Q2 2024 Oxford Industries Inc Earnings Call

Greetings and welcome to Oxford Industries, Inc. Second quarter fiscal 2023 earnings conference call.

Speaker 1: Greetings and welcome to Oxford Industries Inc. second quarter fiscal 2023 earnings conference call. At this time, all participants are in a listen only mode. All right

At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Speaker 1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

Speaker 1: It is now my pleasure to introduce Brian Smith, Director of Financial Reports and Investor Relations. Thank you. Let's get this live streaming news channel right here! You wish men had known?

It's now my pleasure to introduce Brian Smith director of financial reports and Investor Relations. Thank you you may begin.

Thank you and good afternoon before we begin I would like to remind participants that certain statements made on today's call and the Q&A session may constitute forward looking statements within the meaning of the federal Securities laws.

Speaker 2: Thank you and good afternoon. Before we begin, I'd like to remind participants that certain statements made on today's call in the Q&A session may constitute forward-looking statements within the meaning of the federal securities law.

Speaker 2: Forward looking statements are not guarantees and actual results may differ materially from those expressed or implied in the forward looking statement.

Forward looking statements are not guarantees and actual results may differ materially from those expressed or implied in the forward looking statements.

Speaker 2: Important factors that could cause actual results of operations or our financial condition to differ are discussed in our press release issued earlier today and in documents filed by us with the SEC.

Important factors that could cause actual results of operations or our financial condition to differ are discussed in our press release issued earlier today.

And in documents filed by us with the SEC.

Speaker 2: including the risk factors contained in our Form 10-K . We undertake no duty to update any forward-looking statement.

And in the risk factors contained in our Form 10-K.

We undertake no duty to update any forward looking statements.

Speaker 2: During this call, we'll be discussing certain non-GAAP financial measures.

During this call, we'll be discussing certain non-GAAP financial measures.

Speaker 2: You can find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today.

You can find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today.

Speaker 2: which is posted under the investor relations tab of our website at Oxfordinc.com.

Which is posted under the Investor Relations tab of our website at Oxford in Dot Com.

And now I'd like to introduce today's call participants with me today are Tom Chubb, Chairman and CEO.

Speaker 2: And now I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO , and Scott Grassmeyer, CFO and COO. Thank you for your attention, and now I'd like to turn the call over to Tom Chubb. Good afternoon and thank you for joining us.

Unknown Executive: Greetings and welcome to Oxford Industries Inc. 2nd quarter, fiscal 2023 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone wants to require operator assistance during a conference please press star zero on your telephone keypad. As a reminder this conference is being recorded.

Scott grass Meyers CFO and CMO. Thank you for your attention and now I'd like to turn the call over to Tom Chubb.

Good afternoon, and thank you for joining us.

Speaker 3: Before I jump into reporting on results for the second quarter and our outlook for the balance of the year, I want to start by acknowledging the state of Hawaii and the island of Maui in particular.

Before I jump into our reporting on results for the second quarter and our outlook for the balance of the year I wanted to start by acknowledging the state of Hawaii and the.

Brian Smith: It is now my pleasure to introduce Brian Smith, Director of Financial Reports and Investor Relations. Thank you. You may begin. Thank you and good afternoon. Before we begin I would like to remind participants that certain statements made in today's call, named the Q&A session may constitute forward looking statements within the meaning of the federal securities law. Forward looking statements are not guarantees and actual results may differ materially from those expressed or implied in the forward looking statements.

Island of Maui in particular.

Speaker 3: which have been a very important and special part of our business for many years.

Which have been a very important and special part of our business for many years, we have over 200 members who lived on Maui.

Brian Smith: Important factors that could cause actual results of operations or our financial condition to differ or discuss in our press release issued earlier today and documents filed by us with the SEC, including the risk factors contained in our form 10K. We undertake no duty to update any forward looking statements. During this call we will be discussing certain non-gap financial measures. You can find a reconciliation of non-gap to gap financial measures in our press release issued earlier today, which is posted under the Investor Relations tab of our website at oxardings.com.

Speaker 3: We have over 200 members who live on Maui and over 450 in the state of Hawaii.

Over 450, given the state of Hawaii.

Speaker 3: These are wonderful people who we value greatly, and our hearts are with all of them as they work to recover from the devastation of the recent wildfires.

These are wonderful people, who we value greatly and our hearts are with all of them as they work to recover from the devastation of the recent wildfires.

Speaker 3: I am also proud of and grateful for the generosity of our associates across the enterprise who have pitched in in so many ways to help the people of Maui recover from this disaster. This generosity and the resilience of our people in Maui and Hawaii are among the characteristics that make Oxford such a great company.

I'm also proud of and grateful for the generosity of our associates across the enterprise who have pitched in so many ways to help the people of Maui recover from this disaster.

This is jen Rusty and the resilience of our people in Maui and Hawaii are among the characteristics that make Oxford, such a great company.

Moving to our results, we're pleased to be reporting sales and adjusted earnings per share within our forecasted range given the choppy operating environment.

Speaker 3: Moving to our results, we're pleased to be reporting sales and adjusted earnings per share within our forecasted range given the top E operating environment.

Brian Smith: And now I would like to introduce today's call participants with me today are Tom Chubb, Chairman and CEO. It's got Grassmire, CFO, and COO.

Speaker 3: During the quarter, we achieved 16% total year-over-year revenue growth driven by our acquisition of Johnny Was in the third quarter of last year and a 1% increase on an organic basis, which is on top of 11% of organic growth in the year-ago period.

During the quarter, we achieved 16% total year over year revenue growth driven by our acquisition of Johnny was in the third quarter of last year, and a 1% increase on an organic basis, which is on top of 11% organic growth.

Thomas Chubb: Thank you for your attention and now I would like to turn the call over to Tom Chubb. Good afternoon and thank you for joining us.

Thomas Chubb: Before I jump into reporting on results for the second quarter and our outlook for the balance of the year, I want to start by acknowledging the state of Hawaii and the island of Maui in particular, which have been a very important and special part of our business for many years. We have over 200 members who live on Maui and over 450 in the state of Hawaii. These are wonderful people who we value greatly and our hearts are with all of them as they work to recover from the devastation of the recent wildfires.

The year ago period.

Speaker 3: In addition to the tough comparison, the more modest organic growth rate this year reflects, as widely reported across the marketplace, a customer that has become somewhat more cautious with regard to discretionary purchases.

In addition to the tough comparison, the more modest organic growth rate. This year reflects as widely reported across the market place a customer that has become somewhat more cautious with regard to discretionary purchases.

As you know our purpose as a company is to evoke happiness and our customers with our brands our customer metrics indicate that we are doing exactly that.

Speaker 3: As you know, our purpose as a company is to evoke happiness in our customers with our brand.

Speaker 3: Our customer metrics indicate that we are doing exactly that. Excitement for and interest in our brands remains very high. Our active customer count and new customer ad rate are both growing and our average order value has held steady. And we have seen higher traffic across our portfolio of brands this year.

Thomas Chubb: I am also proud of and grateful for the generosity of our associates across the enterprise who have pitched in in so many ways to help the people of Maui recover from this disaster. This generosity in the resilience of our people in Maui and Hawaii are among the characteristics that make Oxford such a great company.

Site for an interest in our brands remains very high.

Our active customer count and new customer add rate are both growing and our average order value has held steady and we have seen higher traffic across our portfolio of brands. This year.

Speaker 3: At the same time, conversion rates are lower on a year-over-year basis.

At the same time conversion rates are lower on a year over year basis. In addition, consumers are making more of their purchases during our promotional events. Both of these factors reinforce the notion that the consumer has become more cautious in their disk.

Thomas Chubb: Moving to our results, we're pleased to be reporting sales and adjusted earnings per share within our forecasted range, given the top operating environment. During the acquisition of Donnie was in the third quarter of last year and a 1% increase on an organic basis, which is on top of 11% of organic growth in the year ago period. In addition to the tough comparison, the more modest organic growth rate this year reflects as widely reported across the marketplace, a customer that has become somewhat more cautious with regard to discretionary purchases.

Speaker 3: In addition, consumers are making more of their purchases during our promotional event.

Speaker 3: Both of these factors reinforce the notion that the consumer has become more cautious in their discretionary spending than they were a year ago, with the increased purchasing activity during promotional periods also putting some modest gross pressure on gross margins.

<unk> spending than they were a year ago with the increased purchasing activity during promotional periods also putting some modest growth pressure on gross margins as we move down the income statement, we saw some operating deleverage during the <unk>.

Speaker 3: As we move down the income statement, we saw some operating deleverage during the quarter as a result of our increased investment in a couple of key expense categories. The first is a...

Quarter as a result of our increased investment in a couple of key expense categories.

The first is a.

Employment expense our team is our most valuable asset and is the key to all of our success to be certain that we can continue to be successful going forward, we need to ensure that we have a sufficient number of staff staff and that fairly comp.

Speaker 3: Our team is our most valuable asset and is the key to all our success.

Thomas Chubb: As you know, our purpose as a company is to vote happiness in our customers with our brands. Our customer metrics indicate that we are doing exactly that. Excitement for an interest in our brands remains very high. Our active customer count and new customer ad rate are both growing and our average order value has held steady. And we have seen higher traffic across our portfolio brands this year. At the same time, conversion rates are lower on a year-over-year basis.

Speaker 3: To be certain that we can continue to be successful going forward, we need to ensure that we have a sufficient number of staff and that they are fairly compensated.

<unk> cited last year the growth in our business head out run the size of our staff and we had a bit of catching up to do to be fully staffed. In addition, we are continuing to invest in our team in an inflationary environment.

Speaker 3: Last year, the growth in our business had outrun the size of our staff and we had a bit of catching up to do to be fully staffed. In addition, we are continuing to invest in our team in an inflationary environment by increasing wage rates and salaries to ensure that we stay competitive and can continue to attract and retain the best people.

Creasing wage rates in salaries to ensure that we stay competitive and can continue to attract and retain the best people.

Thomas Chubb: In addition, consumers are making more of their purchases during our promotional events. Both of these factors reinforce the notion that the consumer has become more cautious in their discretionary spending than they were a year ago. With the increased purchasing activity during promotional periods, also putting some modest growth pressure on gross margins.

Speaker 3: The second major area of increased expense is in advertising and promotion.

The second major area of increased expense is in advertising and promotion.

Speaker 3: As the post-pandemic rebound moves further into the rearview mirror and the market and consumer continue to normalize, we want to make sure we are doing what we need to in order to maintain high levels of excitement about and awareness of our brand.

As the post pandemic rebound moves further into the rearview mirror and the market and consumer continue to normalize we wanted to make sure. We're doing what we need to in order to maintain high levels of excitement about and awareness of our brands.

Speaker 3: Accordingly, we have increased our advertising spend levels this year, both in absolute dollars and as a percentage of sales, especially in awareness advertising and experimenting with new media channels.

Accordingly, we have increased our advertising spend levels. This year, both in absolute dollars and as a percentage of sales, especially in awareness advertising and experimenting with new media channels.

