Q2 2025 Oxford Industries Inc Earnings Call
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Speaker Change: Greetings and welcome to the Oxford Industry's second quarter, fiscal 2024 earnings conference call. At this time, all participants are in a listen only mode. If anyone should require operator assistance during the conference, please press star zero in your telephone keypad. A brief question and answer session will follow the formal presentation.
Speaker Change: As a reminder, this call is being recorded. I would now like to turn the call over to Brian Smith. Thank you, Brian. You may begin.
Brian Smith: Thank you and good afternoon. Before again, I would like to remind participants of certain statements made on today's call in the Q&A session. We constitute forward-looking statements within the meeting of the federal security's laws.
Brian Smith: Ford-looking statements are not guarantees in actual results may differ materially from those expressed or implied in the Ford-looking statements.
Brian Smith: Important factors that kick cause are actual results of operations for our financial condition.
Brian Smith: To differ or discuss in our press release issued earlier today in the documents filed by us with the SEC, including the risk factors contained in our quarantine care. We undertake no duty to update any forward-looking statements.
Brian Smith: This is Brian Smith called, discussing certain non-gap financial measures. You will find a reconciliation of non-gap to get financial measures in our press release issued earlier today, which is posted on our Investor Relations tab over website Oxfordank.com.
Speaker Change: In Alec introduced today's call participants with me today or Tom Chubb, Chairman and CEO, Scott Grasmar and CFO and CLO.
Brian Smith: Thank you for your attention and I would like to turn a follow-up time, sure.
Speaker Change: Good afternoon and thank you for joining us. I'm going to start with an update on the execution of our plan for the second quarter of fiscal 2024 in our current expectations for the island to the year.
Speaker Change: During this second quarter, we continue to make excellent progress on long-term strategic goals, but fell short of delivering on our near-term financial targets.
Speaker Change: Sales of $420 million and adjusted EPS of $270 for the quarter were below our guidance range primarily due to a continued pullback from the consumer.
Speaker Change: The pullback worsens sequentially during the quarter, coinciding with consumer sentiment, hitting an eight-month flow in July with a trend continuing into August and the start of our third quarter.
Speaker Change: Well, most underlying economic indicators remain reasonably strong, the cumulative of fact of several years of inflation may be catching up with the consumer.
Speaker Change: Simultaneously, the second quarter was also marked by several national and global note where the events that led to a more distracted consumer at several points over the summer.
Speaker Change: Certain factors that we may believe may have amplified these headwinds with respect to our particular business include first our focus on a fluent 45 and a customers who tend to be more headline and market sensitive.
Speaker Change: Satan, our significant exposure to Florida, which accounts forever at third of our bricks and mortar business, and grew at an exceptional pace coming out of the pandemic, but as slow down as the new post-pandemic world settles in.
Speaker Change: and finally, some commercial and merchandising missed out on our part, including a assortment message and timing of promotional events.
Speaker Change: The slowdown we experienced in our business has been driven by reduced conversion while traffic has remained strong, which indicates that consumers are very interested in our leading brands, but have become cautious when making purchase decisions.
Speaker Change: Looking across the marketplace, the two areas where the consumer continues to respond positively are newness and value.
Speaker Change: During the quarter we saw a strong full price response to fashion and new and differentiated products.
Speaker Change: While I'm interested in core styles was more muted.
Speaker Change: The consumer also responded to value in the quarter with a higher proportion of sales during the quarter, occurring during promotional events and at our outlet stores than in last year's second quarter.
Speaker Change: The Gregor proportion of all price selling per press rod gross margin.
Speaker Change: versus our expectation, which along with lower than anticipated sales resulted in the operating margin, operating profit, and ultimately EPS that were below our plan.
Speaker Change: Importantly, our balance sheet remains strong.
Speaker Change: Inventories were down on a year-over-year basis to end the quarter.
Speaker Change: Well strong cast loads allowed us to continue investing.
Speaker Change: and the future of our business, including investing in our store pipeline and line storage and distribution center project, which Scott will detail shortly, pay off her debt and return cash directly to shareholders through our quarterly dividend.
Speaker Change: For the balance of the year, we expect to continue to see a more colleges consumer, and accordingly, we have reduced our forecast for the year.
Scott Grasmar: Our play-ballock for achieving forecasted results will be as always to protect the strength and integrity of our brands for the long term by avoiding brand-damaging short-sided reactions to current market conditions.
