Q2 2024 Lands' End Inc Earnings Call

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Operator: In holding, we ask that you please continue to hold, your conference will begin momentarily.

Good day, everyone and welcome to the lands in second quarter earnings call.

Speaker 1: Good day, everyone, and welcome to the Lands' End second quarter earnings call.

Speaker 1: At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session.

At this time all participants are in a listen only mode.

Later, you will have the opportunity to ask questions. During the question and answer session.

Speaker 1: You may register to ask a question at any time by pressing the star and one on your telephone keypad.

You May register to ask a question at any time by pressing the star and one on your telephone keypad.

Speaker 1: You may withdraw yourself from the queue by pressing star 2.

You may withdraw yourself from the queue by pressing star two.

Speaker 1: Please note this call will be recorded, and I will be standing by if you should need any assistance.

Please note this call will be recorded and I will be standing by if you should need any assistance.

Speaker 1: It is now my pleasure to turn the conference over to Bernie McCracken, interim chief financial officer.

It is now my pleasure to turn the conference.

Over to Bernie Mccracken interim Chief Financial Officer. Please.

Please go ahead.

Speaker 3: Good morning, and thank you for joining the Lands and Earnings call for a discussion of our second quarter of 2023 results, which we released this morning and can be found on our website, landsed.com.

Good morning, and thank you for joining the Lands' end earnings call for a discussion of our second quarter 2023 results, which we released this morning. It can be found on our website Landsend com.

Speaker 3: I'm Bernie McCracken, interim chief financial officer, and I'm pleased to join you today with Andrew McLean, our chief executive officer. After the prepared remarks, we will conduct a question and answer session.

Bernie Mccracken interim Chief Financial Officer, and I'm pleased to join you today with Andrew Mcclain, Our Chief Executive Officer.

After the prepared remarks, we will conduct a question and answer session.

Speaker 3: Please also note that the information we're about to discuss includes forward-looking statements. Such statements in the next slide will be available to you as a reminder to all of you who are watching this webinar.

Please also note that the information we're about to discuss includes forward looking statements.

Such statements involve risks and uncertainties the company's actual results could differ materially from those discussed on this call.

Speaker 3: The company's actual results could differ materially from those discussed on this call.

Speaker 3: Factors that could contribute to such differences include but are not limited to those items noted and included in the company's SEC filing.

Factors that could contribute to such differences include but are not limited to those items noted and included in the company's SEC filings.

Speaker 3: including our annual report on Form 10-K and quarterly reports on Form 10-Q .

Including our annual report on Form 10-K, and quarterly reports on Form 10-Q.

Speaker 3: The forward-looking information that is provided by the company on this call represents the company's outlook as of today.

The forward looking information that is provided by the company on this call represents the company's outlook as of today.

Speaker 3: and we do not undertake any obligation to update forward-looking statements made by us.

And we do not undertake any obligation to update forward looking statements made by us subs.

Speaker 3: subsequent events and developments may cause the company's output to change.

Subsequent events and developments may cause the company's outlook to change.

During this call, we'll be referring to non-GAAP measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles.

Speaker 3: During this call, we'll be referring to non-GAAP measures.

Speaker 3: These non-GAAP measures are not prepared in accordance with generally accepted accounting principles.

Speaker 3: A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release issued earlier today, a copy of which is posted in the investor relations section of our website at LandsEnd.com. With that, I'll turn the call.

A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release issued earlier today, a copy of which is posted in the Investor Relations section of our website at lands' end Dot com.

With that I'll turn the call over to Andrew.

Speaker 3: Thank you, Bernie. Good morning and thank you for joining us today.

Thank you Tony Good morning, and thank you for joining us today.

Speaker 3: Before I dive into a review of our second quarter performance, I want to take a moment to highlight a few key call-outs for the period. When we first started, we successfully injected newness across our assortment.

Before I dive into a review of our second quarter performance I wanted to take a moment to highlight a few key callouts for the period.

We successfully injected new this across our assortment.

Speaker 3: We gained market share in our solutions faced when category.

We gained market share and our solutions based swim category.

Speaker 3: We strategically right-side the Rimbentory position, ending the quarter well below prior year levels, and in a strengthened quality and content position, paving the way for greater levels of mueness to come.

We strategically right sized our inventory position ending the quarter well below prior year levels.

Strengthen quality and content position paving the way for <unk>.

The levels of newness to come.

Speaker 3: leveraging our buyer file we have identified and are prioritizing two key high value cohorts.

Leveraging our buyer file we have identified and are prioritizing key high value cohorts.

Speaker 3: We began executing on our expanded focus on licensing and entered into a new licensing agreement for footwear, as well as the license for the Costco channel we mentioned in our last call.

We began executing on our expanded focus on licensing and entered into a new licensing agreement for footwear as well as the license for the Costco Channel, We mentioned in our last call.

Speaker 3: We developed a model to deliver a swim capsule for wholesale partners.

We developed a model that can deliver a swift capsule for wholesale partners.

Operator: Good day, everyone, and welcome to the Lands End Second Quarter Earnings Call. At this time, all participants are enabled in only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one on your telephone keypad. You may withdraw yourself from the queue by pressing star two. Please note that the call will be recorded and I will be standing by if you should need any assistance.

And fixtures our school uniform business performed well and we began our work for our new partnership with Santander.

Speaker 3: In Outfitters, our school uniform business performed well, and we began our work for a new partnership with Santander.

Speaker 3: In our third party marketplace business, we took a conscious decision to curtail short term discounted demand that calls in favour of long term brand profits and positioning.

And our third party marketplace business.

Took a conscious decision to curtail short term discounted demand at COSE.

Favorable long term brand profits and positioning.

Speaker 3: And most important, we generated strong net cash from operations.

Most important we generated strong net cash from operations.

Speaker 3: Our results for the quarter reflect a considerate approach to executing our strategic plan and delivering results that drive shareholder value.

Our results for the quarter.

Operator: It is now my pleasure to turn the conference over to Bernie McCracken, Interim Chief Financial Officer. Please go ahead.

That a considered approach to executing our strategic plan and delivering results that drive shareholder value.

Bernard McCracken: Good morning, and thank you for joining the Lands End Earnings Call for a discussion of our second quarter of 2020 results, which we release this morning and can be found on our website, Lands End Dot Top. I'm Bernie McCracken, Interim Chief Financial Officer, and I'm pleased to join you today with Andrew McLean, our chief executive officer. After the prepared remarks, we will conduct a question and answer session.

Speaker 3: our revenue of three hundred and twenty three million dollars and adjusted EBITDA of 16 million dollars are within our guidance range and demonstrate the concerted effort we're taking to increase cash flow, reduce inventory and lower our debt levels.

Our revenue of $323 million and adjusted EBITDA of $16 million.

Within our guidance range and demonstrate that.

That's where we're taking to increase cash flow reduce inventory and lower our debt levels.

Fundamental to these improvements with a focus on growing gross margin.

Speaker 3: Fundamental to these improvements was a focus on growing gross margin that saw us deliver a 220 basis point improvement from a combination of more valuable transactions and continued improvement in supply chain costs.

Its deliberate at 220 basis point improvement from a combination of more valuable transactions and continued improvement in supply chain costs.

Bernard McCracken: Please also note that the information we're about to discuss includes former looking statements. Such statements involve risks and uncertainties. The company's actual results could differ materially from those discussed on this call. Factors that could contribute to such differences include that are not limited to those items noted and included in the company's SEC violence, including our annual report on form 10K and quarterly reports on form 10Q. The former looking information that is provided by the company on this call represents the company's outlook as of today. And we do not undertake any obligation to update the forward looking statements made by us. Subsequent events and developments may cause the company's outlook to change.

Speaker 3: Conversely, this quarter was characterized by our solution-based customer focus that put a greater emphasis on driving quality sales over simply moving units and positioning our balance sheet for long-term success.

Commercially this quarter was characterized by our solutions based customer focus.

Greater emphasis on driving quality sales over simply moving units.

And positioning our balance sheet for long term success.

Speaker 3: As a result, our year-to-date net free cash flow was a record in the post spin-off period. As I've...

As a result, our year to date net free cash flow was a record in the post spinoff period.

As I've discussed the last couple of quarters.

Speaker 3: the entire Land Then team have been focused on our strategic initiatives to enhance value for our customers, employees and shareholders.

The entire land 17 had been focused on our strategic initiatives to enhance value for our customers employees and shareholders.

Speaker 3: We are taking actions to capture our strength as an iconic American lifestyle brand. Simplify our approach and drive improved profitability.

We are taking actions to capitalize on our strengths as an iconic American lifestyle brand.

So fire approach and drive improved profitability.

Bernard McCracken: During this call, we'll be referring to non-gap measures. These non-gap measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of non-gap financial measures to the most directly comparable gap measures can be found in our earnings release issued earlier today. A copy of which is posted in the investor relations section of our website at landsend.com.

Speaker 3: This course is remakes significant progress in these efforts, achieving key milestones while driving strong execution across the company.

This quarter, we made significant progress in these efforts achieving key milestones, while driving strong execution across the company.

Speaker 3: On the product side, our merchandising strategy, which is focused on growing gross margin and injecting new myths across categories, is working extremely well.

On the product side, our merchandising strategy, which is focused on growing gross margin and injecting newness across categories is working extremely well.

Speaker 3: Our customers are responding positively to newness, providing on merchants great insights into the products our customers are seeking and how to pace the introduction of that newness throughout the year.

Customers are responding positively to newness, providing merchants with great insights into the products our customers are seeking at Hudson pace, the introduction of that new that throughout the year.

Andrew McLean: With that, I'll turn the call over to Andrew. Thank you, Bernie. Good morning, and thank you for joining us today.

Andrew McLean: Before I dive into a review of our second quarter performance, I want to take a moment to highlight a few key collettes for the period. We successfully injected newness across our assortment. We gained market share in our solutions based with category. We strategically right-side our inventory position, ending the quarter well below prior year levels and in a strengthened quality and content position, paving the way for greater levels of newness to come.

