customer trends and results have improved, it would be premature to declare that the inflationary and economic headwinds are no longer significantly impacting our costs.

Although customer trends and results have improved it would be premature to declare that the inflationary and economic headwinds are no longer significantly impacting our customers.

Mark Warden: As the quarter progressed, we saw encouraging signs that the impact of inflation on our customers was starting to moderate. Customer engagement in-store and online picked up average transactions climbed to a new second quarter high, product margins were robust, and customer conversion remained strong. Based on these improving conditions, we see an opportunity to invest, to increase our market share, to accelerate sales growth, and to grow earnings per share results compared to the soft market and results in Q1 of this year.

Speaker 2: While brisk margin remains strong for Q2, and results accelerated versus earlier in the year, total sales declined 5.7% versus the URAGA period, and comparable store sales declined 6.5%.

While gross margin remained strong for Q2 and results accelerated versus earlier in the year total sales declined five 7% versus the year ago period, and comparable store sales declined six 5%.

Speaker 2: Store traffic performance improved in Q2 versus Q1, but still declined versus prior year. We continue to see softness in the segment of our customers with household income under $30,000, including our urban lower income cost.

Store traffic performance improved in Q2 versus Q1, but still declined versus prior year. We continue to see softness in the segment of our customers with household income under $30000, including our urban lower income customers.

Speaker 2: We see this happen as an ongoing challenge throughout the remainder of the year.

We see this headwind is an ongoing challenge throughout the remainder of the year.

Mark Warden: As such, we accelerated investments to fuel profitable brand building activities and drive our excellent customer experience. We continued to roll out our store modernization plans and drive customer engagement with new stores in new markets that capitalize on improving conditions. Sales in Q2 grew approximately 5% versus Q1, 2023 to 294.6 million dollars. Earnings per share increased at an even faster rate of 18% growth versus Q1 to 71 cents, demonstrating the success of our investments to accelerate profitable growth as the year has progressed.

Speaker 2: We are also seeing a favorable mix shift to higher income, more profitable costs.

We're also seeing a favorable mix shift to higher income more profitable customers led by our shoes station banner and our online transactions.

Speaker 2: led by our shoe station banner and our online transact.

Speaker 2: For some perspective, historically, over 50% of our customers were from households with income under $50,000.

For some perspective, historically over 50% of our customers are from households, with income under $50000.

Speaker 2: This year, we're seeing a meaningful shift with over half of our customers, now in households with income over $50,000, including a significant percentage increase in households with income over $75,000.

This year, we're seeing a meaningful shift with over half of our customers now in households, with income over $50000, including a significant percentage increase in households with income over $75000.

Speaker 2: As part of our long-term strategy, we continue to invest to build our brand and acquire these higher income more fluid customers to expand our customer base. At the same time, we also continue to invest in our very important value customer base.

As part of our long term strategy, we continue to invest to build our brand and acquire these higher income more affluent customers to expand our customer base at the same time. We also continue to invest in our very important value customer base.

Mark Warden: While the back-to-school season is not yet complete, August results provide further refined that inflationary conditions have moderated during the year. In Q3, while we are not seeing growth versus prior year yet, we continue to see modest improvement versus Q2 in sales, margins, transaction size, and strong conversion. Competitive intensity has been high in both Q2 and the Q3 back-to-school season, with many competitors deep discounting products and running profit-losing promotion. We remain committed to our profit transformation and targeted promotional strategies that are based on customer analytics and deep knowledge of our loyal customers.

Speaker 2: The broader inflationary environment continues to make it more expensive to compete for share growth, to attract and retain talent, and to capture new customers.

The broader inflationary environment continues to make it more expensive to compete for share growth to attract and retain talent and to capture new customers.

Speaker 2: With unemployment levels remaining near 50-year lows, hiring and retaining employees in the retail space requires continual innovation to ensure a great place to work, as well as higher investments in wages, healthcare, and benefits.

With unemployment levels remaining near 50 year lows hiring and retaining employees in the retail space requires continual innovation to ensure a great place to work as well as higher investments in wages health care and benefits.

Speaker 2: With our team of nearly 6,000 talented customer-focused members, we pride ourselves on delivering the best customer experience.

With our team of nearly 6000 talented customer focused members, we pride ourselves on delivering the best customer experience.

Speaker 2: By investing in our team, we drive and continue new customer engagement, strong conversion levels, and customer loyal.

Investing in our team we are driving continued new customer engagement strong conversion levels and customer loyalty.

Mark Warden: That strategy is working. For example, the August back to school shopping period accounts for half of the company's third quarter gross profit. August sales and product margin results were among the highest of any month in the company's 45 year history. With strong profit results achieved Q3 to date, the company is on track to deliver its full year gross profit margin guidance of 36 to 37%. Given the inflationary environment our customer space, we are very pleased with this result, including our ability to gain market share and our customers response to investments in brand building and customer experience.

Speaker 2: With increased strategic investments in our brand and customer experience and the slower economic recovery, we have decided to lower our expectation for new store openings.

With increased strategic investments in our brand and customer experience and the slower economic recovery, we have decided to lower our expectations for new store openings. This year.

Speaker 2: We now plan to open six to 10 new stores in 2023, likely on the lower end of the range, and less economic conditions improve graphically during Q3.

We now plan to open six to 10, new stores in 2023 likely on the lower end of the range unless economic conditions improved rapidly during Q3.

Speaker 2: Importantly, there's no change to our long-term plan to operate over 500 stores in 2028. We're taking a more measured approach to near-term organic growth in some market conditions improved further.

Importantly, there is no change to our long term plan to operate over 500 stores in 2028, we're taking a more measured approach to near term organic growth until market conditions improve further.

Mark Warden: As such, we plan to continue to invest in those areas in the remainder of Q3. Erik will provide more detailed guidance in his section. Although customer trends and results have improved, it would be premature to declare that the inflationary and economic headwinds are no longer significantly impacting our customers. While gross margin remains strong for Q2 and results accelerated versus earlier in the year, total sales declined 5.7% versus the year ago period and comparable store sales declined 6.5%.

Speaker 2: Economic and inflationary conditions are not improving as quickly as we had projected, and we expect that they will remain challenging as we navigate the remainder of 2023, particularly with urban costs.

Economic and inflationary conditions are not improving as quickly as we had projected and we expect that they will remain challenging as we navigate the remainder of 2023, particularly with urban customers.

Speaker 2: Given that, and reflecting our updated news store plans, we are updating our foliar 2023 sales guidance to $1.19 to $1.21 billion.

Given that and reflecting our updated new store plans, we are updating our full year 2023 sales guidance to $1, one nine to $1 two 1 billion.

Speaker 2: Eric will discuss detailed guidance in a few moments as part of his commentary on the course.

Eric will discuss detailed guidance in a few moments as part of his commentary on the quarter.

Speaker 2: Now, I'd like to discuss how our continued strategic investments are positioning us for profitable growth when the economy improves.

Now I'd like to discuss how our continued strategic investments are positioning us for profitable growth when the economy improves.

Mark Warden: Store traffic performance improved in Q2 versus Q1 but still declined versus prior year. We continue to see softness in the segment of our customers with household income under $30,000 including our urban lower income customers. We see this headwind as an ongoing challenge throughout the remainder of the year. We are also seeing a favorable mixed shift to higher income more profitable customers, led by our shoe station banner and our online transactions. For some perspective, historically over 50% of our customers were from households with income under $50,000.

Speaker 2: Our store modernization program and in-store experience investments continue to drive fleet profitability and productivity. A little over two years into the program, we have 52% of the shoe carnival fleet remodel complete. We are on track for approximately two thirds of the fleet to be completed by summer of 2024.

Our store modernization program and in store experience investments continue to drive fleet profitability and productivity.

Little over two years into the program, we have 52% of the shoe Carnival fleet remodel complete but we are on track for approximately two thirds of the fleet to be completed by summer of 2024.

Speaker 2: I'm also very excited that we opened our 400 store expense or last earnings call. The last time we operated 400 stores was back in 2018. When we were at the very early stages of our multi-year productivity improvement and store rationalization program.

I'm also very excited that we opened our 400th store since our last earnings call. The last time, we operated 400 stores was back in 2018, when we were at the very early stages of our multiyear productivity improvement and store rationalization program.

Mark Warden: This year, we are seeing a meaningful shift with over half of our customers now in households with income over $50,000 including a significant percentage increase in households with income over $75,000. As part of our long-term strategy, we continue to invest to build our brand and acquire these higher income more fluid customers to expand our customer base. At the same time, we also continue to invest in our very important value customer base.

Speaker 2: Since that time, our fleet productivity and profitability has dramatically improved. For comparison, sales now for our 400 stores per door has increased 15%.

Since that time, our fleet productivity and profitability has dramatically improved for comparison sales now for our 400 stores per door has increased 15%.

Speaker 2: With the productivity increases in revenue per door, combined with our targeted promotional strategy, profit per 400 doors this year has increased more than 40% versus 2008.

With the productivity increases in revenue per door combined with our targeted promotional strategy profit per 400 doors. This year has increased more than 40% versus 2018.

Mark Warden: The broader inflationary environment continues to make it more expensive to compete for share growth, to attract and retain talent and to capture new customers. With unemployment levels remaining near 50-year lows, hiring and retaining employees in the retail space requires continual innovation to ensure a great place to work, as well as higher investments in wages, healthcare and benefits. With our team of nearly 6,000 talented customer-focused members, we pride ourselves on delivering the best customer experience.

Speaker 2: As Sheridan preceding quarters, our highly profitable fleet of stores has within a solid position to self-spund our investments in the business.

As shared in preceding quarters are highly profitable fleet of stores has us in a solid position to self fund our investments in the business.

Speaker 2: Additionally, the investment in our CRM platform continues to drive customer membership growth, reaching 33.3 million members, an increase of 12% over prior year.

Additionally, the investment in our CRM platform continues to drive customer membership growth, reaching $33 3 million members, an increase of 12% over prior year.

Speaker 2: Felt from loyalty members now represent over 70% of the company's net sales, and are most profitable, gold tier membership grew over 25%.

Elsewhere in loyalty members now represent over 70% of the company's net sales in our most profitable Gold's here membership grew over 25% in Q2.

Speaker 2: Transaction size for bill members was over 15% higher than none.

Transaction size for gold members was over 15% higher than non members.

Mark Warden: By investing in our team, we drive and continue new customer engagement, strong conversion levels and customer oil, with increased strategic investments in our brand and customer experience and the slower economic recovery we had decided to lower our expectation for new store opening this year. We now plan to open 6 to 10 new stores in 2023, likely on the lower end of the range and less economic conditions improve rapidly during Q3. Importantly, there is no change to our long-term plan to operate over 500 stores in 2028.

Speaker 2: One of the brand building areas we invested in was to reactivate last athletic shoppers. Specifically, those members did not purchase a top global athletic brand with us in 2022. During our period where the supply chain disrupted our assortment and availability. With this year's solid assortment in stores, we utilized our SPRM assets to reengage many of those shoppers and get them to retry shoe carnivores.

One of the brand building areas, we invested in was to reactivate lapsed athletic shoppers specifically those members did not purchase a top global athletic brand with us in 2022 during a period, where the supply chain disrupted our assortment and availability.

With this year solid assortment in stores, we utilized our CRM assets to re engage many of those shoppers and get them to retry shoe Carnival.

Speaker 2: this among other targeted campaigns that's a significant number of customers reactivated into active buyers during Q2. We're very encouraged by these results and continue to invest in targeted brand building and customer programs.

This among other targeted campaigns led to a significant number of customers reactivated into active buyers. During Q2, we're very encouraged by these results and continued to invest in targeted brand building and customer programs.

Mark Warden: We're taking a more measured approach to near-term, organic growth until market conditions improve further. Economic and inflationary conditions are not improving as quickly as we have projected and we expect that they will remain challenging as we navigate the remainder of 2023, particularly with urban customers. Given that and reflecting our updated new store plans, we are updating our full year 2023 sales guidance to $1.19 to $1.21 billion. Erik will discuss detailed guidance in a few moments as part of his commentary on the course.

Speaker 2: As I discussed earlier, we're seeing a shift to more affluent customers, which in part is being driven by our e-com and CRM capabilities. In short, are always on, digital marketing strategy is working very well, capturing and converting customers, and it's partially offsetting the traffic softness we are seeing in some of our urban customers.

As I discussed earlier, we're seeing a shift to more affluent customers, which in part is being driven by our E com and CRM capabilities in short our always on digital marketing strategy is working very well, capturing and converting customers and is partially offsetting the traffic softness we are seeing in some of our.

And customers.

Speaker 2: We have significantly more untapped customers to re-engage in the years ahead. Making CRM a core, continued driver of profitable customer engage.

We have significantly more untapped customers to reengage in the years ahead, making CRM a core continued driver of profitable customer engagement.