Scott Grasmar: At the same time, we will create excitement in enthusiasm for our brands, via some specific initiatives in the second half.
Scott Grasmar: These include new collections, such as our Tommy Bahama, Indigo Tom's collection of denim and denim friendly products, which launched early in the third quarter.
Scott Grasmar: and the initial reception to the collections launch has been strong.
Scott Grasmar: The Indigo Palm's collection encompasses a range of styles for both men and women, and the early success is fewing our optimism for how it can help us continue to build and grow our business going forward.
Scott Grasmar: in Bowtower Directionals as well as wholesale.
Speaker Change: I offer you our guests a completely unbranded sort and a Tommy Bahama product that is appropriate for cooler weather. It enhances our ability to be relevant in the cooler months.
Speaker Change: and the western part of the country, the Midwest, the Mid-Atlantic and the Northeast.
Speaker Change: Also, in the Den on the Universe, Johnny was his collaborating with Susanne Denham, playing to nostalgia for the original premium Denham brand, and featuring a beautiful marketing campaign with Lily Aldridge as the face of the brand.
Speaker Change: I campaign like this, it's new territory for us and we are excited to see what we learned from that.
Speaker Change: From a value perspective, we will then protect the integrity of our brands, but within that constraint, all for plenty of opportunities for our customers to get lots of value for their money in brand-friendly ways.
Speaker Change: Some examples of this include the seasonal lily pellets or flyers sale, which is happening right now.
Speaker Change: and our holiday marketing plans, which features special value products.
Speaker Change: GIF WITH PARTIVE.
Speaker Change: Gift cards, bounce back deals and many others.
Speaker Change: In addition to our focus on top line initiatives, our second half will include focus on our operating margin with a keen interest in the opportunities for SDNA reductions.
Speaker Change: As an example, we invested in the relocation of Johnny Wells' distribution and center operations.
Speaker Change: from High Calls Distribution Centers in Los Angeles.
Speaker Change: to Lion's Georgia.
Speaker Change: that will result in significant operating cost reductions that the Scott will discuss more in a minute.
Scott Grasmar: We will also continue to look across all areas of business for opportunities to reduce STNA spend without impairing our future growth prospects.
Scott Grasmar: While we are disappointed in our recent performance and revised outlook for this year.
Scott Grasmar: Our teams have successfully now navigated challenging economic cycles before.
Speaker Change: and I am confident that we have the right people and strategies in place to emerge on the other side of this difficult market with a health of our brains and our consumer connections stronger than ever.
Speaker Change: Thanks for your attention, and I will now turn on the call over to Scott for additional detail. Scott, thank you, Tom. It's Tom mentioned there were several macroeconomic headwinds across the marketplace that negatively affected our financial results during the quarter.
Scott Grasmar: Most notably lower consumer sentiment and an increase in the promotional environment.
Scott Grasmar: Spidey's headwinds, our teams are focused on executing against our strategies of delivering newness and compelling products that resonate with consumers to combat these challenges and encourage full-price selling. In the second quarter of fiscal 2024, consolidating that sales of $420 million were comparable to the second quarter of fiscal 2023, and below our initial guidance range of $430-$450 million.
Scott Grasmar: Notably, cells in our outlets increase 4%.
Scott Grasmar: It's this channel benefit it from consumers looking for deals and promotions. Off sells and full price brick and more to locations where up 1%.
Scott Grasmar: Driven by new stores and increased promotional activity, partially all set by low single digit negative cons.
Scott Grasmar: Our wholesale channel, which was particularly challenging in the first quarter of this year, had a difficult second quarter with sales down 5% compared to the second quarter of 2020's rate, because the specialty store business across our brands continues to struggle, partially offset by increased sales to major department stores.
Scott Grasmar: E-commerce and food and beverage sales were relatively flat compared to the second quarter of 2023.
Scott Grasmar: Adjusted growth's margin contracted 100 basis points to 63.3% driven primarily by a higher proportion in that sales occur under promotional events and Tommy Bahama, Lily Pulitzer and Johnny Was. Across our three brands, we saw a strong response from consumers to our promotions.
Scott Grasmar: Promotional Indicents and Indicies and Clarence Events. We were able to partially all set this decrease in our emerging brands group to our continued efforts to improve our inventory position and reduce the need for all price, wholesale and promotional direct consumer sales.
