DLTH - Earnings call transcript Q2 2018

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Operator

Good morning and welcome to the Duluth Holdings Second Quarter 2018 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I'd now like to turn the conference over to Donni Case, Investor Relations for Duluth Holdings. Please go ahead.

Donni Case

Thank you, Brandon, and welcome to today's call to discuss Duluth Trading's second quarter 2018 financial results.

we website morning Releases. at which our available release Relations Investor ir.duluthtrading.com earnings issued is this on Our under Press am Officer. Stephanie Dave with here Executive I and Officer; Pugliese, Loretta, Chief Financial Chief today we On today’s provide the will call, to questions. will and your prepared call open remarks management then

expect to as I use similar can the be and by you the comments estimate, forward-looking on we begin, remind include which Before today’s the statements such words of anticipate, would like that call will phrases. identified

not Forward-looking involve and statements uncertainties like upon additional and projections, call turn assumptions predictions of our of statements. results as future refer materially Stephanie? estimates, I’d and cause call for over SEC forward-looking Stephanie of forward-looking events. Chief filings and the differ or this These could as that, their to the risk conference be from statements with by relied date Executive nature Please in only Officer goals, those to Pugliese, outcomes Duluth the to Trading. are to forecasts subject And that expressed actual should information. to speak of

Stephanie Pugliese

Donni, and call. is and to year our welcome second XXXX growth future. quarter investment of conference high our everyone a in you, Thank

quarter product rate great year storytelling, increased through stores successfully all on promotions. our six continuing to new and two healthier XXXX sales are on for quarter through $XXX very had and new infrastructure executing of Retail net million, we the to an delivered strong brand to with second use sales and well in which Our We margins and key relative major driven stores initiatives XX% the and experiences. in reduced XXXX. In for first the rate, direct with largely in goals. that by of improvements. we a quarter, growth omnichannel product, implemented these opened our of relationships XXth sales second happy consecutive increased customers growth our center report a business year-over-year. opened increased quarter, marks XX% We our initiative expanding the to our quarter I'm quarter deepen net a the

total percent have than we last opened first and at across all and to growth. product Our the late less in reliance initial categories our last sales year-round Core Direct saw well strong in more buying we women’s year-over-year men's X.X%, price patterns with promotional sales. more normalized XX% expectations. in are this our activity up was gross drag very second its XX% categories than initial quarter product year, got return meeting clearance reflecting quarter a merchandise stores year a six in result ended and grew quarter weather rate inventory we of past sold as trajectory from continuing We and cooler from position growth We first increased demand to experienced we on new and women's the a performed better seasonal and quarters. seasonal and quarter, of profit men's prior the growing seen a margin. of in with full slightly all strong the quarter. divisions, and Product pent-up

we progress now have what's Turning to other and ahead. made

all of First, aspects omnichannel guides our execution commitment our operations. on to our strategy

months. achieved we I As few mentioned in some the past ago, a milestones significant moment

remarkable major were Both of of job transition last disruption team our of was Our live the week week of has IT to May, our in implemented on and ecommerce system done August. to the projects customers management the these both customers, minimal with went first the platform launched order systems. and a

and omnichannel our also on the customers have Summer In assortment stride winter. integration for This are we We've We're on off fall through an our product with well experience our to of key in this initiatives the to billboards, TV highly omnichannel system kicked our in in of catalog, focused promoting implementation, improving many upgraded stores. hitting way displays. that channels taking and Solved. our planning, radio respect solution-based system crossed resulting all point-of-sale we and view addition, on advertising, digital, the campaigns and integrated in-store our timely and marketing, inventory

a With women Plus strategically up the each of this the XXw. amplifies in building presence, selling the these continued on impact used enterprise. know integrated favorable maximize campaign retail for remain launch with marketing across more making to We we the response shop of using and Women's very Women's potential across learnings more to to Xx sizes only growth to season with often are categories. coincide best-selling in momentum the offerings, customers' our of make We that noticeable They we've in and the available customers. also our approach channel We launch, the overall, but because our of our are sales an our fall focused to new timed continued customers and valuable period. to experiences women's Plus product our line start peak for not tend and styles its

women Plus in products. planned namely for have not instrumental and feel, Women's a Our brand, fall ability down is breaking stores see, the we all key the to retail adopting have to this on try been barrier though.