Mark Warden: Now, I'd like to discuss how our continued strategic investments are positioning us for profitable growth when the economy improves. Our store modernization program and in-store experience investments continue to drive fleet profitability and productivity. A little over two years into the program, we have 52% of the shoe carnival fleet remodel complete. We are on track for approximately two-thirds of the fleet to be completed by summer of 2024. I'm also very excited that we opened our 400 stores since our last earnings call.

Speaker 2: As I mentioned earlier, conditions are improving with our more affluent customer base across the business, and this improvement is particularly evident in the performance of shoe stations.

As I mentioned earlier conditions are improving with our more affluent customer base across the business and this improvement is particularly evident in the performance of shoe station.

Speaker 2: Q2 sales for shoe stations increased low single digits and Q3 sales today grew mid teens versus prior year, outperforming the overall company each quarter and driving profitable growth.

Q2, SaaS for Schuh station increased low single digits in Q3 sales to date grew mid teens versus prior year outperforming the overall company each quarter and driving profitable growth.

Speaker 2: Our investments to harmonize our online and CRM platforms for customers are working. Enabling shoe stations to build top line sales and margin momentum.

Our investments to harmonize our online and CRM platforms for customers are working enabling shoe station to build top line sales and margin momentum.

Mark Warden: The last time we operated 400 stores was back in 2018 when we were at the very early stages of our multi-year productivity improvement in store rationalization programs. Since that time, our fleet productivity and profitability has dramatically improved. For comparison, sales now for our 400 stores per door has increased 15%. With the productivity increases in revenue per door, combined with our targeted promotional strategy, profit per 400 doors this year has increased more than 40% versus 2018.

Speaker 2: We continue to advance value capture programs and game synergies across the shoot carnival and shoot station vanners to drive further efficiencies and margin expansion.

We continue to advance value capture programs and gain synergies across the shoe Carnival and shoe station banners to drive further efficiencies and margin expansion.

Speaker 2: Given the challenging economic landscape, we continue to prioritize reducing inventory levels, sustaining strong margins, and providing the right mix of branded products for our customers.

Given the challenging economic landscape, we continue to prioritize reducing inventory levels sustaining strong margins and providing the right mix of branded products for our customers.

Speaker 2: We started this year with inventory approximately $105 million higher than prior year, with plans in place to rapidly write size our inventory position by back to school. We ended the second quarter with inventory up only $24 million versus prior year, continuing to reduce inventory levels versus year ago. And importantly, as I mentioned earlier, we're maintaining strong margin.

We started this year with inventory approximately a $105 million higher than prior year with plans in place to rapidly right size, our inventory position by back to school.

We ended the second quarter with inventory up only $24 million versus prior year, continuing to reduce inventory levels versus year ago, and importantly, as I mentioned earlier, we're maintaining strong margins.

Mark Warden: As Sheridan preceding quarters, our highly profitable fleet of stores has been a solid position to self-spund our investments in the business. Additionally, the investment in our CRM platform continues to drive customer membership growth reaching 33.3 million members in increase of 12% over prior year. Felt from loyalty members now represent over 70% of the company's net sales and are most profitable, gold tier membership grew over 25% in Q2. Transaction size for gold members was over 15% higher than non-members.

Speaker 2: Car will cover more details in a few moments, but our inventory is on track to be below prior year levels in the coming weeks, and to achieve the annual guidance for inventory to be approximately $40 million lower by year end 2023, compared to year end 2020.

Carl will cover more details in a few moments, but our inventory is on track to be below prior year levels in the coming weeks and to achieve the annual guidance for inventory to be approximately $40 million lower by year end 2023 compared to year end 2022.

Speaker 2: Our balance sheet is built into an even stronger position with over $90 million in cash and marketable securities on-hand as of yesterday. And equally as important, we continue to operate with zero debt. As we have in the past, we're funding our significant investments to grow the business profitably from the strong operating cash flows generated by the business.

Our balance sheet is building to an even stronger position with over $90 million in cash and marketable securities on hand as of yesterday and equally as important we continued to operate with zero debt as we have in the past we're funding our significant investments to grow the business profitably from the strong operating.

Mark Warden: One of the brand-building areas we invested in was to reactivate last athletic shoppers. Specifically, those members did not purchase a top global athletic brand with us in 2022. During our period where the supply chain disrupted our assortment and availability. With this year's solid assortment in stores, we utilized our CRM assets to re-engage many of those shoppers and get them to retry shoe corners. This, among other targeted campaigns, lets a significant number of customers reactivated into active buyers during Q2.

Cash flows generated by the business.

Speaker 2: Before I hand it over to Carl, I will summarize by saying that our second quarter results demonstrated the momentum of our strategy within the context of a challenging economic back.

Before I hand, it over to Carl I'll summarize by saying that our second quarter results demonstrated the momentum of our strategy within the context of a challenging economic backdrop we.

Speaker 2: We delivered improvement on that sales, earns per share, and increased investment in advertising, branding, and customer experience during the quarter versus Q1. Our strategic investments drove growth in our customer loyalty program, high conversion, and continued market share gains in the family footwear channel.

We delivered improvement on net sales earnings per share and increased investment in advertising branding and customer experience during the quarter versus Q1, our strategic.

Mark Warden: We're very encouraged by these results and continue to invest in targeted brand building and customer programs. As I discussed earlier, we're seeing a shift to more affluent customers, which in part is being driven by our ECOM and CRM capabilities. In short, our always on digital marketing strategy is working very well, capturing and converting customers and it's partially offsetting the traffic softness we are seeing in some of our urban customers. We have significantly more untapped customers to re-engage in the years ahead, making CRM a core, continued driver of profitable customer engagement.

<unk> investments drove growth in our customer loyalty program high conversion and continued market share gains in the family footwear channel.

Speaker 2: We opened our 400th store as we continue to invest in the business with new stores, our CRM strategies, store modernization, investing class store experience for our customers.

We opened our 400th store as we continue to invest in the business with new stores, our CRM strategies store modernization and best in class store experience for our customers.

Speaker 2: We saw improving conditions related to the impact of inflation on consumers in the second quarter, but some of our highly valued lower income urban customers remain challenged, and we expect we'll continue to be cautious in the current economic environment.

We saw improving conditions related to the impact of inflation on consumers in the second quarter, but some of our highly valued lower income urban customers remain challenged and we expect we will continue to be cautious in the current economic environment.

Mark Warden: As I mentioned earlier, conditions are improving with our more affluent customer base across the business and this improvement is particularly evident in the performance of Shoe Station. Q2 sales for Shoe Station increased low single digits and Q3 sales today through mid teens versus prior year, outperforming the overall company each quarter and driving profitable growth. Our investments to harmonize our online and CRM platforms for customers are working, enabling Shoe Station to build top line sales and margin momentum.

Speaker 2: We're taking a measured approach to the balance of the year as we expect economic conditions likely will remain challenging, but importantly, our balance sheet is strong and our strategy to drive growth continues to be our priority. When the lower income consumer segments start to improve, we'll be in a great position to drive profitable growth.

We're taking a measured approach to the balance of the year as we expect economic conditions likely will remain challenging but importantly, our balance sheet is strong and our strategy to drive growth continues to be a priority.

When the lower income consumer segment starts to improve we'll be in a great position to drive profitable growth.

Speaker 2: And now I'll hand it over to Carl to provide further color on the quarter and your head.

And now I'll hand, it over to Karl to provide further color on the quarter and year ahead Carl.

Speaker 3: Thank you, Mark. As you discuss, we saw some improving customer trends as the quarter progressed that the impact of inflation on our customer's moderate.

Thank you Marc as you discussed we saw some improving customer trends as the quarter progressed that the impact of inflation on our customers' moderated.

Mark Warden: We continue to advance value capture programs and gain synergies across the Shoe Carnival and Shoe Station banners to drive further efficiencies and margin expansion. Given the challenging economic landscape, we continue to prioritize reducing inventory levels, sustaining strong margins and providing the right mix of branded products for our customers. We started this year with inventory approximately $105 million higher than prior year with plans in place to rapidly right size our inventory position by back to school.

Speaker 3: Customer engagement picked up meaningfully. Product margins remained healthy. Average transactions climbed to new second quarter highs and customer conversion was strong.

Customer engagement picked up meaningfully product margins remained healthy average transactions climbed to new second quarter highs in customer conversion was strong.

Speaker 3: Back to school seasons ongoing and are athletic and children's inventory is exactly where we want it. While competitive intensity has been high in Q2 and early Q3, we remain committed to our profit transformation and our targeted CRM strategy.

Back to school season is ongoing in our athletic and children's inventory is exactly where we want it while competitive intensity has been high in Q2 and early Q3, we remain committed to our profit transformation and our targeted CRM strategies.

Speaker 3: Continue to focus on driving our strategic objectives, which include connecting with our consumers using our CRM program to maximize sales, continuing to reduce our inventory throughout the year and delivering strong product markets.

Continue to focus on driving our strategic objectives, which include connecting with our consumers using our CRM program to maximize says continuing to reduce our inventory throughout the year and delivering strong product margin.

Mark Warden: We ended the second quarter with inventory up only $24 million versus prior, continuing to reduce inventory levels versus year ago and importantly, as I mentioned earlier, we are maintaining strong margins. Car will cover more details in a few moments but our inventory is on track to be below prior year levels in the coming weeks and to achieve the annual guidance for inventory to be approximately $40 million lower by year end 2023 compared to year end 2022.

Speaker 3: We have many more unpacked customers to re-engage with going forward, making CRM a core driver of profitable customer engagement.

Many more untapped customers to reengage with going forward, making CRM, a core driver of profitable customer engagement.

Speaker 3: Moving to the quarter. Total Q2 comp sales were down 6.5%, which was an improvement versus the low double digit applying we saw in Q1 2020.

Moving to the quarter total Q2 comp sales were down six 5%, which was an improvement versus the low double digit decline we saw in Q1 2023 <unk>.

Mark Warden: Our balance sheet is building to an even stronger position with over $90 million in cash and marketable securities on hand as of yesterday and equally as important, we continue to operate with zero debt. As we have in the past, we're funding our significant investment to grow the business profitably from the strong operating cash flows generated by the business.

Speaker 3: including August VTS, we are seeing a trend of improved, but down versus prior year continuing for the balance of 20.

Including August VTS, we are seeing a trend of improved but down versus prior year continuing for the balance of 'twenty three.

Speaker 3: The mechanical perspective, second quarter comp sales and women's non athletic footwear were down low teens with thrust down over 25%. Futsun samples were both...

From a category perspective second quarter comp sales in womens non athletic footwear were down low teens with dress down over 25%.

Each incentives were both down mid teens sport was down mid single digit with leisure down low singles Casuals were up low single digits in the quarter led by flats and tailored.

Speaker 3: Sport was down mid single digit with leisure down load singles. Casuals were up low single digits in the quarter, led by flat 10-K .

Mark Warden: Before I hand it over to Carl, I will summarize by saying that our second quarter results demonstrated the momentum of our strategy within the context of a challenging economic backdrop. We delivered improvement on net sales, earns per share, and increased investment in advertising, branding, and customer experience during the quarter versus Q1. Our strategic investments drove growth in our customer loyalty program, high conversion, and continued market share gains in the family footwear channel.

Speaker 3: Men's non-ethyletic cop cells were down mid-single digit. Casuals were up, low single digit, but strong performance in both canvas and slip.

Mens non athletic comp sales were down mid single digit casuals were up low single digits with strong performance in both Kansas and slip bonds men's dress was down high teens and boots were down mid teens in the quarter.

Speaker 3: Men's dress was down, high teens, and boots were down mid-teen to the...

Children's comp sales were up low single digits led by children's athletic up low single digits driven by performance in court, partially offset by children's non athletic down low singles.

Mark Warden: We opened our 400th store as we continue to invest in the business with new stores, our CRM strategies, store modernization, investing class store experience for our customers. We thought improving conditions related to the impact of inflation on consumers in the second quarter, but some of our highly valued lower income urban customers remain challenged and we expect will continue to be cautious in the current economic environment. We're taking a measured approach to the balance of the year as we expect economic conditions likely will remain challenging, but importantly, our balance sheet is strong and our strategy to drive growth continues to be our priority. When the lower income consumer segment starts to improve, we'll be in a great position to drive profitable growth.

Speaker 3: The trend improvement during the quarter in children's led by athletic reflected our strong inventory position for back to school and we continue to see that improve trend in

A trend improvement during the quarter and children's lead by athletic reflected our strong inventory position for back to school and we continue to see that improved trend in August.

Speaker 3: Comp sales and adult athletic improved to down low single digit with men's downs slightly more than

Comp sales in adult athletic improved to down low single digit with men's down slightly more than women's as we optimized inventory levels. The improved trend of down low single digit continued in August as part of back to school and was led by court in basketball, but with continued softness in skate.