Speaker 3: Land Zend's competitive advantage is that we are a solutions company. Our customers look to us for products that solve life issues. Women continue to perform well during the second quarter, building on the momentum of the first quarter, and we are confident that we're continuing to pick up market share.

<unk> competitive advantage is that we received.

Solutions Company <unk>.

Look to us for products that solve life's issues.

<unk> continued to perform well during the second quarter.

Building on the momentum of the first quarter and we are confident that we are continuing to pick up market share.

In particular, I would call out swim dresses as a high performance silhouette. During the quarter. We are pleased that land's end continues to leverage our authority in swim to drive performance swim.

Speaker 3: In particular, I would call out swim dresses as a high performance silhouette during the quarter. We're pleased that Lands' End continues to leverage our authority in swim to drive performance.

Andrew McLean: Leveraging our buyer file, we have identified and our priorities, I think, two key high-value cohorts. We began executing on our expanded focus on licensing and entered into a new licensing agreement for footwear as well as a license for the Costco channel we mentioned in our last call. We developed a model to deliver a swim capsule for wholesale partners. In our features, our school uniform business performed well, and we began our work for a new partnership with Santander.

Speaker 3: Swim is a top priority for us, not only because of the sales and margin that's generating, but because it also drives sales in its natural vacation in chasing these lactose, towels and cover-up.

<unk> is a top priority for us not only because of the sales and margin is generating but because it also drives sales and its natural vacation adjacencies collect codes titles and coverups.

Speaker 3: Women's live in tops and dresses and men, summer shirts and casual pants, were also strong contributors to our vacation story during Q2.

Women's woven tops and dresses and men's some assurance in casual pants were also strong contributors to our vacation story during Q2.

Linen continues to perform well in the U S and Europe . Following a strong Q1, and we achieved solid performance in our home division during the quarter.

Speaker 3: Linen continued to perform well in the US and Europe following a strong Q1, and we achieved solid performance in our home division during the quarter. Consistent with swim, the units we injected across these categories performed well.

Andrew McLean: In our third party marketplace business, we took a conscious decision to curtail short-term discounted demand that calls in favor of long-term brand profits and positioning. And most importantly, we generated strong net cash from operations. Our results for the quarter reflect a consider the approach to executing our strategic plan and delivering results that drive shareholder value. Our revenue of $323 million and adjusted EBITDA of $60 million are within our guidance range and demonstrate the surface effort we're taking to increase cash flow, reduce inventory and lower our debt levels.

Consistent with swim the newness, we injected across these categories performed well.

As an organization, we have spent considerable strategic energy on optimizing our inventory delivering it at the right time and in quantities of 10 qualities that place in margin dollars ahead of demand.

Speaker 3: As an organization, we have spent considerable strategic energy on optimizing our inventory, delivering it at the right time and in quantities and qualities that place margin dollars ahead of demand dollars.

Speaker 3: As a company, we are increasingly committed to delivering higher gross margins in those rate and dollars. We move swiftly in the quarter to reduce remaining pockets of lower value merchandise and position ourselves to drive a more appropriate level of turn and increase our freshness factor. Ensuring we have the right products at the right time.

As a company we are increasingly committed to delivering higher gross margins in both rate and dollars.

We move swiftly in the quarter to reduce remaining pockets of lower value merchandise and position ourselves to drive a more appropriate level of churn and increase our freshness factor, ensuring we have the right products at the right time.

Andrew McLean: On the mental to these improvements was a focus on growing gross margin that saw as deliver a 220 basis point improvement from a combination of more valuable transactions and continued improvement in supply chain costs. Commercially, this quarter was characterized by our solution-based customer focus that put a greater emphasis on driving quality sales over simply moving units and positioning our balance sheet for long-term success. As a result, our year-to-date net free cash flow was a record in the post-spin-off period.

Speaker 3: We are pleased by the progress we've made in this effort, which, consistent with where we said we'd be last quarter, resulted in inventory below pre-pandemic levels.

We are pleased by the progress we've made in this effort, which consistent with where we said we'd be flat quarter resulted in inventory below pre pandemic levels.

Speaker 3: As a result of the team's strong work to drive inventory productivity and reduce markdowns, combined with more normalized supply chains, we're well positioned to bring Ulyss to more of our assortment.

As a result of the team's strong work to drive inventory productivity and reduce markdowns combined with more normalized supply chain, where we.

Well positioned to bring users to more of our assortment.

Speaker 3: As I mentioned at the top of the call, we grew our gross margin by 220 basis points over the prior year through a range of actions.

As I mentioned at the top of the call. We grew our gross margins by 220 basis points over the prior year to a range of actions.

This includes increasing the speed up throughput and positioning our tried and true fabrics, while at the same introducing new ones.

Speaker 3: And this includes increasing the speed of throughput and positioning our tried and true fabrics while at the same time introducing new ones.

Andrew McLean: As I've discussed, the last couple of quarters, the entire Lands End Inc has been focused on our strategic initiatives to enhance value for our customers, employees and shareholders. We are taking actions to capture our strength as an iconic American lifestyle brand, simplify our approach and drive improved profitability.

Speaker 3: Combined with improved cashflow from the increased turns of our inventory, we have greater flexibility to invest in our strategic initiatives to drive growth and value creations for all stakeholders.

Combined with improved cash flow from the increased turns of our inventory, we have greater flexibility to invest in our strategic initiatives to drive growth and value creation for all stakeholders.

As a digitally native company, we're prioritizing our focus on innovation to improve execution across the enterprise, including taking advantage of emerging technologies like generative AI.

Speaker 3: At the digitally native company, we're prioritizing our focus on innovation to improve execution across the enterprise, including taking advantage of emerging technologies like generative AI.

Andrew McLean: This quarter remates significant progress in these efforts achieving key milestones while driving strong execution across the company. On the product side, our merchandising strategy, which is focused on growing gross margin and injecting units across categories, is working extremely well. Our customers are responding positively to units providing our merchants great insights into the products our customers are seeking and how to pace the introduction of that newness throughout the year. Lands End's competitive advantage is that we are a solutions company.

Speaker 3: whether in customer service and engagement, they to analytics.

Whether in customer service and engagement.

The analytics.

Speaker 3: decision-making or go-to-market strategies, our increasing use of these technologies is driving efficiency and effectiveness in our work.

Asian banking or go to market strategies are increasing use of these technologies is driving efficiency and effectiveness in our work.

Speaker 3: For example, we have developed an internal app for our merchants and designers that uses ChatGPT to analyze our customer data to identify gaps in our assortment to improve buying decisions.

For example, we have developed an internal app for our merchants and designers that uses chat GPT to analyze our customer data to identify gaps in our assortment to improve buying decisions.

Speaker 3: We also made progress this quarter on our efforts to place the customer at the center of our decisions. We recently launched a partnership with Happy Returns to offer a streamlined return process, allowing customers to drop their return for one of more than 9,000 return bars nationwide.

We also made progress this quarter on our efforts to place the customer at the center of our decisions.

Andrew McLean: Our customers look to us for products that solve life issues. Swim continues to perform well during the second quarter, building on the momentum of the first quarter, and we are confident that we're continuing to pick up market share. In particular, I would call out swim dresses as a high-performance silhouette during the quarter. We're pleased that Lands End continues to leverage our authority in swim to drive performance. Swim is a top priority for us, not only because of the sales and margin that's generating, but because it also drives sales in its natural vacation in chasing these lektotes, towels and cover-ups, women's world and tops and dresses and men's summer shirts and casual pants were also strong contributors to our vacation story during Q2.

We recently launched a partnership with happy returns to offer a streamlined returns process.

Allowing customers to drop their returned more than 9000 return das nationwide.

Speaker 3: In addition to improving the customer experience, the HACTI returns process is better for the environment and reduces the carbon footprint associated with shipping back individual return packages.

In addition to improving the customer experience.

Returns purposes is better for the environment and reduces the carbon footprint associated with shipping back individually will return packages.

Another aspect of our innovation focus is how we have begun to leverage the proprietary data from our buyer file to better understand our customers.

Speaker 3: Another aspect of our innovation focus is how we have begun to leverage the proprietary data from our bar file to better understand our customers.

Speaker 3: Rather than focus on demographics, we're instead zeroing in on the behaviors of our key customer cohorts. We have prioritized two high-value customer cohorts to target, each defined by a unique set of characteristics. We have defined them as resolvers and evolvers. We have defined them as resolvers and evolvers.

Rather than focus on demographics, where instead zeroing in on the behaviors of our key customer cohorts.

We have prioritized two high valued customer cohorts to target each defined by unique set of characteristics.

Andrew McLean: Linen continued to perform well in the U.S, and Europe following a strong Q1. And we achieved solid performance in our home division during the quarter. Consistent with swim, the units we injected across these categories performed well. As an organization, we have spent considerable strategic energy on optimizing our inventory, delivering it at the right time and in quantities and qualities that placed margin dollars ahead of demand dollars. As a company, we are increasingly committed to delivering higher gross margins in both right and dollars.

We have defined them as recent offers.

At Bonefish.

Speaker 3: Resolveress of the largest cohort of our existing base.

Resolve is the largest cohort of our existing base.

Speaker 3: This customer is a solutions oriented dresser that prefers classic styles and values quality over trends. They shop primarily on necessity two to three times a year.

This customer is a solutions oriented dress that prefer as classic styles values quality corporate trends.

Primarily on the necessity to two to three times a year.

Speaker 3: In Bulpers, other second largest cohort, and the potential areas for growth.

And ballpark, how the second largest cohort and a potential area for growth.

Speaker 3: This customer is discovering and refining this file as an ongoing journey and they dress what fits their current moments in life. When compared to resolvers, they gravitate towards trend and quality, have buying potential and spend more.

This customer is discovering and refining this style is an ongoing journey and nature as what fits their current moment in life when compared to resolve as they gravitate towards trend in quality.