Thomas Chubb: As we move down the income statement, we saw some operating delabits during the quarter as a result of our increased investment in a couple of key expense categories. The first is employment expense. Our team is our most valuable asset and is the key to all our success. To be certain that we can continue to be successful going forward, we need to ensure that we have a sufficient number of staff and that they are fairly compensated.

Speaker 3: Finally, we are feeling the impact of depreciation, software subscription, and other expenses related to technology and other investments we have made to ensure that we have a modern omni-tunnel selling platform.

Finally, we are feeling the impact of depreciation software subscription and other expenses related to technology and other investments. We have made to ensure that we have a modern omni channel selling platform.

Speaker 3: While these expenses are causing some short-term operating deleverage in a weaker demand environment, we believe that all three of these areas represent prudent investments in our future.

While these expenses are causing some short term operating deleverage and a weaker demand environment. We believe that all three of these areas represent prudent investments in our future.

Thomas Chubb: Last year, the growth in our business had outrun the size of our staff, and we had a bit of catching up to do to be fully staffed. In addition, we are continued to invest in our team in an inflationary environment by increasing wage rates and salaries to ensure that we stay competitive and can continue to attract and retain the best people.

Speaker 3: In keeping with our purpose and objective to evoke happiness in our customers and deliver long-term value to our shareholders, we have a number of strategic initiatives underway which are all designed to drive excellence across our portfolio of lifestyle brands.

In keeping with our purpose and objective to a vote kapinos and our customers and deliver long term value to our shareholders. We have a number of strategic initiatives underway, which are all designed to drive excellence across our portfolio of lifestyle brands.

Thomas Chubb: The second major area of increased expense is in advertising and promotion. At the post-pandemic rebound moves further into the rearview mirror and the market and consumer continue to normalize. We want to make sure we are doing what we need to in order to maintain high levels of excitement about an awareness of our brands. Accordingly, we have increased our advertising spend levels this year, both in absolute dollars and as a percentage of sales, especially in awareness advertising and experimenting with new media channels.

To help spur sustained profitable growth. The biggest of these initiatives is a multi year southeastern United States fulfillment Center enhancement project.

Speaker 3: to help spur sustained profitable growth. The biggest of these initiatives is a multi-year Southeastern United States Fulfillment Center enhancement project to ensure best-in-class direct-to-consumer throughput capabilities for our brand.

Thomas Chubb: Finally, we are feeling the impact of depreciation, software subscription, and other expenses related to technology and other investments we have made to ensure that we have a modern omnichinial selling platform. While these expenses are causing some short-term operating delivery in a weaker-demand environment, we believe that all three of these areas represent prudent investments in our future.

To ensure best in class direct to consumer throughput capabilities for our brands.

Speaker 3: When complete, the fulfillment center will help support our very large, highly profitable e-commerce business across all our brands and will help support our retail business in the eastern half of the country, particularly Florida, which is our largest revenue state by a wide margin.

When complete the fulfillment center will help support our very large highly profitable e-commerce business across all of our brands and will help support our retail business in the eastern half of the country, particularly Florida, which is our largest revenue.

State by a wide margin.

Speaker 3: Another very exciting initiative is the upcoming relaunch of the Donnie Was website.

Another very exciting initiative is the upcoming relaunch of the timing was website.

The new Johnnie was website will have the same beautiful aspirational look and feel of the current site, but we will utilize the excellent best in class technology.

Speaker 3: The new Johnny West website will have the same beautiful aspirational look and feel of the current site, but will utilize the excellent best-in-class technology platform that powers our lily pellets or web.

That form that powers, our Lilly Pulitzer website the.

Speaker 3: The result will be a website that is 100% Johnny was and is much more searchable, more shoppable, easier to check out and overall provides a better customer experience.

The result will be a website that is 100% Johnny was and is much more searchable or <unk> easier to check out and overall provides a better customer experience. When launched later this year, we expect a new site to drive incremental growth.

Thomas Chubb: In keeping with our purpose and objective to evoke happiness in our customers and deliver long-term value to our shareholders, we have a number of strategic initiatives underway which are all designed to drive excellence across our portfolio of lifestyle brands to help spur sustained, profitable growth. The biggest of these initiatives is a multi-year southeastern United States fulfillment center enhancement project to ensure best-in-class direct-to-consumer throughput capabilities for our brands. When complete, the fulfillment center will help support our very large, highly-procably e-commerce business across all our brands and will help support our retail business in the eastern half of the country, particularly Florida, which has our largest revenue state by a wide margin.

Speaker 3: When launched later this year, we expect a new site to drive incremental growth in our Taniwa's e-commerce business.

And our tiny was e-commerce business.

In addition to the website and in our fulfillment center projects, we are driving excellence across the portfolio by leveraging our talented people across the brands specifically, we have been shifting functional expertise across brands.

Speaker 3: In addition to the website and the Fulfillment Center projects, we are driving excellence across the portfolio by leveraging our talented people across the brand.

Speaker 3: Specifically, we've been shifting functional expertise across brands to enhance areas that will further support operational excellence across the enterprise.

The enhanced areas that will further support operational excellence across the enterprise.

Speaker 3: Aligning talent with opportunities to have the maximum impact on the business benefits both the company and the employee.

Lining talent with opportunities to have the maximum impact on the business benefits, both the company and the employees.

Speaker 3: Our healthy business continues to generate strong cash flow and we remain focused on using that cash wisely by investing in organic growth and acquisition opportunities and the return of capital to our shareholders all while maintaining a very healthy balance.

Our healthy business continues to generate strong cash flow and we remain focused on using that cash wisely by investing in organic growth and acquisition opportunities and the return of capital to our shareholders all while maintaining a very healthy balance.

Thomas Chubb: Another very exciting initiative is the upcoming relaunch of the Donnie Wuzz website. The new Donnie Wuzz website will have the same beautiful aspirational look and feel of the current site but will utilize the excellent best-in-class technology per platform that powers our Lilly Pulitzer website. The result will be a website that is 100 percent Donnie Wuzz and is much more searchable or shoppable easier to check out and overall provides a better customer experience. When launched later this year, we expect a new site to drive incremental growth in our Donnie Wuzz e-commerce business.

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Speaker 3: This quarter provides an excellent example of that focus in action.

This quarter provides an excellent example of that focus and action.

During the quarter, we opened five net new locations, bringing our total for the year to eight net new locations by the end of the year. We expect to open 25, net new locations, bringing our total count close to 320 stores and <unk>.

Speaker 3: During the quarter, we opened five net new locations, bringing our total for the year to eight net new locations.

Speaker 3: By the end of the year, we expect to have opened 25 net new locations, bringing our total count close to 320 stores and retail bar restaurant locations.

Retail bar restaurant locations. In addition, the beautiful Tommy Bahama Mirror Monte resort in Indian Wells, California.

Speaker 3: In addition, the beautiful Tommy Bahama Miramonta Resort in Indian Wells, California is on track to open in the third quarter.

Thomas Chubb: In addition to the website and the fulfillment center projects, we are driving excellence across the portfolio by leveraging our talented people across the brands. Specifically, we have been shifting functional expertise across brands to enhance areas that will further support operational excellence across the enterprise. Aligning talent with opportunities to have the maximum impact on the business benefits both the company and the employee.

It's on track to open in the third quarter.

Speaker 3: Included in the openings during the quarter was a beautiful new Marlon Bar in Tami Bahama store in Tami Beach Garden.

Included in the openings during the quarter was a beautiful new Marlin bar in Tommy Bahama store in Palm Beach Gardens. The Marlin bar is off to a terrific start and as always has dramatically enhanced our retail business in that location, particularly.

Speaker 3: The Marlin Bar is off to a terrific start and as always has dramatically enhanced our retail business in that location, particularly our women's business.

Women's business. This marlin bars unique among the eight that we have opened so far in that it is an indoor outdoor location situated at the entrance to an enclosed mall.

Speaker 3: This marlin bar is unique among the eight that we have opened so far in that it is in an indoor outdoor location situated at the entrance to an enclosed mall.

Thomas Chubb: Our healthy business continues to generate strong cash flow and we remain focused on using that cash wisely by investing in organic growth in acquisition opportunities and the return of capital to our shareholders all while maintaining a very healthy balance. This quarter provides an excellent example of that focus in action. During the quarter we open five net new locations bringing our total for the year to eight net new locations. By the end of the year we expect it to open 25 net new locations bringing our total count close to 320 stores and retail bar restaurant locations.

Speaker 3: Our hospitality business is a linchpin of our Tommy Bahama strategy.

Our hospitality business as a linchpin of our Tommy Bahama strategy and with two more Marlin bar scheduled to open this year and three planned for fiscal 'twenty. Four we are extremely excited about the growth that it will help us fuel for many years.

Speaker 3: And with two more Marlon Bar scheduled to open this year and three planned for fiscal 24, we are extremely excited about the growth that it will help us fuel for many years to come.

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Speaker 3: Our cash generation during the quarter also benefited from our acquisition of Johnny Was last year, with Johnny Was contributing $7.3 million of adjusted operating profit, or approximately $0.34 a share to our quarterly results.

Our cash generation during the quarter also benefited from our acquisition of Johnny was last year with Tani was contributing $7 3 million of.

Adjusted operating profit or approximately 34 cents a share to our quarterly results. We are delighted to have Johnny was as part of the portfolio and believe it has lots of runway to grow top line and expand operating margin going forward.

Speaker 3: We are delighted to have Johnny was as part of the portfolio and believe it has lots of runway to grow top line and expand operating margin going forward.

Thomas Chubb: In addition, the beautiful Tommy Bahama Miramonte Resort in Indian Wells, California is on track to open in the third quarter. Included in the openings during the quarter was a beautiful new Marlin bar in Tommy Bahama store in Palm Beach Gardens. The Marlin bar is off to a terrific start, and as always has dramatically enhanced our retail business in that location, particularly our women's business. This Marlin bar is unique among the eight that we have opened so far, in that it is in an indoor outdoor location situated at the entrance to an enclosed mall.

Speaker 3: This strong cash flow allowed us to pay down $46 million of debt, leaving $48 million outstanding, while repurchasing $19 million of stock, or approximately 196,000 shares, representing 1% of our outstanding stock.

This strong cash flow allowed us pay down $46 million of debt, leaving $48 million outstanding while repurchasing $19 million of stock or approximately 196000 shares representing 1% of <unk>.

Our outstanding stock.

Speaker 3: paying $10 million in dividends and investing $15 million in capital expenditures during that quarter.

Paying $10 million in dividends and investing $15 million in capital expenditures during the quarter.

Speaker 3: Our inventories are very healthy and we're in outstanding position to continue to deliver robust cash flow for the balance of the year and for many years to come.

Our inventories are very healthy and were an outstanding position to continue to deliver robust cash flow for the balance of the year and for many years to come.

Thomas Chubb: Our hospitality business is a linchpin of our Tommy Bahama strategy, and with two more Marlin bar scheduled to open this year. And three planned for fiscal 24, we are extremely excited about the growth that it will help us fuel for many years to come.

Speaker 3: Scott will provide more details on the quarter and the balance of the year in a moment, but as we look forward, given the impact of the Maui wildfires and the slightly more hesitant consumer purchasing behavior to start the third quarter, we believe building in a bit of caution to our guidance for the balance of the year is prudent.