Speaker 3: As you optimize inventory levels, the improved trends of down low single-digit continued in August as part of back to school and was led by court in basketball, but with continued softness in skate and run.

And running.

Speaker 3: As I mentioned earlier, competitive intensity was high in Q2. However, our merchandise margin decreased by only 20 basis points in the quarter versus the prior year, improving sequentially versus Q1 performance, and reflecting our discipline strategy and investments in CRM, which are based on data, customer insights, to drive strong product market.

As I mentioned earlier competitive intensity was high in Q2.

However, our merchandise margin decreased by only 20 basis points in the quarter versus the prior year, improving sequentially versus Q1 performance and reflecting our disciplined strategy and investments in CRM, which are based on data customer insights to drive strong private margin.

Carl Chavetta: And now, I'll hand it over to Carl to provide further color on the quarter and year ahead. Carl? Thank you, Mark. As you discussed, we saw some improving customer trends as the quarter progressed that the impact of inflation on our customers moderated. Customer engagement picked up meaningfully. Product margins remained healthy. Average transactions climbed to new second quarter highs and customer conversion was strong. Back to school seasons ongoing in our athletic and children's inventory is exactly where we want it.

Speaker 3: continue to prioritize inventory levels, providing the right mix of the freshest products for our customers and sustaining strong markets.

We continue to prioritize inventory levels, providing the right mix of the freshest products for our customers and sustaining strong margins. We entered the first quarter with inventory up approximately $105 million or 37% versus the previous year with a strategy to right.

Speaker 3: We entered the first quarter with inventory approximately 105 million or 37 percent versus the previous year with a strategy to right size arguments.

Carl Chavetta: While competitive intensity has been high in Q2 and early Q3, we remain committed to our profit transformation and our targeted CRM strategies. We continue to focus on driving our strategic objectives, which include connecting with our consumers using our CRM program to maximize sales, continuing to reduce our inventory throughout the year and delivering strong product margin. We have many more unpacked customers to re-engage with going forward, making CRM a core driver of profitable customer engagement.

<unk> our inventory we ended the first quarter with inventory up approximately $44 million or 13% versus 2022, and importantly, we ended second quarter with inventory only higher than the prior year by approximately $24 million or 6%.

Speaker 3: We ended the first quarter with inventory up approximately 44 million or 13% versus 2022. And importantly, we ended second quarter with inventory only higher than the prior year by approximately 24 million or 6%.

Speaker 3: Inventory at the end of Q2, 23 was higher than Q1, but with back to school in progress, we expect our inventory level to be lower than the prior year and September . And we continue to expect that our inventory level at the end of fiscal 2023 will be approximately $40 million lower than the end of fiscal 2000.

Inventory at the end of Q2 2003 was higher than Q1, but with back to school in progress, we expect our inventory level to be lower than the prior year in September and we continue to expect that our inventory level at the end of fiscal 2023 will be approximately $40 million lower.

Carl Chavetta: Moving to the quarter, total Q2 comp sales were down 6.5%, which was an improvement versus the low-double-digit decline we saw in Q1 2023. Including August VTS, we are seeing a trend of improved but down versus prior year continuing for the balance of 23. From a category perspective, second quarter comp sales and women's non- athletic footwear were down low teens with thrusts down over 25%. Boots and sandals were both down mid-teens. Sport was down mid-single-digit with leisure down low singles.

<unk> then the end of fiscal 2022.

Speaker 3: Currently, our inventory content is clean and we see no reason to change our strategy to achieve our goals. We will continue to optimize inventory levels and diligently manage inventory flow to ensure our stores are stocked with the most desired product offerings that are time appropriate as we move through the balance of fiscal 2023 and going forward.

Currently our inventory content is clean and we see no reason to change our strategy to achieve our goals. We will continue to optimize inventory levels and diligently manage inventory flow to ensure our stores are stocked with the most desired product offerings that are time appropriate as we move through the balance of fiscal two.

'twenty three and going forward.

Speaker 3: To be clear, our strategy to right-size inventory while maintaining the freshest product selection for our customers.

To be clear our strategy to right size inventory, while maintaining the freshest product selection for our customers is ongoing and we will continue even after we achieve our guidance for fiscal year end 2023 to be $40 million lower than the prior year.

Speaker 3: is ongoing and will continue even after we achieve our guidance for fiscal year and in 2023 to be $40 million lower than the prior year.

Carl Chavetta: Casuals were up low single digits in the quarter led by flats and tailored. Men's non- athletic comp sales were down mid-single-digit. Casuals were up low single-digit with strong performance in both canvas and slip-ons. Men's dress was down high teens and boots were down mid-teens in the quarter. Children's comp sales were up low single-digit led by children's athletic up low single-digit driven by performance in court. Partially offset by children's non- athletic down low singles.

Speaker 3: And with that, I would turn the call over to Eric for a review of our financials. Eric.

And with that I will turn the call over to Eric for a review of our financials Eric.

Speaker 4: Thank you, Carl, and good morning, everyone. Moving to the financial results.

Thank you Carl and good morning, everyone moving to the financial results.

Speaker 4: In my remarks, I will be comparing our second quarter results with the second quarter of 2020.

In my remarks, I will be comparing our second quarter results with the second quarter of 2022, noting.

Speaker 4: Noting comparison to Q1 2023 and year-end 2022 If needed for content

Note in comparison to Q1, 2023 and year end 2022, if needed for context.

Carl Chavetta: The trend improvement during the quarter in children's led by athletic reflected our strong inventory position for back to school. And we continue to see that improve trend in arts. Comped sales and adult athletic improved to down low single digit with men's down slightly more than women's. As you optimize inventory levels the improved trend of down low single digit continued in August as part of back to school and was led by court in basketball but with continued softness in skate and running.

Speaker 4: Starting with top line, our net sales in Q2 were 294.6 million. This was down 5.7% on income decline of 6.5% versus prior year.

Starting with topline our.

Net sales in Q2 were $294 6 million. This was down five 7% unencumbered decline of six 5% versus prior year.

Speaker 4: to offer some perspective on our performance, while NET sales in the quarter were lower than the prior year, the Q2 performance represented an improvement of 5% as compared to Q1 2023.

To offer some perspective on our performance.

While net sales in the quarter were lower than the prior year. The Q2 performance represented an improvement of 5% as compared to Q1 2023.

Speaker 4: The comp decline was driven by approximately 7% reduction in traffic versus prior year.

The comp decline was driven by approximately 7% reduction in traffic versus prior year, partially offset by a five 4% increase in ecommerce net sales.

Carl Chavetta: As I mentioned earlier competitive intensity was high in Q2 however our merchandise margin decreased by only 20 basis points in the quarter versus the prior year improving sequentially versus Q1 performance and reflecting our discipline strategy and investments in CRM which are based on data customer insights to drive strong product margin. We continue to prioritize inventory levels providing the right mix of the freshest products for our customers and sustaining strong margins. We entered the first quarter with inventory up approximately 105 million or 37 percent versus the previous year with a strategy to right size our inventory.

Speaker 3: partially offset by a 5.4% increase in e-cromers net sales.

Speaker 3: Some customer trends are improving, but inflationary and economic headlands are still impacting traffic.

Some customer trends are improving but inflationary and economic headwinds are still impacting traffic.

Speaker 3: Shoe Station banner sales for Q2 came in at a low single digit increase versus prior year and shoe carnival banner sales came in at a mid single digit decline.

Shoe station banner sales for Q2 came in at a low single digit increase versus prior year and shoe Carnival banner sales came in at a mid single digit decline.

Speaker 3: In August , we opened our 400th store with the fleet now comprised of 373 shoe carvel stores and 27 shoe station stores.

In August we opened our 400 store with the fleet now comprised of 373 shoe Carnival stores and 27 two station stores.

Speaker 3: Our store productivity and profitability have increased significantly since 2018, which was the last time we operated 400 stores.

Our store productivity and profitability have increased significantly since 2018, which was the last time, we operated 400 stores.

Speaker 3: Q2 gross profit margin was 35.8%, reflecting the 10th consecutive quarter at or exceeding 35%.

Q2, gross profit margin was 35, 8%, reflecting the 10th consecutive quarter at or exceeding 35%.

Carl Chavetta: We ended the first quarter with inventory up approximately 44 million or 13 percent versus 2022 and importantly we ended second quarter with inventory only higher than the prior year by approximately 24 million or 6 percent. Inventory at the end of Q2 23 was higher than Q1 but with back to school in progress we expect our inventory level to be lower than the prior year and September and we continue to expect that our inventory level at the end of fiscal 2023 will be approximately 40 million dollars lower than the end of fiscal 2022. Currently our inventory content is clean and we see no reason to change our strategy to achieve our goals.

Speaker 3: The margin reflex continued advancement of our CRM capability.

The margin reflects continued advancement of our CRM capabilities, resulting in high customer conversion and increase loyalty members in the quarter.

Speaker 3: resulting in high customer conversion and increased loyalty members in the quarter.

Speaker 3: Compared to prior year, Merchandise margin decreased 20 basis points, reflecting in improvement versus Q1 2023. Led by our CRM strategy, which is driving strong product margin.

Imperative prior year merchandise margins decreased 20 basis points, reflecting an improvement versus Q1 2023 led by our CRM strategy, which is driving strong product margin.

Speaker 3: Find distribution and occupancy costs declined in a quarter. However, we're due to leveraging by 20 basis points as a result of the sales decline.

Buying distribution and occupancy cost declined in the quarter. However, we're deleveraging by 20 basis points as a result of the sales decline.

Speaker 3: The buying distribution and occupancy expense reductions were primarily the result of lower freight and distribution costs. Partially offset by higher occupancy costs related to new stores and store modernization.

The buying distribution and occupancy expense reductions were primarily the result of lower freight and distribution costs, partially offset by higher occupancy costs related to new stores and store monetization.

Carl Chavetta: Currently our inventory content is clean and we see no reason to change our strategy to achieve our goals. We will continue to optimize inventory levels and diligently manage inventory flow to ensure our stores are stock with the most desired product offerings that are time appropriate as we move through the balance of fiscal 2023 and going forward.

Carl Chavetta: We will continue to optimize inventory levels and diligently manage inventory flow to ensure our stores are stock with the most desired product offerings that are time appropriate as we move through the balance of fiscal 2023 and going forward.

Speaker 3: SGNA Expensing Q2 was $80.8 million, representing an increase of $6.5 million over Q2 2022, driven by our investment decisions in brand building and customer experience during the quarter. We are pleased with the customer response to our investments and we plan to continue to invest in those areas in the remainder of Q3.

SG&A expense in Q2 was $80 8 million, representing an increase of $6 5 million over Q2, 2022, driven by our investment decisions in brand building and customer experience. During the quarter. We are pleased with the customer response to our investments and we plan to continue.

Eric Gasp: To be clear our strategy to right size inventory while maintaining the freshest product selection for our customers is ongoing and will continue even after we achieve our guidance for fiscal year and 2023 to be 40 million dollars lower than the prior year and with that I will turn the call over to Eric for a review of our financials. Eric? Thank you Garo and good morning everyone moving to the financial results. In my remarks I will be comparing our second quarter results with the second quarter of 2022 noting comparison to Q1 2023 and year end 2022 if needed for context.

To invest in those areas in the remainder of Q3.

Speaker 3: As their percentage of net sales, SGN expenses were 27.4%. In the quarter, as compared to 23.8% in Q2, 2022, and 27.6% in Q1, 2023.

As a percentage of net sales SG&A expenses were 27, 4% in the quarter as compared to 23, 8% in Q2, 2022, and 27, 6% in Q1 2023.

Speaker 3: Q2 operating can was 24.7 million or 8.4% of sales compared to 38.8 million and 12.4% of sales in Q2 2022.

Q2, operating income was $24 7 million or eight 4% of sales compared to $38 8 million and 12, 4% of sales in Q2 2022.

Speaker 3: That income for the second quarter of 2023 was 19.4 million or 71 cents in diluted earnings per share. While lower than 22, 2022 earnings per diluted share in the current quarter reflected in 18% increase versus Q1 2023. We closed out the second quarter with the inventory of 4909 which was up approximately 24 million compared to the prior year or 5.1% on a per store base.

Net income for the second quarter of 2023 was $19 4 million or <unk> 71 in diluted earnings per share while lower than Q2 2022 earnings per diluted share in the current quarter reflected an 18% increase versus Q1 2023.

Eric Gasp: Starting with top line our net sales and Q2 were 294.6 million. This was down 5.7% on income decline of 6.5% versus prior year. To offer some perspective on our performance while net sales in the quarter were lower than the prior year the Q2 performance and improvement of 5% as compared to Q1 2023. The comp decline was driven by approximately 7% reduction in traffic versus prior year, partially offset by a 5.4% increase in e-cromers net sales.

We closed out the second quarter with inventory of $490 million, which was up approximately 24 million compared to the prior year or five 1% on a per store basis.