Andrew McLean: We move swiftly in the quarter to reduce remaining pockets of lower value merchandise and position ourselves to drive a more appropriate level of turn and increase our freshness factor. Ensuring we have the right products at the right time. We are pleased by the progress we've made in this effort which, consistent with where we said we'd be last quarter, resulted in inventory below pre-pandemic levels. As a result of the team's strong work to drive inventory productivity and reduce mark times, combined with more normalized supply chains, we're well positioned to bring U.S, to more of our assortment.

Buying potential and spend more.

Speaker 3: This evolved approach of key non-behagres enables us to define, prioritize, reach, and cater to the customers that matter to land end most. We'll also focus things on expanding our customer base over time.

This evolved approach of keen on behaviors enables us to define prioritize reach and caters to the customers that matter to lands' end, most while also focusing on expanding our customer base the perfect time.

Speaker 3: With those strategic drivers in mind, I want to spend a minute speaking to our second quarter performance.

With those strategic drivers in mind I want to spend a minute speaking to our second quarter performance.

Speaker 3: Our US e-commerce business, our largest direct consumer channel delivered strong margin performance in the quarter. I'm slightly lower than that.

Our U S E Commerce business.

Our largest direct to consumer channel delivered strong margin performance in the quarter was slightly lower than that.

Andrew McLean: As I mentioned at the top of the call, we grew our gross margins by 220 basis points over the prior year to a range of actions. This includes increasing the speed of throughput and positioning our tried and true fabrics while at the same time introducing U.S. Combined with improved cashflow from the increased turns of our inventory, we have greater flexibility to invest in our strategic initiatives to drive growth and value creations for all stakeholders.

Speaker 3: It is pleasing to note that for the period, our customer file remains flat while our rebuy rate improves.

It is pleasing to note that for the period, our customer file remained flat, while our rebuy rate improved.

Speaker 3: Both of these metrics build against the client's experience from late 2021 through all of 2022. We are seeing early success as we transform our go-to-market strategy with more focused promotions around key holidays and market events.

Both of these metrics builder declines experienced from late 2021 through all of 2022, we're seeing early success as we transform our go to market strategy with more focus promotions around key holidays and market events.

Speaker 3: like Memorial Day, like July 4th, and like Amazon Prime Day. To the quarter and go forward, we made a conscious decision to avoid prior levels of discencing to drive market pressure, preferring to show conviction in our solutions-based categories, leading to improved margins.

Memorial Day like July 4th like Amazon Prime day.

For the quarter and go forward, we made a conscious decision to avoid prior levels of discounting to drive market share preparing to show conviction and our solutions based categories, leading to improved margins.

Andrew McLean: As a digitally native company, we're prioritizing our focus on innovation to improve execution across the enterprise, including taking advantage of emerging technologies like generative AI, whether in customer service and engagement, data analytics, decision-making, or go-to-market strategies are increasing use of these technologies is driving efficiency and effectiveness in our work. For example, we have developed an internal app for our merchants and designers that uses chat GPT to analyze our customer data to identify gaps in our assortment to improve buying decisions.

Speaker 3: During the quarter, we continued executing on our licensing strategy, which adds minimum royalty guarantees and new income streams, allowing us to continue to focus on our core capabilities.

During the quarter, we continued executing on our licensing strategy, which acts minimum royalty guarantees and new income streams, allowing us to continue to focus on our core capabilities.

In addition to licensing the Costco channel, which I mentioned on our last call. We have entered into a new multiyear multi geography footwear license.

Speaker 3: In addition to licensing the Costco channel, which I mentioned on our last call, we have entered into a new multi-year, multi-geography footwear license.

Speaker 3: Footwear continues to be an important category for us. And we chose a partner that best fits with the East Coast, that land bend and are evolving focus on solutions that are addressed customers need.

Footwear continues to be an important category for us and we chose a partner.

Andrew McLean: We also made progress this quarter on our efforts to place the customer at the center of our decisions. We recently launched the partnership with Happy Returns to offer a streamlined return process, allowing customers to drop their return but one of more than 9,000 return by Nationwide. In addition to improving the customer experience, the Happy Returns process is better for the environment and reduces the carbon footprint associated with shipping back individual return packages.

First with the east coast of land and other evolving focus on solutions that address customers' needs to be.

Speaker 3: We expect to begin seeing results in 2024 from these two licenses and anticipate adding additional licenses as appropriate and consistent with our strategy.

We expect to begin seeing results in 2024 from these two licenses and anticipate adding additional licenses as appropriate and consistent with our strategy.

Speaker 3: In addition, we developed a turnkey solution with one of our vendors to deliver for a land-end design swim capsule to new distribution channels and expect to announce a launch later this year.

In addition, we developed a turnkey solution with one of our vendors to deliver for our lands end design swim capsule to new distribution channels and expect to announce the launch later this year.

Speaker 3: This model allows us to avoid the distraction of maintaining a wholesale calendar, limits our inventory ownership to a pass-through, and can be leveraged across multiple retailers and geographies.

Andrew McLean: Another aspect of our innovation focus is how we have begun to leverage the proprietary data from our bar file to better understand our customers. Drive and focus on demographics were instead zeroing in on the behaviors of our key customer cohorts. We have prioritized two high-value customer cohorts to target each defined by a unique set of characteristics. We have defined them as resolvers and revolvers. Resolvers are the largest cohort of our existing base.

This model allows us to avoid the distraction of maintaining our wholesale calendar limits, our inventory ownership to a pass through and can be leveraged across multiple retailers and geographies.

Speaker 3: Turning to the outfitters business, we are pleased to note that revenue increased year on year now the Delta relationship. We make good progress with our school uniform business seeing a 20 plus point increase in customer satisfaction over the prior year as we focused on long term relationship reinforcement and retention following pandemic related fulfillment challenges.

Turning to the Outfitters business. We are pleased to note that revenue increased year on year net of the Delta relationship. We made good progress with our school uniform business seeing a 20 plus point increase in customer satisfaction over the prior year as we focused our long term relationship reinforcement and retention.

Following pandemic related fulfillment challenges these efforts around time to ship in stock of what matters.

Andrew McLean: This customer is a solutions oriented successor that prefers classic styles and values quality over trends. They shot primarily on necessity two to three times a year. Involvers are the second largest cohort and a potential area for growth. This customer is discovering and refining this file as an ongoing journey and they dress what fits their current moment in life. When compared to resolvers, they gravitate towards trend and quality of buying potential and spend more.

Speaker 3: These efforts are around time to shift in stock of what matters and customer service response times. Delighted our customers in Paul Goel for long to have grown.

Customer service response times to light with our customers in ponca or well for long term growth.

Speaker 3: We now see opportunity to build next year while showing margin improvement.

We now see opportunity to build next year, while showing margin improvement.

Speaker 3: Overall, we are confident in the opportunity that the outfiter's business presents that on its own and has a potential customer acquisition engine for our consumer business. An example of this opportunity is our recent five-year extension with American Airlines and our recent agreement with Samsung's air bank for their US business, which is expected to launch in December and will outfit nearly 3,000 of their branch network employees.

Overall, we are confident in the opportunities of the outfitters business presents.

On its own as a potential customer acquisition engine for our consumer business. An example of this opportunity is our recent five year extension with American Airlines.

Andrew McLean: This evolved approach of peeing on behaviors that enables us to define, prioritize, reach and cater to the customers that matter to land end most, while also focusing on expanding our customer base over time.

Recent agreement with Santander Bank for their U S business, which is expected to launch in December and will add nearly 3000 deaths that branch network employees.

Speaker 3: As we noted during our last call, Jim cer joined land end to leadap the efver us business and help enhance performance over the long term. Jim has hit the ground running and is working on a number of initiatives to ensure we're taking advantage of all opportunities to serve business and school customers and generate growth.

As we noted during our last call Jim O'connor Joint Lands' end to meet the outfitters business and help enhance performance over the long term Jim has hit the ground running and is working on a number of initiatives to ensure we're taking advantage of all opportunities to serve business and school customers and generate growth.

Andrew McLean: With those strategic drivers in mind, I want to spend a minute speaking to our second quarter performance. Our US e-commerce business, our largest direct consumer channel, delivers strong margin performance in the quarter and slightly lower the mass. It is pleasing to the that for the period our customer file remains flat while our re-buy rate improved. Both of these metrics build against the client experience from late 2021 through all of 2022. We are seeing thoroughly success as we transform our go-to market strategy with more focused promotions around key holidays and market events like Memorial Day, Light July 4th and Light Amazon Prime Day.

Speaker 3: These include implementation of better tools and processes for reaching new and prospective customers, more targeted outreach to convert pipeline to sales and enhance use of data and analytics to ensure our engagement is the most effective it can be. More on this work to come.

These include implementation of better tools and processes for reaching new and prospective customers.

More targeted outreach to convert pipeline to sales and enhanced use of data and analytics to ensure our engagement has been most effective it can be more on this work to come.

Speaker 3: Moving to our third party business, which remains an important growth avenue.

Moving to our third party business, which remains an important growth Avenue.

Speaker 3: The top line results for our third party business are not where we want them to be. But consistent with our B2C strategy, we focused our online marketplace of offering during the quarter on quality of sales, improving gross margin, and better inventory turn and freshness. The results were productive with target and may see throughout the quarter. Demand at calls change mid-quarter, transitioning from strong performance to the significant decline during the final week.

Topline results for our third party business.

Not where we want them to be.

Andrew McLean: To the quarter and go forward, we made a conscious decision to avoid prior levels of distancing to drive market pressure, preferring to show conviction in our solutions based categories, leading to improved margins. During the quarter, we continued executing on our licensing strategy, which adds minimum royalty guarantees and new income streams, allowing us to continue to focus on our core capabilities. In addition to licensing the Costco channel, which I mentioned on our last call, we have entered into a new multi-year multi-geography footwear license.

Consistent with our B to C strategy, we focused our online marketplace offering during the quarter on quality of sales improving gross margin.