Speaker Change: and Justin Estinates at Spencer's increased 5.7% to 213 million compared to 222 million last year. During the second quarter of fiscal 2024, we incurred higher expenses related to recent and ongoing investments in our business. Primarily from the addition of 30 new working motor locations, open since the second quarter of last year.
Speaker Change: and the addition of Jack Rogers brand acquired in the fourth quarter of 2023.
Speaker Change: We also have incurred calls from some of the approximately 15 net new brick and mortar locations, including four Marlon Barlow locations that we expect to open in the second half of the fiscal year.
Speaker Change: Additionally, we incurred approximately a million dollars of expenses which were emitted from a justice DNA associated with a relocation and Johnny was his distribution center operations from Los Angeles to Georgia.
Speaker Change: We expected current additional million dollars of charges related to the relocation in the second half of the year. But a projecting this move to save Johnny was approximately $4 million in operating cost per year with potential for additional savings.
Speaker Change: The result of this yielded 57 million of adjusted operating income for 13 and a half percent operating margin compared to 73 million or 17.3% in the prior year.
Speaker Change: The decrease in adjusted, operating income reflects the SGN investments, a message, challenging consumer environment for sales and growth margin.
Speaker Change: Moving beyond operating income, our effective tax rate was fly. All interest expense was a million dollars lower compared to the second quarter of 2023 resulting from lower average stat levels.
Speaker Change: With all this, we achieved $277 of adjusted EPS.
Speaker Change: On now I'm moving on to our balance sheet beginning with inventory. In the second quarter of fiscal 2024, we're able to decrease them in toy by 6% or 13% or 13 million dollars year over year on a 5-0 basis.
Speaker Change: The decrease in inventories resulted from a continued inventory discipline across our portfolio. We're also able to repay our remaining outstanding debt and ended quarter within an $18 million cash position.
Speaker Change: From a liquidity standpoint, 122 million of cash flows from operations in the first application of 2024, allowed us to fund our elevated level of capital expenditures of 54 million and pay $22 million to dividends.
Speaker Change: I'll be able to repay the $29 million a barring that was outstanding at the end of fiscal 2023.
Speaker Change: I now spend some time on our outlook for 2020-24.
Speaker Change: We finished the second quarter, let's go 24, but native comps at 1% which was lower than our previous forecast at mid-single digit positive comps for the quarter.
Speaker Change: Similar to the results we saw in the second quarter, comp sales figures in the third quarter to date, or negative, we believe the negative contract will continue and result in negative comps in the low to mid-single digit range for the remainder of the year.
Speaker Change: On top of similar cops in the prior year.
Speaker Change: These assumptions compared to our previous expectations from June that assumed mid-single-digit positive constantly remainder of the year, and we revised ourselves for a cast accordingly.
Speaker Change: We're the full year we now spent in that sales to be between 1.5, 1.5, 1.5, 4.4 billion or decline of 2 to 4% compared to sales of 1.5, 7.0, in 2023.
Speaker Change: Our update sales plan for 2024 now includes low-to-mid-single digit sales to clients and tiny Bahama and Lily Pulitzer. Partly offset a sales growth in the low-single digit range for Johnny was an emerging brand's group.
Speaker Change: by Channel Holesale, he can produce the majority of the sales decrease with a partial all set.
Speaker Change: from a sliding crease in our direct consumer channels. We expect wholesale sales, which would down approximately 20 million in the first half of the year, to be relatively flat in the second half of the year, compared to fiscal 2023, as we go against easier cons relative to what we saw in the first half.
Speaker Change: and our direct consumer channels, we expect growth and our outlets and those locations continue to perform well in the current environment. And in our full price retail food and beverage locations that will benefit from the addition of the approximately 30 new locations during the year.
Speaker Change: with spec cells in our e-commerce channel will be flat to slightly negative for the year.
Speaker Change: Looking across the marketplace, there are many macroeconomic risks and uncertainties that could affect our outlook, including consumer headwinds and industry trends that we have already discussed.
Speaker Change: They're also the upcoming elections in November and the related consequences that could have the potential to disrupt demand
Speaker Change: Other challenges including the shipping disruptions to global trade, calls to part by the tax and the red sea, also have potential disrupt the supply goods across the economy and increase freight cost.
Speaker Change: We now anticipate gross margin for the year and will decline by approximately 50 to 100 basis points compared to the prior year. As expected, increase that activity during promotional events across our brands. More than offset the gross margin benefit from proportionally lower health cell cells.