Speaker 3: This higher inventory level of 24 men compares favorably to 44 main hire than the prior year for Q1 2023 and 105 main hire at your end 2022.

This higher inventory level of 24 million compares favorably to <unk> 44 remained higher than the prior year for Q1, 2023 and $105 million higher at year end 2022.

Speaker 3: with back to school shopping in progress. Inventory is on track to be below prior year levels in September 2023. And we expected to be approximately 40 main lower by year end 2023 as compared to 2022. Importantly, our aged and seasonal carrier inventories are in line. And we have no expectation of deep discounting to liquidize merchandise. Moving now to our...

With back to school shopping in progress inventory is on track to be below prior year levels in September 2023, and we expect it to be approximately 40 million lower by year end 2023, as compared to 2022 <unk>.

Eric Gasp: Some customer trends are improving, but inflationary and economic headlands are still impacting traffic. Shoe Station banner sales for Q2 came in at a low single digit increase versus prior year and Shoe Carnival banner sales came in at a mid-single digit decline. In August, we opened our 400 store with the fleet now comprised of 373 Shoe Carnival stores and 27 Shoe Station stores. Our store productivity and profitability have increased significantly since 2018, which was the last time we operated 400 stores.

Importantly, our aged and seasonal carrier inventories are in line and we have no expectation of deep discounting to liquidate merchandise.

Moving now to our strong balance sheet and liquidity position.

Speaker 3: At the end of Q2, we had total cash, cash equivalent, and marketable securities of approximately 47 million. And as of yesterday, that total was over 90 million with no outstanding debt.

At the end of Q2, we had total cash cash equivalents and marketable securities of approximately $47 million and as of yesterday that total is over $90 million with no outstanding debt.

Speaker 3: At the end of 2022, the company had maintained no debt for 18 consecutive years and has continued funding its operations without debt through the second quarter.

Eric Gasp: Q2 gross profit margin was 35.8%, reflecting the 10th consecutive quarter at or exceeding 35%. The margin reflects continued advancement of our CRM capabilities, resulting in high customer conversion and increased loyalty members in the quarter. Compared to prior year, merchandise margin decreased 20 basis points, reflecting in improvement versus Q1 2023, led by our CRM strategy, which is driving strong product margin. Buying distribution and occupancy cost declined in the quarter. However, we're due leveraging by 20 basis points as a result of the sales decline.

At the end of 2022, the company had maintain no debt for 18 consecutive years and as continued funding its operations without debt through the second quarter.

Speaker 3: During the quarter, there were no share repurchases, and we currently have the entire authorized amount of 50 million available for the share repurchase program.

During the quarter there were no share repurchases and we currently have the entire authorized amount of $50 million available for the share repurchase program.

Speaker 3: We provided details updated guide and statistical 2023 in our earnings press release earlier this morning. And so I will cover a few of those items now.

We provided detailed updated guidance for fiscal 2023 in our earnings press release earlier. This morning, and so I will cover a few of those items now given.

Speaker 3: Given the Q2 results driven by lower traffic and consumer trends that remain challenging, we are updating our sales guidance for fiscal 2023 to 1.19 billion to 1.21 billion compared to the prior range of 1.23 billion to 1.25.

Given the Q2 results driven by lower traffic and consumer trends that remain challenging we are updating our sales guidance for fiscal 2023 to $1 9 billion to $1 to $1 billion compared to the prior range of 123 billion to $1. Two 5 billion. We now expect comparable store sales are down 8%.

Eric Gasp: The buying distribution and occupancy expense reductions were primarily the result of lower freight and distribution costs, partially offset by higher occupancy costs related to new stores and store modernization. SGNA expense in Q2 was 80.8 million, representing an increase of 6.5 million over Q2 2022, driven by our investment decisions in brand building and customer experience during the quarter. We are pleased with the customer response to our investments, and we plan to continue to invest in those areas in the remainder of Q3.

Speaker 3: We now expect comparable store sales of down 8% to down 6%

To down 6%.

Speaker 3: Give it our increased strategic investments in brand and customer experience and the slower economic recovery. We now plan to open a total of 6 to 10 new stores in 2023.

Given our increased strategic investments in brand and customer experience and the slower economic recovery. We now plan to open a total of six to 10 new stores in 2023.

Speaker 3: We continue to expect Rose Prophet Margin to be between 36% and 37%.

We continue to expect gross profit margin to be between 36% and 37%.

Speaker 3: We now expect total SGNA expense to be between $321,000,000 and $327,000,000, or approximately 27% of net sales, as we continue to invest in brand building and historic experience.

We now expect total SG&A expense to be between $321 million and $327 million or approximately 27% of net sales as we continued to invest in brand building and store experience.

Eric Gasp: As their percentage of sales SGNA expenses were 27.4% in the quarter as compared to 23.8% in Q2 2022 and 27.6% in Q1 2023. Q2 operating income was 24.7 million or 8.4% of sales compared to 38.8 million and 12.4% of sales in Q2 2022. Net income for the second quarter of 2023 was 19.4 million or 71 cents in diluted earnings per share. While lower than Q2 2022, earnings per diluted share in the current quarter reflected in 18% increase versus Q1 2023.

Speaker 3: For the year, including the extra week, we are lowering our deluded EPS guidance, the 310, the 325, from our previous expectation of 360 to 385.

For the year, including the extra week, we are lowering our diluted EPS guidance to $3 10 to 325 from our previous expectation of $3 60 to $3 85.

Speaker 3: As I discussed earlier, we continue to inspect the inventory at the end of fiscal 2023 to be approximate 40 million lower than the prior year.

As I discussed earlier, we continue to expect inventory at the end of fiscal 2023 to be approximately $40 million lower than the prior year.

Speaker 3: We are seeing some improving conditions, but we expect inflationary and economic headwinds will continue to significantly impact our lower income or ring costs.

To close we are seeing some improving conditions, but we expect inflationary and economic headwinds will continue to significantly impact our lower income urban customers. We are taking a measured approach to the balance of the year our strategy to drive growth will remain a priority our balance sheet is strong with cash and we.

Speaker 3: We are taking a measured approach to the balance of the year. Our strategy to drive growth will remain a priority. Our balance sheet is strong with cash and we have no outstanding debt.

Eric Gasp: We closed out the second quarter with the inventory of 499 main which was approximately 24 main compared to the prior year or 5.1% on a per store basis. This higher inventory level of 24 main compares favorably to 44 main higher than the prior year for Q1 2023 and 105 main higher at year end 2022. With back to school shopping in progress, inventory is on track to be below prior year levels in September 2023 and we expected to be approximately 40 main lower by year end 2023 as compared to 2022.

Have no outstanding debt.

Speaker 3: This concludes our financial review. Now we would like to open the call up for questions.

This concludes our financial review now we would like to open the call up for questions.

Thank you. So you have a question. Please press star one on your telephone keypad, if you wish to remove yourself from the queue simply press Star One again, one moment for your first question.

Speaker 1: star one on your telephone keypad. If you wish to remove yourself from the queue, simply press star one again. One moment for your first question.

<unk>.

Speaker 1: Your first question comes from a line of Mitch Comets of Seaport Research. Your line is open.

Your first question comes from the line of Mitch commits.

Research Your line is open.

Speaker 5: Uh, yes, thanks for taking my questions. I've got maybe a handful. Um, Marco, something you could start by just elaborating on what you're seeing with the lower income consumer, especially if you could maybe reconcile that with your, um, prepared remark that the inflation impact is starting to moderate. Um, maybe you could start there. Hi Mitch, good morning.

Yes, thanks for taking my questions I've got maybe a handful.

Mark I was hoping you could start by just elaborating on what Youre seeing with the lower income consumer, especially if you can maybe reconcile that with your prepared remark that the inflation impact is starting to moderate.

Eric Gasp: Importantly, our aged and seasonal carrier inventories are in line and we have no expectation of deep discounting to liquidize Dice. Moving now to our strong balance sheet in the quality position. At the end of Q2, we had total cash, cash equivalents, and marketable securities of approximately 47 million. And as of yesterday, that total was over 90 million with no outstanding debt. At the end of 2022, the company had maintained no debt for 18 consecutive years and has continued funding its operations without debt through the second quarter.

Maybe just start there.

Eric Gasp: Moving now to our strong balance sheet in the quality position. At the end of Q2, we had total cash, cash equivalents, and marketable securities of approximately 47 million. And as of yesterday, that total was over 90 million with no outstanding debt. At the end of 2022, the company had maintained no debt for 18 consecutive years and has continued funding its operations without debt through the second quarter. During the quarter there were no share purchases, and we currently have the entire authorized amount at 50 million available for the share repurchase program.

Hi, Mitch good morning, Thanks for joining us today.

Speaker 6: We'll hopefully see if the trend we started to see as Q2 began. In Q1 we saw significant declines from traffic with the urban markets and the broader market traffic challenge. As we got into the beginning part of Q2 we started to see meaningful improvements within the base and it left us investing into that driving advertising.

We observed a trend we started to see as Q2 began.

In Q1, we saw significant declines from traffic.

With the urban markets and the broader market timing challenge as we got into the beginning part of Q2, we started to see meaningful improvements within the base and then left with us investing into that driving advertising.

Eric Gasp: During the quarter there were no share purchases, and we currently have the entire authorized amount at 50 million available for the share repurchase program. We provided detailed updated guidance for fiscal 2023 in our earnings press release early this morning, and so I will cover a few of those items now. Given the Q2 results driven by lower traffic and consumer trends that remain challenging, we are updating our sales guidance for fiscal 2023 to 1.19 billion to 1.21 billion compared to the prior range of 1.23 billion to 1.25 billion.

Speaker 6: building brand activity and we saw continued improvement as the quarter improved progress through the quarter.

<unk> brand activity and we saw continued improvement as the quarter improved progressed through the quarter.

Eric Gasp: We provided detailed updated guidance for fiscal 2023 in our earnings press release early this morning, and so I will cover a few of those items now. Given the Q2 results driven by lower traffic and consumer trends that remain challenging, we are updating our sales guidance for fiscal 2023 to 1.19 billion to 1.21 billion compared to the prior range of 1.23 billion to 1.25 billion. We now expect comparable store sales of down 8% to down 6%.

Speaker 6: If you unpack that a little, we're seeing two different

If you unpack that a little we're seeing two different.

Speaker 2: situations. One in our more urban markets, the inner cities, cross geographies, we're seeing traffic challenges.

Situations, one and are more urban markets.

Our cities across the geographies, we're seeing traffic challenge.

Speaker 2: On the other side, we're seeing improvement conditions where the inflationary impact is starting to show its encouraging sign.

On the other side, we're seeing improving conditions, where the inflationary impact is starting to show encouraging signs.

Eric Gasp: We now expect comparable store sales of down 8% to down 6%. Give it our increased strategic investments in brand and customer experience and the slower economic recovery, we now plan to open a total of 6 to 10 new stores in 2023. We continue to expect Roseprofit margin to be between 36% and 37%. We now expect total SGNA expense to be between 321 million and 327 million or approximately 27% of net sales as we continue to invest in brand building and store experience.

Eric Gasp: Give it our increased strategic investments in brand and customer experience and the slower economic recovery, we now plan to open a total of 6 to 10 new stores in 2023. We continue to expect Roseprofit margin to be between 36% and 37%. We now expect total SGNA expense to be between 321 million and 327 million or approximately 27% of net sales as we continue to invest in brand building and store experience. For the year, including the extra week, we are lowering our deluded EPS guidance, the 310, the 325, from our previous expectation of 360 to 385.

Speaker 2: So two different situations, but we're very pleased with what we started seeing as the quarter progressed. And that continued through Q2 and continued to moderate as we went into Q3.

There are two different situations, but we're very pleased with what we started seeing as the quarter progressed and that continued through Q2 and continued to moderate as we went into Q3.

Speaker 5: Okay, that's helpful. Thank you. And then on the Merch Margin, it was down 20 BIPs every year. You say what that is compared to 2Q of 19. And then also I'd be curious to know, I know you got to really change your Bogo strategy. Is there any way you can kind of provide this information on Merch Margin like Bogos in this quarter versus maybe Bogos four years ago?

Okay. That's helpful. Thank you and then on the merch margin was down 20 bps year over year can you say what that is compared to <unk> 19, and then also I'd be curious to know I know you guys are really change your bogo strategy.

Is there any way you can kind of provide us information on merch margin.

Eric Gasp: For the year, including the extra week, we are lowering our deluded EPS guidance, the 310, the 325, from our previous expectation of 360 to 385. As I discussed earlier, we continue to expect inventory at the end of fiscal 2023 to be approximately 40 million lower than the prior year. To close, we are seeing some improving conditions, but we expect inflationary and economic headwinds will continue to significantly impact our lower income urban customers. We are taking a measured approach to the balance of the year. Our strategy to drive growth will remain a priority. Our balance sheet is strong with cash and we have no outstanding debt.