launching Flexpedition line while weather also being women's new and of innovative including incredibly of be repellent and tough men's water flexible several pants. from to him apparel, will We changing This and conditions. and is protect bottoms her lines

encountered line for Polish ingredients with of and styles to month & Spit The grime XX new active and an scents uses last men fight dirt with universal products. and new our natural Apothecary launched women line lifestyle. addition, In

store retail. in Hardgear new a We also continued store concepts additional growth expect in within men Alaskan through styles and from

of of As a we is strategy stores. mentioned, of the market our the retail critical to a through previously growth omnichannel enhance element total addition

and up conviction expansion long-term an and buyers. will strategy often even our the more best markets sales by direct That With those stores additional high-value, in returns create working. store, ship greater we that serve later see in expression online, to processes, double to our are that convert and across that roll shop established end pick supporting begin buyers most and customers outpace more momentum channel like to shop easier the brand of than single growth they market The we continue customer to of Omni-channel to channels those from into markets who opportunity store know because larger the have profitability. retail why better. for we is opportunity the and quarter, our game services out base store is leverage year. footprint, we created This spend this is our our without buy customers multi-channel

Before year. Dave, the I want over you update to store to the call fiscal I on our turn plans for expansion retail

are mentioned in some opened only six new in published planning XX we year, which our put stores, quarter for Adding expected for schedule construction Ohio North Friendswood, located and this opened now a Carolina of within Cary, Denton, to openings now Springs; store we are on delays three The store and is has than Texas rather that is and experienced heavy in eight In of first as I major the the we our year more to of successfully Oregon; our XXXX. eight lot open Arlington. target stores stores Portland, seven early As Colorado in closing, Columbus, projects. stores to guidance. earlier, previously at we've Texas in to done and a Lubbock, change lifting this the two half of IT the open year, will stated which completion total our

have fourth digital, ensure quarter. marketing. at these that projects and in the the to you incremental profitability With high of and new lion’s in sales the with ongoing successful us we like by television, that initiatives year. growth end, balance to and, Many on engaging the all-important earlier, looking that and share focusing forward we product of know hard is areas innovation, happens the I ahead a year work localized of behind us storytelling mentioned women supporting team of To are that our the

also season. the with in-store, more online, up store, center and fully buy distribution omnichannel render We ship from improvements peak the to plan experience pick for

year our with our look progress you. guidance We the sharing and reiterating are forward to for

turn to status capital will financial cover results our and initiative. to call I of the our Dave Now, the over project Dave?

Dave Loretta

Thank you, good Stephanie and morning.

net sales to direct sales $XXX up of quarter to sales Sales XX% growth million to the million segments $XX.X our For year. we with $XX.X by driven retail and X.X% reported both and increasing XX% growing last compared second was million. direct retail

$X.X million $X.X in this the for new one the year. six three from quarter, shipping quarter, stores were the our direct fees Revenues business. State Texas, we During in including from states top is slightly opened down million which of three last of

a these quarter, XXX X.X% revenues, in product sequentially the direct the reflects basis increase increased point the from second Excluding sales first quarter. which

direct in to sales our continue outpaced opened store Additionally, we established or markets stores stores. with no up recently see markets,

increase and In pre-opening were expenses. an cost of dollar in growing decline product net quarter points sales, expenses to terms, gross an second primarily $X.X administrative in $X.X advertising in selling offset compared expenses, sales the price growth administrative of net and profit point increase basis to to freight last increase was $X.X was a in in in XX general an of year. last percentage for compared Selling, of gross million to $XXX,XXX SG&A year. and expenses due revenues our rate Our shipping compared year. Included last margin to general $X.X in last basis as higher decrease store expenses, new XX.X% full sales compared XX.X% and delivery of included of in million in to million profit store SG&A year. base, partially decreased million to XX.X% by marketing XX The and due XX.X% the products to

expenses, EBITDA technology and to was points $X.XX year. to was with XX.X% XXX increased or basis retail short and XX% and web costs diluted to staffing to As year. sales, capital quarter in second line a a million per store of cost compared This as percentage system. stores of last of Bottom to in sales net we compared in net million was second outstanding due sales XX.X% or increase XX.X% catalog We our to of resulting XXX last increase basis decline planned with an decreased net to $X.X XX.X% from increase diluted a net XXX greater XX.X% on quarter of increased share offset $X.XX due working selling expenses sales. million, expense proportional a administrative of in needed a year. line, income income year. sales XX year. last expenses of $X retail the additional to due leverage $XX growth basis share million leverage reported balance as center General the point retail shipping basis on compared training of XX.X% marketing and percentage and Selling million primarily or to to per partially marketing to of depreciation costs revolving XX.X% million, call to of a management the higher new compared XX% with This expenses order net a to reduction net percentage points net advertising to points credit. due sales. primarily of Adjusted of increase the The was sales term ended by due $XX.X coupled last last for coupled television of in higher $XX XX cost. occupancy net cash point net compared increased The $X.X and our advertising basis