Speaker Change: We also anticipate a slightly negative impact in the second half from an increase in freight rates. Our guidance contains our best estimate of the increased freight we'll have on earnings.
Speaker Change: In addition to slightly lower sales in negative growth margin, we expect SG&A to grow at a rate higher than sales in 2024, primarily due to the investments in our business, including expanding our store count by ahead of approximately 30 locations with five new Tommy Bahama Moreland bars.
Speaker Change: Continued IT investment and the addition of Jack Rogers.
Speaker Change: Additionally, as discussed during our last call, we expect the Jack Rogers brand acquired in the fourth quarter of fiscal 2023. To generate an offer and we'll also approximately 2.5 million in 2024. As we reset and refocus the business.
Speaker Change: We also anticipate lower interest of spends of 2 million for the year compared to 6 million in 2020-3
Speaker Change: and hired a role to another income, primarily from a full year of the time Bahama Mayor Monte Resort.
Speaker Change: Additionally, we expect a higher adjusted effective tax rate or approximately 24% compared to 23% in 2023, which benefited from certain favorable items they are not expected to re-occur in 2024.
Speaker Change: Considering all these items we respect.
Speaker Change: Operating Mortgen to decrease from 2023 levels and now it's that 2024 adjusted EPS to be between $7 and $7.30.
Speaker Change: vs. Adjusted EPS of $1015 last year, but decreases in all of our businesses in a higher tax rate, being partially all set by the lower interest of spent and higher adjusted rule to southern income.
Speaker Change: in the third quarter of 2024, we expect sales of 310 million to 325 million compared to sales of 3.
Speaker Change: 327 million in the second quarter of 2023. We also spent.
Speaker Change: of course, more than to contract by approximately 50 to 100 basis points with the trend of increased sales during promotional events, expected to continue. As G&AD leveraging, a million dollars a lower interest has been and a flat variety in other income.
Speaker Change: We spent this to result in 3rd quarter, just the EPS, between 0 and 20 cents, compared to a dollar and 1 cent and the 3rd quarter of 2023.
Speaker Change: Given our fixed call structure and the season alley of our business, third quarters typically the smallest of the year from a sales and EPS perspective. And we'll be further impacted in 2024 by heavy pre-opening calls for new stores and more of them borders.
Speaker Change: It's spending on the investments we're making in 2024. I'd like to briefly discuss our updated cat-backs outlook for the remainder of the year.
Speaker Change: Due to refined cash flow timing projections.
Speaker Change: for our Alliance Georgia Disappusion Center project and adjustments to other capital projects. Capital expenditures in fiscal 2024 have been moderated or now especially to be approximately 150 million, including 54 million incurred during the first half of the year.
Speaker Change: Compared to 74 million in fiscal 2023.
Speaker Change: for the POSME 75 million related to this significant moment of year project to build a new distribution center in line storage that will enhance the direct consumer through full capabilities of our brands.
Speaker Change: The remaining couple of expenditures related to the execution of our pipeline of Marlon Bores increases in store count across Tommy Bahama, William Pulitzer, Johnny West, Southern Todd, and the B4 Bonnet Company.
Speaker Change: and increased investment in our various direct consumer technology systems initiatives. We expect this elevated capital expenditure level to moderate in 2025 and further moderate in 2022 and beyond after the completion of the Lions Georgia project.
Speaker Change: We also have a pause about local and archational liquidity position as well. Cash flow from operations are expected to remain there to be very strong given us ample room to fund the previously mentioned investments. A quarterly dividend.
Speaker Change: and limit the need to bar under or revolver. Although we do a spat, they mod a step decision from much of a second half due to the elevated capital expenditures.
Speaker Change: Thank you for your time today. We'll now turn the call over questions. Paul. Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad.
Speaker Change: The confirmation tone will indicate your line is on the question cube. You may press star to have you'd like to remove your questions from the cube.
Speaker Change: The Department of State and Speaker Covenant, and maybe not started at the government head and said to have to focus on this flow of cheese.
Speaker Change: In the interest in typing as the participants limit themselves to one question and one follow.
Speaker Change: One moment, please, while we pull for questions.
Speaker Change: Thank you. Our first question is from Ashley Owens with T-Bank Capital Markets. Please proceed with your question.