Better inventory turn and freshness. The results were picked up with target Macy's throughout the quarter demand at Kohl's change to make quarter transitioning from strong performance to the significant decline during the final weeks and conversation with Kohl's, we choose to stick with our plan and protect our focus on gross margin.

Speaker 3: In competition with Coles, we choose to stick with our plan and protect our focus on gross margin.

Speaker 3: Our marketplace strategy provides strong sales and margin opportunities and we plan to strategically grow these existing partnerships and explore new opportunities to expand our brand reach.

Our marketplace strategy provides strong sales and margin opportunities and we plan to strategically grow these existing partnerships and explore new opportunities to expand our brand reach.

Andrew McLean: Footwear continues to be an important category for us and we chose a partner that best fits with the youth folks that land and are evolving focus on solutions that are addressed customers needs. We expect to begin seeing results in 2024 from these two licenses and anticipate adding additional licenses as appropriate and consistent with our strategy. In addition, we developed a turnkey solution with one of our vendors to deliver for a lands-end design swim capsule to new distribution channels and expect to announce a launch later this year.

Speaker 3: Lastly, I'll touch on our international business. In a number of ways, we have been using the business to test strategies that have been both discussed and implemented in the US business, mainly Tudor, Inventory Control, Driving, Freshness, and the Higher Gross margins. The results, coupled with expense management, have allowed us to deliver profitability consistent with prior years, but with smaller demand and revenue.

Lastly, I'll touch on our international business and a number of ways. We have been using the business to test strategies that have been discussed and implemented in the U S business, namely tighter inventory control driving freshness and higher gross margins. The results coupled with expense management have allowed us.

To deliver profitability consistent with prior years, the smaller demand and revenues.

Speaker 3: We have eliminated poor selling items and focused on what we were good at. For our advertising key items like linen and dresses and incorporating units into the assortment.

Eliminated who are selling items and focus on what we're good at prioritizing key items like Linden and dresses and incorporating newness into the assortment.

Andrew McLean: This model allows us to avoid the distraction of maintaining a wholesale calendar, limits our inventory ownership to a pass-through and can be leveraged across multiple retailers and geographies. Turning to the outfit just business, we are pleased to note that revenue increase year-on-year now of the Delta relationship. We make good progress with our school uniform business seeing a 20-plus point increase in customer satisfaction for the prior year. As we focused on long-term relationship reinforcement and retention following pandemic all related fulfillment challenges, these efforts around time to shift in stock of what matters, and customer service response times, delighted our customers and poor go well for long-term growth.

Speaker 3: Gross margin in Europe this course has proven nicely by approximately 190 basis points year over year. We have also focused on osing the vacation in Europe with swim and women that strong opportunities to capture market share in that segment as we look forward.

Gross margin in Europe . This quarter grew nicely by approximately a 190 basis points year over year. We have also focused on owning that vacation in Europe with swim and Linden has strong opportunities to capture market share in that segment as we look forward.

Speaker 3: Before turning the call over to the Burry, I want to spend a moment talking about something that I referenced earlier. As we continue the successful execution of our strategy and generate strong operating cash flow from increased trends of merchandise and lower inventory carrying costs, we have the flexibility to invest more cash in the business to drive sustainable value creation.

Before turning the call over to Bernie I want to spend a moment talking about something that I referenced earlier as we continue the successful execution of our strategy and generate strong operating cash flow from increased trends of merchandise and lower inventory carrying costs, we have the flexibility to invest more cash than that.

To drive sustainable value creation.

Andrew McLean: We now see opportunity to build next year while showing margin improvement. Overall, we are confident in the opportunity that the outfiter's business presents but on its own and has a potential customer acquisition engine for our consumer business.

Speaker 3: We're being deliberate with these investments, targeting areas where we can inject new this into the brand to serve you and existing customers with the solutions they're looking for while operating and executing more efficiently.

We're being deliberate with these investments targeting areas, where we can inject newness into the brand to serve new and existing customers with the solutions. They are looking for while operating and executing more efficiently.

Speaker 3: More on that to come, but for now I'll turn the call over to Bernie to discuss our second quarter performance and third quarter outlook.

Andrew McLean: An example of this opportunity is our recent five-year extension with American airlines and our recent agreement with Santander Bank for their US business, which is expected to launch in December and will outfit nearly 3,000 of their branch network employees.

More on that to come but for now I'll turn the call over to Bernie to discuss our second quarter performance and third quarter outlook.

Speaker 3: Thank you Andrew. For the second quarter, total revenue performance was within our guidance range at $323 million, a decrease of 8% compared to last year.

Thank you Andrew for.

For the second quarter total revenue performance was within our guidance range at $323 million, a decrease of 8% compared to last year.

Andrew McLean: As we noted during our last call, Jim will come and join Lands End to lead the outfiter's business and help enhance performance over the long-term. Jim has hit the ground running and is working on a number of initiatives to ensure we're taking advantage of all opportunities to serve business and school customers and generate growth. These include implementation of better tools and processes for reaching new and prospective customers, more targeted outreach to convert pipeline to sales and enhance use of data and analytics to ensure our engagement because the most effective can be more on this work to come.

Speaker 3: Our U.S. e-commerce business all sales decreased 4% compared to the second quarter of 2022. Driven by continued promotional effectiveness within SWIM and our adjacent product categories, all set by lower markdown inventory sales.

Our U S E Commerce business saw sales decreased 4% compared to the second quarter of 2022, driven by continued promotional effectiveness within swim and our adjacent product categories offset by lower markdown inventory sales.

Speaker 3: Critically, as Andrew mentioned, we achieved strong bottom line performance and improved overall gross margin in US e-commerce.

Critically as Andrew mentioned, we achieved strong bottom line performance and improved overall gross margin in U S E Commerce.

Speaker 3: Our European commerce business in the quarter was down 21% year over year.

Our Europe e-commerce business in the quarter was down 21% year over year.

Speaker 3: Reflecting product-assorted editing focused on key categories and continued macroeconomic challenges.

Reflecting product assortment editing focused on key categories and continued macroeconomic challenges.

Andrew McLean: Moving to our third-party business, which remains an important growth avenue. The top-line results for our third-party business are not where we want them to be but consistent with our B2C strategy. We focused our online marketplace offering during the quarter on quality of sales, improving growth margin and better inventory to an infreshness.

Speaker 3: It's important to note that we are beginning to see some stabilization in the market as we saw sequential improvement compared to the first quarter.

It is important to note that we are beginning to see some stabilization in the market as we saw sequential improvement compared to the first quarter.

Speaker 3: Global e-commerce sales decreased 9% from 2022, or 6% when adjusting for Japan, which closed last year and accounted for $8 million of revenue in the second quarter last year.

Global E Commerce sales decreased 9% from 2022 or 6% when adjusting for Japan, which closed last year and accounted for $8 million of revenue in the second quarter last year.

Andrew McLean: The results were productive with Target and Macy throughout the quarter, demand that calls change made quarter, transitioning from strong performance to the significant decline during the final weeks. In competition with calls, we choose to stick with our plan and protect our focus on growth margin. Our marketplace strategy provides strong sales and margin opportunities and we plan to strategically grow these existing partnerships and explore new opportunities to expand our brand reach.

Speaker 3: Sales from lands and outsteaders were down 4% from the second quarter of 2023.

Sales from Lands' end outfitters were down 4% from the second quarter of 2023.

Speaker 3: excluding the $5 million difference in year over year revenue from Delta. The land then Alpharder's business was up 4% primarily driven by high single digit growth in our school uniform.

Excluding the $5 million difference in year over year revenue from Delta. The Lands' end Outfitters business was up 4%, primarily driven by high single digit growth in our school uniform business.

Speaker 3: Revenue for our third party business was down 11% compared to the prior year.

Revenue for our third party business was down 11% compared to the prior year.

Andrew McLean: Lastly, I'll touch on our international business. In a number of ways, we have been using the business to test strategies that have been both discussed and implemented in the U.S, business, namely, tighter inventory control, driving freshness and higher growth margins. The results, coupled with expense management, have allowed us to deliver profitability consistent with prior years, but with smaller demand and revenues. We have eliminated porous selling items and focused on what we were good at, for our advertising key items like linen and dresses and incorporating units into the assortment.

Speaker 3: Primarily driven by weaker than expected online performance at poles. Partially offset by strong performance at Macy's target and Amazon.

Primarily driven by weaker than expected online performance at pulse, partially offset by strong performance at Macy's target and Amazon.

Speaker 3: Women's swim continued to be a winning category for us overall. And that included selling swim inventory through these important partners.

Women's swim continued to be a winning category for us overall and that included selling swim inventory through these important partners.

Speaker 3: are newly launched Macy's Marketplace that have been performing better than planned. Driven by strong sales and women's nip and bottoms, and we look forward to seeing more to come from this partnership. Gross margin in the second quarter.

Our newly launched Macy's marketplace have been performing better than planned driven by strong sales in women's knits and bottoms and we look forward to seeing more to come from this partnership.

Gross margin in the second quarter was 43%.

Speaker 3: and approximately 220 bases point improvement from 2022.

And approximately 220 basis point improvement from 2022.

Andrew McLean: Gross margin in Europe, this course approved nicely by approximately 190 basis points year-over-year. We have also focused on owning the vacation in Europe with swim and linen that's strong opportunities to capture market share in that segment as we look forward.

The margin improvement was primarily driven by the strength of swim and.

Speaker 3: The margin improvement was primarily driven by the strength of swing and adjacent vacation product categories, reduction in markdown inventory, and improvements in supply chain policy.

And adjacent vacation product categories reduction in markdown inventory and improvements in supply chain costs.

Speaker 3: As a percentage of sales, SG&A was 38%, which was an increase of 170 basis points compared to 2022.

As a percentage of sales SG&A was 38%, which was an increase of 170 basis points compared to 2022.