<unk> will provide more details on the quarter and the balance of the year in a moment, but as we look forward given the impact of the Maui wildfires and a slightly more hesitant consumer purchasing behavior to start the third quarter, we believe building in a bit of caution.

Thomas Chubb: Our cash generation during the quarter also benefited from our acquisition of Johnny was last year. With Johnny was contributing $7.3 million of adjusted operating profit or approximately $34 cents a share to our quarterly results. We are delighted that Johnny was as part of the portfolio and believe it has lots of runway to grow top line and expand operating margin going forward. This strong cash flow allowed us to pay down $46 million of debt, leaving $48 million outstanding, while repurchasing $19 million of stock or approximately $196,000 shares, representing 1% of our outstanding stock, paying $10 million in dividends, and investing $15 million in capital expenditures. Our inventories are very healthy and we are an outstanding position to continue to deliver robust cash flow for the balance of the year and for many years to come.

On to our guidance for the balance of the year is prudent.

Speaker 3: At the same time, we know that our efforts to evoke happiness, drive excellence across the portfolio, and invest in our business will drive profitable growth and long-term shareholder value for many years to come as evidenced by our expected 10-year adjusted EPS cashier of 14% based on our updated guidance range.

At the same time, we know that our efforts towboat Kapinos drive excellence across the portfolio and invest in our business will drive profitable growth and long term shareholder value for many years to come.

Evidenced by our expected 10 year adjusted EPS CAGR of 14% based on our updated guidance range.

Speaker 3: Now I will turn the call over to Scott for more details on the quarter and the balance of the year. Scott, thank you, Tom.

Now I'll turn the call over to Scott for more details on the quarter and the balance of the year Scott. Thank.

Thank you Tom.

Speaker 4: Tom mentioned we're pleased to report another strong quarter that is within our guidance range. In an uncertain microeconomic environment where the consumer has become more cautious or operating groups that secured very well going against direct consumer costs of 14% in the second quarter of 2022.

As Tom mentioned, we are pleased to report another strong quarter that is within our guidance range and an uncertain microeconomic environment with consumer has become more cautious our operating groups executed very well going against direct to consumer comps of 14% in the second quarter of 2022.

Speaker 4: Consolidated net sales for the second quarter of fiscal 2023 were 420 million, which included 52 million in sales for Johnny Was and increases in each operating group, growing 16% above last year's second quarter net sales of 363 million.

Consolidated net sales for the second quarter of fiscal 2023 were $420 million, which included $52 million of sales for Johnny was an increases in each operating group growing 16% above last year's second quarter net sales of $363 million.

Thomas Chubb: Scott will provide more details on the quarter and the balance of the year in a moment, but as we look forward given the impact of the Maui wildfires and the slightly more hesitant consumer purchasing behavior to start the third quarter, we believe building in a bit of cost into our guidance for the balance of the year is prudent. At the same time we know that our efforts to vote cabinets drive excellence across the portfolio and invest in our business will drive possible growth and long term shareholder value for many years to come as evidenced by our expected 10 year adjusted EPS cager of 14% based on our updated guidance range.

Speaker 4: In the aggregate, Tommy Pahama, Willie Pulsar, and emerging brands had decreases of 3%, in full price brick and mortar, 4% in full price e-commerce, and 7% in wholesale sales.

In the aggregate Tommy Bahama, Lilly Pulitzer and emerging brands had decreases of 3% and full price brick and mortar, 4% full price ecommerce and 7% in wholesale sales.

Speaker 4: These declines were all set by 8% growth in our food and beverage business and 16 million of cells from the Lily Poulter e-commerce flash cell that we did not hold in the second quarter last year.

These declines were offset by 8% growth in our food and beverage business and $16 million of sales from the Lilly Pulitzer E. Commerce Flash sale that we did not hold in the second quarter last year.

Speaker 4: Adjusted gross margin was 64.3% compared to 64.6% last year. This slight decline was driven by increased e-commerce flash sales at Willie Poulter and a greater proportion of sales during Time Bahamas loyalty award card flipside and in the season clearance event.

Adjusted gross margin was 64, 3% compared to 64, 6% last year.

This slight decline was driven by increased ecommerce flash sales at Lilly Pulitzer and a greater proportion of sales during time, Bahamas loyalty reward card flip side into season clearance events, partially offset by the higher gross margin of Johnny was and reduced freight expense.

Scott Grassmire: Now I will turn the call over to Scott for more details on the quarter and the balance of the year. Scott, thank you Tom. This Tom mentioned we are pleased to report another strong quarter that is within our guidance range. In an uncertain microeconomic environment where the consumer has become more cautious or operating groups that secured very well going against direct consumer cost of 14% in the second quarter of 2022. Consolidated net sales for the second quarter of fiscal 2023 were 420 million which included 52 million of sales for Johnny was and increases in each operating group growing 16% above last year's second quarter net sales with 363 million.

Speaker 4: Parsely offset by the higher burst margin of Johnny was and reduced freighted space.

Speaker 4: Adjusted SG&A expenses were $202 million compared to $163 million last year.

Adjusted SG&A expenses were $202 million compared to $163 million last year.

Speaker 4: This quarter included 29 million of SG&A associated with the Johnny Was business, which we did not own in the prior year period.

This quarter included $29 million of SG&A associated with the Johnny was business, which we did not own in the prior year period.

There were also additional SG&A increases in our other business businesses for employment cost advertising cost barrels variable expenses and other expenses and we continue to invest in our businesses to fuel and support anticipated future growth.

Speaker 4: There were also additional SG&A increases in our other businesses for employment costs, advertising costs, variable expenses, and other expenses if we continue to invest in our businesses to fuel and support and anticipate future growth.

The result of all of this yielded $73 million of adjusted operating income.

Speaker 4: Result of all this yielded 73 million of adjusted operating income.

Speaker 4: for a 17% operating margin compared to $78 million in 2022. The $73 million of operating income included $7 million of operating income for Johnny Wise. The decrease in operating income reflects our planned SG&AD leveraging and the $2 million impact of lower royalty income from our licensing partners, notably in the furniture and home categories which saw a surge during the pandemic and subsequent recovery period.

Or a 17% operating margin compared to $78 million in 2022.

Scott Grassmire: In the aggregate Tommy Bahama, Lily Politzer and emerging brands had decreases of 3% in full price brick and mortar, 4% in full price e-commerce and 7% in wholesale sales. These declines were all set by 8% growth in our food and beverage business in 16 million of sales from the Lily Politzer e-commerce flash sale that we did not hold in the second quarter last year. Adjusted gross margin was 64.3% compared to 64.6% last year.

$73 million of operating income included $7 million of operating income for Johnny was the.

The decrease decrease in operating income reflects our planned SG&A deleveraging and the $2 million impact of lower royalty income from our licensing partners, notably in the furniture and home categories, which saw a surge during the pandemic and subsequent recovery period.

Moving beyond operating income.

Speaker 4: We incurred more interest and expense after having no debt in the second quarter last year and benefited from a lower effect of tax rate due to the favorable tax impact of stock awards testing during the quarter.

We incurred more interested expense after having no debt in the second quarter last year.

Scott Grassmire: This slight decline was driven by increased e-commerce flash sales at Lily Politzer and a greater proportion of sales during time Bahamas low to award court flip side in the season clearance events. Partially all set by the higher gross margin of Johnny was and reduced freight expense. Adjusted S.G.N.A, expenses were 202 million compared to 163 million last year. This quarter included 29 million of S.G.N.A, associated with the Johnny was business which we did not own in the prior year period.

<unk> benefited from a lower effective tax rate due to the favorable tax impact of stock awards vesting during the quarter.

Speaker 4: With all this switch ebbed, $3.45 of adjusted EPS towards the top end of our guidance range.

With all this we achieved $3 45 of adjusted EPS towards the top end of our guidance range.

I'll now move on to our balance move on to our balance sheet beginning with inventory.

Speaker 4: I'll now move on to our balance sheet, beginning with inventory.

Our inventories increased 14% or 28% year over year.

Speaker 4: Our inventory's increased 14% or 28% year-over-year on a 5-po basis, including 18 million of joining was inventory.

On a FIFO basis, including $18 million of shiny was inventory.

Scott Grassmire: There were also additional S.G.N.A, increases in our other businesses for employment cost, advertising cost, variable expenses, and other expenses that we continue to invest in our businesses to fuel and support into spade future growth. The result of all this yielded 73 million of adjusted operating income or a 17% operating margin compared to 78 million in 2022. The 73 million of operating income included 7 million of operating income for Johnny was. The decrease in operating income reflects our planned S.G.N.A.D, leveraging and the 2 million impact of lower royalty income from our licensing partners, notably in the furniture and home categories which saw a surge during the pandemic in subsequent recovery period.

Speaker 4: Excuse me the 14% increase in inventory is in line with their low double digit

Excuse me, 14% increase in inventories in line with our low double digit.

Plan.

Excuse me.

Speaker 4: Plan sales increase for 2023. So we we believe our inventory levels are appropriate to allow us to deliver on our forecast for the remainder of the year.

Planned sales increase for 2023.

So we believe our.

Inventory levels are appropriate to allow us to deliver on our forecast for the remainder of the year.

Speaker 4: We used our cash, cash equivalents and short-term investments on our balance sheet last year, as well as some borrowings under our evolving credit agreement to fund our acquisition to Johnny Wise. We finished the quarter with $48 million of borrowings under our evolving credit facility.

We used our cash cash equivalents and short term investments on our balance sheet last year.

As well as some borrowings under our revolving credit agreement to fund our acquisition of Johnny was we finished the quarter with 48 million of borrowings under our revolving credit facility.

Speaker 4: after having $119 million of borrowings at the beginning of the year, $153 million of cash flow from operations in the first half of fiscal 2023, compared to $91 million in the first half last year, allowed us to significantly reduce outstanding debt by $71 million during the first half, while also funding $31 million of capital expenditures, $21 million in dividends, and $19 million of share repurchases.

After having a $119 million of borrowings at the beginning of the year of $153 million of cash flow from operations in the first half of fiscal 2023 compared to $91 million in the first half last year.

Scott Grassmire: Moving beyond operating income we incurred more interest expense after having no debt in the second quarter last year and benefited from a lower effect of tax rate due to the favorable tax impact of stock awards testing during the quarter. With all this we achieved $3.45 of adjusted EPS towards the top end of our guidance range.

Allowed us to significantly reduced outstanding debt by $71 million during the first half while also funding $31 million of capital expenditures $21 million in dividends and $19 million of share repurchases.

Speaker 4: What we have spread strong cash flows for the back half of the year and anticipate repaying additional debt in the fourth quarter.

We expect strong cash flows for the back half of the year and anticipate repaying additional debt in the fourth quarter.

Scott Grassmire: Moving on to our balance sheet, beginning with inventory. Our inventory has increased 14% or 28% year every year on a 5.0 basis including 18 million of Johnny was inventory. The 14% increase in Imentoi's in line with our low double digit plant sales increase for 2023 so we believe our Imentoi levels are appropriate to allow us to deliver on our forecast for the remainder of the year. We used our cash, cash equivalence and short term investments on our balance sheet last year as well as some borrowings under our evolving credit agreement to fund our acquisition of Johnny was.