Speaker Change: [inaudible]
Speaker Change: Hi, thanks for taking my question today. This is Chantana Madalco on for Ashley. So...
Chantana Madalco: I just wanted to dig into maybe a little bit more about how you're thinking about promotional events going into the back half maybe any color you could provide there by brand just you know now that the thinking around promotions is a little bit differently
Speaker Change: Also, let me see if you could dig in further for us on what you're hearing from wholesale partners, maybe an update on the order box. Thank you.
Speaker Change: Okay, so on the promotions, I wouldn't say that we're really thinking about it differently. I think what we're thinking is just we recognize.
Speaker Change: that they're going to be very important this year especially as they always are.
Speaker Change: during the holiday period.
Speaker Change: So we're going to start a bit earlier as you know, the shopping season is about five days, shoot, not about it's exactly five days shorter this year than it was.
Speaker Change: Last year, so it's going to be important that we jump on at the beginning of the night, Vember.
Speaker Change: We're gonna have an assortment of mailers. We're doing a mailer and Tommy Bahama that we haven't done in a couple of years. So that would be a little bit of a change.
Speaker Change: We've got a great gift with purchase offering that we're going to do over the cyber weekend starting with Black Friday and going through the weekend, actually starting on Thursday, I believe.
Speaker Change: We've got our normal gift cards, we've got bounce back sales
Speaker Change: Will have the Lily Pulitzer Flash sale in January. So it's really the same type of things I think it's just that our focus on those maybe will be a little bit.
Speaker Change: Moran temp, and it has been in the past.
Speaker Change: in terms of wholesale performance of scatmons and his prepared remarks.
Speaker Change: The year over all has been tougher in the whole sale. We do expect the second half to be about flat with last year was the first half was down, I think about 5%.
Speaker Change: or so, but our performance with our majors, which is where we have the most visibility to how we're doing. It's actually been quite good. And I think it's where it's starting to see spurring bookings where actually it's encouraged with.
Speaker Change: and what we're seeing there.
Speaker Change: Awesome, thanks, nice to hear.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question is from Dana Telsey with Telsey Advisory Group. Please proceed with your question.
Dana Telsey: Hi, good afternoon, everyone. As you think about the state of the consumer and what you saw in outlets versus the other channels of distribution.
Dana Telsey: with the Browns with Tommy with Lily, what are you seeing that's different? How did the cadence of the quarter go and the categories that perform better or worse than others and with the promotional environment?
Speaker Change: How deep are the markdowns and how you're thinking about promotions for Q3 and Q4. Thank you.
Speaker Change: Okay, thank you, Dana. So the cadence of the quarter, as we mentioned, was that it got worse sequentially through the quarter. May was actually in okay month.
Speaker Change: June, South, and a bit, but not terribly, and then July got a lot worse, especially in the back half of July, and then, as we mentioned, August was weak as well.
Speaker Change: In terms of what the consumer is looking for, as you know, I think very well, it is a value driven market right now. We are intent on maintaining our strategy of being a portfolio of full price.
Speaker Change: Premium Brands, and we're not really bearing away from that.
Speaker Change: But we are going to be paying a lot of attention and be very focused on sort of a sort of that.
Dana Telsey: Type some promotional activities that you've seen from us in the past, Dana, and then as we mentioned in our prepared remarks.
Dana Telsey: You know, during the second quarter did a greater proportion of our sales during those events. We may have had a little bit more in terms of the number of promotional days.
Speaker Change: But the biggest factor was just that that was the time when the consumer was most interested in
Speaker Change: in shopping and the time where they were most interested in converting.
Speaker Change: I would say that the discounts were also a little bit steeper during the second quarter.
Speaker Change: And I think it's reasonable to expect that we're going to see a similar pattern in the third and fourth quarter. And that is what we've built into our guidance and Scott, you may want to.
Scott Grasmar: Reiterate and elaborate on our guidance of it.
Scott Grasmar: Yeah, as we mentioned the call, we have moderated the conference where we were expecting positive constant, our earlier guidance, and we moderate them down to get into the low to mid-singled digit range.
Scott Grasmar: and just basically what we've been seeing recently in the state of the consumer. We just thought it was prudent, that and we do have the shorter period between Thanksgiving Christmas and we do think it's going to be a promotional period.
Scott Grasmar: and we're going to try to do similar type of that, but as we found in the second quarter we tended to have a little bit more inventory to fuel those of that. Then we might have last year, which I did a road versus margin a little bit.