roughly the and improvements inventory able focus, area inventory, compared million $XX As increased we're to the growing to increase year. faster to due additional our the by to growing right-size realize prior sales this of or million of continue levels. with $XXX Overall, we than XX% to investment an inventory quarter stores has and half

which XXXX period as our in to XXXX. outlook to Turning based on is period compared XX-week financial a XX-week

up adding retail to the year the is mid-single square net sales between net compared year We to segment total accounting reaffirming for expect for XX% in expected and gross and and be XXXX, of XXX,XXX a of total to grow million as direct this to $XXX XX million our we to feet. The open sales. $XXX segment guidance digits with are expect stores

expenses retail as last SG&A due discussed, be partially increase to The points advertising As of growth prior to as leverage overhead increase expenses. our year. our and our in to of the people, offset basis increase year, administrative in from expenses, flexing the percentage expected over general is and rate gained gross primarily in net rate by selling previously profit year investments flat and selling and to a and XX to is result compared full XXX an points technology sales basis a

to $X.XX. shares We of a XX%. share and expect between full share diluted of $X.XX average a be XXXX earnings weighted per and diluted This XX.X year tax count assumes million rate

to priorities, an like strategy. on the year, capital which in reflected investment to update initiatives. infrastructure At upgrades I'd give continued and to capital allocation our the beginning shared expanding you we necessary execute retail the of Now our expenditure and systems our with the foundational channel omnichannel a

is break As year From and noted with changes down track on timing previously, the four the components. of system stores no grand to openings. into core the the investment in for retail standpoint, initiatives a material pace

it is implementation of and as real-time order other business inventory platform chain with system This all First, integrating replacement the visibility the AX of across and Microsoft's serves complete hub customer management the feeds. our network Dynamic platform. water enables our of the critical the

we mentioned, the during with now the Stephanie the to new quarter converted As and proceed components. second successfully system other can

to more providing consistent our enable new the conversion service. This platform. was personalized web site will completed with in develop multiple a and while the customer Commerce to implementation of a enhancing August, to our Salesforce content devices, early customers Second with and more Cloud addition digital website e-commerce us the in agile experience across conversion

completing quarter. integration in our to now critical this and be of Third, the is the completed the upgrade during upgrade to elements are the our for chain card gift on third in with to across payments will stores point-of-sale visibility process the inventory customer's activities network total OMS throughout enabling card enhancements chip channels, us and hub into PIN real-time and program. our The

and program POS blend implementation allow in The year in store a an select be customers. source scheduled and allocation customers will with to for hours closer begin with us XXXX, to in planning This the XXXX. order our of Retail. processing the customers its online tool allow to for supply omni omnichannel in-store begin fourth our few component a pick are in tool fall localize first forecasting our state-of-the-art addition, test more this capabilities that ship our item to to that key then us an and In to as tests. number systems order assortment assortment this merchandise TXT by early a the place learnings on functions within ability to functions introduce the inventory merchandising order rollout returns enable from further proximity, from customers. replenishment for The on ability knowhow the in the technology to and store We’ll better up We’ll upgrades based seamless embarking an phase and predict will products our stores this we're of these the planning fall level for tool offered our store. and including

initiatives. plans move are Horeb, center on our the projects to Wisconsin schedule the who’ve closing, made direct our on distribution in upgrade quarter. these just be well budget for and as new Belleville, facility we into year-to-date year this office Lastly, home the progress third pleased great and completed functions in Wisconsin. results, and with fulfillment Duluth as in down order during the an the our capital in road critical to the second are teams quarter also Mount In a Both include

expect our the call open momentum and plans to near have that full deliver continue to execute With rest we’ll guidance. We term year of the good heading Operator? year questions. the on I'll to our financial into and

Operator

Please with Raymond James. question [Operator ahead. go first comes Instructions] Dan from Wewer Our