Speaker 4: I'll now spend some time on our Outlook for 2023. As Tom mentioned, we are moderating our full year view to reflect the impact of the Maui wildfires and a bit more cautious, caution being shown by the consumer early in the third quarter.

I will now spend some time on our outlook for 2023 as Tom mentioned, we are moderating our full year view to reflect the impact of the Maui wildfires and a bit more cautious caution being shown by the consumer early in the third quarter.

Speaker 4: For the full year, we now expect net sales to be between 1.57 billion and 1.6 billion, growth of 11% to 13% compared to sales of 1.41 billion in 2022. We plan to increase in sales in the 53 weeks.

For the full year, we now expect net sales to be between.

One $5 7 billion and $1 6 billion growth of 11% to 13% compared to sales of 141 billion in 2022.

The increase in sales in the 53 week two.

Speaker 4: 2023, includes the benefit of the full year of Johnny was as well as growth in our existing brands and the low single digit range to have been by our direct consumer businesses while wholesale sales in our existing businesses are expected to be comparable to 2022.

2023.

<unk> includes the benefit of the full year of Johnny was and as well as growth in our existing brands.

In the low single digit range, driven by our direct to consumer businesses, while wholesale sales in our existing businesses are expected to be comparable to 2022.

Scott Grassmire: We finished the quarter with 48 million of borrowings under our evolving credit facility after having 119 million of borrowings at the beginning of the year. 153 million of cash flow from operations in the first half of fiscal 2023 compared to 91 million in the first half last year. I allowed us to significantly reduce outstanding debt by 71 million during the first half while also funding 31 million of capital expenditures 21 million of dividends at 19 million of share repurchases. We have spread strong cash flows for the back half of the year and anticipate repaying additional debt in the fourth quarter.

We still anticipate modest gross margin expansion for the full year of 2023 with much of that improvement in the first and fourth quarters.

Speaker 4: We still anticipate modest gross margin at expansion for the full year of 2023 with much of that improvement in the first and fourth quarter.

Speaker 4: The higher sales and modestly higher gross margins are expected to be all set by increased S.G.NA, which is expected to grow at a rate higher than sales in each quarter of 2020.

Sales and modestly higher gross margins are expected to be offset by increased SG&A, which is expected to grow at a rate higher than sales in each quarter of 2023.

Speaker 4: as we continue to invest in our businesses as Tom outlined earlier. While we don't want to back off on expense investments that help build for the future, we are redoubling our efforts to scrub the income statement and prudently trim expenses where appropriate.

As we continue to invest in our businesses as Tom outlined earlier.

We don't want to back off on expense investments that help build for the future. We are redoubling, our efforts to scrub the income statement and prudently trim expenses where appropriate.

Speaker 4: We also expect royalty income for the year to be lower, with the second half being comparable to the prior year.

We also expect royalty income for the year to be lower with the second half being comparable to the prior year.

Scott Grassmire: Our now spend some time on our outlook for 2023. As Tom mentioned, we are moderating our full year view to reflect the impact of the Maui wildfires and a bit more cautious, caution being shown by the consumer early in the third quarter. For the full year, we now expect net sales to be between 1.57 billion and 1.6 billion growth of 11 percent to 13 percent compared to sales of 1.41 billion in 2022.

Speaker 4: Considering all these items, we expect that operating margin will decrease from 2022 levels to a percentage of between 14 and 14 and a half percent of spells. Additionally, we anticipate higher interest expense at 5 million for the year after incurring almost 4 million of interest expense in the first half. This compares to 3 million of interest expense in the full year of 2022 when we had no debt outstanding until the third quarter.

During all of these items, we expect that operating margin will decrease from 2022 levels to a percentage of between 14 and 14, 5% of sales. Additionally, we anticipate higher interest expense at $5 million for the year. After a current almost $4 million of interest expense in the first half <unk>.

<unk> 3 million of interest expense and the full year of 2022.

Scott Grassmire: The plan to increase in sales in the 53-week 2023 includes the benefit of the full year of Johnny was as well as growth in our existing brands. In the low single-digit range, driven by our direct consumer businesses, while wholesale sales in our existing businesses are expected to be comparable to 2022. We still anticipate modest growth margin at expansion for the full year of 2023 with much of that improvement in the first in fourth quarters.

When we had no debt outstanding until the third quarter.

Speaker 4: We also expect a higher effective tax rate of approximately 24% compared to 23% in 2022.

We also expect a higher effective tax rate of approximately 24% compared to 23% in 2022.

Speaker 4: After considering these items, 2023 adjusted EPS is now expected to be between $10.30 and $10.60 versus the adjusted EPS of $10.88 last year, with the inclusion of a full year profit from Johnny was being offset by lower off-running income and resisting businesses, the increased effect of tax rate and higher interest expense.

After considering these items 2023, adjusted EPS is now expected to be between $10 30, and $10 60.

Versus adjusted EPS of $10 88 last year with the inclusion of a full year of profit from Johnny was being offset by lower operating income in our existing businesses the increased effective tax rate and higher interest expense.

Scott Grassmire: The higher sales and modestly higher growth margins are expected to be all set by increased SQNA, which is expected to grow at a rate higher than sales in each quarter of 2023. As we continue to invest in our businesses as Tom outlined earlier. While we don't want to back off on its expense investments that help build for the future, we are redoubling our efforts to scrub the income statement, improving the trim of expenses where appropriate.

Speaker 4: Further we'd expect pressure on our second half performance as we rehabilitate our business from Maui where our brands generated nearly 30 million of cells in 2022. Of our six locations on the island, only the wildway at Tommy Bahamas store in restaurant and Johnny was store, remain open, but was significantly reduced traffic. Our Lahaina Marlin-Boral location was a total loss.

Further we expect pressure on our second half performance as we have built our business on Maui, where our brands generated nearly $30 million of sales in 2022 of our six locations on the island only that Huawei at Tommy Bahama store and restaurant and Johnny was store remain.

The open but with significantly reduced traffic are behind the Marlin bar location was a total loss while the reopening path in results after reopening for our three stores in the whaler village Center remains uncertain.

Scott Grassmire: We also expect royalty income for the year to be lower with the second half being comparable to the prior year. Considering all these items, we expect that operating margin will decrease from 2022 levels to a percentage of between 14 and 14.5 percent of sales. Additionally, we anticipate higher interest expense at 5 million for the year after incurring almost 4 million of interest expense in the first half. This compares to 3 million of interest expense in the full year of 2022 when we had no debt outstanding until the third quarter.

Speaker 4: While the reopening path and results after reopening for our 3 stores in the village center remains uncertain. We expected net effect of this is a negative impact approximately 10 cents per share on both the 3rd and 4th quarter. Rel defects is expected in the end of this class.

We expect a net effect of this has a negative impact of approximately <unk> <unk> per share on both the third and fourth quarter or <unk> 20 for the second half.

Speaker 4: In the third quarter of 2023, we expect sales of 335 million compared to sales of 313 million in the third quarter of 2022. In the third quarter of 2023, we expect higher sales.

In the third quarter of 2023, we expect sales of $320 million to $335 million compared to sales of $313 million in the third quarter of 2022 in the third quarter of 2023, we expect higher sales.

Scott Grassmire: We also expect a higher effect of tax rate of approximately 24% compared to 23% in 2022. After considering these items, 2023 adjusted EPS is now expected to be between $10.30 and $10.60 versus adjusted EPS of $10.88 last year with the inclusion of a full year profit from Johnny was being all set by lower off running income and resisting businesses being increased effective tax rate and higher interest expense. Further we expect pressure on our second half performance as we rehabilitate our business from Maui where our brands generated nearly 30 million of sales in 2022.

Speaker 4: as this year includes a full quarter of Johnny Was after Q3. Last year only included half a quarter of operations after the September 2022 acquisition. Partially offset by lower, respected sales and our other businesses after we generated 12% comps in the third quarter last year. We also anticipate comparable gross margin to last year's third quarter and continued SG&AD leveraging.

As this year includes a full quarter of Johnny was after Q3 last year only included half a quarter of operations. After the September 2022 acquisition, partially offset by lower expected sales in our other businesses. After we generated 12% comps in the third quarter of last year.

Also anticipate comparable gross margin to last year's third quarter and continued SG&A deleveraging.

We expect this to result in third quarter adjusted EPS of between <unk> 90.

Speaker 4: We have spent this to result in third quarter just the PS of between 90 cents and a dollar and 10 cents compared to a dollar and 46 cents in the third quarter of 2022. The lower year over year EPS, expectation of the quarter is apparently early driven by increased strina investments. It has a larger impact on our operating income and our smallest sales quarter of the year. And by the impact of the situation in Maui.

And a $1 10.

Compared to a $1 46 in the third quarter of 2022, the lower year over year EPS expectations in the quarter as parent really driven by increased SG&A investments.

Scott Grassmire: Of our six locations on the island, only the Waleia Tommy Bahamas store and restaurant in Johnny was store remain open but was significantly reduced traffic. Our Lahaina Marlin Bar location was a total loss while the reopening path and results after reopening for our three stores in the Wailer Village Center remains uncertain. We expected net effect of this is a negative impact of approximately 10 cents per share on both the third and fourth quarter or 20 cents for the second half.

It has a larger impact on our operating income in our smallest sales quarter of the year and by the impact of the situation in Maui.

In the fourth quarter, we expect increased sales due in part to the additional week in the quarter with otherwise comparable sales year over year after generating 9% comps in Q4 of 2022.

Speaker 4: In the fourth quarter, with respect, increased sales, doing part to the additional week in the quarter, with otherwise comparable sales year every year, after generating 9% comps in Q4 of 2022.

Modestly higher gross margins as the fourth quarter of 2022.

Speaker 4: Modestly, higher gross margins as the fourth quarter of 2022 included certain inventory markdowns in the emerging brands businesses and modest SG&A de-leveraging as SG&A increases at a higher rate than sales. Also, with respect to interest expense in the fourth quarter to be lower than interest expense in the fourth quarter last year, due to our significant reduction in debt during 2023.

Included certain inventory markdowns and the emerging brands businesses and modest SG&A deleveraging as SG&A increases at a higher rate than sales also we expect interest expense in the fourth quarter to be lower than interest expense in the fourth quarter of last year due to a significant reduction in debt during 2023.

Scott Grassmire: In the third quarter of 2023, we expect sales of 320 to 335 million compared to sales of 313 million in the third quarter of 2022. In the third quarter of 2023, we expect higher sales as this year includes a full quarter of Johnny was after Q3 last year only included half a quarter of operations after the September 2022 acquisition. Partially, I'll set by lower respective sales in our other businesses after we generated 12% comps in the third quarter last year.

Scott Grassmire: We also anticipate comparable gross margin to last year's third quarter and continued SGAD leveraging. We expect this to result in third quarter just the PES of between 90 cents and a dollar and 10 cents compared to a dollar and 46 cents in the third quarter of 2022. The lower year over year EPS, expectation of the quarter is apparently driven by increased SGNA investments, which has a larger impact on our operating income and our smallest sales quarter of the year and by the impact of the situation in Maui.