Speaker Change: And then, in terms of products, I would say, you know, anything that's truly new, truly innovative, truly differentiated, or the products that are most likely to get the consumers' attention and that's just broadly.
Speaker Change: I would say that the more casual categories, the Afleisure type product.
Speaker Change: Smith has been slower, most types of things have been slower.
Speaker Change: Dress has really been strong across the Portfolio and more the dressier end of the spectrum I would say but...
Speaker Change: You know, the more presentable way into the spectrum of, I think, is where we've seen the relative strengths in general.
Speaker Change: and then just picking apart freight costs, how are you thinking about the puts and takes on margins?
Speaker Change: Yeah, we built in about 15 to 20 basis points and Margin had do this elevated for eight. So it's not a due to your amount. We are watching, and that's mainly some of the red sea issues that have inflated rates. We are seeing, or we are watching closely these poor, the East Coast.
Speaker Change: Situation with the Union Negotiations in our...
Speaker Change: Deverting some product to the West Coast, and then we'll um
Speaker Change: You can bring it across the country in some cases. Yes, so that's something we continue to watch, but we have build on some disruption from that. Obviously, if these coastboards have to go on strike, that's going to be a disruptor to get everyone.
Speaker Change: and just one last thing, what the change in business patterns.
Speaker Change: Any, whether it's marketing or store openings or Marlon bars, any adjustments that you're thinking about, whether in terms of timing or shifts and how you're thinking about any of the initiatives. Thank you.
Speaker Change: That's not really, man, we're pretty much full steam I had, done.
Speaker Change: Yeah, on the growth initiative, we all asked you, and it's something we always looked at, but it's obviously, you know, we're looking at opportunities there, when they present themselves. We mentioned the Chinese distribution center, which we, you know, was going to save us a bit of money and we're looking at other opportunities to...
Speaker Change: you know, reduce that DNA, but as far as growth initiatives.
Speaker Change: We're moving forward. Which would include the stores that were opening the Marlin bars and the distribution center in Lyons.
Speaker Change: And you know, look, we don't believe that this is a, you know, at worst an old school recession.
Speaker Change: Maybe not even that. It's not the type of event that we saw in the pandemic or the financial crisis.
Speaker Change: and you know we want to be ready when business starts to pick up. We believe in our direct to consumer channels as we do our wholesale channel and building stores and more than bars and having a DC that can serve us.
Speaker Change: Both retail, wholesale and our e-commerce businesses, you know, going to be very important as we get a year or two, three years out. So we want to make sure that we're there.
Speaker Change: These are long-term projects that we need to manage for the long-term.
Speaker Change: Thank you. Thank you. Thank you, Don.
Speaker Change: Thank you. Our next question is from Marie Tho Sarna with UBS. Please be seated here question.
Speaker Change: Hi, Good afternoon. Thanks for taking our questions. I guess maybe if you could have worked a little bit more on the promotional activity across each of the big brands, I know Eric Collock, there was some shift in promotional events and then he pulled it through but you know, I'm sorry to that, like anywhere we're used to all.
Speaker Change: Like promotions really surprise you on the negative side and yeah, like just just a bit more detail from that will be very helpful. Thank you.
Speaker Change: I was, mercy, I was saying it's a small, we just had, we sold through a bit less at full price than we expected, so we had more inventory when we did, like Tommy's end of the season sale had, you know more inventory than did the prior year, you know, Lily Johnny was, that was more the case, so it just resulted in, and you had it consume work.
Speaker Change: Much more willing to buy during those events, so it wasn't that we.
Speaker Change: had major change in the events, or were majorly different on the Griotide discounts. It was just more inventory, available at Seoul. So we kind of traded some full price sales for off price sales during now.
Clarence: typical Clarence periods.
Speaker Change: and then just a quick follow up, surprise the seals, so kind of just roll down on the...
Speaker Change: Restaurant Business. Could you allow it with a little bit more about what happened there? And lastly, could you remind us the comm sales, you know, the compares you're all against in the second half of the year? I think, yeah, just to be mindful of that. Thank you.
Speaker Change: Yes, I think the restaurant's slow down is you know Marisa, the restaurant's just have not slowed down really up until the second.
Speaker Change: Quarterday have been extremely strong as they reopened, even during the pandemic.
Speaker Change: When service was much more limited, I were quite strong and I just had been...