Dan Wewer

sales to I terrific any increasing as exceeded was curious there It fiscal earnings actually second your to the they quarter. how if internal was quarter the a and and Stephanie, thought compared your guidance for the plan, to year? was expectations,

Stephanie Pugliese

we exceeded of close from we than plan terms a SG&A but very results, control internal places. quarter and the expectations quarter. for were number side a internal - - plan, had we sales We in store better our new in our So, of were to we're in on expectation, plan the expense in the second

in momentum we we look the the for that quarter the well pleased continuing the us fourth with plans to sales, coming fourth profitability get now, that year, but remarks, as second closer closer the ready balance prepared to of we've mentioned is the certainly really on of the and majority into got our focus of the the my get the our that of forward to It's the have quarter. for is execute As half we as year, vast all-important. I it’s year. right And majority we're

this at that very point, and The of we've the things put big executing comfortable we're team us. So with guidance got ahead is there. very we've out well,

Dan Wewer

revenues based the are rate like year-to-date half the looks of on the It slows you second in growth year in the in guidance? where reiterating

Stephanie Pugliese

how much terms But half of we little with of as stores in new target mix line expect we we bit I pretty where are go anniversarying stores expecting be in right it as are some top we are business, coming a of to tough still of direct business really pretty the that we're end momentum And expecting we the year-to-date. in you where which the then business is to up We're second a of stay the and are of numbers in the - be. the are retail will, that'll mid-single-digit the the coming into as picked Obviously, function quarter we growth, change kind a first off we to so with quarter, to part year. solid. on that up if in second said,

Dan Wewer

will retail how contribution the growing your you question, just more sales from get as gross rate, thoughts expense operating rate, impact Duluth's will changed and experience the a - retail have follow-up how margin long-term with you margin model, And rate? on

Stephanie Pugliese

than - So to total, kind entry point our percent at retail just ultimate mentioned bit part which margin the start price the I'll have as which their the said, half look full of at percent direct the a when in so - profitability. rate, with will his of stores gross the gross sit profit selling over as of retail margins at as we prepared pressure Dave more on profit know - do that are you had the business. the product little We freight, was a is That of if gross of in additional we decline XX-basis-point higher remarks.

know advertising ultimate retail some of got But side we takes is you've way on benefiting margin, business it we term. look particular look overhead look only So, gross expense. know not expenses, puts and at around mix us long to advertising leverage operating overall we as margin particularly we and it break today, it the When things. today leverage it's the the increasing and probably and as on towards the and you the is in it's not out allocate retail at at way to obviously as

over overall to next that benefit to We for leverage you biggest kind the us our advertising is of piece point bottom to and allow income continue which profitability it forward and the inflection are several on contribution that start of as anticipating years allow increase that the line. we will of go going us if the is to

that. quarters articulating what not for So on several been the changes past to seeing any we’ve we’re

that the In way it’s out fact, we expected. playing

Operator

ahead. Baird. next Jonathan go Please Komp question Robert W. Our with comes from

Jonathan Komp

pretty I signaled didn’t to maybe the also curious would start good great? saw be how trends if just quarter, on start what worked following up work or could just and wanted and seasonally ask the kind trended out during comments direct just a I things business any you and you think play how of I

Stephanie Pugliese

about end really this first the so would say that at second have nice wonderful of was didn’t surprise the quarter we quarter. struggled did that thing is, unpleasant with we’ve two Well weeks like last quarter, I not to was the we first have in it that

pulled was have Second really quarter pent-up of my quarter, prepared some marketing along. in together we the all quite quarter The team strong mentioned weekend that We and did I demand integrated but out of remarks started off as campaigns. mentioned well. first coming

Day talk team well the One of that channels, we us. Father’s the played areas of Day about out the quarter, job campaigns that those had across didn’t very around and I did an was specifically I our thought those for all both integrating, in excellent of and Mother’s messaging campaigns

our other products that was Summer we last that us for our Dry well Fly, course of worked at call through ended in of kind product, had we already The way month that that inventory I very felt good mentioned quarter’s performed well. our May coming thing because May, quarter. product for because for good like in Solved very the in us spring the in point and as out spot. about position on summer the seasonal that those that belt well the position product, Breezeshooter, inventory we the had of was quarter an product strength under and all Armachillo, We a

don't and net we first products were Tanks, some quarter in that for our were momentum looking able and Underwear, want at fact, fact point Fire those the to second. and Hose, with products do strong month that. core pleased like well of continue I No-Yank that weather Flex because is August we in continue Buck to hot still In are product mention that so Naked through of sales customer fail the to But to

team from all say was the firing the just a very to quarter. I really So that product think in perspective I'm cylinders pleased on