Speaker 4: and a higher effect of tax rate as the fourth quarter 2022 included certain favorable items that are not expected to repeat in the fourth quarter of the current year.

And a higher effective tax rate as the fourth quarter of 2022 included certain favorable items that are not expected to repeat in the fourth quarter of the current year.

Capital expenditures in 2023 are expected to be approximately $90 million compared to $47 million in 2022, as we mentioned last quarter. The planned capex increases includes spend associated with brick and mortar locations, including buildout associated with approximately 35 locations across all brands.

Speaker 4: Tapal expenditures in 2023 are expected to be approximately 90 million compared to 47 million in 2022. As we mentioned last quarter, the plan cat-x increases include spend associated with brick and mortar locations, including build out associated with approximately 35 locations across all brands, including three Maulen bars and about 10 new Johnny Was locations.

Including three Marlin bars in about 10, new Johnny was locations a number of these are relocations and remodels, which along with a few store closures should result in a net increase of full price stores of about 25 by the end of the year with approximately nine net new locations in both the third.

Speaker 4: A number of these are relocations and remodels, which along with a few store closures, should result in a net increase of full price stores of about 25 by the end of the year, with approximately nine new locations in both the third and fourth quarters. They spend associated with these brick and mortar locations represent about one half of the planned capital expenditure amounts for 2023.

Third and fourth quarters.

Scott Grassmire: In the fourth quarter, we expect increased sales due in part to the additional week in the quarter with otherwise comparable sales year every year after generating 9% comps in Q4 of 2022. Modestly higher gross margins as the fourth quarter of 2022 included certain inventory markdowns and emerging brand businesses and modest SGNA D leveraging as SGNA increases at a higher rate than sales. Also we expect interest expense in the fourth quarter to be lower than interest expense in the fourth quarter last year due to our significant reduction in debt during 2023 and a higher effect of tax rate as the fourth quarter 2022 included certain favorable items that are not expected to repeat in the fourth quarter of the current year.

Spend associated with east brick and mortar locations represent about one half of the planned capital expenditure amounts for 2023.

Additionally, we will also continue.

Speaker 4: Additionally, we will also continue with our investments in our various technology systems and initial loops. Finally, we anticipate initial spin associated with a multi-year project across a fulfillment network in the southeastern U.S.

Continue with our investments in our various technology systems initiatives finally, we anticipate.

Initial spend associated with a multi year project across our fulfillment network in the southeastern U S.

Speaker 4: to enhance direct consumer throughput capabilities for brands. We continue to have a very positive outlook on our cash and liquidity position as well. After generating cash flow from operations of 126 million in 2022, which included a working capital increase of 85 million.

Enhanced direct to consumer throughput capabilities for our brands.

We continue to have a very positive outlook on our cash and liquidity position as well after generating cash flow from operations of $126 million in 2022, which included a working capital increase of $85 million, we expect to increase our cash flow from operations significantly to a level in excess of $200 million.

Speaker 4: We expect to increase our cash flow from operations significantly to a level in excess of $200 million in 2023. This level of positive cash flow from operations provides ample cash flow to fund our plan 2023 capital expenditures. Payment of dividends at the

Scott Grassmire: Capital of Spendishers in 2023 are expected to be approximately $90 million compared to $47 million in 2022. As we mentioned last quarter, the Plan Path X increases include spend associated with brick and mortar locations, including build out associated with approximately 35 locations across all brands, including three smaller bars and about 10 new Johnny West locations. A number of these are relocations and remodels, which along with a few store closures, should result in a net increase of full price stores of about 25 by the end of the year, with approximately nine net new locations in both the third and fourth quarters.

<unk> 2023, this level of positive cash flow from operations provides ample cash flow to fund our planned 2023 capital expenditures payment of dividends at the current rate $20 million of recently completed share repurchases and the continued reduction of our outstanding debt during the year.

Scott Grassmire: They spend associated with these brick and mortar locations represent about one half of the plan half of expenditure amounts for 2023. Additionally, we will also continue with our investments in our various technology systems initiatives. Finally, we anticipate initial spend associated with a multi-year project across or fulfillment network in the southeastern U.S, to enhance direct consumer throughput capability.

Speaker 4: 20 million have recently completed share repurchases and the continued reduction of our outstanding debt during the year.

Speaker 4: Although Estonian investments will put pressure on 2023 margins, these actions set the table well for mid to upper single digit top line growth and long-term operating margin target as or above 15%. Thank you for your time today, and now we return the call over for questions. Doug?

The SG&A investments will put pressure on 2023 margins. These actions set the table well for mid to upper single digit top line growth and long term operating margin target at or above 15%.

Thank you for your time today and now we turn the call over for questions Doug.

Speaker 1: Thank you. Ladies and gentlemen, at this time, we will begin by asking a question and answer such.

Thank you ladies and gentlemen at this time, we'll be conducting a question and answer session. If.

Speaker 1: If you'd like to ask a question, you may press star one on your telephone keypad. A confirmation tunnel indicate your line is in the question queue. You may press star two if you would like to...

If you'd like to ask a question you May press star one on your telephone keypad a.

A confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the Q4.

Speaker 1: for a participant using speaker equipment. It may be necessary to pick up your hands set before pressing the start.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Speaker 1: Our first question comes from the line of Edward Yeruma with Piper Sandler. Please continue with your question.

Our first question comes from the line of Edward <unk> with Piper Sandler. Please proceed with your question.

Scott Grassmire: We continue to have a very positive outlook on our cash and liquidity position as well. After generating cash flow from operations of $126 million in 2022, which included a working capital increase of $85 million, we expect to increase our cash flow from operations significantly to a level in excess of $200 million in 2023. This level of positive cash flow from operations provides ample cash flow to fund our plan 2023 capital expenditures, payment of dividends at the current rate, $20 million of recently completed share repurchases, and the continued reduction of our outstanding debt during the year. Although Estonia Investments will put pressure on 2023 margins, these actions set the table well for mid to upper single digit top line growth and long-term operating margin target at or above 15%.

Speaker 5: Hey, good afternoon, guys. Thanks for taking the question. And our thoughts are for all of your colleagues in.

Hey, good afternoon, guys. Thanks for taking the question and our thoughts are for all of your colleague.

Speaker 5: I guess a couple quick ones from me. You guys have added quite a few new customers to the Tommy Bahama customer file really over the past couple of years. I do think about kind of retaining some of those customers. I guess kind of maybe talk about trends that you've seen and maybe tie that back to sort of like comments around the promotional environment. And then as a follow up, just maybe any insight on the organic growth rate that Johnny was and how the business is performing would be appreciated. Thank you.

Yes.

A couple of quick ones from me first.

<unk> added quite a few new customers to the Tommy Bahama customer file over the past couple of years as you think about kind of retaining some of those customers I guess kind of when you talk about trends that you've seen and maybe tie that back on the comments around the promotional environment.

And then as a follow up just maybe any insight on the organic growth rate and Johnny wise and how the business is performing would be appreciated. Thank you.

Okay. Thank you Ed and thanks for your comments regarding Maui, we know that you know what a special place that is in it is that.

Speaker 3: Okay, thank you Ed and thanks for your comments regarding Maui. We know that you know what a special place that is and it is a tough situation for sure.

Tough situation for sure.

So we appreciate the thoughts on the customers at Tommy Bahama I would say what we're seeing.

There is really what we're seeing fundamentally across the brands and I think this is.

Unknown Executive: Thank you for your time today, and now we return the call over for questions. Doug? Thank you.

Speaker 3: consistent with what's going on in the market. What is that? Traffic remains good. Interest in the brand is good. Our customer count is growing. Our new customer ad rate is growing. The issue is really young conversion. And we would attribute that as we said during the comment.

Consistent with what's going on in the market place is that.

Unknown Executive: Ladies and gentlemen, at this time, we will be inducting a question and answer your session. If you'd like to ask a question, you may press star one on your telephone keypad. A confirmation tunnel indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing a star key.

Traffic remains good interest in the brand is good our customer count is growing our new customer AD is growing the issue is really on conversion.

And we would attribute that as we said during the comments.

Speaker 3: to lower or to more cost as consumer of that.

Two lower.

More cautious consumer that's I believe.

Edward Yruma: Our first question comes from the line of Edward Yoruma with Piper Sandler. Please continue with your question. Hey, good afternoon guys. Thanks for taking the question, and our thoughts are for all of your colleagues in Maui. I guess a couple of quick ones from me. First, you guys have added quite a few new customers to the Tommy Bahama customer file, really over the past couple of years. As you think about kind of retaining some of those customers, I guess kind of maybe talking about trends that you've seen and maybe tied that back to some of the comments around the promotional environment.

Speaker 3: I believe, you know, part of it is being worried about the, you know, about where the economy is going in the actions of a Fed and interest rates and all that. And then I do think the other factor is that

Part of it is being worried about.

Yes.

You know about where the economy is going and the actions of the fed interest rates and all of that.

And then I do think the other factor, that's making customers being more.

Speaker 3: making customers be more selective in the buying and the amount of promotional activity in the market place. That does seem to be updating a bit through the spring in the early part of the summer. It was at very elevated levels and that part does seem to be correcting a bit, but I think there's

Selective and they're buying is the amount of promotional activity in the marketplace.

It does seem to be abating, a bit through the spring and the early part of the summer it was buried.

Edward Yruma: And then as a follow-up, just maybe any insight on the organic growth rate that Johnny was and how the businesses performing would be appreciated. Thank you. Okay. Thank you, Ed. Thanks for your comments regarding Maui. We know that you know what a special place that is and it is a tough situation for sure. So we appreciate the thoughts on the customers at Tommy Bahama. I would say what we're seeing there is really what we're seeing fundamentally across the brands.

Debt levels in that part does seem to be correcting a bit but I think there is some overhang.

Speaker 3: some overhang from the economy, but weighing on the consumer a bit.

From.

From the economy.

Weighing on the consumer a bit.

Speaker 3: And then in terms of Donnie was, I would say that there's the same thing. They're experiencing some organic growth challenges themselves. They're not any different than what we're seeing in the other brands. And it's really the same.

And then in terms of Donny was I would say that there is a those same thing.

They are experiencing some organic growth challenges themselves or not.

Edward Yruma: And I think this is consistent with what's going on in the marketplace is that traffic remains good. Interest in the brand is good. Our customer count is growing. Our new customer ad rate is growing. The issue is really young conversion. And we would attribute that as we said during the comments to a lower or to more cost as consumer that I believe, you know, part of it is being worried about the, you know, about where the economy is going in the actions of a pet and interest rates and all that.

Any different.

We are seeing in the other brands and it's really the same same setup.

Speaker 3: Og if I get this?, it'd be because it themselves doesn't have a trach. brick. it. I'm going to set that work there.

Drivers at work there.

Speaker 6: Yeah, and they are, you remember they have a very heavy California business in California. Was really difficult, you know, both the first quarter and part of the second quarter for sure. So that's been a particular challenge, you know.