<unk> in this quarter versus maybe pogos four years ago.

Yeah.

Speaker 7: Hi Mitch, this is Karl. Good morning. From a Bogos strategy, Bogos four years ago, we would have run entire stock up.

I've mentioned this is Carl good morning.

Eric Gasp: As I discussed earlier, we continue to expect inventory at the end of fiscal 2023 to be approximately 40 million lower than the prior year. To close, we are seeing some improving conditions, but we expect inflationary and economic headwinds will continue to significantly impact our lower income urban customers. We are taking a measured approach to the balance of the year. Our strategy to drive growth will remain a priority. Our balance sheet is strong with cash and we have no outstanding debt.

From a from a bogo strategy.

<unk> four years ago, we wouldn't run entire stock of.

Speaker 2: Our inventory for the most part at a buy one, get one half box for energy. We don't longer do that. When you see any buy one, get something from us. It's very curated product box specifically for that particular...

Of our inventory for the most for the most part.

On a buy one get one half off strategy.

No longer do that when you see a buy one get something from us.

It's very curated product bought specifically for that particular.

Speaker 2: event and those margins are tend to run about a thousand basis points higher than they would have back in when we were running bogal on the entire inventory.

Event.

Eric Gasp: This concludes our financial review.

And those margins tend to run about 1000 basis points higher than they would have back when we were running bogo on the entire inventory.

Operator: Now we would like to open the call up for questions. Thank you. If you have a question, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, simply press star 1 again, one moment for your first question.

Speaker 2: And let me build on that for a sec. If you take that back to 2019.

And Mitch let me build on that for us.

Take that back to 2019.

Speaker 2: We've run a little over 500 and 50 basis point higher gross margin than we just to compare to what we ran 2019 2019 we're at 30.1 gross margin I don't have a market margin in front of us right this second four years back We can follow up with that but on a gross margin perspective. We're still landing it over 500 basis points improvement versus 2019

Mitchel Kummetz: Your first question comes from the line of Mitch Cummets of Seaport Research. Your first question is about a handful. Mark out something you can start by just elaborating on what you are seeing with a lower income consumer, especially if you can maybe reconcile that with your prepared remark that the inflation impact is starting to moderate if you just start there.

Mitchel Kummetz: Your first question comes from the line of Mitch Cummets of Seaport Research. Your first question is about a handful.

Run little over 550 basis points higher gross margin than this Q2 compared to what we ran in 2019 2019 were at 31 gross margin are on merch margin in front of US right. This second four years back we can follow up with that but on a group.

Mark Warden: Mark out something you can start by just elaborating on what you are seeing with a lower income consumer, especially if you can maybe reconcile that with your prepared remark that the inflation impact is starting to moderate if you just start there. Hi, Mitch. Good morning. Thanks for joining us today. We hope that the trends we started to see as Q2 began. In Q1, we saw significant declines from traffic with the urban markets and the broader market traffic challenge.

Most margin perspective, we're still landing at over 500 basis points improvement versus 2019.

Speaker 5: Okay, good. And then Eric, maybe just on the guide, we can kind of back into the second half of the year, but is there any color that you could provide? You know, three, two versus four, or two, whether it's, you know, comp or margin, anything or anything there?

Okay. Good and then Eric maybe just on the on the guide we can kind of back into the.

Mark Warden: Hi, Mitch. Good morning. Thanks for joining us today. We hope that the trends we started to see as Q2 began. In Q1, we saw significant declines from traffic with the urban markets and the broader market traffic challenge. As we got into the beginning part of Q2, we started to see meaningful improvements within the base and it led to us investing into that driving advertise, of Building Brand Activity, and we saw continued improvement at the quarter and improved progress through the quarter.

Mark Warden: As we got into the beginning part of Q2, we started to see meaningful improvements within the base and it led to us investing into that driving advertise, of Building Brand Activity, and we saw continued improvement at the quarter and improved progress through the quarter. If you unpack that a little, we're seeing two different situations. One in our more urban markets, inner cities, cross geographies, we're seeing traffic challenge. On the other side we're seeing inflationary impact starting to show encouraging signs.

The second half of the year, but is there any color that you can provide.

<unk> versus <unk>, whether it's.

Comp or margin anything or anything there.

Speaker 2: Hey, Mitch, it's Mark, I'm going to grab that. So again, we've seen conditions improving throughout the year.

And then just mark I'm going to grab that.

Again, we see conditions improving throughout the year Q1 was down double digit and that progressed as I shared in Q2 to down mid single digits Q3 started off and we've continued to see nice, but moderate improvement versus Q2, so when we.

Speaker 2: Q1 was down double digit, and that progressive that shared in Q2 to down your mid-single digit.

Speaker 2: Q3, I started off and we continued to see it nice, but moderate improvement versus Q3.

Speaker 2: So when we look at the whole year, we're taking in balance the perspective that the back half of the year continues with similar results as we're seeing right now. But take a better approach, who says,

Mark Warden: If you unpack that a little, we're seeing two different situations. One in our more urban markets, inner cities, cross geographies, we're seeing traffic challenge. On the other side we're seeing inflationary impact starting to show encouraging signs. So two different situations, but we're very pleased with what we started seeing at the quarter progress, and that continued through Q2 and continued to moderate as we went into Q3. Okay, that's helpful. Thank you. And then on the merch margin, it was down 20 bit every year.

Mark Warden: So two different situations, but we're very pleased with what we started seeing at the quarter progress, and that continued through Q2 and continued to moderate as we went into Q3. Okay, that's helpful. Thank you. And then on the merch margin, it was down 20 bit every year. And you say what that is compared to Q2 of 19, and then also I'd be curious to know, I know you guys have really changed your bogos strategy. Is there any way you can kind of provide us information on merch margin like bogos in this quarter versus maybe bogos four years ago?

The whole year, we're taking in balance the perspective that the back half of the year continues with similar results as we're seeing right now we're taking a measured approach and says yes.

Speaker 2: will be in that minus 8 to minus 6% so very similar to what we have just achieved in Q2, very similar to what we've just achieved in the month of August . But a measured conservative approach. However, if we start to see the economic conditions improve or sequentially get better as they have been each quarter, then we have a well-stied potential and we're gonna continue to invest in the brand building and advertise and to go after that, shouldn't we?

We will be in that minus 2% to minus 6%. So very similar to what we adjusted achieved in Q2 very similar to what we just achieved in the month of August, but a measured and conservative approach. However, we.

We start to see the economic conditions improve or sequentially get better as they have been each quarter and we have upside potential and we're going to continue to invest in the brand building and advertising to go after that should we say.

Speaker 5: Okay, and then on the SGNA, just a little help here because SGNA dollars were up to 6.5 million in the quarter and you talked about accelerated investment.

Okay, and then on the SG&A just a little help here.

Mark Warden: And you say what that is compared to Q2 of 19, and then also I'd be curious to know, I know you guys have really changed your bogos strategy. Is there any way you can kind of provide us information on merch margin like bogos in this quarter versus maybe bogos four years ago?

Because SG&A dollars were up $6 5 million in the quarter and you talked about accelerated investments.

Speaker 5: If I back into the back half, it looks like SGNA dollars actually down a little bit year over year. It sounded like you expected some investments to continue. So I guess maybe really two questions. Were any investments accelerated into 2Q, which led to that big dollar increase? And why is SGNA down in the back half if you're continuing to invest? Are you finding some dollars to kind of pull out of the business in other areas?

If I back into the back half it looks like SG&A SG&A dollars are actually down a little bit year over year. It sounded like you're expecting some investments to continue so I guess, maybe two questions. One were worth any any investments accelerated into <unk>, which led to that big dollar increase in <unk>.

Carl Chavetta: Hi, this is Carl Good morning. From a bogos strategy, bogos four years ago, we would have run entire stock of our inventory for the most part at a buy one get one half lock strategy. We don't longer do that when you see any buy one get something from us. It's very curated product box specifically for that particular event, and those margins tend to run about a thousand basis points higher than they would have back in when we were running bogos on the entire inventory.

<unk>.

Why is SG&A down in the back half if youre continuing to invest where you're finding some dollars to kind of pull out of the business in other areas.

Speaker 3: Sure, Mitch. Good morning, Mrs. Eric. Good to speak with you. You know, as I think about it, when we saw the market conditions approved, we did do some acceleration in the growth. And as you can see, the sales didn't prove, and we were at 5% EPS was up 18. And Mark talked a little bit about where we invested, and not just the library a little bit. Perhaps that was in the brand building, and we did have full-forward investments, particularly in advertising.

Sure Mitch.

This is Eric good to speak with you.

As I think about it when we saw the market conditions improve we did do some acceleration in our growth and as you can see the sales did improve and are up 5% EPS was up 18.

Mark talked a little bit about where we invested in I'll just elaborate a little bit perhaps of that was in the brand building and we did have pull forward investments, particularly in advertising.

Speaker 3: You'll continue to have spend in new stores. We also talked a little bit about it that we launched our shoe station business in February of 23. So there's additional cost related to that.

Carl Chavetta: And let me build on that for a sec. If you take that back to 2019, we've run a little over 500 and 50 basis point higher gross margin than we just Q2 compared to what we ran 2019, 2019, we're at 30.1 gross margin. I run the market margin in front of us right this second four years back. We can follow up with that, but on a gross margin perspective, we're still landing it over 500 basis points improvement versus 2019. Okay, good.

Continue to have spend in new stores, we also talked a little bit about it but we launched our shoe station business in February of 'twenty. Three so there was additional cost related to that expense.

Speaker 3: The other half of that increase was the in-store experience. We had modernization costs or that strategy will continue. These investments are working and we will continue in it to invest. So when I think about the back half of the year, however, as I mentioned, we did pull forth some of those expenses. So we will moderate and continue to watch that expense. And we'll see how that plays out. And as Mark talked about, we'll see how opportunistic we are.

The other half of that increase was the in store experience.

We had modernization cost or any of that strategy. We will continue these investments are working and we will continue to invest so when I think about the back half of the year. However, as I mentioned, we did pull forward. Some of those expenses. So we will moderate and continue to watch that expense and we'll see how that plays out and as mark.

Mark Warden: And then Eric, maybe just on the on the guide, we can kind of back into the second half of the year, but is there any color that you could provide, you know, three q versus four q, whether it's, you know, comp or margin, anything or anything there? Hey, Mitch, it's Mark. I'm going to grab that. So, again, we've seen conditions improving throughout the year. Q1 was down double digit, and that progress was I shared in Q2 to down your mid single digits.

Mitchel Kummetz: Okay, good. And then Eric, maybe just on the on the guide, we can kind of back into the second half of the year, but is there any color that you could provide, you know, three q versus four q, whether it's, you know, comp or margin, anything or anything there? Hey, Mitch, it's Mark. I'm going to grab that. So, again, we've seen conditions improving throughout the year. Q1 was down double digit, and that progress was I shared in Q2 to down your mid single digits.

<unk> talked about we will see how opportunistic we are.

Speaker 5: And then I guess last question for Carl, you talked about

And then I guess last question for Karl you talked about.

Speaker 5: the clinical improvement and the athletic business. It sounds like you've got better inventory. I mean, one of the things that I just noticed online is that there's a lot of kind of promo air max product. And I'm just curious, maybe your broader thoughts on how you're position in athletic, I'm curious to know if, like a lot of that product was bought on closeout or are those promos margin diluted?

Sequential improvement in the athletic business it sounds like you've got better inventory I mean, one of the things that I've just noticed online is that theres a lot of kind of promo air Max product and I'm just curious.

Maybe just your broader thoughts on on how Youre positioned in athletic and I am curious to know like the.

Mark Warden: Q3, I started off and we continued to see it nice, but moderate improvement versus Q2. So when we look at the whole year, we're taking in balance the perspective that the back half of the year continues with similar results we're seeing right now. But take a better approach, will be in that minus 8 to minus 6%, so very similar to what we have just achieved in Q-tube, very similar to what we've just achieved in the month of August, but a measured conservative approach.

Mitchel Kummetz: Q3, I started off and we continued to see it nice, but moderate improvement versus Q2. So when we look at the whole year, we're taking in balance the perspective that the back half of the year continues with similar results we're seeing right now. But take a better approach, will be in that minus 8 to minus 6%, so very similar to what we have just achieved in Q-tube, very similar to what we've just achieved in the month of August, but a measured conservative approach.

A lot of that product was bought on closeout or or are those promos.

Margin dilutive.

Speaker 3: So Mitch, we're in much better position heading into back to school and coming out of back to school soon with our athletic inventories versus a year ago. Really had to do with the delivery, on time delivery of products from our key keys under.

So Mitch we're in much better position.

Heading into back to school and coming out of back to school soon.

With our athletic inventories versus a year ago really had to do with the <unk>.

Delivery on time delivery of products from our key key vendors.