Jonathan Komp

key what I'm with And a business? all of that any More seeing new and tracking of for kind metrics both in in terms in there and the trends overall the just online any place the of follow-up. maybe you're improvements conversion the you're website curious just new recently, or functionality, the

Stephanie Pugliese

which great Then live customers of kind July hadn't a kind strategy so, in to of So of have. with middle or went and kinks to work in digging was and the we able there internally out we the that we were launched the a at August. of the before got employees beginning around few seen website we

one, we’re to sure team And kudos working as pleased that's really we're to we seen the of high making and customers. haven't - said, caliber tinkering think launched we are major That sure We it number website that really customers. on our I for that disruptions hard to was the is through the seamlessly the people those that refining we’re certain working to things traffic month we make of are web expected inbound coming things, places to through links example out in the right to August. on and check for that the that getting to be

of you be very has really kind with the we're and speed track to of very on the with pleased So that been did for the much we of you with track if be. had for refine improvement. our site And we far, we the incredible we're where on about where remember, adjustment you expected probably expect that, website of we're and as customers continuing we for website time an to to some talked if plumbing fact expected will a will but example

speed Our and for mobile customers. site site has our seen improvement navigation great around

overall online, management in pickup More So store, launched obviously we’ve the experience ship into like how omnichannel in and from are We're two and cetera. store, linking the to what amazing order we now can more on that and just mentioned I to do ECP buy back fall these pleased like went the we’re weeks. et tools few with just real the things launch going focusing as system we now really how we to the come. right we see get past peak just over said

stuff team focusing the that right now. that’s is So on the

couple to We’re be going piloting peak. will so the be over that ready the Getting of weeks. kinks things next those of out for that,

Jonathan Komp

know item the was marketing much ratio than year? could wondering, some underlying that the expense how me, from about the think just the leverage advertising the rule one and for versus of on basis down give full quarters more that more and gaining if just color half of XXX you’re to points last expense, the Maybe first are expense accounting within is I on you changes that and just of kind how shifting that for a - I’m

Dave Loretta

you little Jon, there. a I give can color

that For into we third last going is to by quarter. did second have year accounting improvement planned But quarter, the all the some second at are quarter change. material the not the expenses over push for that impacted the

are So some the those future that the around We getting pushed campaigns. and largely amounts creative in projects to for second ad third had happen $XXX,XXX. the quarter to preparing those of into roughly some budgeted quarter,

you little gives is third quarter. what's quarter for to going a impact improvement that feel So the more what and second in

As articulated before, saying see just the the fourth of we to talked impact, quarter. we've pulled to about we going be third $X costs from degree going third into to rule that some roughly accounting not same were of million catalog quarter were the quarter,

of the be last quarter some of drops the quarter As pulling only third fourth the timing we really we’d some look to compared we out at and book made adjustments year. roughly there, that into half of

the of the advertising ad So to full year. points the a basis we see anywhere to still leverage full the from of for slight XXX adjustment basis XXX year to points but on expect for the timing

Operator

Michael comes ahead. go Davidson. next Kawamoto Our D.A. with Please question from

Michael Kawamoto

little like a in markets store growth three years. for talk you had a direct looks have two what that can more or off first Just about open

I think that some disclosed he you've showed that those about. recently of figures acceleration talked

So just markets would any incremental how color helpful. are those be trending on

Dave Loretta

for is based months you, where the ago, of XXXX, store I two market direct. share trends years Sure, has the been a upwards – can total rate at direct for at established growth, rate, the growth of that through a we seeing continue pace relative couple of that double information on did growth through give company

we the presence online store there and start store further trend markets see of as kind and in and store, the that that continues the to year-to-date the shopping with trend that continues So with dynamic. both mature customers

we to established, that more we the as back and year year of pleased the that of become in see half out play So into and our expect response markets well. see next to as

Michael Kawamoto

said And expectations your I decline year, XX% I you’re think XQ What what slightly XQ kind of you shipping full in revenue, was you flattish said in on full-year there, believe. it that then thinking? the is are think for still down I