Andrew McLean: Before turning the call over to Bernie, I want to spend a moment talking about something that I referenced earlier. As we continue the successful execution of our strategy and generate strong, operating cash flow from increased trends of merchandise and lower inventory carrying costs, we have the flexibility to invest more cash in the business to drive sustainable value creation. We're being deliberate with these investments, targeting areas where we can inject newness into the brand to serve new and existing customers with the solutions they're looking for while operating and executing more efficiently.

Speaker 3: due to de-liveraging from lower revenues. Partially, offset by lower digital marketing spend and cost controls across the entire business.

Due to deleveraging from lower revenues, partially offset by lower digital marketing spend and cost controls across the entire business.

Speaker 3: Since the close of the second quarter, we have taken actions to reorganize our global sourcing team, and consolidating our vendor base, which will reduce our supply chain fixed expense.

Since the close of the second quarter, we have taken actions to reorganize our global sourcing team.

Consolidate our vendor base, which will reduce our supply chain fixed expenses.

Speaker 3: Our performance led to a net loss for the quarter of $8 million or 25 cents per share compared to a net loss of $2 million or $7 cents per share in 2022.

Our performance led to a net loss for the quarter of 8 million or <unk> 25 per share compared to a net loss of $2 million or <unk> <unk> per share in 2022.

Bernard McCracken: More on that to come, but for now I'll turn the call over to Bernie to discuss our second quarter performance and third quarter outlook. Thank you, Andrew. For the second quarter, total revenue performance was within our guidance range at $323 million, a decrease of 8% compared to last year. Our U.S, e-commerce business all sales decreased 4% compared to the second quarter of 2022, driven by continued promotional effectiveness within swim and our adjacent product categories all set by lower markdown inventory sales.

Speaker 3: In addition to these GAAP measures , adjusted EBITDA is an important profitability measure that we use to manage our business in turn.

In addition to these GAAP measures adjusted EBITDA is an important profitability measure that we use to manage our business internally.

Speaker 3: For the second quarter, adjusted EBITDA was $16 million, roughly flat year over year and in line with our expectations.

For the second quarter, adjusted EBITDA was $16 million roughly flat year over year and in line with our expectations.

Speaker 3: Moving to our balance sheet, in the toys at the end of the second quarter were $396 million, compared to $569 million a year ago.

Moving to our balance sheet inventories at the end of the second quarter were $396 million.

Compared to $569 million a year ago.

Speaker 3: The 30% improvement in our inventory position was a result of our supply chain teams continued effort to improve efficiency and receive inventory closer to a selling.

The 30% improvement in our inventory position was a result of our supply chain teams continued effort to improve efficiency and received inventory closer to selling season.

Bernard McCracken: Critically, as Andrew mentioned, we achieved strong bottom line performance and improved overall gross margin in U.S, e-commerce. Our Europe e-commerce business in the quarter was down 21% year over year. Reflecting product disorder that editing focused on key categories and continued macro economic challenges.

Speaker 3: We achieved the objective shared on our prior call, bringing our inventory to pre-pandemic levels.

We achieved the objective shared on our prior call, bringing our inventory to pre pandemic levels.

Speaker 3: Accordingly, year-to-date net cash provided by operations was $172 million better than last year, primarily due to this improved inventory flow and productive.

Accordingly year to date net cash provided by operations was $172 million better than last year.

Primarily due to this improved inventory flow and productivity in.

Bernard McCracken: It's important to note that we are beginning to see some stabilization in the market as we saw sequential improvement compared to the first quarter. Global e-commerce sales decreased 9% from 2022 or 6% when adjusting for Japan, which closed last year and accounted for $8 million of revenue in the second quarter last year. Sales from lands and outfitters were down 4% from the second quarter of 2023. Excluding the $5 million difference in year over year revenue from Delta, the land and outfitters business was up 4% primarily driven by high single-digit growth in our school uniform business.

Speaker 3: In terms of our debt at the end of the second quarter, our term blow balance was $237 million.

In terms of our debt at the end of the second quarter, our term loan balance was $237 million.

Speaker 3: and our $275 million ABL had $70 million of borrowings outstanding, which was $65 million lower than the second quarter last year.

And our $275 million ABL at $70 million of borrowings outstanding.

Which was $65 million lower than the second quarter last year.

Speaker 3: Despite lower borrowings outstanding on the ABL, we continue to have elevated interest expense driven by higher market rates.

Despite lower borrowings outstanding on the ABL, we continue to have elevated interest expense driven by higher market rates.

Speaker 3: We continue to explore opportunities to refinance our debt and are committed to doing so subject to favorable market conditions.

Continue to explore opportunities to refinance our debt and are committed to doing so subject to favorable market conditions.

Speaker 3: During the second quarter, we repurchased $3 million worth of shares under the company's previously announced $15 million share repurchase authorization.

During the second quarter, we repurchased $3 million worth of shares under the company's previously announced $50 million share repurchase authorization.

Bernard McCracken: Revenue for our third-party business was down 11% compared to the prior year. Primarily driven by weaker than expected online performance at polls, partially offset by strong performance at Macy's target in Amazon. Women's swim continued to be a winning category for us overall and that included selling swim inventory through these important partners. Our newly launched Macy's marketplace has been performing better than planned, driven by strong sales in women's nip and bottoms and we look forward to seeing more to come from this partnership.

Bringing the balance of the remaining authorization to $35 million.

Speaker 3: bringing the balance of the remaining authorization to $35 million as of the end of the quarter. Now moving the guy.

At the end of the quarter.

Now moving to guidance.

Speaker 3: The product teams have done a fantastic job managing inventory, which enables us to introduce more newness in the back half.

Our product teams have done a fantastic job managing inventory, which enables us to introduce more newness in the back half.

Speaker 3: With fresher inventory and less clearance sales, we expect to continue our gross margin expage.

With fresher inventory and less clearance sales, we expect to continue our gross margin expansion.

Speaker 3: We expect these higher quality sales will continue to improve our inventory efficiency and cash flow in this high interest rate environment.

We expect these higher quality sales will continue to improve our inventory efficiency and cash flow in this high interest rate environment.

Bernard McCracken: Gross margin in the second quarter was 43% and approximately 220 basis point improvement from 2022. The margin improvement was primarily driven by the strength of swim and adjacent vacation product categories. Reduction in markdown inventory and improvements in supply chain policy.

Speaker 3: In the third quarter, we expect net revenue to be between $340 million and $355 million.

In the third quarter, we expect net revenue to be between $340 million and $355 million. We expect a net loss of $6 5 million to $4 million and diluted loss per share to be between 20.

Speaker 3: We expect a net loss of $6.5 million to $4.1 million, and diluted loss per share to be between 20 cents and 13 cents.

13th.

Bernard McCracken: As a percentage of sales, SG&A was 38%, which was an increase of 170 basis points compared to 2022 due to deleveraging from lower revenues, partially offset by lower digital marketing spend and cost controls across the entire business. Since the close of the second quarter we have taken actions to reorganize our global sourcing team and consolidating our vendor base which will reduce our supply chain fixed expenses.

Speaker 3: We expect adjusted EVA to be in the range of $13 million to $16 million, which takes into account S-TNA headwinds related to normalized compensation.

We expect adjusted EBITDA to be in the range of 13 million to $16 million, which takes into account SG&A headwinds related to normalized compensation accruals.

Speaker 3: Based on our second quarter results, we are updating our full year guidance and now expect net revenue of $1.5 billion to $1.55 billion. We expect net income to be in the range of a net loss of $4.5 million to net income of $1 million and diluted loss per share of 14 cents to earnings per share of three cents.

Based on our second quarter results, we are updating our full year guidance and now expect net revenue of.

One 5 billion to $155 billion, we expect net income to be in the range of a net loss of four 5 million.

Bernard McCracken: Our performance led to a net loss for the quarter of $8 million or $25 cents per share compared to a net loss of $2 million or $7 cents per share in 2022. In addition to these gap measures, adjusted EBITDA is an important profitability measure that we use to manage our business internally. Because the second quarter adjusted EBITDA was $16 million, roughly flat year over year and in line with our expectations. Moving to our balance sheet, inventory at the end of the second quarter were $396 million compared to $569 million a year ago.

To net income of $1 million and net diluted loss per share of <unk> 14.

To earnings per share of <unk>.

Speaker 3: We expect adjusted even us to be in a range of $77 million. To $84 million, our guidance for the full year incorporates approximately $35 million in capital spending.

We expect adjusted EBITDA to be in a range of $77 million.

$84 million.

Our guidance for the full year incorporates approximately $35 million in capital expenditures.

Speaker 3: Additionally, as we have discussed, our improved inventory management will enable us to maintain inventory at normalized levels going forward. With that, I will turn the call

Additionally, as we have discussed our improved inventory management will enable us to maintain inventory at normalized levels going forward.

With that I will turn the call back over to Andrew.

Bernard McCracken: The 30% improvement in our inventory position was a result of our supply chain teams continued effort to improve efficiency and received inventory closer to its selling season. We achieved the objective shared on our prior call bringing our inventory to pre-pandemic levels.

Speaker 3: Thank you, Bernie. For confidence that our actions to transform the business are positioning us to drive shareholders or returns in the second half of a year, our vacation solutions business is continuing to develop with the course we're offering seasonally replaced with our long-held authority in Azure. Our pack of those line of out-tour using our wonderweight fabric and new solutions has already begun performing ahead of expectations in both the US and Europe .

Thank you Bernie we're confident that our actions to transform the business are positioning us to drive shareholder returns in the second half of the year.

Vacation solutions business is continuing to develop with the core swim offering seasonally replaced with our long held a therapy in <unk>, our <unk> lineup outerwear using our wonder wait fabric. Our new solution has already begun performing ahead of expectations in both the U S and Europe .

Bernard McCracken: Accordingly, year-to-date net cash provided by operations was $172 million better than last year primarily due to this improved inventory flow and productivity. In terms of our debt at the end of the second quarter, our term low balance was $237 million. And our $275 million ABL had $70 million of borrowings outstanding, which was $65 million lower than the second quarter last year. Despite lower borrowings outstanding on the ABL, we continued to have elevated interest expense driven by higher market rates. We continued to explore opportunities to refinance our debt and are committed to doing so subject to favorable market conditions.