Speaker Change: Super strong, and I think a little bit of that has slowed down.
Speaker Change: Florida, for example, is a big restaurant market, and as we talked about in the retail business and Florida as well, which had been just sort of nonstop.
Speaker Change: Go Go, since the pandemic, and it sort of settled down to where it was performing more like the rest of the country during the quarter.
Speaker Change: As far as Comps last year, Q3, I think Q4, where we're kind of in that.
Speaker Change: We were kind of at the 3 to 5% range negative and so we're projecting similar type of similar type comps in our second half this year.
Speaker Change: and where before we were rejecting positive comp. So that's the big change in God, and this is really that comp movement, it's the biggest change.
Speaker Change: Thank you.
Speaker Change: And we're going to be working very hard, of course, Mauricio, to try to turn that negative compass up soon into a positive result that given what we've seen over the last six or eight weeks, we just thought it was prudent to lower that expectation.
Speaker Change: Thank you. Our next question is from Janine Stikter with BTIG. Please proceed with your question.
Janine Stikter: Hi, and thanks for taking my question. So, you know, to start out, you, on the consumer you went through a whole host of factors that might have contributed to this flow down. I think you talked about the traction and inflation.
Speaker Change: I'm merchandising this step. You know, maybe to help us rank water in your opinion, which is the most meaningful in terms of the change you've seen in the top line trend.
Speaker Change: And then I'm within that. We've looked for more context around Florida. It grew a lot in the years after COVID. I'm talking about some normalizations. Just maybe your thoughts on what ending we're in with the normalization there and maybe some context on how much it grew with COVID. Thank you.
Speaker Change: So with respect to Florida what I want to be very clear about is that it's not underperforming so much the rest of the country is that it's just no longer outperforming the rest of the country, which was...
Speaker Change: really what happened continuously for the three previous years.
Speaker Change: was that it outperformed everybody else.
Speaker Change: Now, it's sort of more running with the pack. What I believe we're going to see going forward at least for the next several quarters.
Speaker Change: is that it's probably just going to run with the pack a bit more so if things pick up nationally.
Speaker Change: I would expect Florida to pick up with that, I believe, and if they don't pick up as quickly I think Florida will sort of stay more or less where most of the other regions.
Speaker Change: and then terms of trying to rank order the three factors that we talked about, the headline distraction, Florida, and the merchandising missteps.
Speaker Change: Kind of hard to do that. I would say that they're all meaningful factors, Janina, I think they all had a material impact.
Speaker Change: and Results, there's some data.
Speaker Change: from a big advertising agency that sort of supports our theory on the headline.
Speaker Change: Distraction, where they looked at, I think, over a hundred brands that mostly cater to a 45 and uptight consumer and saw that during July, they were down 14% year every year.
Speaker Change: and that would tend to support the theory that that was a material factor for us.
Speaker Change: are merchandising this step. Some of them we can measure a little bit more than that.
Speaker Change: Others, but we, again, think that they were material and then the Florida thing, I mean, it's a third of our business and it went from a third of our retail business.
Speaker Change: and it went from a significant outperform to running with the plaque which cost us a lot of incremental contribution dollars.
Speaker Change: Okay, great. And then on the merchandising mist that sounds like you have a lot of things already in the work. But I just love to hear your sense of when we should expect to see some improvement there.
Speaker Change: Well, certainly on a year over year basis, as we get to the second quarter of next year, they're all completely fixable.
Speaker Change: And, undoubtedly, we will make some other missteps next year that's a part of the business. Hopefully, they'll just be a little less pronounced than this year, and we believe they will, and then in terms of...
Speaker Change: What we've got coming for the third and fourth quarter.
Speaker Change: from the Merchandise and Commercial.
Speaker Change: Stone Point, we really like a lot.
Speaker Change: One of the things that we've got, that we think will be a meaningful plus for us this year. We've got the Indigo Poms launch in Tommy Bahama, which is...
Speaker Change: I'm already driving some positive results in the...
Speaker Change: The getting cooler month that we're in now and should the health as we get.
Speaker Change: Further into the cooler months and then in January, they're actually going to have a early spring delivery that's going to hit the floor in January. Typically January is just to be in and out what everything that's left over.
Speaker Change: from sort of the pre-Ahalla day in Resort time. In this year we're actually going to give our guests a taste of spring in January that we think they'll be receptive to them, the likes of them.