Dave Loretta

probably at a this is Well, little XX% extreme. stage

are a we driving any incrementally going We seeing and to shipping to that be don’t offers free it year-to-date more anticipate lesser extent we’re did we last year. than

going it’s be closer XX% year-over-year. to So to down

so but dollars – of year, You at $X what point. we for smaller, that's year-over-year an impact XX%, or full are a expect down know, still not upwards this roughly the still it’s million as big the so of becoming

Operator

Jim with Our ahead. comes Please go Stifel. next Duffy from question

Jim Duffy

first there any the is around the on mentioned team from around disruption second Stephanie the the that, caused from that? successful potential thoughts and implementations. tuning size and the in business any to fine that of Congratulations way that, of the is, disruption systems then any you impact of to Couple some questions quarter size

Stephanie Pugliese

looked you we a it to examples. couple specific Jim, of at give

of has the days places. the mixed in of visibility many customer, too up couple we for prices we see, over or we been a disruption they up couple past promotional to promo Some That had worked pricing four weeks the so cases did that in showing through showing a were promotional where some the had or weren't so.

we in within particularly but days, to bit given it the we of particular it detecting able problem. of wasn't where of a the business that that We happening most the the to that on lost little cases fact was those really quarter hours material expect remedy several were

was impact a real quarter. So we material don't the over it think

- improvements, those today, and updates fine-tuning that to of would business any we're would the ongoing doing almost website. that that were builds landing people are two ads. are there terms remember are that the coupled the characterize the it if based-on efficient website to old two - the you we’re prospecting more the of actually pages, types more more websites more our things be directing together, was I as make to making say website, In How we do How URLs. that that tinkering,

Now consider our we're you as mobile actually well. when three site

all this at we're URL to one, from the are point old had. to having, not making into we because that Those there some not fine we're the have one the we disruption major it's hasn't diverted Now, customer. of that really from expecting that just some organic so search leading been and that of addresses material are not we're inbound the links but sure – prospecting we're that being tuning

Jim Duffy

has feel in Dynamic brands and with that? Microsoft the power a of lost how a that should Do now the then sales been system? that capture we leveraging inventory lot you're finding might view proven tool time the AX successfully that And about retailers. real inventory by just very respect think of to powerful you Is otherwise for other that have to

Stephanie Pugliese

question don't think leveraging differently answer and yet. I that Slightly first directly, to your we're

go examples the the of what a we hours leveraging obviously two couple component only powerful month where of for is. there September peak The get And able will quick available of Those kind inventory that instead do more season store we'll store. activity. the be for that group a individual in the their is stage stores out learnings a based I to based of up and select leverage to of believe of quick tool type from on is it things When can handle to part the on very in the and can we're first we online where piloting be roll most say to learnings, then to in available product each we very this are it’s able to of in that of of pick we on few in home ability also ship-from-store the the and days. quickly customer buy but based

don't example enough just of as that to back can of take stores be advantage a we large piece rolling maximum as it for we'll But it. the Some far have room.

risk in able to POS The system mention to system have POS it component another everything didn’t real remarks the then our disappointing inventory we mentioned to system. prepared inventory want something, do That upgrade thought was is would other upgrade allowed store was who wisely. customer that my just had that real being our tandem. the time - we That to in real didn't time also them. ordered thing working I POS to so feeds just we that the because a we and for I use time in a to biggest it to was thing The

we it will, making role diligent very, sure before been So these that you and if all cautious working very on systems very proper are out. we’ve

Jim Duffy

improvement. is be you pending Stephanie. the does would I’m deep definitely leverage just the experience Any an conversion, of the with as great. become know going about new website, I some the on you of more feature? website, there a improved help the talk this Any Thanks, consumer kind of personalization can but capabilities unlocks new you are expecting

Stephanie Pugliese

hit word data where you already think a are of today the to the systems perspective and a I have would as from of built had. that's Jim, it. personalization the is we that we’re And part something augment that we now ton we I on a about talking infrastructure all categorize

the the the we to we're the on infrastructure have we've that and data and action we the now got personalization. that data able systems that that testing, now resources will be that action in enable putting to place to Now need

personalized we're on go to where they prior our easy customers and them. So envisioning for in facilitated want our a based to landing emails, pages personalized search, fashion direct able much being to more

things to addition service. other they're way those online buy of your customer pick types that of things from technology-enabled like of end local amazing In really you they're from your store, day home the up all the on something but - and just it work at the can

now super So it. we're let’s right action technology now in crossroads at infrastructure on data that rich, place of

also XX customer that engage groupings start lot months but not the customer to that, the if over a you goes really expect we markets. next only ratcheting more And action, fully. will, So up of from that to

store, that if a in store we like things on website, are customer are market forward. be that the going interesting a how with really a go communications you're differentiating think we to versus a without So market