Speaker 3: We're not content to rest there. Building on related and long held authorities admits, especially, Supima and Bottoms to outfit our customers for their vacation and allow them to own their destination.

We're not content to rest there building on relate to the long held authorities admits, especially subpoena and bottoms to outfit our customers for their vacation and a lot of them on the destination.

Speaker 3: Before we open it up for Q&A, I'd like to reiterate that you can take away from the second quarter. First, we're focused on ensuring the customer is at the center of all decision making and we'll continue to lean into our competitive advantage as a solutions company with strong customer loyalty.

Before we open it up for Q&A I'd like to reiterate a few key takeaways from the second quarter.

First we're focused on ensuring the customer because of the center of all decision, making and will continue to lean into our competitive advantage as a solutions company with strong customer loyalty.

Speaker 3: We plan to continue to take actions to drive margin expansion across our business and improve the overall efficiency of the enterprise. But a talented leadership team in place were appoiced to execute against these initiatives. And so we believe we are well positioned from our enhanced cash flow to start fully invest in our business to drive growth and value creation for our shareholders and other stakeholders.

Second we plan to continue to take actions to drive margin expansion across our business and improve the overall efficiency of the enterprise with a talented leadership team in place we're poised to execute against these initiatives and third we believe we are well positioned from our enhanced cash flow to thoughtfully invest.

Bernard McCracken: During the second quarter, we repurchased $3 million worth of shares under the companies previously announced $50 million share repurchased authorization, bringing the balance of the remaining authorization to $35 million as of the end of the quarter.

And our business to drive growth and value creation for our shareholders and other stakeholders.

Bernard McCracken: Now moving to guidance. The product teams have done a fantastic job managing inventory, which enables us to introduce more newness in the back half. With fresher inventory and less clearance sales, we expect to continue our gross margin expansion. We expect these higher quality sales will continue to improve our inventory efficiency and cash flow in this high interest rate environment.

That concludes our prepared remarks, we look forward to your questions.

Speaker 3: That concludes our preparing marks. We look forward to your questions.

At this time, if you would like to ask a question. Please press star one on your telephone keypad.

Speaker 1: At this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two.

You may remove yourself from the queue at any time by pressing star two.

Speaker 1: Once again, to ask a question, please press star one. Our first question comes from Dana Telfi with Telfi Group. Please go ahead.

Once again to ask a question. Please press star one our first question comes from Dana Telsey with Telsey Group. Please go ahead.

Bernard McCracken: In the third quarter, we expect net revenue to be between $340 million and $355 million. We expect a net loss of $6.5 million to $4.1 million and diluted loss per share to be between $0.20 and $13. We expect adjusted EBA to be in the range of $13 million to $16 million, which takes into account SGNA headwinds related to normalized compensation of course.

Speaker 3: I did more thing everyone and nice to see the improvement on the growth margin. If you want to pass the quarter in the current macro environment.

Hi, good morning, everyone and nice to see the improvement on the gross margin as you unpack the quarter on the current macro environment, how much of what's happening on the sales side would you say is the.

Speaker 3: How much of what's happening on the sales side with these days, the math girl and consumer health?

Echo in consumer health, how much adjustments that you're making to the internal business.

Speaker 3: How much are adjustments that you're making to the internal business?

Speaker 3: And beyond swim, what other categories, what did you see from other categories during the quarter?

And beyond swim what other category what did you see from other categories during the quarter and was the exit rate of the quarter. How is the cadence of the quarter and then I'll have a quick follow up.

Speaker 3: and was the exit rate of the quarter? How was the cadence of the quarter and then I said, what's the cost?

Bernard McCracken: Based on our second quarter results, we are updating our full-year guidance and now expect net revenue of $1.5 billion to $1.55 billion. We expect net income to be in the range of a net loss of $4.5 million to net income of $1 million. And net and diluted loss per share of $0.14 to earnings per share of three cents. We expect adjusted EBA to be in a range of $77 million to $84 million. Our guidance for the full-year incorporates approximately $35 million in capital expenditures. Additionally, as we have discussed, our improved inventory management will enable us to maintain inventory at normalized levels going forward.

Speaker 4: I'm just writing this down. Hi, Dana. How are you? Hi. Good. How are you?

Okay, I'm, just writing that down high data and how you Bill Hi, Scott.

Good.

Speaker 4: Dana, I think we understand our customer really well. We really got the goods with the database, and I think that, you know, if we looked at it, a lot of spectators.

And I think we understand our customer really well, we really got to grips with the database.

I think that as we looked at it.

Perspective.

Speaker 4: It's not just about the demographics, it's about really understanding the cohorts of the customer. And we put a lot of time and effort into looking at really the largest cohort which we serve, which is the result of continues to be strong for us, but we're seeing it growing category, which is the evolve.

It's not just about the demographics, it's effectively understanding the cohorts of the customer.

So a lot of time and effort into looking at really the largest cohort, which we served the resolver.

It continues to be strong for us, but we're seeing a growing category, which is the bolivar.

Speaker 4: And it's tempting to categorize them as younger or different, but really, they're in the chase and category to us. They live in that through.

And it's tempting to categorize them as younger or different but really.

There was an adjacent category for us and they live in that.

Our next Uber were millennials.

Speaker 4: through her world, late millennials. And it's like, we're able to tap them. And then when you ask me about, when you ask me about the sentiment about consumer, we cut seven million customers and available market with the JSON fees of 120 million for all that. So there's plenty of room for us to lean in and take share and take new customers. So the actions that you saw, and the numbers that it come out of the quarter are really actions we took to write the business. We didn't want to change it.

Andrew McLean: With that, I will turn the call back over to Andrew. Thank you, Bernie. For confidence that our actions to transform the business are positioning us to drive shareholders or returns in the second half of a year. Our vacation solutions business is continuing to develop with the course we're offering seasonally replaced with our long-held authority in Azure. Our pack of those line up out to where using our wonder white fabric, a new solution has already begun performing ahead of expectations in both the US and Europe. We're not content to rest there building on related and long-held authorities in NITS, especially Supima and bottoms to outfit our customers for their vacation and allow them to own their destination.

We're able to tap them. When you asked me about when you asked me about the sentiment about consumer.

7 million customers and available market with Adjacencies of 120 billion Sirona. So there's plenty of room for us to lean in and take share.

New customers. So the actions that you saw in the numbers that have come out of the quarter are really actions we took.

Right. The business, we didn't want to chase that last summer up demand, we wanted to be known for our users. We wanted to do paper and users and we wanted to be disciplined in what we thought and actually get to the point, where we ran out.

Speaker 4: That last dollar of demand, we want it to be known for our units, we want it to be paid for our units.

Speaker 4: And we wanted to be disciplined in what we bought and actually get the point where we ran out of it.

Speaker 4: First, this is having an endless stream of product, but you're just finding ways to sell progressively through the season. So there was an operating discipline that really dominated this conversation.

Proceeds from having an endless stream.

You're just finding ways to sell progressive.

Andrew McLean: Before we open it up for Q&A, I'd like to reiterate that few key takeaways from the second quarter. First, we're focused on ensuring the customer is at the center of all decision-making and will continue to lean into our competitive advantage as a solutions company with strong customer loyalty. Second, we plan to continue to take actions to drive margin expansion across our business and improve the overall efficiency of the enterprise. With a talented leadership team in place, we're a poise to execute against these initiatives. And third, we believe we are well positioned from our enhanced cash flow to start fully invest in our business to drive growth and value creation for our shareholders and other stakeholders.

So there was the operating discipline that really dominated the conversation.

Speaker 4: In terms of other categories, and I'm happy to come back to the first part, but in terms of other categories for us, what's been just amazing to see is the blossom's business has really stepped up. And I think about five of them.

In terms of the other category I am happy to come back to the first part but in terms of other categories for us.

Just amazing to see the pluses businesses.

Really stepped up.

I think about bottoms.

Speaker 4: Companies like Workfor, where they've had strong bottom business, it's that you get a very loyal customer. They always come back. And I look at the development that we've made. It's not just about technology, it's about how do you feel and being able to deliver a unit in those bosses. I don't know, the consistent nature that's been really powerful to us.

The company has not worked for where they've had strong bottoms business is that you can have very loyal customers. They always come back and I look at the development that we've made it's not just about it.

Just about the quality.

How do we feel and being able to deliver and use it in those boxes on a consistent basis really awkward to it.

Speaker 4: we reintroduced denim into the assortment right at the end of two two. It's mostly going to be a backup thing for us, but as we introduced that assortment, we saw real strength of it. The customer really embraced it much more evolved, much more thoughtful, and it's my core catering for catering to these two cohorts. It's like it's very powerful to see the selling that's going on underneath the covers. So this was a conscious decision week.

Reintroduce them into the assortment right at the end of Q2, mostly going to be a back half thing for us, but as we introduce that assortment, we saw real strength in the car.

Operator: That concludes our preparing remarks. We look forward to your questions. At this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, to ask a question, please press star one.

Really embraced this much more evolved much more thoughtful.

Our catering where case that we're catering to these key cohorts.

Very powerful to see the solid that's going on underneath the covers so this was a conscious decision.

Dana Telsey: Our first question comes from Dana Telfi with Telfi Group. Please go ahead. Hi, good morning, everyone, and nice to see the improvement on the growth margin.

Speaker 4: chose to run the business on our units to continue to deliver that unit. So make it about our core channels, the B2C and the B2C businesses.

<unk> to run the business on our units to continue to deliver that unit. So it makes it about our core channels.

The fee businesses.

Andrew McLean: As you unpack the quarter in the current macro environment, how much of what's happening on the south side would you say is the macro and consumer health? How much are adjustments that you're making to the internal business? And beyond swim, what other categories, what did you see from other categories during the quarter? And was the exit rate of the quarter? How is the cadence of the quarter? And then I typically follow up?