Speaker Change: We like our line up for the second half we wish that consumer were a little bit stronger than they are, but we do think we've got good tools to work with, to try to capitalize on the demand that is there.
Speaker Change: Hi, great for big things for all the color
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question is from Paul Lajoy with City Group. Please proceed with your question.
Paul Lajoy: Hey guys, thanks. Can you talk about which regions were...
Speaker Change: Good morning.
Paul Lajoy: Yes, Corridor is the sounds like Florida was in line with the chamber. Where did you see better results by Regine and where did you see weaker results?
Speaker Change: and then see you, talk about
Speaker Change: Where each of the brands are in terms of sole price selling?
Speaker Change: Related to all time too.
Speaker Change: and also maybe relative to...
Speaker Change: Pre-Pandemic Levels, just try to understand the level of Markdowns that you're seeing, what the send you of the assortment, breach of the brand, are selling a full price today versus what? So last year you'd be poor, maybe pre-pandemic, just to kind of frame where you are in that continuum.
Speaker Change: Okay, thank you Paul and first with respect to the regional question.
Speaker Change: This is on a relative basis. No wear was really great. Every, I'm out of every wear.
Speaker Change: was with soft during the quarter.
Speaker Change: That the places that were relatively strong were some of the cooler weather places like the Midwest.
Speaker Change: The Mid-Atlantic New England were some of the, and then some of the spots out west, I think, especially the northwest.
Speaker Change: Some of the desert areas were relatively strong as compared to Florida, Texas, some of the places that, you know, were a little bit, a little bit weaker, but again, nowhere was really what I would call strong.
Speaker Change: It was everywhere was soft and again on Florida it's not that it was.
Speaker Change: You know, way worse than other places, it's just that it looked more like other places where for the last couple of years it had been an outlier on the, on the positive side.
Speaker Change: and now I'm the relative level of this kind of... Yeah, what one more to add to that? The Marlomar location's held. The retail side of the Marlomar's held much better.
Speaker Change: and then the...
Speaker Change: Average is out there, so that that part was encouraging. Yeah, very important. Yeah, as far as the level of discount, we, we, we were pretty low levels, you know, since print, the pandemic, I would say this year's kind of reverting back to closer to a pre-pandemic level, I don't have that percentages, but it's not a big outlier from where we operated pre-pandemic, it's just been more promotional than we've been since the pandemic. And again, it's the...
Speaker Change: Low or full price sales, this is shielding. It's not not because we're doing lots more events, it's just a low or full price sales. It's just fuel there, providing more inventory that we need to clear. And we're, um, so our some of our clearance, uh, and promotional events are just a bit bigger.
Speaker Change: I think about chicken prices, they need to be
Speaker Change: adjusted lower to avoid having to use more discounts to drive sales or...
Speaker Change: He prefer to leave him where they are and show the customer that this count has a call to action.
Speaker Change: I think that we want to, you know, we don't want to, you know, reprise existing product or, you know,
Speaker Change: The same style, if it goes forward, there's a little bit of an opportunity to adjust the AUR by buying.
Speaker Change: More heavily into some of our lower price points offerings and future seasons and I think we will do a little bit of that.
Speaker Change: I don't think it'll be dramatic, but I think we'll probably invest a little bit more in some of the lower price point.
Speaker Change: Price points that we already have where we were lightering inventory this year and we am in upcoming seasons. I think we're probably investing a little bit more. That was an example of one of the...
Paul Lajoy: is she was Paul that we had in the second quarter was
Speaker Change: Our opening price point dresses in Tommy Bahama, which for Tommy Bahama is sort of $90, $120. We were significantly under invested in inventory and that price point for dresses.
Speaker Change: During the second quarter, and we felt that we, you know, we, I think, lost some revenue as a result of that, and so, when we get to next spring, I think you'll see us more heavily invested, so again, not so much.
Speaker Change: Changing the prices on existing product, but we do have some ability to tweak that AUR just by the mix of price points that we're offering.
Speaker Change: Thank you, good luck.
Speaker Change: Thank you. There are no further questions at this time. I would like to hand the floor back over to management for any closing comments.
Speaker Change: Okay, Paul, thank you very much for hosting our call and thanks to all of you for your interest in our company and we look forward to talking to you again in December and I hope I will all as well until then.
Speaker Change: Thank you for watching!
Speaker Change: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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