Yes.

Remember they are.

Very heavy California business in California.

It was really difficult.

Both the first quarter and part of the second quarter for sure.

So that's been a particular challenge that Tony was.

Speaker 3: But we remain super excited about having them be part of our portfolio. They did have, you know, they delivered $7.2 million. I think it was of operating profit.

We remain super excited about having them be part of our portfolio.

They did have.

<unk> delivered $7 $2 million I think it was of operating profit, which translates to 34 cents a share for the quarter I think they were at a.

Speaker 3: which translates to 34 cents a share for the quarter. I think they were at a 14 to operating margin, which is lower than where we think they can and will be were very confident of that, but it's still, you know, it's a respectable operating margin.

Edward Yruma: And then I do think the other factor that's making customers be more selective in the buying and the amount of promotional activity in the marketplace. That does seem to be updating a bit through the spring in the early part of the summer. It was at very elevated levels. And that part does seem to be correcting a bit, but I think there's some overhang from the economy that's weighing on the consumer a bit.

14 to operating margin, which is lower than where we think they.

Can and will be we're very confident of that but it's still a respectable operating margins and the focus this year Ed as you know in Germany was has been very much about onboarding them onto our platform.

Speaker 3: And the focus this year at, as you know, in John Lundz, has been very much about onboarding them onto our platform, setting them up the way that we like to run our brands, which is not 180 degrees different than the way they were running under private equity ownership.

Setting them up the way that we like to run our brands, which is not a 180 degrees different than the way they were running under private equity ownership, but it is a little bit. So we view this as the baseline year.

Edward Yruma: And then in terms of Johnny was, I would say that there's the same thing there, you know, they're experiencing some organic growth challenges themselves, they're not any different that what we're seeing in the other brands. And it's really the same same set of drivers at work there. Yeah, and they, you remember, they have a very heavy California business in California was really difficult, you know, both the first quarter and a part of the second quarter, for sure, so that that's been a particular challenge that Johnny was.

Speaker 3: But it is a little bit, so we view this as the base line here.

Speaker 3: We very feel very strongly and confident that we can grow both top line and expand the upper hand more, clapping Water please!

Feel very strongly and confidently that we can grow both top.

Hotline and expand operating margin and Johnny was.

Speaker 3: going forward. And one of those activities, as we outlined on the call, that we've been working on this year is bringing among the Lily Pulitzer sort of back end, if you will, for e-commerce. Johnny was has a nice e-commerce.

Going forward and one of those activities as we outlined on the call that we've been working on this year.

Bringing him on the Lilly Pulitzer sort of back end, if you will.

For E Commerce, Johnny was has a nice e-commerce.

Speaker 3: business and when you land on the landing page, it's a beautiful website, but the shop ability of it is just not great and we're convinced that that's causing us to lead money on the table, which when we get alive on the new, really website, we think will be a big enhancement for the business.

Business and when you land on the landing page.

Edward Yruma: But we remain super excited about having them be part of our portfolio. They did have, you know, they delivered $7.2 million. I think it was of operating profit, which translates to 34 cents a share for the quarter. I think they were at a 14 to operating margin, which is lower than where we think they can and will be. We're very confident of that, but it's still, you know, it's a respectable operating margin.

Beautiful website, but the shop ability of it is just not grade and we're convinced that that's causing us to leave money on the table, which when we go live on the <unk>.

New.

<unk> website, we think will be.

Big enhancement.

Yes.

Still very excited about Johnny was and what it can contribute this year and going forward.

Speaker 3: still very excited about John and what it can contribute this year and going forward.

Thank you very much.

Thank you Ed.

Edward Yruma: And the focus this year at is, you know, and Johnny was has been very much about onboarding them onto our platform, setting them up the way that we like to run our brands, which is not 180 degrees different than the way they were running under private equity ownership.

Our next question comes from the line of Noah is that skin with Keybanc. Please proceed with your question.

Speaker 1: Our next question comes on the line of Noah Zatzkin with Keybank. Please proceed with your question.

Hi, Thanks for taking my question I guess first just hoping you could provide any color on kind of the monthly cadence of sales through the quarter.

Speaker 7: Hi, thanks for taking my questions. I guess first, just hoping you could provide any color on kind of the monthly cadence of sales moving through the quarter and then the exit rate, leaving the second quarter. And then secondly, just wondering how you're feeling about the inventory position and then any color on plan adjustments to their promotional calendar through the bounce of the year would be helpful. Thanks.

Then the exit rate.

Leaving the second quarter.

Thomas Chubb: But it is a little bit so we view this as the baseline year. We very feel very strongly and constantly that we can grow both top line and expand the operating margin and Johnny was going forward. And one of those activities, as we outlined on the call that we've been working on this year, is bringing them on the Lily Pulitzer sort of backend, if you will, for e-commerce. Johnny was has an icy commerce business and when you land on the landing page, it's a beautiful website, but the shop ability of it is just not great and we're convinced that that's causing us to lead money on the table, which when we get alive on the new Lily website, we think will be a big enhancement for the business. And still very excited about John was and what it can contribute this year and going forward. Thank you very much. Thank you, Ed.

And then secondly, just just wondering how youre feeling about the inventory position and then any color on planned adjustments to their promotional calendar through the balance of the year would be helpful. Thanks.

Okay. Thank you thanks for being on the call today, so through the second quarter.

Speaker 3: Okay, thank you Noah. Thanks for being on the call today. So through the second quarter, June was a, what I would call a wobbly month. It got a little better later in the month and sort of a wobbly month, but July actually ended up being a good month. It was pretty strong. And then as we commented in the prepared remarks.

June was a what I would call it wildly months that got a little better later in the month.

Sort of a wildly month, but July actually ended up being a good month it was pretty strong.

And then as we commented in the prepared remarks early August has been up.

Speaker 3: early August has been a bit soft. It's not like the bottom's dropping out or anything like that, but it has been soft as we saw during some of the first quarter months.

Bit soft, it's not like the bottoms dropping out or anything like that.

But it has been soft as we saw during some of the first quarter months as well and the sum of all these things now as convinced as we said on the call that the consumer is in a more <unk>.

Speaker 3: as well and you know the some of all these things know as convinced us as we said on the call that the consumer is in a more cautious shopping mindset that the

Cautious.

Stopping.

Mindset at this point and accordingly, we have moderated our guidance a little bit for the rest of the year in terms of inventory I'm going to let Scott.

Speaker 3: And accordingly, we have moderated our guidance a little bit for the rest of the year. In terms of inventory, I'm gonna let Scott comment on that in more detail, but we feel great about where inventory is. We think we're in a good spot. Yeah, we did, we do. We're up 14% on a 5.0 basis on inventory year every year, but we...

Noah Zatzkin: Our next question comes on the line of Noah Zaskin with Keybank. Please just here with your question. Hi, thanks for taking my question. I guess first just hoping you could provide any color on kind of the monthly cadence of sales moving through the quarter and then the exit rate, leaving the second quarter. And then secondly, just just wondering how you're feeling about the inventory position and then any color on plan adjustments to their promotional calendar through the bounce of the year would be helpful. Thanks. Okay, thank you Noah. Thanks for being on the call today.

Comment on that in more detail, but we feel great about where inventory is we think we're in a good spot. Yes. We did we do were up 14% on a FIFO basis on inventory year over year, but.

We.

Speaker 4: you know, with the addition Johnny was, with the sales growth we have. And also last year we were building inventory still, trying to kind of get inventory back to appropriate levels. It was really Q3 and Q4 before we really felt we got inventory back to where it needed to be. So I think by the end of the year, we should be much closer to flat and maybe even a little down year over year. So we feel good about where we are.

With addition, Johnny was with the sales growth we have and also last year. We were building inventories still trying to kind of get them and toy box back to appropriate levels. It was really Q3 and Q4 before we really felt we got inventory back to where it needed to be.

Thomas Chubb: So through the second quarter, June was a what I would call a wobbly month. It got a little better later in the month and sort of a wobbly month, but July actually ended up being a good month. It was pretty strong. And then as we commented in the in the prepared remarks early August has been a bit soft. It's not like the bottoms dropping out or anything like that. But it has been soft as we saw during some of the first quarter months as well.

Starting by the end of the year.

We should be much closer to flat and maybe even a little down year over year. So we feel so good about where we are there.

Speaker 3: And then in terms of plan changes to the promotional environment, I would say that in Lillipilates or in particular as we've done all year, it's not really that we're doing more promotions, we're just mixing them up a bit. As you saw with the, we had a couple of events this year that we didn't have last year, but we've also eliminated.

And then in terms of planned changes to the promotional environment I would say that in literally pellets are in particular as we've done all year, it's not really that we're doing more promotions were just mixing them up.

As you saw with the we.

We had a couple of events. This year that we didn't have last year, but we've also eliminated some in Tommy Bahama I think it will be really very very similar to what.

Thomas Chubb: And you know the some of all these things. Now it's convinced us as we said on the call that the consumer is in a more cautious shopping. You know mine said at this point and accordingly we have moderated our our guidance a little bit for the rest of the year.

Speaker 3: Some in Tommy Bahama, I think it will be really very very similar to what we did last year.

What we did last year.

Sure.

Thank you.

Our next question comes from the line of Merck Serono with UBS. Please proceed with your question.

Speaker 1: Our next question comes from a line of Mauricio Serna with UBS. Please proceed with your question.

Scott Grassmire: In terms of inventory, I'm going to let Scott comment on that in more detail. But we feel great about where inventory is. We think we're in a good spot. Yeah, we did we do. We're up 14% of on a 500 basis on inventory year every year. But you know, we, you know, with the dish and Johnny was with the sales goods we have. And also last year, we were building inventory still trying to kind of get him in toy backs to back to appropriate levels.

Great. Good afternoon, and thanks for taking my question just wanted maybe to delve in more detail.

Speaker 2: Great, good afternoon and thanks for taking my question. Just wanted it maybe to go a bit more detail about what caused the company to lower the sales outlook. I know like, you know.

But at what cost.

The company to nowhere the sales outlook I know like.

Previously you talked about.

Speaker 2: previously talked about this in the earnings call and the previous earnings call that you know, we have sense more caution from consumers, just trying to understand like

In the earnings call in the previous earnings call that we had.

Hence more caution from consumers.

I'm trying to understand.

Speaker 2: Is this, and considering that, you know, that the sales and got an EPS came within your expectations, you know, if this was something that really happens. Post quarter or it's just like baking more conservative because, you know, if there's still a lot of uncertainty. And then maybe if you could elaborate more about like your so far like.

It did.

And considering that the sales and got an EPS came within your expectation.

Scott Grassmire: It was really Q3 and Q4 before we really felt we got inventory back to where it needed to be. So I think by the end of the year, you know, we should be much closer to flat and maybe even a little down year over year. So we feel it felt good about where we are, there. And then in terms of playing changes to the promotional environment, I would say that in Lily Pulitzer in particular, as we've done all year, it's not really that we're doing more promotions, we're just mixing them up a bit.

This was something that really happen post quarter.

It's just like banking market in San Francisco.

There's still a lot of uncertainty and then maybe if you could.