Operator

from comes Our Dylan next Please question Carden Blair. with ahead. go William

Dylan Carden

in and is product Just very they there particularly half product tailwinds internally tailwinds, sounds of that saying direct and given you gross your share? around of year start as in the expecting growth real of far that you’re the curious can kind back margin choppier sales the like as sort some fall, anything own comparisons expectations of ramping in

Stephanie Pugliese

direct? - talking of different mid-single Are the you Dylan differently digits from

Dylan Carden

like mean, flow revenue from fourth around a you. margin for product comparison XQ more shifts coming you Gross quarter harder important a quarter, and maybe sounds I some as little is the new exactly. of in be have fall kind won’t versus in in there some a it’s drag, Yes, a XQ. moves bit. which It of much

Just the saying expectations as far heading sort quarters? as individual into of

Stephanie Pugliese

some direct but offerings mid-single and I’d on focused and kind of also what puts much the marker comparisons, a have that reason very past mean on et is, articulated in being things might we’ve got you we’re articulated product positives things. some of that still I takes why that, say digit reasons Yes, perhaps some right new some lot we in now new cetera. We've and tougher

got coming On We’ve of launches third upside quarter. think will. the but into if in you not some strong pipeline only into product we’ve the fourth launched, that some the things I already new quarter late things

on quarter. would early investments fourth the is potentially we early continue now, but that new from We late capabilities, - to where that have we’re website as still made, there idea as brand right new But benefit learning that. the the we’ve as it’s

growth year, the opened the side some big this the when on from headwinds particularly in direct we’ve though On store some think We’ve flip if markets of Texas. you the will you markets. got new about

We rate those last on quarter to year, so activity. - did and a some promotional growth so margin to at but types had direct fourth the got with drag And in markets. in a we strong we’ve cost growth of

had Our the We as prepared the remarks, team for mentioned is in that's long we obviously - a quarter. activity positive promotional brand term. second I in think less the

profit that at rate ultimately. So growth rate balance we're we how looking gross with the

look different on estimates we're basing we we're of that a the we're as to is why comfortable of for year. look examples second the bunch road, have on down the it, what and digits now, at with right the place half mid-single that’s saying and So our

Dylan Carden

could It ahead sort as some sounds of and like I order the management in correct, I on in that has kind benefit you're available your just of to new what's changed of better management sort if of have discipline inventory and seen things systems, inventory far of as And Is sale? ask new to inventory internally quarter. for versus approach - view. just what guess has the wanting

Stephanie Pugliese

of Well, are there couple things. a

partners First, years, XX with have that have that our time X, manufacturing to I We have for with been XX, we we credit We've stepped great our base partners more area, our team we give have times, of with often. and a us in goods example, and partnership need more to internal X, partners. and lead to partnered said up worked over for said, we in well them very flexibility goods. with deliver as and your really flowing our team. need how They reducing manufacturing

that. to I have them So really for give kudos

now doesn't we flow thing other we inventory been that looking of to past lower having run be addition and fulfill than mean how working weeks is still low, how across getting keep in on but confidence as customers' and how supply, a smarter we're individual about the we inventory The direct, the enterprise need way, in lower can in and to have expectations. clearer location, our some necessarily we in that to together we're we've and that each at can much much retail visibility and really able they're to the

where that that the So you I’m happy that has know quarter was earlier, this help done. planning inventory fully and in what very really forward, will even we we inventory to think growth improve very when that and of get that's saw assortment our we we we and that as we first pleased some team sales with tools I'm expect And actually us go lower very, place about even that the growth, more. quarter And improve and then going mentioned further.

Operator

for to question-and-answer the like turn our closing session. I any would back remarks. to over Stephanie This concludes conference

Stephanie Pugliese

few want to questions. the all you, third in to you with quarter Thank call sharing you. all of forward say just I Thanks. for today. just thank months We our look results for a our joining

Operator

conference now presentation. you attending concluded. The today's has Thank for

may You now disconnect.

Duluth (DLTH) 5 Sep 182018 Q2 Earnings call transcript