Speaker 4: And then really the thought about driving cash well, we saw different paths.

And then really be thoughtful about driving cash flow we saw different paths.

Speaker 4: just hitting our numbers and delivering shareholder value. And I think the results come through.

Hitting on hitting our numbers and delivering shareholder value and I think.

The results come through.

We're happy with the EBITDA It was within our guidance, we're happy with the EBITDA.

Speaker 4: happy with the e-fit that it was within our guidance. We're happy with the e-fit that.

Speaker 4: If the same was last year, if we get that on 30% left, and I'm sorry, and we saw cashflow that this business hasn't seen since this spin. So it's been strong, it's been powerful, and we're continuing to see that trend involved.

The same with last year, so if we get that on 30% less inventory and we saw cash flow that this business has not seen since the spin so.

Andrew McLean: Okay, I'm just writing this down. Hi, Dana. How you doing? Hi. Good. How are you? I'm good. Dana, I think we understand our customer really well. We really got the goods with the database. And I think that, you know, as we looked at it, a lot of spectres, it's not just about the demographics, it's about really understanding the cohorts of the customer, and we put a lot of time and effort into looking at really the largest cohort which we've served, which is the resolver.

It's strong it's been powerful and we're continuing to see that trend involved.

Speaker 4: I think you asked me if I had a huge reach, thought you'd well, to still also in data that the cadence that you asked for, on how the quarter progressed.

You asked me about how Q3 started to sell sell in data that the cadence that you asked for the quarter.

Rs <unk>.

Speaker 1: Our business improves sequentially each month.

As our business improved sequentially each month got better each month through July and that has continued into August .

Speaker 1: and got better each month and through July , and that has continued into August .

Speaker 4: I think it's the capital that for you, Dana, is that we're seeing a natural transition going on as wouldn't begin to act.

I think just to pick up on that for you.

We're seeing a natural transition going on it wouldn't be good.

Andrew McLean: You know, it continues to be strong for us, but we're seeing it grow in category, which is the evolve. And it's tempting to categorize them as younger or different, but really there are there are adjacent categories to us. They live in that through Gen X, through her world, millennials. And it's like, we're able to tap them. And when you ask me about, when you ask me about the sentiment of that consumer, we cut seven billion customers and the available market with the JSON fees of 120 million to run after.

As we come towards the end of the season, but what we really what we've really seen is the ancillary categories start to pick up the pace pick up being understood that.

Speaker 4: We come towards the end of the season. That's what we've really, what we've really seen it.

Speaker 4: The Azure Wear category starts to pick up the pace and pick up the ownership, but we've changed our assortment for the back out for the year. I talked about this in the last class. In a moment, we would traditionally focus on heavier Azure Wear pieces. And I think as we look at climate change.

We changed our assortment.

In the back half of the year I talked about this in the last 12 months.

We traditionally focus on heavily here and so we're pieces and I think as we look at climate change.

Speaker 4: We look at the fact that we're probably going to have an El Nino insert. We think it's going to be about layering. We think it's going to be about rain wear. We really wanted to get behind those. And we implemented new fabrications that are wonder-weight fabrications and are packables. They're absolutely fantastic products. I can't wait to show them to you. I wish we were on video right now. But I think they're really going to help us carry through the huge three-year building into a strong Q4.

Look at the fact that we're probably going to have an el Nino Windsor, We think it's going to be at that layer and we think it's going to be about rainwear.

Andrew McLean: So there's plenty of room for us to lean in and take share and take new customers. So the actions that you saw and the numbers that it come out of before are really actions we took to write the business. We didn't want to chase that last dollar of demand. We wanted to be known for our units, we wanted to be paid for our units, and we wanted to be disciplined in what we bought and actually get the point where we ran out of items first to start having an endless stream of product, but you know, you're just finding ways to sell progressively through the season.

Really wanted to get behind US we implemented new fabrications are wonder wait application in our Packable.

Absolutely fantastic products account, we showed them to you.

I wish it were around video right now, but I think they are really going to help us.

Carried through Q3 and build it into a strong Q4.

Speaker 3: Got it. Thank you. And then to other quick things on the gross margin, drivers of sustainability to see the continued improvement. And then on the piece with calls, what steps are being taken to improve that business and how do you see that unfolding? Thank you.

Got it thank you.

Two other quick things on the gross margin drivers the sustainability to continue.

Andrew McLean: So there was an operating discipline that really dominated this conversation. In terms of other categories, I'm happy to come back to the first part, but in terms of other categories for us, what's been just amazing to see is the blockchain's business has really stepped up. And you know, as I think about firms, the companies I work for where they've had strong bonds business is that you get a very loyal customer. They always come back and I look at the development that we've made.

Continued improvement in farmer.

Peace with Kohl's.

What steps are being taken to improve that business and how do you see that unfold on contour.

Speaker 4: Perfect. I'll take calls and I'll let for any take for as far as I can.

Okay, I'll take calls and I'll, let Ernie St gross margin.

Yes.

Yes.

We like our relationship with Carnival and other Wisconsin company, we've been together for a long time, we really introduced that new.

Speaker 4: We like our relationship with COFIS. Another responsibility we've been to get us for a long time. We really can introduce this new...

Speaker 4: journey with them in our digital ecosystem. And it's been very powerful and it's grown well. We fund ourselves in the quarter faced with a dilemma that like we continue to improve our margins about pricing and our quality and our units in our core business. Those with still a point where they really wanted to be focused on sort of an older strategy which evolved more discant. And we made a decision.

Andrew McLean: It's not just about technology, it's about how do you feel and being able to deliver a unit in those bosses on a consistent basis that's been really powerful to us. We really introduced denim into the assortment right at the end of 22. It's mostly going to be a backup thing for us, but as we introduced that assortment, we saw real strength in it. You know, the customer really embraced it much more evolved, much more thoughtful, and it's like we're catering, we're catering to these two cohorts, and it's like it's very powerful to see the selling that's going on underneath the covers.

Germany with that digital ecosphere and.

Very powerful and it's growing well.

And ourselves in the quarter with Amazon.

Amazon, we continue to improve our margins about pricing.

Our quality and our music in our core business is still at a point, where they really wanted to be focused on.

And also on our strategy, which involve more discounts and we made a decision that.

Speaker 4: that we wanted to put our business and our customers first. We like the customer, we spend for everything. We like the product strategy that we have. We like the pricing architecture that we're building. And we're going to do whatever it takes to protect that.

But we wanted to put our business and our customers for us.

And from everything we like the product strategy that we have we like the pricing architecture that we are building and we're going to do whatever it takes to protect that.

Andrew McLean: So this was a conscious decision. We chose to run the business on our units to continue to deliver that units and make it about our core channels, the BCC and the BCC businesses, and then really the thoughtful about driving cash flow. We saw different paths to hitting our numbers and delivering shareholder value, and I think the results come through. I'm happy with the EBITDA. It was within our guidance, we're happy with the EBITDA.

Speaker 4: And with calls, we see a long-term opportunity here with calls. This is something that is going to be on the lane forever. There is an inflection point. We're at an inflection point. We wish them really well. They're grateful for people for the future. And we will find the ways to continue our partnership evolve it and build it.

With <unk>, we see a long term offices into here with cost this isn't something that is done.

The underlying.

They are at an inflection point we are at.

An inflection point, we wish them really well, they're a great group of people for the future and we will find a way to continue our partnership if all of it and build it.

Speaker 4: Clearly, as we put Q3 and Q4 together, you can see it in the guidance, which we feel good about, we've got other routes to building that you've got a number and to our profitability as it builds and sharehold that value and we'll continue to wear those in specifically to market grain.

Clearly as we put Q3 and Q4 together you can see it in the guidance, which we feel good at that.

Andrew McLean: It was the same as last year, so we hit that on 30 percent left, and we saw cash flow, this business hasn't seen since this spin. So it's been strong, it's been powerful, and we're continuing to see that trend involved.

We've got other routes to building the EBITDA number and to our profitability and to build insurance held their value and we will continue to layer those in.

Andrew McLean: I think you asked me, if I had to restart it, well, to start also with EBITDA that the cadence that you asked for, on how the quarter progressed. Our business improves sequentially each month, and get better each month and through July, and that has continued until August. I think the takeout for you, Dana, is that we're seeing a natural condition going on, as when begins to act, becomes towards the end of the season.

<unk> to market.

Speaker 4: And we feel really good about where we are with the growth in target, the growth in Amazon and the growth in NACI. And I think it's only a matter of time before we really start to see that growth come back. Because I do think the strategy that calls is going to go after all the work.

And we feel really good about where we are with the growth in target and Amazon.

Growth in Macy's and I think it's only a matter of time before we really start to see that growth come back.

The strategy that comes is going to go after.

Both before and meet the brands like land debt.

Speaker 1: And then, you know, I'll add on the polls. One of the important features of our marketplace strategy.

And then I'll add on consoles.

Andrew McLean: It's like what we've really, what we've really seen is the elsewhere categories start to pick up the pace and pick up the ownership, because we've changed our assortment for the back after the year. I talked about this in the last class, but we're really, we would traditionally focus on heavier assortment where it pieces, and I think, as we look at climate change, we look at the fact that we're probably going to have an L-linear insert, we think it's going to be about layering, we think it's going to be about rain, where you really want it to get behind those, and we've implemented new fabrications, our wonder weight fabrication and our packables.

The important features of our marketplace strategy is that it's a single use inventory we fulfill for all our marketplaces. So it allows us to diversify and sell through other distribution channels without having a normal retailers risk would be similarly.

Speaker 1: is that it's a single use inventory. We fulfill for all marketplaces. So it allows us to diversify and sell to other distribution channels without having what a normal retailer's risk would be in single use and inventory just specifically for that distribution channel. So really the risks are overall use of the inventory and we can sell it through other distribution channels.

Similarly in inventory, just specifically for that that distribution channels. So it really de risks our our overall use of the inventory that we can sell it through other distribution channels.