More about like your so far right.

Speaker 2: You know, big picture lessons learned from, you know, Johnny Wath, and how you see that, the growth from the brand, you know, going forward. Thank you.

Big picture lessons learned from Johnny why and how you see that the growth on the brand going forward. Thank you.

Okay. So.

Speaker 3: Okay, so I think and thank you for the question, Mauricio, and thank you for being all on that on the guidance.

And thank you for the question Mauricio and thank you for being on but on the guidance.

Scott Grassmire: As you saw, we had a couple of events this year that we didn't have last year, but we've also eliminated some in Tommy Bahama, I think it will be really very, very similar to what we did last year.

Speaker 3: I think we've covered that reasonably thoroughly, but again, I think the issue is just a realization and a belief on our part that the consumer is in fact a bit more cautious. And early in the year, I'm not sure we really saw that at all as the years progressed.

I think we covered that reasonably thoroughly.

I think the issue is just a realized station and a belief on our part.

Consumer is in fact, a bit more cautious.

Early in the year I'm not sure we really saw that at all as the year has progressed and especially as we got into August I think we just have.

Unknown Executive: Thank you.

Speaker 3: And especially as we got into August , I think we just had...

Mauricio Vega: Our next question comes from the line of Mauricio Serna with UBS, please proceed with your question. Great, good afternoon and thanks for taking my question. Just want it maybe to get a little bit more detail about what caused the company to lower the sales outlook. I know like previously talked about this in the earnings call, and the previous earnings call that we have sent more caution from consumers. Just try and understand, considering that the sales and EPS came within your expectations, if this was something that really happened, post-quarter, or it's just baking more conservatively because there's still a lot of uncertainty, and then maybe if you could elaborate more about your, so far, big picture lessons learned from Johnny Was, and how you see that, the growth from the brand going forward.

Speaker 3: Pretty strong evidence. It's hard to know exactly what's going on in the

Pretty strong evidence that it's hard to know exactly what's going on in the consumer's mind, but theyre just being a little bit more careful about when they spend again interest in the brand remains very high our traffic looks really good.

Speaker 3: consumers mind, but that they're just being a little bit more careful about when they spend again interest in the brand remains very high or traffic looks really good When they do spend as reflected in our average order values and our Abert annual spend that actually you're spending the same or even a little bit more than they did

When they do spend is reflected in our average order values and our average annual spend actually you're spending the same or even a little bit more than they did.

Speaker 3: Last year, but the conversion rate is lower.

Last year, but the conversion rate is lower and more of it happening during promotional time periods and when you look at all of that together that tells us that you have.

Speaker 3: and more of it happening during promotional time period.

Speaker 3: And when you look at all that together, that tells us that you have a consumer that's just being a little more careful about how they're spending their discretionary dollars. But we feel very good about the health of our brands and our position in the marketplace, our cash flow.

Consumer that's just being a little more careful about how they are spending their discretionary.

But we feel very good about our health of our brands and our.

<unk> position in the marketplace, our cash flow.

Mauricio Vega: Thank you. Okay, so I think, and thank you for the question, Mauricio, and thank you for being all on, but on the guidance. I think we've covered that reasonably thoroughly, but again, I think the issue is just a realization and a belief on our part, that the consumer is, in fact, a bit more cautious, and early in the year, I'm not sure we really saw that at all, as the years progressed, and especially as we got into August, I think we just have pretty strong evidence.

Speaker 3: we outline Mauricio is just outstanding. It's going to be fantastic for the year, over 200 million dollars and we're investing that money.

<unk> <unk> was just outstanding it's going to be fantastic for the year over $200 million and we're investing that money.

Speaker 3: We kind of done it all in the last 12 months acquisition, stock repurchases.

We kind of done it all in the last 12 months the acquisition stock repurchases.

Speaker 3: dividends, cat-backs, I mean, we're kind of hidden checking all the boxes.

Dividends Capex, I mean, where.

We're kind of hidden.

All of the boxes, if you will.

Speaker 3: And then lessons learned from Johnny was, I think every acquisition we do. As you know, Mauricio, I believe all six of the brands that we have in our company, every bit of our company is something that we acquired in the last.

And then lessons learned from Johnny was Hudson every acquisition, we do.

As you know Mauricio I believe all six of the brands that we have in our company to every bit about company is something that we acquired in the last.

Mauricio Vega: It's hard to know exactly what's going on in the consumer's mind, but that they're just being a little bit more careful about when they stand. Again, interest in the brand remains very high, our traffic looks really good. When they do spend, as reflected in our average order values and our average annual spend, they actually are spending the same, or even a little bit more than they did last year, but the conversion rate is lower, and more of it's happening during promotional time periods, and when you look at all that together, that tells us that you have a consumer that's just being a little more careful about how they're spending their discretionary dollars, but we feel very good about the health of our brands and our position in the marketplace, our cash flow.

Speaker 3: 20 years and I think we get better and better with each acquisition and how we do it.

20 years, and I think we get better and better with each acquisition, how we do it.

Speaker 3: In an example of that, I would point to and Johnny was is

And an example of that I would point to and Johnny was.

Speaker 3: you know, moving, I know it made from the outside not feel super quick, but it was actually pretty quickly to go ahead and get them on a much better website, which will have done hopefully quite soon, but certainly.

Moving.

Maybe from the outside not feel Super quick, but it was actually pretty quickly to go ahead and get them on a much better website, which will have done.

Hopefully quite soon but certainly.

Speaker 3: this year. So we always learn little things and one of the things is to to move as quickly as he can and I think we're doing that in Johnny was and as I mentioned earlier

This year, so we always learn little things and one of the things.

To move as quickly as we can and I think we're doing that and Johnny wells and as I mentioned earlier.

We believe very strongly that this is a brand that continues to grow and <unk>.

Speaker 3: believe very strongly that this is a brand that continues to grow and expand operating margins as we move forward. And it's already contributing.

Mauricio Vega: As we outline Mauricio, it's just outstanding, it's going to be fantastic for the year, over $200 million, and we're investing that money. We've kind of done it all in the last 12 months acquisition, stock repurchases, dividends, cap acts, we're kind of hidden checking all the boxes, if you will. And then lessons learned from Johnny was, I think every acquisition we do, is you know Mauricio, I believe all six of the brands that we have in our company every bit of our company is something that we acquired in the last 20 years, and I think we get better and better with each acquisition of how we do it.

Expand the operating margin as we move forward and it's already it's already contributing.

Speaker 3: added 34 cents to EPS in this quarter, which, you know, we're quite happy to have.

Added 34 cents to EPS in this quarter, which were quite happy to happen.

Speaker 4: One of them, Rachel, on the top line, but the top and bottom line is the Maui situation that we talked about, so it's...

One of the same resale on.

Topline, both top and bottom line as the Maui situation that we talked about.

Speaker 4: You know, three to four million dollars both in the third quarter and top one and in the fourth quarter and top one in our projections that we reduced it. We got a third six stores, a $30 million business on.

$3 million to $4 million, both in the third quarter on top on and in the fourth quarter on top line in our projections that we've reduced we've got 36 stores at $30 million business on Maui and the two that are open are operating it.

Speaker 4: Maui and the two that are open are operating it, you know, less than half of the cell phone right now.

Less than half of the sales volume right now.

Speaker 4: uh you know the Lahaina Marlin bar is gone it's it's

Lahaina Marlin bars gone.

It has gone into three <unk> village stores are not open right. Now we are optimistic that we will be able to get them open, but I don't think theres going to be a lot of tourists, it's very very close to.

Speaker 4: It is gone and the three-way wish village stores are not open right now. We are optimistic that we will be able to get them open, but I don't think there's going to be a lot of tours. It's very, very close to Lahaina. So we really think it's going to take quite a while for the tourism back to get back in that area. So that is also a contributor to both our top and bottom lawn gardens changes.

Mauricio Vega: And an example of that, I would point to, and Johnny was, is you know moving, I know it made from the outside not feel super quick, but it was actually pretty quickly to go ahead and get them on a much better website, which will have done hopefully quite soon, but certainly this year. So we always learn little things, and one of the things was to move as quickly as you can, and I think we're doing that, and Johnny was.

Behind us so we really think it's going to take quite a while for the tourism back to get back in that area. So that is.

Also contributor to both our top and bottom line guidance changes.

Got it very comfortable.

Speaker 2: I'm very helpful and congratulations on those all. Thank you. Thank you, Marie, too.

Congratulations and there was something.

Thank you. Thank you Murray.

Our next question comes from the line of Paul <unk> with Citigroup. Please proceed with your question.

Mauricio Vega: And as I mentioned earlier, I believe very strongly that this is a brand that can continue to grow and expand operating margin as we move forward. And it's already contributing, it was added 34 cents to EPS in this quarter, which we're quite happy to have. One of Zayn Marie-Cell on the top line, but the top and bottom line is the Maui situation that we talked about so it's you know three to four million dollars both in the third quarter and top on and in the fourth quarter and top on in our projections that we reduced and we've got third six stores a thirty million dollar business on Maui and the two that are open are operating it you know less than half of the sale volume right now you know the Lahaina Marlambar is gone it's it's it it is gone and the three railroad village stores are not open right now we are optimistic that we will be able to get them open but I don't think there's going to be a lot of tours it's very very close to Lahaina so we we we really think it's going to take quite a while for the tourism back to to get back in that area so that is also contributor to both our top and bottom line guidance changes I'm very helpful and congratulations on those I think.

Thanks, It's Tracy Kogan for Paul I was wondering if you guys could just elaborate on the current trends.

Speaker 8: Thanks. It's Tracy Cogan for Paul. I was wondering if you guys could just elaborate on the current trends a little bit more. I was wondering if it is one brand more than the other where you're seeing a caution or maybe one channel versus another. Just any differences you're seeing there. And then I have a follow up. Thanks.

I was wondering if you could either one brand more than the other where youre seeing across your maybe one channel versus another just any differences.

You are seeing there and then I have a follow up thanks.

Speaker 3: So the trend tracious really gets the three bigger brands are all having a roughly similar experience.

So that trend Tracey has really yet.

The three bigger brands are all having a roughly similar experience.

Speaker 3: And it's a bit of a mix of channels and again, it's really the conversion issue that we're, you know, that's holding us back a bit and then the three smaller brands actually continue to grow nicely, but when you're as small as as they are still at this point, there's, you know, there's a bit of room to run always. So that's, you know, that's kind of what we're seeing.

And it's a bit of a mix of channels and again, it's really the conversion issue that were.

Holding us back.

A bit and then the three smaller brands actually continue to grow nicely, but.

When you're a small as they are still at this point there is there's a bit of room.

To run always so that's that's.

Kind of what we're seeing.

Speaker 8: got it and then I was I was wondering if you could quantify some of the moving pieces within Gross Margin this quarter and kind of where those are headed in the back half I think you mentioned freight helping I was wondering if you could maybe quantify that and maybe talk about when that benefit runs out does it still go into next year that freight benefit any any color you have on that would be helpful.

Got it and then I was wondering if you could quantify some of the moving pieces within gross margin this quarter and kind of where those are headed in the back half I think you mentioned freight helping I was wondering if you could maybe quantify that and maybe talk about when that benefit runs out does it still go into next year.