Speaker 3: As far as promotional activity, as we've stated, since we are not ending global promotion environment at...

As far as promotional activity as we've stated since we're not in a global promotion environment.

Mark Warden: However, if we start to see the economic conditions improve or sequentially get better as they have been each quarter, then we have outside potential, and we're going to continue to invest in the brand building and advertise them to go after that, should we say it?

Mitchel Kummetz: However, if we start to see the economic conditions improve or sequentially get better as they have been each quarter, then we have outside potential, and we're going to continue to invest in the brand building and advertise them to go after that, should we say it? Okay, and then on the S-GNA, just a little help here, because S-GNA dollars were up 6.5 million in the quarter, and you talked about accelerated investment, if I back into the back half, it looks like S-GNA dollars actually down a little bit, year-over-year, it sounded like you expected some investments to continue, so I guess maybe really two questions, one, were any investments accelerated into Q-tube, which led to that big dollar increase, and why is S-GNA down in the back half if you're continuing to invest, or are you finding some dollars to kind of pull out of the business in other areas?

Speaker 3: since we have sort of remodeled our promotional strategy. We're able to take products that we need to move on, get very aggressive and clean them up. While we maintain price, the most valuable product that we have in that balance enables us to achieve our margin goals and continue to liquidate the distressed inventory and remain competitive in the marketplace with those, frankly, that are doing more global promotions. The most valuable product that we have in the marketplace is the most valuable product that we have in the marketplace.

Since we have sort of remodeled our promotional strategy, we're able to take products that we need to move on and get very aggressive and clean them up while we maintain price.

Eric Gasp: Okay, and then on the S-GNA, just a little help here, because S-GNA dollars were up 6.5 million in the quarter, and you talked about accelerated investment, if I back into the back half, it looks like S-GNA dollars actually down a little bit, year-over-year, it sounded like you expected some investments to continue, so I guess maybe really two questions, one, were any investments accelerated into Q-tube, which led to that big dollar increase, and why is S-GNA down in the back half if you're continuing to invest, or are you finding some dollars to kind of pull out of the business in other areas? Sure, Mitch.

The most valuable product that we have in that balance enables us to achieve our margin goals and continue to liquidate.

Stressed inventory and remain competitive in the marketplace with those frankly that are doing more global promotions.

Okay, Alright, thanks, guys. Good luck.

Okay.

Speaker 1: Your next question comes from line of symposar of William Creeding. Your line is open.

Your next question comes from the line of Sam Poser of Williams trading your line is open.

Speaker 5: Good morning. Thank you for taking my questions. I want to talk about the inventory and how you're getting

Hum.

Good morning.

Thank you for taking my questions I wanted to talk about the inventory and how you're getting to.

Speaker 5: 40 million below at the end of the year. My math tells me and I know it includes other things that your receipts in the back half of the year would probably have to be down almost 17 percent.

$40 million below at the end of the year. My Math tells me and I know it includes other things that you are.

Receipts in the back half of the year would probably have to be down almost 17%.

Eric Gasp: Good morning, this is Eric. Good to speak with you. As I think about it, when we saw the market conditions approved, we did do some acceleration in our growth, and as you can see, the sales did improve, and we were at 5 percent, EPS was up 18, and Mark talked a little bit about where we invested, and not just the library in a little bit, perhaps for that wasn't the brand building, and we did have pull forward investments, particularly in advertising.

Mitchel Kummetz: Sure, Mitch. Good morning, this is Eric. Good to speak with you. As I think about it, when we saw the market conditions approved, we did do some acceleration in our growth, and as you can see, the sales did improve, and we were at 5 percent, EPS was up 18, and Mark talked a little bit about where we invested, and not just the library in a little bit, perhaps for that wasn't the brand building, and we did have pull forward investments, particularly in advertising.

And.

Speaker 5: Even if you get to that number, the inventory is still going to be well above where it is. And my question is, if you're, if your receipts have to be down in that range,

Even if you get to that number the inventory is still going to be well above where it is and my question is on the bureau of your receipts have to be down in that range.

Speaker 5: then how do you bring enough newness in for both holiday and for spring early?

Then how do you bring enough newness in for both holiday and spring early.

Speaker 5: and keep things going. Or should you just be more aggressive with the inventory you have now to drive it down to open up more open to buy for better goods and still achieve.

And keep things going or should you just be more aggressive with the inventory you have now to drive it down to open up more.

Eric Gasp: You'll continue to have spend in new stores. We also talked a little bit about it, but we launched our shoestation business in February of 23, so there's additional costs related to that expense. The other half of that increase was the insta-work experience. We had modernization costs, and that strategy will continue. These investments are working, and we will continue in it to invest. So when I think about the back half of the year, however, as I mentioned, we did pull forward some of those expenses, so we will moderate and continue to watch that expense, and we'll see how that plays out. And as Mark talked about, we'll see how opportunistic we are.

Mitchel Kummetz: You'll continue to have spend in new stores. We also talked a little bit about it, but we launched our shoestation business in February of 23, so there's additional costs related to that expense. The other half of that increase was the insta-work experience. We had modernization costs, and that strategy will continue. These investments are working, and we will continue in it to invest. So when I think about the back half of the year, however, as I mentioned, we did pull forward some of those expenses, so we will moderate and continue to watch that expense, and we'll see how that plays out. And as Mark talked about, we'll see how opportunistic we are.

You know more open to buy for.

Better goods and still achieve.

The.

Inventory you want to at the end of the year.

Speaker 2: You know, Sam, if you'd say the inventory reduction is in accumulation of several strategies, receipts would be down to a year ago. If you remember a year ago, receipts balloon significantly in the fourth quarter when the late inventories do to supply chain issues. And if you remember a year ago, receipts would be down to a year ago.

Sam.

The inventory reduction is an accumulation of several strategies receipts would be down to a year ago. If you remember a year ago receipts balloon significantly in the fourth quarter when the late inventories.

Due to supply chain issues came in at the same time as the early receipts due to improve supply chain chain.

Speaker 2: came in at the same time as the early receipts due to improved supply chain. Chain, uh...

Carl Chavetta: And then I guess last question for Carl. You talked about the clinical improvement in the athletic business. It sounds like you've got better inventory. I mean, one of the things that I've just noticed online is that there's a lot of promo air max product, and I'm just curious. Maybe just your broader thoughts on how your position in athletic, and I'm curious to know if like a lot of that product was bought on clothes out, or are those promos, you know, margin diluted?

Speaker 2: situation that caused a big lip in inventory. We'll be down to that and more in line with the appropriate amount of receipts at that time frame. That's part one. Part two we continue to work very closely with our vendor partners.

Situations that caused.

A big blip in inventory will be down to that and more in line with the appropriate amount of receipts at that timeframe. That's part one part two we continue to work very closely with our vendor partners.

Speaker 2: to get creative on many ways to reduce inventory as we go through the back half of the year, as well as reevaluating model stocks, letter play, as everything based on the sales trend that we're seeing.

To get creative on.

Many many ways to reduce inventory.

As we go through the back half of the year as well as reevaluating modeled stocks letter play is everything based on the sales trend that we're seeing.

Carl Chavetta: So Mitch, we're in much better position heading into back-to-school and coming out of back-to-school soon with our athletic inventories versus a year ago really had to do with the delivery, on-time delivery of products from our key key vendors. As far as promotional activity, as we've stated, since we're not in a global promotion environment, since we have sort of remodeled our promotional strategy, we're able to take products that we need to move on, get very aggressive, and clean them up, while we maintain price on the most valuable product that we have, and that balance enables us to achieve our margin goals and continue to liquidate, the distressed inventory, and remain competitive in the marketplace, with those, frankly, that are doing more global promotion.

Speaker 2: So we're very confident we're going to hit that number. And as we stated, it's something in progress. It'll be ongoing as we move forward. We're being very careful here to continue to deliver great product assortment to our stores and continue our strong margins.

So we're very confident we're going to hit that number and as we stated.

It's in something in progress.

It will be ongoing as we move forward.

We're being very careful here.

To continue to deliver great product assortment to our stores and continue our strong strong margins and we believe we have a formula to get there by the end of the year.

Speaker 2: And we believe we have a formula to get there by the end of the

Speaker 1: Okay, and then thank you. And can you tell us what your store productivity was year over year? And also you had guided shoe station to be up low double digits prior for the year. Where does that stand now?

Okay and then.

Thank you and could you tell us what your store product activity was year over year.

And also you had guided shoe station to be up low double digits.

Prior for the year, where does that stand now.

Hi, good morning.

Speaker 2: So our productivity is progressed dramatically, like the said in my speech over the past five years.

Mitchel Kummetz: Alright, thanks guys, good luck.

So our productivity has progressed dramatically like I said in my speech over the past five years.

Shem Poser: Your next question comes from the line of Shem Poser of William Strading. Your line is open. Good morning. Thank you for taking my question. I want to talk about the inventory and how you're getting to 40 million below at the end of the year. My math tells me, and I know it includes other things, that your receipts in the back half of the year would probably have to be down almost 17%.

Speaker 2: revenues per door are approaching the highest they've ever been. They will touch the high water mark of the Finland listened to 21 and 22, but they're out 15% from when we're in the midst of the last time we have 400 doors.

Revenues per door are approaching the highest they've ever been there won't touch the high watermark.

The stimulus into 'twenty, one 'twenty, two but theyre up 15% from when we were in the midst of the last time, we had 400 doors.

Shem Poser: And even if you get to that number, the inventory is still going to be well above where it is. And my question is, if your receipts have to be down in that range, then how do you bring enough newness in for both holiday and for spring early and keep things going? Or should you just be more aggressive with the inventory you have now to drive it down to open up more open to buy for better goods and still achieve the inventory you want to at the end of the year?

Carl Chavetta: And my question is, if your receipts have to be down in that range, then how do you bring enough newness in for both holiday and for spring early and keep things going? Or should you just be more aggressive with the inventory you have now to drive it down to open up more open to buy for better goods and still achieve the inventory you want to at the end of the year? You know, Sam, it's a, the inventory reduction is an accumulation of several strategies.

Speaker 2: And more importantly, the profit has just been transformational. Now, we've completed the modernization in half our fleet, conversion is strong, and the response is outstanding. Profit per 400 doors now is up over 40% as I said, compared to when we were in the midst of the pro.

And more importantly, the profit has just been transformational not only completed the modernization and half of our fleet conversion is strong and the response was outstanding profit per 400 doors now is up over 40% as I said compared to when we were in the midst of the program neither.

Speaker 2: Neither the sales nor productivity are going to touch the higher watermarked year-term, a vestigulous year, or incredibly pleased with where it's growing over the long.

Sales, nor productivity are going to touch the higher watermark near term of the stimulus years, we're incredibly pleased with wireless growing over the long term.

Speaker 2: In terms of shoe station, it's accelerating. We could be more pleased with the integration, with the synergies, with the margin capture, and with the customer response to that incredibly fresh performance running portfolio. It's been spectacular.

In terms of the shoe station.

It's accelerating we couldnt be more pleased with the integration with the synergies with the margin capture and with the customer response to that incredibly fresh performance running portfolio, it's been spectacular.

Speaker 2: When you look at where it spins, I said my prepare remarks. We started to seek rope in Q2 meaningfully and it accelerated throughout Q2 and climbed into the mid-teens in the Q2.

Look at where it's been as I said in my prepared remarks.

Carl Chavetta: You know, Sam, it's a, the inventory reduction is an accumulation of several strategies. Receipts would be down to a year ago. If you remember a year ago, receipts ballooned significantly in the fourth quarter when the late inventories due to supply chain issues came in at the same time as the early receipts due to improved supply chain chain situation that caused a big lip in inventory. We'll be down to that and more in line with the appropriate amount of receipts at that time frame.

We are starting to see growth in Q2 meaningfully and it accelerated throughout Q2 and climb into the mid teens in Q3, we're.

Carl Chavetta: Receipts would be down to a year ago. If you remember a year ago, receipts ballooned significantly in the fourth quarter when the late inventories due to supply chain issues came in at the same time as the early receipts due to improved supply chain chain situation that caused a big lip in inventory. We'll be down to that and more in line with the appropriate amount of receipts at that time frame. That's part one.

Speaker 2: We're not breaking out specific guidance that we're expecting.

We're not breaking out specific guidance.

As expected.

Speaker 2: In this very difficult context, Shoe Station is going to grow this year and buck the trend in the challenging retail market.

In this very difficult context to station is going to grow this year and Buck the trend in a challenging retail environment.

Speaker 1: So I just want to walk through something here. You feel great about everything. You've cut your EPS guidance by 16%. You've cut your revenue guidance by 3%, 3%, after cutting last quarter.

So I just want to walk through something here.

Feel great about everything.

<unk>.

Your EPS guidance by 16%.

Cut your revenue guidance by 3% three plus percent after cutting.

Carl Chavetta: That's part one. Part two, we continue to work very closely with our vendor partners to get creative on many ways to reduce inventory as we go through the back half of the year as well as re-evaluating model stocks, letter play as everything based on the sales trend that we're seeing. So we're very confident we're going to hit that number and as we stated, it's a project in something in progress. It'll be ongoing as we move forward. We're being very careful here and to continue to deliver great product assortment to our stores and continue our strong margins and we believe we have a formula to get there by the end of the year.

Carl Chavetta: Part two, we continue to work very closely with our vendor partners to get creative on many ways to reduce inventory as we go through the back half of the year as well as re-evaluating model stocks, letter play as everything based on the sales trend that we're seeing. So we're very confident we're going to hit that number and as we stated, it's a project in something in progress. It'll be ongoing as we move forward.

Last quarter as well.

Speaker 1: So you seem to feel based on what you're saying, a lot better than the results are telling us right now. And I think everybody wants to sort of put that balance that against your confidence, what's really going on, and what you need to do to fix the business right now rather than just saying it's macro stuff.

So youre you seem to feel based on what Youre, saying a lot better than the results are telling us right now.

And I think everybody wants to sort of put that back.

Balance that against your confidence, what's really going on and what you need to do to fix the business right now rather than just saying its macro stuff.

Speaker 2: Yes, so we do feel really good about our underlying business and the improvements we're seeing through the year. As I said, many times the Metro Paraphram Marks were having difficulty with store traffic and particularly in urban markets. We don't see that measurably.

Yes, so we do feel really good about our underlying business and the improvements we're seeing through the year as I've said many times in my prepared remarks, we're having difficulty with store traffic and particularly in urban markets, we don't see that measurably improving.

Carl Chavetta: We're being very careful here and to continue to deliver great product assortment to our stores and continue our strong margins and we believe we have a formula to get there by the end of the year.

Speaker 2: in their balance of the year and therefore we are taking a measure approach on that dimension. When you look at the other side, as I talked about, we're encouraged by the more fluid customer results.

The balance of the year and therefore, we are taking a measured approach on that dimension. When you look at the other side as I talked about we are encouraged by the more affluent customer results.

Carl Chavetta: Okay, and then thank you and can you tell us what your store productivity was year over year and also you had guided shoe station to be up low double digits prior for the year. Where does that stand now? Hi, Sam. Good morning. So our productivity is progressed dramatically, like I said, in my speech over the past five years revenues per door are approaching the highest they've ever been. It won't touch the high water mark of the Finland listened to 21 and 22, but they're out 15% from when we were in the midst of the last time we had 400 doors, and more importantly, the profit has just been transformational.

Shem Poser: Okay, and then thank you and can you tell us what your store productivity was year over year and also you had guided shoe station to be up low double digits prior for the year. Where does that stand now? Hi, Sam. Good morning. So our productivity is progressed dramatically, like I said, in my speech over the past five years revenues per door are approaching the highest they've ever been. It won't touch the high water mark of the Finland listened to 21 and 22, but they're out 15% from when we were in the midst of the last time we had 400 doors, and more importantly, the profit has just been transformational.

Speaker 2: Whether that's in shoe stations, turning some meaningful growth, comparing to Q1, or our Fluid E-commerce shopper, showing signs of improving as the year goes, or transactions, climate, and new eyes. There are so many things that are moving forward positively, but the bottom line is a challenging economic market.

Whether that is shoe station turning to meaningful growth compared to Q1, or our fluids e-commerce shopper showing signs of improving as the year goes or transactions climbed to new highs. There are so many things that are moving forward positively, but the bottom line is a challenge.

Economic market.

Speaker 2: And we do not see it getting better to a point of getting into growth during Q3 or Q4 as our guide implies. The underlying thing. What's up?

And we do not see it getting better to a point of getting into growth during Q3 or Q4 as our guide implies.

The underlying thing.

Speaker 1: One last thing, what percent of your overall business historically or however you want to talk about it has been sort of the moderate more urban customer that seems mostly affected. What is the, what percent of your total revenue does that business, has that business represent?

One last thing what percent of your overall business historically or however, you want to talk about it has been sort of the moderate more urban customers. It seems mostly affected.

Carl Chavetta: Now we've completed the modernization in half our fleet, conversion is strong and the response is outstanding. Profit per 400 doors now is up over 40% as I said compared to when we were in the midst of the program. Neither sales nor productivity are going to touch the high watermarked year term of a stimulus year or incredibly pleased with where it's growing over the long term. In terms of shoe station, it's accelerating.

Shem Poser: Now we've completed the modernization in half our fleet, conversion is strong and the response is outstanding. Profit per 400 doors now is up over 40% as I said compared to when we were in the midst of the program. Neither sales nor productivity are going to touch the high watermarked year term of a stimulus year or incredibly pleased with where it's growing over the long term. In terms of shoe station, it's accelerating.

What is the what percent of your total revenue does that business has that business represented.

Speaker 2: He said, he was talking about it earlier that about historically over half of our customers and about half of the revenue comes from households under 50,000.

Yes, I was talking about it earlier that about historically over half of our customers and about half of our revenue comes from households under 50000.

Speaker 2: There's a segment below that though, which we have about double digit percent come from the households under 30,000 households.

There is a segment below that which we have about double digit percent come from households, under 30000 households that $30000 per year household income in that segment in particular in urban markets. The sub $30000 household and urban markets across the country that represent double D.

Carl Chavetta: We could be more pleased with the integration, with the synergies, with the marching capture and with the customer response to that incredibly fresh performance running portfolio. It's been spectacular. When you look at where it's been, as I said in my prepare remarks, we've started to see growth in Q2, meaningfully and it accelerated throughout Q2 and climbed into the mid-teens in Q3. We're not breaking out specific guidance, so we're expecting in this very difficult context, shoe station is going to grow this year and buff the trend in the challenging retail department.

Shem Poser: We could be more pleased with the integration, with the synergies, with the marching capture and with the customer response to that incredibly fresh performance running portfolio. It's been spectacular. When you look at where it's been, as I said in my prepare remarks, we've started to see growth in Q2, meaningfully and it accelerated throughout Q2 and climbed into the mid-teens in Q3. We're not breaking out specific guidance, so we're expecting in this very difficult context, shoe station is going to grow this year and buff the trend in the challenging retail department.

Speaker 2: $30,000 for your household income. It's that segment in particular in urban markets, the sub-$30,000 household in urban markets across the country that represent double digit portion of our business. That's the portion that's struggling. That's the portion that's giving us some traffic at wins.

Digit portion of our business. That's the portion that structure. That's the portion that is giving us some traffic headwinds.

Speaker 2: It's been moderating, as I said, to one double digit, Q2 mid singles, Q3 improving, but we don't see it improving fast enough to just put optimism in the back half of the year. Simply put, until the households under $30,000.

It's been moderating as I said Q1 double digit Q2 mid singles in Q3, improving but we don't see it improving fast enough to put optimism in the back half of the year simply put until the household under $30000 has better economic conditions, we're going to be a headwind.

Mark Warden: I just want to walk through something here. You feel great about everything. You've cut your EPS guidance by 16%. You've cut your revenue guidance by 3%, 3%, after cutting last quarter as well. You seem to feel, based on what you're saying, a lot better than the results are telling us right now. I think everybody wants to put that balance that against your confidence, what's really going on and what you need to do to fix the business right now rather than just saying it's macro stuff.

Speaker 2: better economic conditions, we're going to see a headwind in our urban market.

In our urban markets.

Speaker 2: Offset by the things that are working in the non-erven markets, which I want to reiterate again.

Offset by the things that are working in the non urban markets, which I won't reiterate again.

Thank you very much.

Sam.

Speaker 8: We have a follow-up question from Mitch Kometz of Seaport Research, your line is open.

We have a follow up question from Mitch commence.

Seaport Research your line is open.

Speaker 1: Yeah, thank you. Yeah, just to follow up on that question from Sam, if that consumer that below $30,000 household income consumer, you think you're losing them right now to kind of the targets in the wall marks of the world. And as the macro gets better, that you can kind of regain them.

Thank you, yes, just a follow up on that question from Sam.

That consumer that below $30000 household income consumer.

Youre, losing them right now to kind of the targets and the walmarts of the world and as the macro gets better that you can.

Kind of regain them.

Mark Warden: Yes, so we do feel really good about our underlying business and the improvements we're seeing through the year. As I said many times in my prepare remarks, we're having difficulty with store traffic and particularly in urban markets. We don't see that measurably improving in the balance of the year and therefore we are taking a measured approach on that dimension. When you look at the other side, as I talked about, we're encouraged by the more fluid customer results.

Speaker 2: They're still engaged, simply put. We look at our broad CRM database that's now over 33 million.

They're still engaged simply put we look at our.

Broad CRM database, that's now over $33 million, which saw a 12% growth, we can dissect them and understand who's still engaging with us and we're seeing strong engagement is still in that under 50000 under 30000 household income, but we're not seeing them convert at the same levels as we did.

Speaker 2: So we're 12% growth. We can dissect that and understand who's still engaging with us. And we're seeing strong engagement still in that under 50,000 and under 30,000 household incomes. But we're not seeing them convert at the same level that we did during 21 and 22. So we see them active, but not converting, which says we have an opportunity to continue engaged with them as we did in Q2 as we started to impact the school.

During 'twenty one into 'twenty, two so we see them active but not converting which says we have an opportunity to continue to engage with them as we did in Q2 as we start to back to school.

Mark Warden: Whether that's in shoe stations, turning to meaningful growth, compared to Q1 or our fluid e-commerce shopper showing signs of improving as the year goes or transactions, climate and new eyes, there are so many things that are moving forward positively, but the bottom line is a challenging economic market. And we do not see it getting better to a point of getting into growth during Q3 or Q4 as our guide implies. The underlying thing is that.

Speaker 2: And I consider what we saw as we were encouraged about was re-engaging those customers during back to school with our broader athletic position showed very encouraging results.

Sort of encouraged about what re engaging those customers during back to school with our broader athletic physician showed very encouraging results. They still have weakness in that segment, Mitch, but we continue to see improvement.

Speaker 2: They still have weakness in that segment, Mitch, but we continue to see improvement. Up.

We've seen you guys.

Yes.

Speaker 1: And then with your upper income consumer, where you seem to be doing better, I'm also curious, do you think that, you know, some of that strength is people trading down from, if you specialty retail or the department stores? And if so, you know, how do you retain that new customer as the macro improves?

And then with your upper income consumer where you seem to be doing better I'm also curious do you think that some of that strength is.

Mark Warden: One last thing, what percent of your overall business historically or however you want to talk about it has been sort of the moderate more urban customer that seems mostly affected. What is the what percent of your total revenue does that business has that business represents? Yes, I was talking about it earlier that about historically over half of our customers and about half of the revenue comes from households under 50,000. There's a segment below that, though, which we have about double digit percent come from the households under 30,000 households, the $30,000 for your household income.

People trading down from maybe specialty retail or the department stores and if so.

How do you retain that customer.

As the macro improves.

Speaker 2: Yeah, in our over $75,000 households, we saw the biggest growth in the past quarter.

Yes, there are over $75000 households, we saw the biggest growth in the past quarter that we're capturing as part of our strategy is a former department store shopper through the.

Speaker 2: We're capturing as part of our strategy is the former department store shopper through the...

Speaker 2: brand assortments and the death of product that our organization are bringing in were able to satisfy what the department stores used to as well as some family footwear that are heavily private label were instead continuing to be focused on the best brand the death of assortment and they're liking what they say

Brand Assortments.

Yes, the product that Karl and his organization are bringing in we're able to satisfy what the department stores used to as well as some family footwear that are heavily private label, where instead of continuing to be focused on the best brands and the depth of assortment and they're liking what they see.

Mark Warden: It's that segment in particular in urban markets, the sub-30,000-dollar households in urban markets across the country that represent double digit portion of our business. That's the portion, that's the structure. That's the portion that's giving us some traffic headwinds. It's been moderating, as I said, to one double digit, Q2, mid singles, Q3 improving. But we don't see it improving fast enough to put optimism in the back half of the year. Simply put, until the households under 30,000, that's better economic conditions. We're going to see a headwind in our urban markets offset by the things that are working in the non-urban markets, which I want to reiterate again.

Speaker 2: That the KPIs are working across the board for that higher end consumer. And I do think we retain them as the mall shop or the department store shopper and private label focused family footwear retailers. Don't have to name the storements we have.

That's the Kpis are working across the board for that higher end consumer and I do think we retain them as the mall shoppers Department store shopper and private label focused family footwear retailers.

Don't have the same assortments we have.

Speaker 1: Okay, and then maybe the last one for Carl, when you were going through your kind of category performance on the quarter, I thought I heard you say that boots weren't very good. I don't think of QQ as being much of a boot quarter, but are you getting any early reads on boots as you've gotten into kind of August and back to school and kind of remind me how you're thinking about boots for the back half of the year?

Okay, and then maybe last one for Carl.

When you were going through your kind of category performance in the quarter I thought I heard you say that weren't very good.

Think of <unk> as being much of a good quarter, but are you getting any early reads on boots.

You've gotten in there kind of August and back to school and kind of remind me how youre thinking about boots for the back half of the year.

Shem Poser: Thank you very much. Thank you, Pam.

Speaker 2: Mitch, we're not seeing a lot of action right now in boots.

Mitch we're not seeing a lot of action right now in boots.

Mitchel Kummetz: We have a follow up question from Mitch commits of seaport research. Your line is open. Yeah, thank you. Yeah, just to follow up on that question from Sam, that consumer that below 30,000 or household income consumer, you think you're losing them right now to kind of the targets in the wallmarks of the world. And as the macro gets better that you can kind of regain them. I think they're still engaged. Simply put, we look at our broad CRM database that's now over 33 million, which is over 12% growth.

Mark Warden: We have a follow up question from Mitch commits of seaport research. Your line is open. Yeah, thank you. Yeah, just to follow up on that question from Sam, that consumer that below 30,000 or household income consumer, you think you're losing them right now to kind of the targets in the wallmarks of the world. And as the macro gets better that you can kind of regain them. I think they're still engaged. Simply put, we look at our broad CRM database that's now over 33 million, which is over 12% growth.

Speaker 2: during Q2 and early Q3. We did see an uptick in Western, which typically happens at this time, especially with a lot of the festivals in the whole tale or slip.

<unk>.

During Q2 and early Q3.

We did we did see an uptick in western which which typically happens at this time, especially with a lot of the festivals in the whole Taylor Swift Stadium concert thing.

Speaker 2: stadium concert thing, that typically short live.

That that typically is short lived.

Speaker 2: We are hearing although experiencing in a very small way, some early sales on...

We are hearing although experiencing a very small way.

Some early sales.

Speaker 2: combat, which is tranquillal surprising to us. But that's about it. It's with the weather and the

Combat, which is frankly, a little surprising to us.

But that's about it.

With the weather and the.

Mitchel Kummetz: We can dissect that and understand who's still engaging with us. And we're seeing strong engagement still in that under 50,000 and under 30,000 household income. But we're not seeing them convert at the same level as we did during 21 and 22. So we see a massive but not converting, which says we have an opportunity to continue engagement with them as we did in Q2 as we started to in back to school.

Mark Warden: We can dissect that and understand who's still engaging with us. And we're seeing strong engagement still in that under 50,000 and under 30,000 household income. But we're not seeing them convert at the same level as we did during 21 and 22. So we see a massive but not converting, which says we have an opportunity to continue engagement with them as we did in Q2 as we started to in back to school.

Speaker 2: Frankly, the lack of some new fashion there, we're not seeing anything too much at this point.

Frankly, the lack of some new fashion, there, we're not seeing anything too much at this point.

Okay, alright, thanks again.

Speaker 8: And we have another follow up question from Sam Pozer of Williams trading your line is open.

And we have another follow up question from Sam Poser of Williams trading your line is open.

Speaker 1: Carl, you said that the adult athletic business was down low single digits, your inventory had improved. Can you give us some idea of...

Carl you said that the adult.

Atlantic business was down low single digits.

Tori had improved can you give us some idea of.

Mitchel Kummetz: And I can think of something we thought we're pretty much about was re-engaging those customers during back to school with our broader athletic position shows very encouraging results. They still have weaknesses in that segment, Mitch, but we continue to see improvement up. We've seen. Okay. And then with your upper income consumer, where you seem to be doing better, I'm also curious, do you think that, you know, some of that strength is people trading down from, if you specialty retail or the department stores and it's so, you know, how do you retain that new customer as the macro improves.

Mark Warden: And I can think of something we thought we're pretty much about was re-engaging those customers during back to school with our broader athletic position shows very encouraging results. They still have weaknesses in that segment, Mitch, but we continue to see improvement up. We've seen. Okay. And then with your upper income consumer, where you seem to be doing better, I'm also curious, do you think that, you know, some of that strength is people trading down from, if you specialty retail or the department stores and it's so, you know, how do you retain that new customer as the macro improves.

Speaker 1: of like stock to sales ratios there, you know, is the inventory down most single digits as well? Is it up?

Of like stock to sales ratio there.

Is the inventory down low single digits as well isn't it up.

Speaker 1: Doubled it, I mean, you know, just some some ratio of of of of that.

I mean, just some some ratio of.

Of that.

Speaker 1: about relationship. Here's what I would say, stab, as we came out of second quarter, the inventory levels in athletic were higher than a year ago, or sales down at a...

Of that relationship here.

Here's what I would say SAB as we came out of second quarter the inventory levels.

Atlantic were higher than a year ago with sales down.

At a.

Speaker 1: down those singles. That had to do all with timing of deliveries last year. And the fact that we didn't deliver a lot of that athletic inventory until late August or November . So a comparison really wouldn't be fair at this point. I'll say we feel real comfortable where athletic inventory is going forward as we move through Q3 and E.

Down-low singles that had to do all with the timing of deliveries last year and the fact that we didn't deliver a lot of that Atlantic inventory until late August early September. So a comparison really wouldnt be fair at this point I'll say, we feel real comfortable where inventory is going forward as well.

Mitchel Kummetz: Yeah, our over 75,000 other households, we saw the biggest growth in the past quarter. We're capturing this part of our strategy, the former department store shopper through the brand absorbance and the death of product that our audience organization are bringing in were able to satisfy what the department stores used to as well as some family footwear that are heavily private label were instead continuing to be focused on the best brand, the depth of assortment.

Mark Warden: Yeah, our over 75,000 other households, we saw the biggest growth in the past quarter. We're capturing this part of our strategy, the former department store shopper through the brand absorbance and the death of product that our audience organization are bringing in were able to satisfy what the department stores used to as well as some family footwear that are heavily private label were instead continuing to be focused on the best brand, the depth of assortment.

Move through Q3 at the end of the year.

Speaker 5: And then to follow up one more time, you mentioned that skate and running were soft and and and court and basketball were good. Um, are.

And then to follow up one more time, the you mentioned that.

<unk> and running were soft.

And in court and basketball were good.

R R.

Mitchel Kummetz: And they're liking what they say that the KPIs are working across the board for that higher end consumer. And I do think we retain them as the mall shopper department store shopper and private label focused family footwear retailers don't have this name assortments we have.

Mark Warden: And they're liking what they say that the KPIs are working across the board for that higher end consumer. And I do think we retain them as the mall shopper department store shopper and private label focused family footwear retailers don't have this name assortments we have.

Speaker 5: Can business really get that much better with skate and running soft? And do you see any light at the end of that tone?

Oh, Okay can business really get that much better with skate and running soft and do you see any light at the end of that tunnel.

Speaker 1: I would say that we're seeing some improvement. We certainly are performance running business where we have access to the hot brands that have turned it is very strong. We're seeing small improvements beyond the growth category. At this point, we don't see any improvement in skate. I will say.

I would say that we're seeing some improvement we certainly our performance running business, where we have access to the hot brands there.

Carl Chavetta: Okay, and then maybe last one for Carl. When you were going through your kind of category performance on the quarter, I thought I heard you say that boots weren't very good. I don't think of QQ as being much of a boot quarter, but are you getting any early reads on boots as you've gotten into kind of August and back to school and kind of remind me how you're thinking about boots for the back half of the year.

Has churn that is very strong.

Seeing small improvements beyond.

Murray.

At this point, we don't see any improvement in skate.

I will say at.

Speaker 1: at shoe carnival, a large percentage of our athletic businesses done in basketball and court, lately the biggest percentage in the channel and that business is very strong and will continue to ride that until the other businesses come back.

At shoe Carnival.

A large percentage of our athletic business is done in basketball in court.

The biggest percentage in the channel and that business is very strong and we will continue to ride that until the other businesses come back.

Carl Chavetta: Mitch, we're not seeing a lot of action right down in boots during Q2 and early Q3. We did see an uptick in Western, which typically happens at this time, especially with a lot of the festivals and the whole Taylor Swift stadium concert thing. That typically short lived. We are hearing, although experiencing in a very small way, some early sales on combat, which is frankly a little surprising to us, but that's about it. It's with the weather and frankly the lack of some new fashion there, we're not seeing anything too much at this point. Okay, all right, thank you again.

Speaker 5: And then lastly, Eric, what about, given what the stock is and everything else? I mean, where are you standing on share buyback and so on these?

And then lastly, Eric.

What about.

Given where the stock is and everything else I mean, where are you standing on share buyback.

And so on these days.

Speaker 1: Thanks, Sam. Our priority, as you know, we invest in the business, then dividends, and then lastly, if there's an opportunistic position, we'll look at the stopback, stop bybacks. We still have the 50 million that was authorized at the beginning of the year, so that's an opportunity for us. So we will be continuing to evaluate it.

Thanks, Sam our priority priorities as you know we invest in the business then dividends and then lastly.

If there is an opportunistic position we will look at the stop back stock buybacks. We still have the 50 million that was authorized at the beginning of the year. So that's going to that's an opportunity for us. So we will be continuing to evaluate it.

Thanks very much.

Speaker 8: There no further questions at this time. I would now like to turn the call back to the management team for closing remarks.

There are no further questions at this time I would now like to turn the call back to the management team for closing remarks.

Shem Poser: And we have another follow up question from Sam Poser of Williams trading your line is open. Carl, you said that the adult athletic business with download single digits, your inventory had improved. Can you give us some idea of like stock to sales ratio there. You know, is the inventory down low single digits as well as double did I mean, you know, just some some ratio of that of that relationship. Here's what I would say, Sam, as we came out of second quarter, the inventory levels in athletic were higher than a year ago or sales down at a download singles.

Speaker 1: Thank you all so much for joining today's call. I look forward to discussing Q3 results later this year. And as I mentioned at the top of the call, Steve Alexander has recently joined us to support our investor relations function. Please reach out to him with any questions.

Okay.

Thank you all so much for joining today's call and look forward to discussing Q3 results later this year and as I mentioned at the top of the call. Steve Alexander has recently joined us to support our Investor Relations function. Please.

Please reach out to him with any questions or follow ups you might have.

Speaker 2: Thanks Mark, thanks again to everyone for joining the call today. I'm around all day. I look forward to speaking with you and hopefully meeting you in person going forward. Thanks very much again for joining the call.

Thanks, Mark Thanks, again to everyone for joining the call today I'm around all day and I look forward to speaking with you and hopefully meeting you in person going forward. Thanks, very much against joining the call.

This concludes today's conference call you may now disconnect.

Okay.

Hmm.

[music].

Shem Poser: That had to do all with timing of deliveries last year. And the fact that we didn't deliver a lot of athletic inventory until late August, early September. So a comparison really wouldn't be fair at this point. I'll say we feel real comfortable where athletic inventory is going forward as we move through two, three in the end of the year. And then to follow up one more time, the you mentioned that skate and running were soft and and and court and basketball were good.

No.

Shem Poser: Are are Can business really get that much better with skate and running soft and do you see any light at the end of that tunnel. I would say that we're seeing some improvement. We certainly are performance running business where we have access to the hot brands that are has turned it is very strong. We're seeing small improvements beyond recovery. At this point, at this point, we don't see any improvement in skate.

Shem Poser: I will say at shoe carnival, a large percentage of our athletic businesses done in basketball and court. Lately, the biggest percentage in the channel and that business is very strong and will continue to ride that until the other businesses come back, and then lastly, Erik, what about, you know, given where the stock is and everything else? I mean, where are you standing on Share Buyback and so on these days? Thanks, Sam.

Shem Poser: Our priority, as you know, we invested in the business, then dividends. And then lastly, if there's an opportunistic position, we'll look at the stopback, stop buybacks. We still have the 50 million that was authorized at the beginning of the year. So that's going to, that's an opportunity for us. So we will be continuing to evaluate it. Thanks very much. There no further questions at this time.

Mark Warden: I would now like to turn the call back to the management team for closing remarks. Thank you all so much for joining today's call. I look forward to discussing Q3 results later this year. And if I mention it at the top of the call, Steve Alexander has recently joined us to support our investor relations function. Please reach out to him if any questions or follow-up you might have. Thanks, Mark. Thanks again to everyone for joining the call today. I'm around all day. I look forward to speaking with you and hopefully meeting you in person going forward. Thanks very much again for joining the call. This concludes today's conference call. You may now disconnect.

Mark Warden: And if I mention it at the top of the call, Steve Alexander has recently joined us to support our investor relations function. Please reach out to him if any questions or follow-up you might have. Thanks, Mark. Thanks again to everyone for joining the call today. I'm around all day. I look forward to speaking with you and hopefully meeting you in person going forward. Thanks very much again for joining the call.

Operator: This concludes today's conference call. You may now disconnect.

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