Speaker 1: And then Dana going on to the gross margin. We really benefited in Q2 from our authority in our swims and the payload effect on the adjacent categories. Our reduction in markdown inventory, which is down 10% over last year and will continue to improve throughout the rest of the back half.

And then Dana going onto the gross margin.

We really benefited in Q2 from our authority in our swim and its halo effect on.

Andrew McLean: They're absolutely fantastic products. I can't wait to show them to you. I wish we were on video right now, but I think they're really going to help us, carry through Q3 and build it into a strong Q4. Got it. Thank you.

Paul on the adjacent categories are.

A reduction in markdown inventory, which is down 10% over last year, and we will continue to improve throughout the rest through the back half.

Speaker 1: And then also we're thinking you need to benefit from supply chain costs.

And then also we're continuing to benefit from supply chain costs.

Andrew McLean: And then, to other quick things, on the gross margin, drivers of sustainability to see the continued improvement. And then on the piece with Coles, what steps are being taken to improve that business, and how do you see that unfolding? Thank you. Okay, I'll take Coles and I'll let her and you take gross margin. We're, we like our relationship with Coles. It's another responsible company. We've been together for a long time. We really can produce this new tyranny with them in our digital eco sphere.

Speaker 1: And each of these areas is going to support a growth of large and expansion through the rest of the year.

And <unk>.

Each of these areas is sort of support.

Our gross margin expansion through the rest of the year.

Speaker 1: And then as Andrew discussed, our consolidation of our supply chain and our reorganization of our sourcing crew, those are benefit that will benefit in 2024. And you would know our sourcing, the market is capitalized and already mentored. So those savings will more lend towards the 2024 benefit.

As Andrew discussed our consolidation of our supply chain and our reorganization of our sourcing group.

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Those are benefits that will that will benefit us in 2024.

Even though our sourcing department is capitalized at our inventory.

So those savings will more lending towards the 2024 and that a bit.

Thank you.

Andrew McLean: And it's been very powerful and it's grown well. We fund ourselves into a quarter of space with a dilemma that we continue to improve our margins about pricing and our quality and our units in our core business. Coles was still at a point where they really wanted to be focused on sort of an older strategy which evolved more discounts. And you know, we made a decision that we wanted to put our business in our customer first.

Speaker 1: Thank you. We'll take our next question from Alex Farman with Craig Hallem, Capitol Group.

Thank you we'll take our next question from Alex Fuhrman with Craig Hallum Capital Group.

Speaker 1: Hey guys, thanks for taking my question. Now, just a quick one for me. I mean, it seems very impressive that you're able to raise those that you miss out guidance for the year. At the midpoint, even that demand is probably not as strong as you had hoped for.

Hey, guys. Thanks for taking my question just a quick one for me.

Very impressive that you are able to.

Raised the EBITDA guidance for the year at the midpoint, even add demand is probably not as strong.

As you had hoped for.

Speaker 1: You know, what kind of the outlook for the next couple of years is from a high level. In terms of margin recovery, you feel like there's more room to go based on, you know, the levers you have to pull the active.

Yeah.

What's kind of the outlook for the next couple of years it from a high level in terms of margin recovery do you feel like there's more room to go based on the levers you have to pull at the current revenue level or you really need some more significant revenue growth to start to see substantial margin expansion.

Andrew McLean: We like the customer percent of everything. We like the product strategy that we have. We like the pricing architecture that we're building. And we're going to do whatever it takes to protect that with Coles. We see a long-term opportunity here with Coles. This is something that is going to be on the lane forever. They're at an inflection point. We're at an inflection point. We wish them really well. There are a couple of people for the future.

Speaker 1: current revenue level or you really need some more significant revenue growth to start to see the substantial marginic passes.

Yeah.

Alan.

Speaker 4: for after so I like how you do it. Alex, we're going to continue to grow on for the market. But it's business.

After solid tiny Alex we're going to continue to grow growth market.

Andrew McLean: And we will find a way to continue our partnership with all of us and build it. Clearly, as we put Q3 and Q4 together, you can see it in the guidance, which we feel good about. You know, we've got other routes to building that you've got a number and to our profitability. And to build and shareholder value and we'll continue to wear those in specifically to market space. And we feel really good about where we are with the growth in target, the growth in Amazon and the growth in Macy.

Speaker 4: and its future is continuing upon growing this gross margin, managing its inventory and delivering cashflow. And we see running work to do that.

And.

And its future is contingent upon growing this gross margin managing inventory and delivering cash flow, we see running room to do that.

Speaker 4: We see right now that we're, we've benefited at cost of this year, particularly in Q1 from tailwinds and shipping costs, but really getting to grips with our manufacturing base, our source base, our own source of organization. And we see opportunities to really leverage the agency.

We see.

Where is it.

We benefited this.

This year, particularly in Q1 from tailwind in shipping costs, but really.

Really getting to grips with our manufacturing base, our sourcing base around sourcing organization and we see opportunities so really leverage the AUC before we even get to the conversation around fashion and once you start to lap the units on top of that.

Speaker 4: before we even get the conversation around fashion. And once you start to layer the new list on top of that, I think you've got another upside-off opportunity that can continue over the next three to five years.

Andrew McLean: And I think it's only a matter of time before we really start to see that growth come back. Because I do think the strategy that Coles is going to go after. Well, before I need the grant like that. And then, you know, I'll add one of the polls. One of the important features of our marketplace strategy is that it's a single use inventory. We fulfill all our marketplaces. So it allows us to diversify and sell to other distribution channels without having what a normal retailer's risk would be in single use.

I think <unk> got another upside opportunity that can continue over the next three to five years.

Speaker 4: of upward motion and trajectory on our close margin. As that is going to come through in close margin dollars, it's going to come through in increased operating profits for the company and it will come through in a more flexible balance sheet forward. So as we see, Turing continued to increase as we move that inventory faster.

Most of the NIM trajectory on our gross margin and that is going to come through in gross margin dollars is going to come through.

Operating profits for the company and it will come through in a more flexible balance sheet as we see trends continued to increase as we move that inventory faster.

Speaker 4: and we really put our inventory to work versus our cash to work. So we do see it as an inflection point. It has, you probably think about your model and recognize that it's changed, but I think it's changed that necessary. And as we built that and we see those increased that you was, then sales and build a man will come. We want to think about it this way. Work's soccer and cash laid for us is the man bless.

Really.

Andrew McLean: And inventory just specifically for that distribution channels. So really the risks are our overall use of the inventory and we can sell it through other distribution channels. And the thing that's going on to the growth margin. You know, we really benefit it in Q2 from our authority in our swim and the payload effect on the adjacent categories. You know, our reduction in markdown inventory, we just down 10% over last year. And we'll continue to improve throughout the rest through the back, and then also we're continuing to benefit from supply chain plus and each of these areas is going to support a gross margin expansion through the rest of the year and then as Andrew discussed, our consolidation of our supply chain and our reorganization of our sourcing through those are benefits that will benefit us in 2024 and you would know our sourcing the market is capitalized and already mentored so those savings will more lend towards the 2024 benefit. Thank you.

Put our inventory versus our cash to work so.

We do see this as an inflection point.

And as you probably think about your model and recognize that it's changed but I think as change that necessary as we filter and we see those increase thank you Juan.

Sales in those demand will come.

Wanted to think about it this way.

Profit and cash lag versus demand led.

Speaker 4: where it would use the piece in man's land and then the profits would fall. I think that's a conscious decision on our part, a conscious decision to sort of wrap ourselves around the customer.

We used the peak demand less and then the profits with bonds.

I think thats a conscious decision on our part.

Conscious decisions, it's a wrap ourselves around the customer.

Great that's really helpful. Thank you.

Youre welcome.

Speaker 4: Thank you. And at this time, we have no further questions in queue. This will include the lands in second quarter earnings call. You may disconnect your line at this time and have a wonderful day.

Thank you and at this time, we have no further questions in queue.

This will conclude the lands' end second quarter earnings call. You may disconnect. Your lines at this time and have a wonderful day.

Speaker 2: .

[music].

Alex Fuhrman: We'll take our next question from Alex Fuhrman with Craig Hallem, capital group. Hey guys, thanks for taking my question. This is a quick one for me. I mean, you know, it seems very impressive that you're able to, you know, raise those that you miss out guidance for the year at the midpoint even as, you know, demand is probably not as strong as you had hoped for. You know, what kind of the outlook for the next couple of years? It's from a high level in terms of margin recovery.

Andrew McLean: You feel like there's more room to go based on, you know, the levers you have to pull out this current revenue level or, you know, you really need some more significant revenue growth to start to see the substantial margin expansion. Alex, I personally like how you do it. Alex, we're going to continue to grow on gross margins, but this business and its future is continuing on growing as gross margin, managing as inventory and delivering cash flow.

Andrew McLean: We see running work to do that. We see right now that we're, you know, we've benefited at cost of this year, particularly in Q1 from tailwinds and shipping costs, but really we're really getting to grips with our manufacturing base, our sourcing base, our own sourcing organization. We see opportunities to really leverage the AUC before we even get the competition around fashion. And once you start to layer the new list on top of that, I think you've got another upside opportunity that can continue over the next three to five years of upward motion and trajectory on our gross margin.

Andrew McLean: And that is going to come through in gross operating profits for the company, and it will come through in a more flexible balance sheet for us. We see trends continue to increase as we move that inventory faster. And we really put our inventory to work versus our cash to work.

Operator: So we do see this as an inflection point. You probably think about your model and recognize that it's changed, but I think it's changed that necessary. And as we build that, and we see those increase than you was, the sales and the demand will come. We want to think about it this way. What's offered in cash led versus the man's led, where it would use the piece in man's led and then the profits would fall. Now I think that's a conscious decision on our part. A conscious decision to sort of wrap ourselves around the cup. Thank you and at this time we have no further questions in queue.

Operator: This will include the Lands End Second Quarter Earnings Call.

Operator: You may disconnect your line at this time and have a wonderful day.