That frees benefit any any color you have on that would be helpful. Thanks.

Tracy Kogan: Thank you thank you Mauricio our next question comes on the line of Paul there's you with city group please pursue with your question thanks it's Tracy Coden for Paul I also wonder if you guys could just elaborate on the current trends a little bit more I was wondering if is it is it one brand more than the other where you're seeing a caution or maybe one channel versus another just any differences you're seeing there and then I have a follow-up thanks so that trend Tracy is really it's the you know the three bigger brands are all having a roughly similar experience and it's a bit of a mix of channels and again it's really the conversion issue that we're you know that's holding us back a bit and then the three smaller brands actually continue to grow nicely but when you're as small as as they are still at this point there's you know there's a bit of room to run always so that's you know that's kind of what we're seeing got it and then I was I was wondering if you could quantify some of the moving pieces within gross margin this quarter and kind of where those are headed in the back half I think you mentioned freight helping I was wondering if you could maybe quantify that and maybe talk about when that benefit runs out does it still go into next year that freight benefit any any color you have on that would be a helpful thanks yeah the freight for the most part is you know it's close to fleshing itself through the system you know the you know the higher freight from last year was mainly a first half item and mainly a first quarter less on the second quarter fairly minimal in Q3 and 4 so you know that that's much less of an impact and then it had been you know in previous quarters um we got um you know then you know having Johnny was helps us um uh there and then we um we had some inventory write downs in Q4 last year that we uh in in our emerging brands group that we don't anticipate uh anniversary so our fourth quarter that will help our fourth quarter gross margin So, I think those are the big runs. Got it. Thanks very much. Thank you, Tracy.

Speaker 4: Yeah, the freight for the most part is close to fleshing itself through the system. The higher freight from last year was mainly a first half item and mainly a first quarter or less on the second quarter. Fairly minimal in Q3 and 4. So that's much less of an impact than it had been in previous.

Yes, the freight for the most part is as close to a flushing itself through the system.

No.

The higher freight from last year was mainly a first half.

Item and mainly a first quarter less so in the second quarter are fairly minimal.

In Q3 and four so.

Yes.

Much less of an impact than it had been.

In previous quarters.

Speaker 6: We got, you know, having Johnny was helps us there. And then we had some inventory write downs in Q4 last year that we in our emerging brands group that we don't anticipate anniversary ring. So our fourth quarter, that will help our fourth quarter, gross margin. So.

We got you.

Then having Johnny was helps us.

There and then we.

We had some inventory write downs in Q4 last year that we.

And our emerging brands group that we don't anticipate.

Anniversarying, so our fourth quarter that will help our fourth quarter gross margin.

Yes.

So.

I think those are the bigger items got it thanks very much.

Speaker 8: Got it. Thanks very much. Thank you, Tracey.

Thank you Tracy.

Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Please proceed with your question.

Hi, good afternoon, everyone.

Speaker 9: as you think about high as you think about

Okay.

Hi, as you think about.

Speaker 9: What's happening with the current consumer, with the consumer right now, and obviously your inventory levels also, how are you planning full price versus markdown business going forward? And is there anything on the category side by brand that has done better or not is better to give you any indication of consumer pulse and what they're focused on?

What's happening with the current consumer with the consumer right now and obviously inventory levels also.

How are you planning full price versus markdown business going forward and is there anything on the category side by brand that has done better or not is better to give you any indication of consumer pulse and what they're focused on.

Yes, great questions as always Dana and thanks for being on the call. So in terms of full price for.

Speaker 3: Yes, great questions as always, Dana. Thanks for being on the call. So in terms of full price versus more.

Versus markdown.

Speaker 3: You know, our plan obviously is to do as much full price business as we possibly can. As we outlined in our response to NOAA.

Plan, obviously is to do as much full price business as we possibly can.

And as we outlined in our response to know.

Speaker 3: Earlier in Lily Pulitzer, we're not really going to do more promotional events, but we're going to mix them up So the cadence of those and the look of those will be a little bit different Then they were last year and then and Tommy Bahama

Earlier, and Lilly pellets, or we're not really going to do more promotional events, but we're going to mix them up so the cadence of those and the look of those will be a little bit different than what they were last year and then in Tommy Bahama.

Speaker 3: It's really gonna be very similar to what you saw last year and really get in the past.

It's really going to be very similar to what you saw last year and really in the past.

Speaker 3: And the issue will be, you know, whether the consumer shops at their normal levels during full price.

Issue will be.

Whether the consumer shops at their normal levels during full price or whether they hold back a little bit more and save their dollars.

Speaker 3: or whether they hold back a little bit more and save their dollars.

Dana Telsey: Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Please excuse me for your question.

Speaker 3: for the events and that certainly we saw a bit of that in the second quarter where people were holding off and spending during the events.

For the Ben So Thats, certainly we saw a bit of that in the second quarter were.

Thomas Chubb: Hi, good afternoon, everyone. As you think about what's happening with the current consumer, with the consumer right now, and obviously your inventory levels also, how are you planning full price versus markdown business going forward? And is there anything on the category side by brand that has done better or not is better to give you any indication of consumer pulse and what they're focused on? Yes, great questions. As always, Dana. Thanks for being on the call.

People were holding off in spending during the events, which in more when the consumer is feeling a little more robust they tend to not just <unk>.

Speaker 3: more when the consumer is feeling a little more robust they tend to not wait they just want it as soon as it hits the line.

As soon as it hits the floor.

Speaker 3: And that's kind of what we've factored into, you know, our guidance is best as we can estimate all that.

And thats kind of what we've factored in.

Our guidance as best as we can estimate it all of that.

Speaker 3: That's what we packed with into our guidance for the balance of the year. And then the category question is a good one because we've definitely seen a return this year too. I wouldn't call them dressy styles, but dressy or where during the pandemic, it went super casual and cozy and that actually continued.

That's what we factored into our guidance for the balance of the year Amendment category question is a good one.

Because we've definitely seen a return this year or two.

Thomas Chubb: So in terms of full price for versus markdown, you know, our plan obviously is to do as much full price business as we possibly can. And as we outlined in our response to Noah earlier in Lily Pulitzer, we're not really going to do more promotional events, but we're going to mix them up. So the cadence of those and the look of those will be a little bit different than what they were last year.

Color dressy styles, but dressy you're aware.

During the pandemic it went super casual and cozy and that actually continued.

Speaker 3: for a while and we're more back to sort of what I would call normal, so ladies wearing prettier, more structured dresses and...

For a while and we're more back to sort of what I would call a normal so ladies wearing prettier more structured dresses.

Gentlemen, wearing more long sleeve woven and that kind of thing.

Speaker 3: gentleman wearing more long sleeve woven than that kind of thing.

And in the first half if you think about it when we were buying product.

Thomas Chubb: And Tommy Bahama, it's really going to be very similar to what you saw last year and really in the past. And the issue will be whether the consumer shops at their normal levels during full price, or whether they hold back a little bit more and save their dollars for the event. And so that certainly we saw a bit of that in the second quarter where people were, you know, holding off and spending during the events, which in more when the consumers feeling a little more robust, they tend to not wait.

Speaker 3: And in the first half, if you think about it, when we were buying products.

Speaker 3: At the time we had to place those dives that hit the floor in the first half. That was when the supply chain was an absolute disaster and we were probably buying.

At the time, we had the place those buys that hit the floor in the first half.

That was when the supply chain was an absolute disaster and we were probably buying typically six weeks earlier than we normally would which meant we were buying and much more of an information vacuum and as a result of that I think natural.

Speaker 3: typically six weeks earlier than we normally would, which meant we were buying in much more of an information vacuum.

Speaker 3: And as a result of that, I think it's a natural sort of instinct that because we didn't know, we got much more basic and core in our assortment.

Sort of.

But because we didn't.

We got much more.

Thomas Chubb: They just want it as soon as it hits the floor. And that's kind of what we've factored into, you know, our guidance is best as we can estimate all that. That's what we've factored into our guidance for the balance of the year. And then the category question is a good one because we've definitely seen a return this year to, I wouldn't call them dressy styles, but dressy or where, you know, during the pandemic, it went super casual and cozy.

Basic and core in our assortment.

Speaker 3: And you know to be honest, I think that probably hurt us a little bit in the first half.

To be honest I think that probably you heard us talk a little bit in the first half by the time, we get to the second half what's on the floor now and particularly for fourth quarter were much more where we're buying in our normal cycle.

Speaker 3: By the time we get to the second half, what's on the floor now, and particularly for fourth quarter, we're much more aware we're buying our normal cycle.

Thomas Chubb: And that actually continued for a while and we're more back to sort of what I would call normal, so ladies wearing prettier, more structured dresses and gentlemen wearing more long sleeve ones and that kind of thing. And in the first half, if you think about it, when we were buying product, at the time we had to place those thighs that hit the floor in the first half, that was when the supply chain was an absolute disaster and we were probably buying typically six weeks earlier than we normally would, which meant we were buying in much more of an information vacuum.

Speaker 3: The assortments have a lot more newness in them than we did in the first half of the year. And I think we've got a better aligned with what the consumer actually wants now, which is those dressier styles. Not that there's not still plenty of room for a core invasive.

<unk> have a lot more newness in them than we did in the.

First half of the year.

And I think we've got.

We are better aligned with what the consumer actually wants now which is Bose.

Dressier styles, not that there's not still plenty of room for core and base.

Speaker 3: But just the proportion was probably a little bit out of whack.

But just the proportion was probably a little bit out of whack.

Speaker 3: during the first half. I think we're in much better shape for the second half.

During the first half and I think we're in much better.

For the second half.

Thank you.

Thank you Dana.

There are no further questions I would like to hand, it back to Mr. Johnson for closing remarks.

Speaker 1: further questions I'd like to hand it back to Mr. Chubb for closing.

Speaker 3: Okay, thank you Doug and thanks to all of you for your interest in our company. We look forward to talking to you again in December and hope that all of you are well until then.

Okay. Thank you, Doug and thanks to all of you for your interest in our company.

We look forward to talking to you again in December and the help hope that all of you are well until then.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.

Thomas Chubb: And as a result of that, I think it's a natural sort of incident because we didn't know who we got much more basic and core in our assortment. And you know, to be honest, I think that probably hurt us a little bit in the first half. By the time we get to the second half, what's on the floor now and particularly for fourth quarter, we're much more where we're buying in our normal cycle.

Thomas Chubb: The assortments have a lot more newness in them than we did in the first half of the year. And I think we've got a better aligned with what the consumer actually wants now, which is those dressier styles, not that there's not still plenty of room for core and basic. But just the proportion was probably a little bit out of whack during the first half. I think we're much better saved for the second half.

Dana Telsey: Thank you. Thank you, Dana. No further questions?

Thomas Chubb: I'd like to hand it back to Mr. Chubb for closing remarks. Okay, thank you, Doug, and thanks to all of you for your interest in our company. We look forward to talking to you again in December and to help hope that all of you are well until then. Thank you, gentlemen.

Unknown Executive: This does include today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful